Here's the draft, as handed off for Cass to work his magic...
Now that the enabling technology behind BitShares is proven and we have settled in to a comfortable pre-launch
point at Number 4 on the charts, it is time to Reimagine Everything as we approach next month’s epic assault on Number 2. Everything about BitShares has been simplified and streamlined in preparation for its introduction to the Outside World. We have a focused vision, an elegant story, a consolidated product, a solid legal framework and a decentralized organization all wrapped up in one revolutionary self-funding juggernaut.
And you won’t want to miss its
PTS Anniversary Snapshot
on November 5, 2014
The biggest news is that we will be combining BitShares X, DNS, and VOTE into a single powerful product to be known simply as BitShares (BTS). And, BitShares will extend its currency
metaphors to become the first block chain to fully integrate its human resources as a self-governing community
. Then, each of us can decide whether we think that “C” in DAC stands for Decentralized Autonomous Community, Company, or Currency.
BitShares will have many faces. The users of a BitShares debit card, or its wallets, or its voting booths, or its day-trader's consoles won't need to know what is behind the digital tokens they are using. But, there will be times when a bigger metaphor is needed to inform design decisions, communicate the vision, or explain the legal theory of operation.
So pick your favorite. BitShares is a manned community
supporting an unmanned company
that produces innovative currencies
. And, it will soon be optimally decentralized at all three levels. Most of what you have learned about BitShares still applies. But, it is now easier to explain and more compelling than ever. Let’s have a look!
Our New Competitive Edges
The new BitShares (BTS) will have significant competitive edges over the several DACs it replaces. In fact, when the developers of X, DNS, and VOTE saw how competitive BTS would become, they surrendered immediately. Resistance was futile. We have all been assimilated – not as a centralized collective of mere followers, but as decentralized community of cooperating entrepreneurs. We can now work together while competing more effectively in an increasingly crowded industry. We expect much of that competition to surrender soon too. Here’s why:Competitive Edge #1: Shared Network Effect Features
As individual DACs, each of our developers would have had to duplicate the hardest parts of the job – growing network effect, generating critical mass, and building market depth. By combining onto one blockchain, we could share the fruits of our combined efforts. BitShares will integrate the following common services that would be much less effective if they weren’t common services
• A unified basket of stable, robust global currencies (BitAssets)
• A unified set of well-compensated, best-of-breed delegates
• A unified name and reputation system
• A unified secure messaging system
• A unified set of on and off ramps – portals to the fiat world.
• A unified marketing umbrella – attracting attention to each other
• A unified consensus-based governing system
• A unified family of tools and wallets and interfaces
• A unified way to attract and fund the best developers and marketing talent.
BitShares BTS moves our whole ecosystem into one DAC friendly free-trade zone with all the services that benefit from network effect already in place.
It offers new developers instant network effect. Built in.
While the BitShares Toolkit is open source software that anyone is free to adopt, the network effect doesn’t come with the Toolkit!
You get that by joining our community. You still run your own business with its own custom storefront and Internet presence. You just skipped a year or two of trying to get traffic to stop by!Competitive Edge #2: Self-Funded Growth
Metaphors matter. If BitShares were a currency
, we would want it to have a limited supply. If BitShares were a company
, it would happily issue new shares to propel growth by attracting new infusions of cash, services, or intellectual capital. What should BitShares the community
do? We think it should fairly recognize the contributions of all of its members – past, present, and future. Fast-growing companies recognize that, as long as the value infused from new sources exceeds the value of shares issued, the future value of everybody’s shares will increase. The BitShares community will therefore use the company metaphor, not the currency metaphor, to inform its growth policy decisions.
How will this work? Well, Bitcoin has for years issued 50 new bitcoin “shares” every block to incentivize its mining “employees” to do the work required to secure its network. This policy gradually increases the supply
of its shares but does nothing to increase their value
because the work done has no residual benefit. The net cost of this wasteful work is about a half billion dollars per year. If that new money didn’t have to be spent on outrageously expensive security, it could grant 101 small businesses an annual budget of 5 million dollars each
to do something useful, something to promote Bitcoin’s growth.
BitShares is able to use its DPOS technology to do exactly that! It will also offer up to 50 BTS per block to incentivize 101 employees (delegates) to secure the network PLUS do something useful to grow stakeholder value. Since its DPOS security mechanism is so efficient, almost all of the BTS issued will go toward software, marketing, and infrastructure. Stakeholders must approve new issuances by explicitly approving any new-hires that they are convinced will add more value than they consume. They may choose to issue zero new shares; and, there is a hard-coded limit of 50 BTS per block (~6.3% annually). It will likely be half that – far below Bitcoins ~10% inflation.
BitShares is the first blockchain that can hire its own staff.
The BitShares community, viewed as a company, will soon have 101 job openings for people who can help grow the business. These will be highly competitive elected positions subject to approval of the stakeholders. Each of these openings is able to pay employees with stake in the enterprise, just like any successful startup would do. This is a huge competitive advantage; and, it is what will allow BitShares to fund the technology and user base growth needed to penetrate all sectors of the global economy. It is a true a game changer that will ultimately attract the best and brightest talent to join our community. This is the competitive advantage that may well propel BitShares beyond Bitcoin in the next few years.Why the Sudden Change?
