The New Consensus: Bitshares' response to DecentralizedEconomics criticisms

[Frodo]

I agree with toast on this matter. What is the value of giving promises that no single party is able to keep? Every future shareholder is involved in the decision process. This is the way it should be.

I think the fear that some have is round 2 of the big bulk inflation.

If there's a Round 2 of that, then BitShares is dead. Period. Every ounce of promotion we are doing, and much more, would be lost.

I think the whole point of those changes was to position BitShares well so that it will be strong for many years to come.

Agreed .
Dilution is only mean to fund the operation and grow the eco-system , if there comes to a point that the current rate of dilution can't sustain the operation , then we're not actually growing , are we ?

If our business grows 10 times , then yes , more dilution maybe acceptable in the future . You can add 10X dilution and people might gladly accept it .

But if the business stays the same or even shrinking , then additional dilution won't do much good either . Everybody's pay will be diluted as well to the point that no dilution amount can revive the business .

I remembered at the old days , the poor people can't afford to eat regular meal , they make rice porridge for the
whole family , and as the rice became rare , they added more water to make the porridge to a point that it's not even a porridge but water with rice . 

Unless those additional dilution is paid in a postpone period , just like the stock options in real companies .

If we're gonna argue that our system is "self-funding" , then we have to increase the value , so the dilution can have meaning . Otherwise , it's just like putting more water in a rice porridge . If there comes to a point that we need additional dilution to maintain a shrinking business , then just like what people in the regular company would do : Cut costs , reform business model , make extra income , lobby for outside funding .

Dilution is not the final answer for everything .

I agree that dilution isn't a universal solution, yet I don't agree with the rest you said.
Growing an ecosystem isn't a linear process. You can't say that for every $1 worth of work put into the system it has to grow more than $1. The point is this has just to be true on average. There will be days where you spend more than you make, but that is okay as long as it doesn't happen too often.

Just look at BitShares' history. We already had a cap of $80 mil. Since then we lost value. Was it wrong to dilute in this time to get to the point where we currently are? Was it wrong to pay bytemaster, toast, vikram and all the others for their development efforts, even though they didn't bring a huge value improvement yet? No. The time where this efforts pay out will come, but probably not today or tomorrow. It is simple. You have to invest first, before you can make money.

[btswildpig]

I think the fear that some have is round 2 of the big bulk inflation.

If there's a Round 2 of that, then BitShares is dead. Period. Every ounce of promotion we are doing, and much more, would be lost.

I think the whole point of those changes was to position BitShares well so that it will be strong for many years to come.

Agreed .
Dilution is only mean to fund the operation and grow the eco-system , if there comes to a point that the current rate of dilution can't sustain the operation , then we're not actually growing , are we ?

If our business grows 10 times , then yes , more dilution maybe acceptable in the future . You can add 10X dilution and people might gladly accept it .

But if the business stays the same or even shrinking , then additional dilution won't do much good either . Everybody's pay will be diluted as well to the point that no dilution amount can revive the business .

I remembered at the old days , the poor people can't afford to eat regular meal , they make rice porridge for the
whole family , and as the rice became rare , they added more water to make the porridge to a point that it's not even a porridge but water with rice . 

Unless those additional dilution is paid in a postpone period , just like the stock options in real companies .

If we're gonna argue that our system is "self-funding" , then we have to increase the value , so the dilution can have meaning . Otherwise , it's just like putting more water in a rice porridge . If there comes to a point that we need additional dilution to maintain a shrinking business , then just like what people in the regular company would do : Cut costs , reform business model , make extra income , lobby for outside funding .

Nike can't afford the labor in the US anymore , so they moved to China . Now they can't afford the labor in China too , they moved to Vietnam . Imagine instead of doing that , Nike borrow more debts or even issue more liquid shares just to pay for the high price labor effort that's not enough to grow the business ?

In this Bitcoin recession , there are still companies making profit and getting new funding . That's because they have a sound and profitable business model . Dilute more just to keep it going isn't business .

