Author Topic: Dividends 2.0 - A Simplified Implementation of Dividends and Honest Blockchains  (Read 20502 times)

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Offline phoenix

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The political currencies have to deal with that. These new currencies are decentralized and you don't know which one people will want but I highly doubt Bitcoin will remain in top demand. It's not like the dollar which could remain in top demand by force.

Bitcoin can't stay in top demand by force, but it can stay up through inertia.
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Offline luckybit

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BitUSD or BitApples solves this problem in a decentralized manner.

Sure, it is good for speculators, but not for real investors.

Imagine that around 70% of all transactions in our decentralized bank happens between Bitcoin and Bitshares. That could be perfectly the case because most people will enter with Bitcoins in order to obtain any other currency, or take loans in BitBTC.

You're making a lot of assumptions.
1. Nothing stops anyone from selling Bitshares directly for USD. There is no rule that people have to trade BTC or that everyone with BTS will want BTC. Some will want to cash out for USD. Some will want LTC or anything else.

2. Bitcoin buying power increases even while supply increases but if supply increases then it's inflationary even if buying power increases relative to the dollar which is much more inflationary. The buying power of the dollar is decreasing faster than the buying power of the
.
It will happen the same that is happening in Wall ST right now. Because around 60% of all transactions in the world are made in dollars, when the dollar goes up and down, it affects secundary currencies that haven't got the strength to trade against anything which is not the dollar. Example: most currencies in South América trade against the dollar for importation/exportation. If the dollar goes down, they go down too.
The political currencies have to deal with that. These new currencies are decentralized and you don't know which one people will want but I highly doubt Bitcoin will remain in top demand. It's not like the dollar which could remain in top demand by force.

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Offline liberman

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maybe we have different concepts of inflation ,

No, it might be just a misunderstanding.
There is price inflation and money inflation.
We are talking here about money inflation.

Imagine a world in which there is only Bitcoin, so prices are only relative to Bitcoins. By mining, you augment the money supply, so inflation of both prices and money happens.
Today, because Bitcoin is measured against bigger currencies and demand is so high, it happens an apparently paradoxical situation: the currency is inflating while the prices are deflating. Weird, eh?

Offline WaPTS

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I don't believe it's fair to say that BTC has a 10% yearly inflation.  The total supply is 21 million coins that's what Satoshi decided.

If Satoshi released all 21 million coins right away (or at least within the first year), then we would have 0% inflation since the cap has been reached.  What difference does it make if the 21 million units are released gradually or all at once (besides the fact that releasing all at once would be terrible).

If I make another btc clone and flood the market with 21 million coins, is it even fair to say that my coin has zero inflation and BTC has 10% inflation?

Your right, BTC has 12% yearly inflation :)     

All that matters is potential 'coins in circulation'.  Every time a new coin is mined someone has financial incentive to sell to cover the cost of mining and this selling pressure devalues the coin.  Imagine what would happen to BTC price if miners were not dumping on the market?
I don`t understand why you say there is inflation in BTC,  BTC is coin other than the shares of all BTC,  10000 BTC only can buy pizza  four years ago ,but now 1BTC maybe can buy 100 pizza or more , it is deflation.
if the inflation you say is ?
1BTC is 1/2,000,000 of all BTC ( when the acount of created BTC is 2,000,000 )  ,1BTC is 1/12,000,000 of all BTC ( when the acount of created BTC is 12,000,000 now)

You are not understanding what inflation is. Inflation is just the increase in money supply. Period.
Because Bitcoin is still mined, it is inflationary. It will cease to inflate at some point, but not right now.
What you really mean is that Bitcoin increases its VALUE at a much higher rate that its inflation.
So you should separate the concepts of value and inflation, they are not the same.
maybe we have different concepts of inflation ,

Offline liberman

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I don't believe it's fair to say that BTC has a 10% yearly inflation.  The total supply is 21 million coins that's what Satoshi decided.

If Satoshi released all 21 million coins right away (or at least within the first year), then we would have 0% inflation since the cap has been reached.  What difference does it make if the 21 million units are released gradually or all at once (besides the fact that releasing all at once would be terrible).

If I make another btc clone and flood the market with 21 million coins, is it even fair to say that my coin has zero inflation and BTC has 10% inflation?

