This post is my reaction to the posts of DecentralizedEconomics on the bitcointalk forums, about Bitshares. While I believe that Bitshares is much greater than the straw man version of it that he attacks, and our devs are far more honest than he believes (and more honest than most in crypto), I also believe that he has an important point, and he highlights one important weakness of Bitshares that we must correct.
We must harness this criticism and make Bitshares even better!I believe that having a known, fixed, future supply maximum is absolutely critical to a successful cryptocurrency. This is the essential 'promise' of Bitcoin: There will eventually be only 21 million Bitcoins. There is no central authority which can increase this limit.
We took a huge blow when we went from a 2 billion supply cap to a 2.5 billion and growing supply. I'm not saying paid delegates are bad (they are amazing), and I'm not saying inflation is necessarily bad (it is necessary). What I am saying is that not knowing for certain what the maximum possible number of coins will be at some point in the future undermines everything that it means to be a cryptocurrency.
Paid delegates are amazing, and they will sustain Bitshares going forward. Paid delegates are the way that we hire talent, and reward them with equity. If the price goes up, they scale and support even more development/marketing/promotion. If the price goes down, and we have to cut back, and allow several paid delegate slots to support one developer, then we cut back.
Paid delegates are not a problem, they are not what I am talking about here. With paid delegates we have a known, fixed future maximum supply, as shown here:https://bitsharestalk.org/index.php?topic=11213.0
Investors can look at this possible future supply and make rational decisions based on it.
I love paid delegates and think we should elect even more of them to promote and build Bitshares faster.So what is the problem?
What we can never do again is to have another share supply increase like "the merger". What this looks like to pretty much everyone is the following:
* Bitshares is clearly too centralized because the core dev group decreed by fiat that the share supply would increase, and it happened. Therefore there is no guarantee of a supply limit in the future.
You can see this though in posts by people like DecentralizedEconomics and NewMine. And while they only show one side of the story, their side of the story has a significant grain of truth to it. We must change such that this is no longer true, and can never happen again, if we want to claim to be decentralized.
In the past, the dev team has said things such as "It is important that we are able to pivot, and that might require increasing the share supply".
I think this stance must be abandoned publicly, and we as a whole community must decide that it will not ever be allowed, to the point that if it occurred we would all simply rebel and continue to support the old chain.
Paid delegates are enough. If funds are needed desperately for a task, and the community agrees, then we could elect a bunch of paid delegates and fund it. No additional unexpected inflation, ever again. We must all agree that this poorly named "merger" was an event that happened in Bitshares past, but which can never happen again under any circumstances. Because if it can happen again by dictates of a core group, then what DecentralizedEconomics says about Bitshares is actually true.
I say all of this with the utmost respect and admiration for our developers. You all are the best! It is okay to experiment and try things, but we must also analyze the consequences and make sure that we do not repeat mistakes.So here is what we should all agree to. A new social consensus, stronger than the last:We will never allow any extra additional inflation of the BTS supply for any reason, and we will never increase the delegate payout above the amount in the current plan (Max 50 BTS per 10 second block, halving each 4 years). Paid delegates are sufficient to fulfill Bitshares needs, and no other inflationary mechanisms will be added.
I am well aware of the idea that we do not think of Bitshares as a currency, and that BitAssets are the currency in our system. Yet BTS must still remain a store of value
, and it is important for a store of value to have a known, fixed supply limit. This limit can increase over time, provided that it does so in a way that is known in advance (which we achieve with the paid delegates max block pay).
In any hard problem there are tradeoffs. If we trade away the ability to create an increase in the supply of BTS in order to achieve <X>, we might lose flexibility. But we also gain a lot of perceived stability, and a corresponding increase in market value. And a higher market value makes the paid delegate inflation go a LOT farther and buy us much more. I believe this tradeoff is worth it. If we attain a higher market cap and get to where a paid delegate position can sustain a core developer, or even a team of developers, or a huge marketing campaign, then we will not be in a position where we will have to emergency inflate (and ruin the BTS value) to pay for something we need. We could also run some 'emergency fund' paid delegates who would store up BTS which could be used for such events if the community approved.
I believe that we gain more value (ability for Bitshares to pay for things it needs), with a hard limit on its inflation rate. We would have such a hard limit with the 50 BTS per block pay limit, and a community consensus to never add any other inflation. The previous 25% inflation, and the panic it caused, resulted in a price drop form the 8000 sat range to 4000 sat, before recovering to the 5000-5500 range now. (For this purpose I measure in satoshis in order to remove the effect of the crypto bear market form the calculation). Inflating cost us about 1/3 to 1/2 of BitShares purchasing power, thus making paid delegates 1/3 to 1/2 less effective than they would otherwise have been at the higher cap. The best way to achieve the goals of Bitshares is to support stability, growth, and a higher cap, which in turns increases the power of paid delegate positions. We cannot achieve that desired stability if the threat of another big inflation forced through by a centralized power group in Bitshares looms over investors heads.
For this reason, I believe this is important to regain the trust of those we lost in the "merger", and to help grow our community going forward. In the coming weeks, with the website relaunch, the release of version 1.0, etc, it is a good time to broadcast this message to the wider crypto community.
Bytemaster can create whatever blog posts he wants about Bitshares being decentralized, and in terms of the technical specifications, this is true. But one fact remains: If a centralized power group within Bitshares is capable of pushing through an inflation in the share supply, Bitshares is still too centralized!
This is the problem we must remedy.
Bitshares must become "sufficiently decentralized".
Devs should think about this and agree that paid delegates are enough to secure the future of Bitshares, and agree that they will never attempt to add more inflation.
The community should forge a new social consensus that we will not allow any powerful group within Bitshares to add more inflation to the share supply than the current known, fixed amount, for any purpose (even if we want to merge with Ethereum or whatever our silly dream is!)
We must vow to remain on the chain with the known, fixed supply cap, and not the fork where the supply has been greatly inflated. Chalk the "merger" up to growing pains, and part of Bitshares history, just make sure it doesn't happen again.
A Bitshares with a strong consensus that the future supply cap is a hard cap is a Bitshares that is more stable, a better store of value, which attracts more investors and has a higher cap, which allows it to better support more growth efforts through paid delegates.
This Bitshares is one that can say truthfully that DecentralizedEconomics complaints are incorrect, and that the community of all stakeholders has the power here, not any centralized group.
Thank you for reading, and I appreciate your thoughts and feedback!