I greatly admire the DAC concept . I hope as the inventor of this concept , BM can relate BTS as if it's a real company . Then you might have a better view . Try to forget "community" or "software" or a "dream" or "future vision" for a second , think about if this is your company and you're the CEO , what would you do ?

Dilution is not the final answer for everything .

[xeroc]

This is a good question. Are the supply cap and inflation going to be determined by an individual, some individuals or the votes of the decentralised company's shareholders?

The bigger picture is, and that is what toast wrote in his blog post, that for any upcoming hardfork that changes the protocol (not just bugfixes) shareholder approval is required before a hardfork will become "valid" ..

[cube]

There is confusion about we what wish to commit to now and what the reality about how the system works is.

The system is ruled by shareholder vote. If you promise a fixed cap as part of the system, you are lying.
...

This is a good question. Are the supply cap and inflation going to be determined by an individual, some individuals or the votes of the decentralised company's shareholders?

[toast]

There is confusion about we what wish to commit to now and what the reality about how the system works is.

The system is ruled by shareholder vote. If you promise a fixed cap as part of the system, you are lying. The chance to have people believe anything the devs or the code says has passed. The only thing left is the consensus metric.

If you promise a fixed cap is what everyone thinks is the best option to commit to now, that's a different story. We should have a shareholder vote of confidence to convince the world that's what current shareholders want.

[bytemaster]

All of us believe in the cause, but many of us have a family to support. In some cases the government won't let me work for less even if I wanted to.   

Why should anyone expect to profit off of the sacrifice of others and then blame the other for expecting compensation of equal value?   

[Ander]

Many developers would take "equity" in place of salary (ie, not contribute to sell pressure) but if you cannot offer them equity then they will go work someplace else and support BitShares part time if at all.

This statement (if true) disappoints me ... 
So all (or the majority) of the Dev's are motivated because of money/equity only? Is anybody motivated for the great vision behind bitshares?
Is anybody motivated to dedicate himself in the name of freedom, in the name of liberty or whatever? So you say we are depended from the bitcoin success (or not) and not by our self?
I really don't want to believe that in case that our market cap decrease to much (whatever the reason is) we will loose the support of all of our Dev's...
Sorry but I have imagined it a little bit different ... and I still (want to) believe, I can keep dreaming ...

The developers are clearly motivated by much more than that.

It was simply a statement that it feels better to have stability than to have to fear for your future.

[cass]

I think the fear that some have is round 2 of the big bulk inflation.

If there's a Round 2 of that, then BitShares is dead. Period. Every ounce of promotion we are doing, and much more, would be lost.
I think the whole point of those changes was to position BitShares well so that it will be strong for many years to come.

 

[donkeypong]

I think the fear that some have is round 2 of the big bulk inflation.

If there's a Round 2 of that, then BitShares is dead. Period. Every ounce of promotion we are doing, and much more, would be lost.

I think the whole point of those changes was to position BitShares well so that it will be strong for many years to come.

[CLains]

It comes down to the fact that we are still a startup, and as BM says, BTC could at least in theory tank down another 10x. If that were to occur, BitShares would still be a great startup with a killer idea, but unlike a traditional startup it would be crippled and unable to raise money from investors as the equity dilution would not be sufficient to draw in enough capital. So rules break down at a certain level of existential crisis, and who knows where we are a year from now; we could be soaring at 20x where we are now, or we could be stir-frying in post-apocalyptic trans-fats of bitcoin mining operations gone awry.

[Ander]

I think I would feel comfortable stating no more "bulk" inflations like the "merger".   
I think I would also feel comfortable limiting the maximum delegate dilution rate to 2x what it is now *if* we fall under 20M  otherwise to keep it what is now. 

I definately support no more unilateral inflations.

I think a statement from the devs that they don't support any more "bulk" inflations would be useful to the marketplace.  I don't think we really even need to say anything about paid delegates, since those are working well.  I think the fear that some have is round 2 of the big bulk inflation.

(Maybe I am off base and the market doesn't care about this, but I think there remains lingering distrust as a result and this might help). 