Your right, BTC has 12% yearly inflation :)     

All that matters is potential 'coins in circulation'.  Every time a new coin is mined someone has financial incentive to sell to cover the cost of mining and this selling pressure devalues the coin.  Imagine what would happen to BTC price if miners were not dumping on the market?
I don`t understand why you say there is inflation in BTC,  BTC is coin other than the shares of all BTC,  10000 BTC only can buy pizza  four years ago ,but now 1BTC maybe can buy 100 pizza or more , it is deflation.
if the inflation you say is ?
1BTC is 1/2,000,000 of all BTC ( when the acount of created BTC is 2,000,000 )  ,1BTC is 1/12,000,000 of all BTC ( when the acount of created BTC is 12,000,000 now)

You are not understanding what inflation is. Inflation is just the increase in money supply. Period.
Because Bitcoin is still mined, it is inflationary. It will cease to inflate at some point, but not right now.
What you really mean is that Bitcoin increases its VALUE at a much higher rate that its inflation.
So you should separate the concepts of value and inflation, they are not the same.

Offline liberman

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BitUSD or BitApples solves this problem in a decentralized manner.

Sure, it is good for speculators, but not for real investors.

Imagine that around 70% of all transactions in our decentralized bank happens between Bitcoin and Bitshares. That could be perfectly the case because most people will enter with Bitcoins in order to obtain any other currency, or take loans in BitBTC.
It will happen the same that is happening in Wall ST right now. Because around 60% of all transactions in the world are made in dollars, when the dollar goes up and down, it affects secundary currencies that haven't got the strength to trade against anything which is not the dollar. Example: most currencies in South América trade against the dollar for importation/exportation. If the dollar goes down, they go down too.

Now take our situation: because in our market Bitcoin will be predominant, Bitshares will be drawn at the mercy of Bitcoin. And this has huge implications, specially for DACs, which will all of them be in a similar situation as the South American countries in regard to USA.
So I think that Bitshares will only help to make more secure trades to speculators, but will not help very much DACs, at least while the monopoly of Bitcoin continues, or any other show up.

Think about it.

Offline WaPTS

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I don't believe it's fair to say that BTC has a 10% yearly inflation.  The total supply is 21 million coins that's what Satoshi decided.

If Satoshi released all 21 million coins right away (or at least within the first year), then we would have 0% inflation since the cap has been reached.  What difference does it make if the 21 million units are released gradually or all at once (besides the fact that releasing all at once would be terrible).

If I make another btc clone and flood the market with 21 million coins, is it even fair to say that my coin has zero inflation and BTC has 10% inflation?

Your right, BTC has 12% yearly inflation :)     

All that matters is potential 'coins in circulation'.  Every time a new coin is mined someone has financial incentive to sell to cover the cost of mining and this selling pressure devalues the coin.  Imagine what would happen to BTC price if miners were not dumping on the market?
I don`t understand why you say there is inflation in BTC,  BTC is coin other than the shares of all BTC,  10000 BTC only can buy pizza  four years ago ,but now 1BTC maybe can buy 100 pizza or more , it is deflation.
if the inflation you say is ?
1BTC is 1/2,000,000 of all BTC ( when the acount of created BTC is 2,000,000 )  ,1BTC is 1/12,000,000 of all BTC ( when the acount of created BTC is 12,000,000 now) 

Offline luckybit

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I don't believe it's fair to say that BTC has a 10% yearly inflation.  The total supply is 21 million coins that's what Satoshi decided.

If Satoshi released all 21 million coins right away (or at least within the first year), then we would have 0% inflation since the cap has been reached.  What difference does it make if the 21 million units are released gradually or all at once (besides the fact that releasing all at once would be terrible).

If I make another btc clone and flood the market with 21 million coins, is it even fair to say that my coin has zero inflation and BTC has 10% inflation?

People believe Bitcoin is deflationary when it's really not. It's inflationary, but at a much much lower rate than the dollar so compared to the dollar it is deflationary.
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Offline luckybit

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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?

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.

These ideas are briliant and have given me something to think about.
It actually makes a lot of sense if the transaction fees result in being destroyed because it solves a lot of potential problems.

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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.