Once BitSharesX was nicely tracking its market pegs and preparing for the coming marketing push, Bytemaster turned his attention to BitShares VOTE. As he applied all the lessons learned from BitSharesX, VOTE began to look a lot like the BTS DAC we have just described. There were compelling reasons for it to incorporate the features of X and DNS and it was clear that self-funding DACs were an enormous competitive advantage.
This would have made VOTE a far better investment than BTSX and forced BTSX and DNS to incorporate all the same features just to compete. The net effect would be a complete fragmentation of all the network effect each DAC was trying to build. This would split the best available delegates, the registration of new users, the number of traders available to make the markets, and the depth of the markets themselves.
If we declined to build the best DAC possible in each case by leaving out features so that they would compete less, then some other competitor would simply seize the opportunity to do so anyway. Darwinian forces would rule. There was no choice but to build the most competitive DAC we know how. And, we keep learning; so, every new DAC in the future would be more competitive than those before it. This would set up an inevitable boom and bust cycle as shiny new DACs killed off their predecessors.
On top of that, our big marking push for BTSX was looming; and, all the promotional materials for it were being finalized. If we were going to switch our strategic plan to a single hypercompetitive DAC, we were going to have to move quickly. Finding the Right Formula
We now had the problem of moving all stakeholders into one tent and giving them a fair share of the combined stake. This was not easy. The interests of stakeholders had to be defended for BTSX, DNS, VOTE, PTS, and AGS. Collectively, these represented developed, developing, and future DACs. Some had begun to trade independently and had widely varying value metrics including market cap, liquidity, risk taken, future potential, likely overlapping membership in other categories, specifics to be negotiated with each individual developer. Several proposals were discussed. Everybody had his own idea of what constituted a fair weighting and expressed it energetically at bitsharestalk.org.
Finally, we decided to simply treat BTS like a new DAC and do a “normal” share drop distribution to various snapshots for the various constituency groups. BTSX would map directly 1:1 into BTS shares and represent 80% of the initial BTS supply. The remaining 20% would go those with interests in not-yet-operational DACs including PTS/AGS holders and the developers who had been working on those new DACs.
It is every DAC developer’s responsibility to define the initial share allocation in such a way as to maximize the success and support for their DAC. Here is how we have done that duty for the planned BTS share drop in late November.
[Updated Table and Caption]The percentage numbers in this table trace the snapshot shares back to where they originally came from for the purposes of demonstrating indirect honoring of PTS/AGS. DNS sold prior to proposal announcement still benefited the sellers and the buyers before that date will receive a small adjustment from other funds.
As in all grand compromises, everybody had to give a little:
• BTSX holders have to accept a 20% dilution phased in linearly over two years. In return, they become the super DAC they would have had to compete against and gain the support of two great development teams.
• AGS and PTS holders (at various points in time) had to accept a 6% dilution of their stake in merged future DACs (9.4% instead of 10%) but the growth potential of being participants as owners on the BTS Main Chain is a far, far better deal. They also remain compelling demographics for third party developers to target in their share drops.
• Developers of DNS and VOTE had to settle for a smaller stake (1.2%) in a much bigger DAC. Given the combined potential, this was also a great trade.
• Non-BTSX stakeholders had their expected value potential phase in gradually over the next two years to avoid shocking the BTSX market and to account for the rate at which they would have likely taken to reach maturity anyway. Now a much bigger potential will phase in, as their BTS shares vest over that time.
• BitShares MUSIC and BitShares PLAY developers have elected to remain independent from BTS and will continue to honor their proposed share distributions. Other third party developers are expected to emerge in the coming months as well.Summary
Despite the stress and confusion of these negotiations, we are all far better off than we were a week ago.
• The unified development team can now focus on making one insanely great product.
• The marketing teams can now focus on one clean, easy to tell story.
• We will have a single large market cap that will continue to grow as new features are added.
• Users attracted to one service will now discover them all.
• Day traders and speculators can now focus on one deeper and more robust market.
• Users of BitAssets will enjoy tighter pegs and greater liquidity.
• Everything will operate with a common basket of currencies, one set of global account names, and a unified reputation management system.
• Secure communications will connect all businesses on the chain.
• Smart contracts will soon be possible between businesses on the chain and any mix of their customers.
• Everybody’s efforts will be directed to achieving one big network effect.And that should make all the difference!
[Updated Cautionary Notes]
Be sure to have your PTS & DNS out of the exchanges
and back in your wallets on Nov 5th.
BTER and BTC38 will honor DNS
but will have to stay in business two years to issue them as they vest.
The hard fork from BTSX to BTS will happen later in the month.
This will require nothing but a normal wallet update.
The BTSX markets will not be affected and will continue trading like any other upgrade.
Then you can import your PTS and AGS credits at your leisure.