Hopefully we will see more comments from the community as well.  Its felt like mostly me and the devs so far.  I don't want to be end up pushing for this if the community is not in agreement!

[gamey]

There are also different ways of looking at this.  Honestly, we're the first chain to do this on a large scale but we won't be the last.  I'll bet even money that within 2 years, NXT does this.  Just because we did it once doesn't put our chain in any different category, nor does it mean that we're somehow magically centralized enough to allow this.  *Every* chain can do this.

The only coin not centralized enough to readily do this is BTC itself and thats because I believe there are multiple independently written fully validating nodes.

So when people go on about how we might inflate it again yadda yadda, just point out that any coin can do it and we are no different except that we have already done it and that is what is giving BTS value at the moment.  BTS has some quality devs wanting to see this thing succeed and they've been given enough BTS etc continue this thing until it will clearly be the most advanced crypto-currency at that point.  Ethereum will be advanced but in a different area.

Also, it wasn't our fault as much as BTCs.  BitShares developed bitUSD too late.  If they had put all their BTC into bitUSD from the start then perhaps they would never have had to do this.

[bytemaster]

I think I would feel comfortable stating no more "bulk" inflations like the "merger".   
I think I would also feel comfortable limiting the maximum delegate dilution rate to 2x what it is now *if* we fall under 20M  otherwise to keep it what is now. 

I definately support no more unilateral inflations.

[Ander]

There is only one way to achieve trust that 3.7 is the absolute hard cap and that is for the protocol to free itself from needing / wanting support of any developer that supported the prior change.  Effectively, fire current management and hire new management.   Unless you are prepared to do that, then current management "rules".    Not that I want to rule or anything, it is just the practical reality.   I very much look forward to the day where BTS is bigger than any small group of individuals.

I absolutely don't want that, as I love you and Toast and all the other devs.  You are the #1 reason why I believe in Bitshares in the first place.

But I believe there is a way to establish a lot more trust than we have now, and that is simply to have "current management" state that they do not ever want to do that kind of inflation again, and also to have a consensus of the community also state that they do not support ever having that kind of inflation again.


It seemed from past comments and the early comments in this thread that the opposite was true - that the possibility of another such dilution is definitely left open if needed.  I feel that this is a significant worry for the crypto community.   They think bitshares will do this again, and just go and add another billion to that share supply.   



I agree that it most likely will not be needed, and this is a good reason why we should commit to not doing it.   If it is probably not needed, and we gain a benefit for publicly committing to not inflating, then lets publicly commit to not inflating! 

I believe the benefit of this commitment would be significant.  I perceive Bytemaster and Toast and the other devs as being very honest.  Most others in crypto do as well.

Right now you are honest developers who seem to be fine with inflating BTS if necessary, and thus an investor needs to factor in some realistic percent chance that BTS will have another big inflation, and this makes them not want to buy.

But if you state "no more new inflations", then you become honest developers who stated publically that no new surprise inflations will occur, and then the percentage chance that one should rationally assign to BTS having another big inflation round significantly drops.

[bytemaster]

I thought there was a hard cap for Bitshares. 3.7 billion.

https://bitsharestalk.org/index.php?topic=11213.0

There is if no one changes the rules.  The point of this post is that we should all publically agree to commit to "we won't change the rules, even if it seems like a good idea".  Such a commitment would greatly raise the cost of changing the rules, thus making it less likely to occur, thus making investors perceive of the BTS hard cap as real, in the same way that they perceive the Bitcoin hard cap of 21 million as real. 

Because right now, plenty of people out there do NOT perceive the 3.7 billion BTS hard cap as real, and it hurts us.

There is only one way to achieve trust that 3.7 is the absolute hard cap and that is for the protocol to free itself from needing / wanting support of any developer that supported the prior change.  Effectively, fire current management and hire new management.   Unless you are prepared to do that, then current management "rules".    Not that I want to rule or anything, it is just the practical reality.   I very much look forward to the day where BTS is bigger than any small group of individuals.