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Offline bytemaster


I would like to introduce a new, simplified, approach to implementing Dividends on a blockchain.  As many astute economists have pointed out, destroying the currency and paying dividends have the same effect on your bottom line.  In one case you end up with more units of a fixed supply, in the other case the units you have become more valuable.   Despite the economic equivalence of these two actions there is a critical psychological difference.   People are often unable to separate real return on capital from capital appreciation.  There is also a huge difference in user experience between seeing the number of dollars they have go up due to 1% interest while ignoring the 5% inflation.  They still 'feel' they got more.

This leads me to the following critical observation that all crypto-currencies are currently operating under the illusion that you have realized high gains when the reality is almost all coins have an inflation rate north of 10% per year.  As a result people are paying taxes on imaginary gains because the gains were not adjusted for inflation.  Just like we want the government to be 'honest' and tax people on their savings rather than hide the tax in inflation, all crypto-currencies should be honest and show the users' balance decrease by 10% per year as fees paid to miners.   

The reason this has never been implemented is because 'implementing a tax' has been considered entirely too difficult and inefficient.  I would now like to present a new approach to crypto-currencies that will simultaneously eliminate the inflation deception, enable dividends, and put an end to all crypto-currencies that think changing the money supply actually means something to the market.   This change could easily be adopted by all Altcoins without having to change the blockchain at all.   

Rather than considering the 'unit' of a currency to be individual shares, people should transact in 'Percent of Money Supply' and all balances should be represented as 'Percent of Money Supply'.   As currency is created you see your balance shrinking due to inflation.  When money is destroyed your see your balance increasing due to 'dividends'.   You can shift the decimal on this percentage to create friendly numbers, but ultimately it is still a percentage.   With a simple change to the user interface dividends can be implemented with ease.

If all block chains implemented this policy then the unit value on sites like http://coinmarketcap.com/ would be a meaningful way of comparing the coins.   In the case of BitShares this eliminates a large amount of bookkeeping and simply changes the way the currency is entered or displayed by the user.   Users get to see their dividends as their balance increases over time even though no coins are actually transferred to them. 

In the case of Bitcoin users would be able to write of a 10% loss per year against their capital gains.  I would like to officially proclaim that Bitcoin implements demurrage by charging people for holding a balance.  It is currently hidden by inflation, but none the less the economic system of all coins to date have a hidden wealth tax in the name of security and are terribly inefficient.  A future coin that is able to eliminate this inflation and 'tax' will have significantly more value. 

Given this insight, many of our future block chains have become much easier to implement. 



For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Lighthouse

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So what is the first DAC we should expect to see this in?  I'm ready for some of these ideas to make their way into a PTS derived DAC :)
Before you say the price of PTS is too high, take a look at theThe Reason.  Protoshares are an entirely new type of Cryptocurrency, one that pays to hold.

Offline Lighthouse

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Perhaps it would be a good idea to show a day-to-day and month-to-month % change.   I don't think I would really appreciate very minor changes in my holdings relative to the entire user-base, but if the interface pointed out the specific change whether good or bad would be valuable.
Before you say the price of PTS is too high, take a look at theThe Reason.  Protoshares are an entirely new type of Cryptocurrency, one that pays to hold.

Offline bytemaster

Perhaps it would be a good idea to show a day-to-day and month-to-month % change.   I don't think I would really appreciate very minor changes in my holdings relative to the entire user-base, but if the interface pointed out the specific change whether good or bad would be valuable.

I think the interface would show your gains (or losses) over a regular interval.   So you would see your balance + todays gain.  Then you would see 'current APR'.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline bytemaster

So what is the first DAC we should expect to see this in?  I'm ready for some of these ideas to make their way into a PTS derived DAC :)

Every DAC we do will implement this.  This particular feature just saved me a ton of development time.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Lighthouse

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So let me get this straight - transaction fees will be destroyed, so what is the incentive to process transactions and who is doing that now in this system?
Before you say the price of PTS is too high, take a look at theThe Reason.  Protoshares are an entirely new type of Cryptocurrency, one that pays to hold.