This is how I internally think about it anyway. But I never considered it could be implemented as part of the interface. What truly matters for the protoshare owner is the percentage they have of the total money supply. The numbers or units of account are not always as accurate and the term dividend could generate all kinds of confusion so I think this idea you propose might eliminate the confusion while also providing more accurate information.
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Offline coolspeed

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Inflation in Bitcoin is not perceived because the real value of the currency in relation to goods and other currencies is increasing very fast on average. From a point of view of a today user, s/he only sees that his/her coins gain in value over time, perceiving that as a fake deflation.
Infation is only a problem when you reach certain stability in real market shares, or when the decline starts. For example, what is happening to the dollar right now.

In my opinion, the ideal currency is the one which is able to expand/shrink (inflate itself by increasing/decreasing money supply) in the same ratio as market/exchange adoption does happen. So if you have 1 dollar today and are able to buy 1kg of apples, the ideal is that 20 years from now you can also buy 1kg of apples with 1 dollar.
This stability has many advantages. The first one being able to take loans and pay in a predictable way.
Do you imagine taking a loan today in bitcoins at $1000, and having to pay it when it is at $100,000? You would fail to pay, and this happens because money supply (inflation) is just not enough to support the incredible demand.
But how to implement this in a virtual currency? It is a problem if we don't want centralization, and centralization is precisely the biggest problem we want to avoid, for political reasons.

If you regard bts as a kind of META-currency more than altcoin, you can ignore this disadvantage. (What? META-currency? Am I creating concepts around again? )

But, can bitAssets gain dividends? And, should they?  ::)
« Last Edit: December 03, 2013, 11:55:35 am by coolspeed »
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Offline bytemaster

Inflation in Bitcoin is not perceived because the real value of the currency in relation to goods and other currencies is increasing very fast on average. From a point of view of a today user, s/he only sees that his/her coins gain in value over time, perceiving that as a fake deflation.
Infation is only a problem when you reach certain stability in real market shares, or when the decline starts. For example, what is happening to the dollar right now.

In my opinion, the ideal currency is the one which is able to expand/shrink (inflate itself by increasing/decreasing money supply) in the same ratio as market/exchange adoption does happen. So if you have 1 dollar today and are able to buy 1kg of apples, the ideal is that 20 years from now you can also buy 1kg of apples with 1 dollar.
This stability has many advantages. The first one being able to take loans and pay in a predictable way.
Do you imagine taking a loan today in bitcoins at $1000, and having to pay it when it is at $100,000? You would fail to pay, and this happens because money supply (inflation) is just not enough to support the incredible demand.
But how to implement this in a virtual currency? It is a problem if we don't want centralization, and centralization is precisely the biggest problem we want to avoid, for political reasons.

BitUSD or BitApples solves this problem in a decentralized manner.   
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Offline liberman

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Anyway, at least for some DACs, we have here a good opportunity to implement automatic demurrage based on actual, real demands.

For example, with WeTube we can implement a fixed ratio Gigabyte/WeCoins. If we always consider that sharing 1Gb will generate 1 WeCoin, inflation will always satisfy demand and we will not see what is happening with all altcoins today.
The original good parts of any demurrage system is that the ratio between man-working-hours and money earned is fixed, so the system could be, in theory, very stable. Disadvantages are that it mostly kills speculation, but some will argue that that is a good thing.

I'd like to read opinions of economists about this option.

Offline cgafeng

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Offline liberman

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Inflation in Bitcoin is not perceived because the real value of the currency in relation to goods and other currencies is increasing very fast on average. From a point of view of a today user, s/he only sees that his/her coins gain in value over time, perceiving that as a fake deflation.
Infation is only a problem when you reach certain stability in real market shares, or when the decline starts. For example, what is happening to the dollar right now.

In my opinion, the ideal currency is the one which is able to expand/shrink (inflate itself by increasing/decreasing money supply) in the same ratio as market/exchange adoption does happen. So if you have 1 dollar today and are able to buy 1kg of apples, the ideal is that 20 years from now you can also buy 1kg of apples with 1 dollar.
This stability has many advantages. The first one being able to take loans and pay in a predictable way.
Do you imagine taking a loan today in bitcoins at $1000, and having to pay it when it is at $100,000? You would fail to pay, and this happens because money supply (inflation) is just not enough to support the incredible demand.
But how to implement this in a virtual currency? It is a problem if we don't want centralization, and centralization is precisely the biggest problem we want to avoid, for political reasons.

Offline phoenix

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Divisibility is more important than supply.


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Yes, but people are more used to dealing with large amounts of money than very small units.
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