Subsidizing bitUSD, bitEUR, bitCNY yield to minimum 5%, has this been discussed?

[Troglodactyl]

I think many people are scared of the word subsidy because of the negative connotations it has relating to government use. It's important to remember that bitshares are not coins, they're shares in a company. A company subsidizing a product is vastly different from a government subsidizing an industry. If done intelligently, it is exactly what makes or breaks the market. The companies or blockchains that are not able to subsidize and thus direct their capital with intelligence, will simply have to burn it to subsidize the recording of its existence (like bitcoin).

A developer delegate is another example of the blockchain subsidizing a product, in this case it is subsidizing it's own development (instead of waiting for consumers to do it for free).

This is so obviously a short time artificial distortion of our product to anyone who scratches just slightly below the surface.  It might win over brief attention from those who don't get that deep, but to any potential serious users it just obfuscates the fact that we actually have a real sustainable product that's worthwhile.

Do not be so sure...his proposal is achieving a giant step in making this statement not so true....

Anything that can be freely terminated at any time is sustainable. At any time the market gains the information that it is unprofitable, it will end instantly.

On the one hand you're saying that the benefit of this is that we can advertise it as fixed and predictable interest, and on the other you're saying we can kill it at a moments notice.  You can't have both.

And no, the fact that it can be terminated does not mean it's sustainable.  It just means you can choose to stop sustaining it before it eats through everything else you have.

[Rune]

It is possible to set up a bitAsset to be guaranteed 5% from the shorts

That was the original design - did the Fortune writer take the time to understand this?  No, we were called a bucket shop instead.  Our competitors will use this against us to pounce on our throats.  They will throw out the same kinds of words that we used to describe NuBits.

I agree that share dilution to re-invest in development in new infrastructure is a good idea.  Dilution to raise money to provide 'parking' incentives is too direct of a path to bad publicity.

Unless our collective market analysis on the prospects of bitshares is catastrophically wrong, we will not actually be diluting much to provide these incentives. They will merely be a minimum guarantee that we know will be met anyway. If we want to guard against being catastrophically wrong about the potential of bitshares, shouldn't we just sell our shares? I'd say it is worth it for us to bet on what we already believe is right: That bitshares will grow, especially when betting in this way will itself help us grow.

[gamey]

I think many people are scared of the word subsidy because of the negative connotations it has relating to government use. It's important to remember that bitshares are not coins, they're shares in a company. A company subsidizing a product is vastly different from a government subsidizing an industry. If done intelligently, it is exactly what makes or breaks the market. The companies or blockchains that are not able to subsidize and thus direct their capital with intelligence, will simply have to burn it to subsidize the recording of its existence (like bitcoin).

I don't think the difference is as large as you are claiming.  It isn't "vastly different".  The subsidizing is a form of wealth redistribution in both situations.  In theory, they should work the same.  I can't really see a difference at the motivation level.  As a citizen, you vote and have interest in your country's currency.  As a stockholder, you vote and have interest in your company's value (shares).

You whole approach seems to repeating how great this new metaphor is and how great it will be to spend all this new found money.  yuck

Government subsidies are democratically decided, and thus are used to enrich individual humans and the gatekeepers of the democratic process.

Company subsidies are decided by the capital itself, and is thus used to seek as much profit as possible.

We are still democratically decided, it is just weighted by stake.  The result is the same, you vote what is in your interest as do others.  The subsidies are wealth redistribution.  In theory, you vote for a government that is pro-subsidy (which is both sides) in a way that you find optimal.  It is the same thing in both systems.  Don't kid yourself.  The differences are a lot smaller than you claim.  Large stakeholders have more voting power so they'll be more against the subsidies, but for a lot of people it is the same system.   

The subsidies impact large shareholders to a higher degree, just like taxes (subsidies to government) impact the wealthy to higher degree than others.

So in our system the wealthy could use their stake to redistribute money to themselves via delegates.
In a normal democratic system, the poor could vote to redistribute the money of the wealthy.  (and wealthy redistribute to themselves through other means)
This is probably the largest difference IMO.

[sschechter]

Maybe we should remind ourselves that we are not a classical business ... and also need not necessarily take the same strategies .. as classical businesses ..

Like engineering controversy to garner publicity?

MeTHoDx, you read this book? http://www.amazon.com/Trust-Me-Lying-Confessions-Manipulator/dp/1591846285/ref=sr_1_1?ie=UTF8&qid=1414539073&sr=8-1&keywords=trust+me+im+lying

Its my next BitShares book club recommendation.

[Rune]

It is possible to set up a bitAsset to be guaranteed 5% from the shorts, if the shorts compete on how much collateral they are willing to put up for that rate. Again, its by adjusting the level of security that one can fix the return.

This sounds to me like it would reduce bitasset holder confidence in the safety of their asset. With a guaranteed 5% and a public bail-out policy, they will consider bitassets essentially risk-free as long as they trust our brand. And honestly, they will nearly be, in the beginning we will have such an absurd growth potential because we have yet to absorb the entire crypto industry.

[sschechter]

It is possible to set up a bitAsset to be guaranteed 5% from the shorts

That was the original design - did the Fortune writer take the time to understand this?  No, we were called a bucket shop instead.  Our competitors will use this against us to pounce on our throats.  They will throw out the same kinds of words that we used to describe NuBits.