Offline HackFisher

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People may lack of knowlege you posted in this thread, so I suggest to give people choise to switch balance viewes on user interface, and teatch user there.

The manner of people are hard to change, and peole may be confused by the new strategy, so UI might be the key to succuss.

It's great to just point this simple true idea, missunderstood by people. And it's  straightforward and simple mathematically.

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Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline HackFisher

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Besides, how will trade be infulenced? If to show as percentages, the order list can not easily adjust, it may not easy for the market to accept it.

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Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline bytemaster

So let me get this straight - transaction fees will be destroyed, so what is the incentive to process transactions and who is doing that now in this system?

No, transaction fees still exist because there is limited space in the block chain and these fees will 'destroy' the currency.

New blocks are created by all full nodes and anyone with a financial interest in the network will pick the largest value transactions with the highest fees (which are destroyed and thus show up as dividends).

If you do not include transactions in a block then your mining difficulty will be higher (proof-of-stake) so those blocks will never make it into the chain. 
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline bytemaster

Besides, how will trade be infulenced? If to show as percentages, the order list can not easily adjust, it may not easy for the market to accept it.

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This is a good consideration.   Ultimately there are still shares and a money supply under the hood.   The rate of change in the money supply would make the change inconsequential for the order book.   What would you do with your 'dividends' earned while you had an open order?   Markets would function at the 'share level' and the display would just show you the percentage level.   Thus dividends will accrue to your bids and asks equally and thus be irrelevant. 
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline bytemaster

People may lack of knowlege you posted in this thread, so I suggest to give people choise to switch balance viewes on user interface, and teatch user there.

The manner of people are hard to change, and peole may be confused by the new strategy, so UI might be the key to succuss.

It's great to just point this simple true idea, missunderstood by people. And it's  straightforward and simple mathematically.

Sent from my GT-N7100 using Tapatalk

When people think of Bitcoin they think of a unit of something.  When they think of this system it is still a unit of something and will not be displayed as 'percentages'.  They will just see that they gain or lose some of their balance very day due to dividends or mining tax.   They will simply call them shares. 

I do think that a flexible GUI would be a nice alternative for existing crypto-currencies for people who want to deduct inflationary gains from their taxes.  Eventually people may start trading in these percentage units rather than bitcoins... but it is like the debate between BTC and mBTC vs %BTC and people will have a hard time adjusting for old DACs.  New DACs how ever it will just be viewed as the money supply. 
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Lighthouse

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Show both - the actual numerical amount of currency you have AND the % of the total money supply you represent in some sort of understandable format

I dunno, if you can nail this it will be good but it could be very confusing and doesn't really feel like dividends in the same way although I know it is intellectually.
Before you say the price of PTS is too high, take a look at theThe Reason.  Protoshares are an entirely new type of Cryptocurrency, one that pays to hold.

Offline bytemaster

Show both - the actual numerical amount of currency you have AND the % of the total money supply you represent in some sort of understandable format

I dunno, if you can nail this it will be good but it could be very confusing and doesn't really feel like dividends in the same way although I know it is intellectually.

There is a difference between implementation and user experience.   Users will experience this just like actual dividends, this just simplifies my under-the-hood implementation.   
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline super3

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This concept will work perfectly for Protoshares and onwards. I think other "more spendable" Cryptocurrencies will have problems this. Dynamically changing balances would perhaps make it very hard to price items.

Offline bytemaster

This concept will work perfectly for Protoshares and onwards. I think other "more spendable" Cryptocurrencies will have problems this. Dynamically changing balances would perhaps make it very hard to price items.

Actually pricing becomes easier because you will have more price stability by removing the inflation from the mix.   

For currencies like BTC the wallet would probably want to price things in USD because then they will still see their balance going up despite the 12% APR inflation.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

 

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