I agree that share dilution to re-invest in development in new infrastructure is a good idea.  Dilution to raise money to provide 'parking' incentives is too direct of a path to bad publicity.

[starspirit]

It is possible to set up a bitAsset to be guaranteed 5% from the shorts, if the shorts compete on how much collateral they are willing to put up for that rate. Again, its by adjusting the level of security that one can fix the return.

Possible there are many variations of bitAsset design and we do not necessarily know what has the best chance of success. I'm not sure if some sort of experimental testbed is possible for competing designs running in parallel, and see which come out on top and indicate changes to the core product.

[Method-X]

Maybe we should remind ourselves that we are not a classical business ... and also need not necessarily take the same strategies .. as classical businesses ..

Like engineering controversy to garner publicity?

[Rune]

http://fortune.com/2014/01/28/cash-menagerie-inside-the-bitcoin-confab/

"Still, avarice wasn’t totally suppressed. A handful of boiler-room types were scattered around the show floor, sweating through cheap suits as they touted “ridiculously profitable” cloud-based mining services or automated bitcoin trading robots. Enthusiasm shaded into hyperbole, claims of guaranteed returns were thrown around with indictable abandon, and buttonholed interlocutors were encouraged to “reserve your spot now.” One new platform would let users “earn 5% on anything” because “we’re cutting out the middleman” — when in fact, what was being promoted was a kind of digital bucket shop, a casino disguised as a stock exchange."

Can you guess who they're talking about? 

It's possible to mess up marketing campaigns. That doesn't mean we have to mess it up.

A guarantee by shareholders because they believe in the long term viability of their company should be enough to explain it. Also, do you think someone shouting "variable interest rates" would have been even mentioned in that article?

[Rune]

How would you explain your campaign to the media?

The company takes opposing positions because they believe in its long term viability. Anyway this isn't for a media campaign, this is for when one guy explains to another guy that bitUSD is better than a bank because it pays at least x% interest rate. People love talking interest rates in easy numbers. Once this campaign becomes unprofitable we will end it. At that point people will already be on board and understand the inner workings better, and why they can trust the interest rate to stay high.

[Ander]

I think it is enough to post something like "last year people earned X% on BitUSD"... not changing... true... past performance is no guarantee of future performance.

I agree.

We just pay out the amount of money that was generated from fees.

We tell people what this rate was in the past.  The future rate is not guaranteed to be the same, but they are given an idea of what might happen.

[sschechter]

http://fortune.com/2014/01/28/cash-menagerie-inside-the-bitcoin-confab/

"Still, avarice wasn’t totally suppressed. A handful of boiler-room types were scattered around the show floor, sweating through cheap suits as they touted “ridiculously profitable” cloud-based mining services or automated bitcoin trading robots. Enthusiasm shaded into hyperbole, claims of guaranteed returns were thrown around with indictable abandon, and buttonholed interlocutors were encouraged to “reserve your spot now.” One new platform would let users “earn 5% on anything” because “we’re cutting out the middleman” — when in fact, what was being promoted was a kind of digital bucket shop, a casino disguised as a stock exchange."

Can you guess who they're talking about? 

[sschechter]

How would you explain your campaign to the media?

[Rune]

Do we want people to understand how our system works or do we just want to throw returns in peoples faces?

You realise we are talking about marketing a product, right? No, we do not require people to understand how our company works on the back-end, yes we want to throw clearly digestible numbers in their faces when telling them about our products.

People don't need to know how BitShares works.  But they ABSOLUTELY need to know how it makes money if they are being asked to risk their own.  If you are unable to or unwilling to explain how you are able to offer them returns, the first word out of their mouths will likely be Ponzi. When I hear 5% interest guaranteed, I think to myself "whats the catch?"

You: "Hey want to try our financial product?  You'll get a 5% return on your investment"
Me: "5%, thats pretty good.  How does it work?"
You: "That's not that important."
Me: "Go fuck yourself"

There is nothing wrong with explaining the details, in fact everything should always be 100% transparent.

You just don't open with "Hey, do you wanna know how my company works?" when you're trying to sell a product.

That conversation would go:
You: "Hey want to try our financial product?  You'll get a 5% return on your investment"
Me: "5%, thats pretty good.  How does it work?"
You: "Shareholders in the company take opposing positions, and guarantee the rate is always at least 5%"

[Rune]

I think many people are scared of the word subsidy because of the negative connotations it has relating to government use. It's important to remember that bitshares are not coins, they're shares in a company. A company subsidizing a product is vastly different from a government subsidizing an industry. If done intelligently, it is exactly what makes or breaks the market. The companies or blockchains that are not able to subsidize and thus direct their capital with intelligence, will simply have to burn it to subsidize the recording of its existence (like bitcoin).

A developer delegate is another example of the blockchain subsidizing a product, in this case it is subsidizing it's own development (instead of waiting for consumers to do it for free).

This is so obviously a short time artificial distortion of our product to anyone who scratches just slightly below the surface.  It might win over brief attention from those who don't get that deep, but to any potential serious users it just obfuscates the fact that we actually have a real sustainable product that's worthwhile.

Do not be so sure...his proposal is achieving a giant step in making this statement not so true....

Anything that can be freely terminated at any time is sustainable. At any time the market gains the information that it is unprofitable, it will end instantly.