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Offline bytemaster

Decentralized Autonomous Countries
« on: December 15, 2013, 12:20:11 AM »

Every user of Bitcoin is a citizen of the Bitcoin Country and has an opportunity to vote on which transactions get included in the blockchain.   In order to cast a vote they must purchase electricity and computing power.   If they decide to vote for themselves, they must purchase a lot of power or they effectively have no influence.   Your odds of being elected ‘President for a Block’ are about as good as being elected a term as President of the Untied States.   Instead, most people choose to join a political party known as a ‘mining pool’.  Everyone mining in a pool is voting the party line. 

As a country Bitcoin will burn almost $1 billion dollars in the coming year to reach consensus via voting on which blockchain is the official chain.  This is a billion dollars that could have been invested into other businesses in the Bitcoin economy. 

If you view bitcoin as the currency of the Bitcoin country, then the Bitcoin Government must impose a 12% wealth tax to fund its elections and provide for the common defense. The heads of various political parties take a cut of these taxes as well as the lobbyists (miners) which represent a small minority of bitcoin users and thus could be thought of as “special interests” compared to the vast majority of bitcoin users who have no influence.  If you would like become a special interest, you must purchase your right to vote from other special interests whom sell voting rights (ASICs) for a profit.

The interesting thing about Bitcoin voting rights, is that they allow foreigners to vote who may not own a single Bitcoin but instead are mercenaries for hire ready to work for any country that will pay them the most. 

Effectively, control of the Bitcoin is defined by who ever is willing to consume the most capital for the least reward and I know no one can compete with the United States Government in this metric.   

No mining system based upon computation and electricity will be able to avoid Bitcoin’s fate.  Even a mining algorithm that can only run on a CPU will result in mining being concentrated into specialized computers lacking everything but a CPU and RAM cooled in massive warehouses.  Mining pools will be created and “political parties” will form. 

Existing Proof-of-Work systems that operate on the basis of consumption of capital will result in centralization and in the hands of a few self-appointed mining Zars.
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Offline NineLives

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Re: Decentralized Autonomous Countries
« Reply #1 on: December 15, 2013, 12:42:10 AM »
Nice read but I don't understand.  Its a bit above me but, are you saying that Bitcoin will eventually be controlled by governments in a country some day no matter what?  I may not have understood.
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Offline bytemaster

Re: Decentralized Autonomous Countries
« Reply #2 on: December 15, 2013, 01:05:54 AM »
Nice read but I don't understand.  Its a bit above me but, are you saying that Bitcoin will eventually be controlled by governments in a country some day no matter what?  I may not have understood.

I am saying that Proof-of-Work based upon consumption cannot achieve decentralization.  I am also saying that the current Bitcoin ecosystem is rather corrupt and while existing players are acting in a benevolent manner, we are ultimately at their mercy and thus living under a dictatorship without any checks and balances built into the protocol.  Two players could effectively enforce that tainted coins could not be transferred. 

Bottom line, proof-of-work in this form is incompatible with Invictus' goal of decentralization. 
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Offline NineLives

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Re: Decentralized Autonomous Countries
« Reply #3 on: December 15, 2013, 01:18:44 AM »
Nice read but I don't understand.  Its a bit above me but, are you saying that Bitcoin will eventually be controlled by governments in a country some day no matter what?  I may not have understood.

I am saying that Proof-of-Work based upon consumption cannot achieve decentralization.  I am also saying that the current Bitcoin ecosystem is rather corrupt and while existing players are acting in a benevolent manner, we are ultimately at their mercy and thus living under a dictatorship without any checks and balances built into the protocol.  Two players could effectively enforce that tainted coins could not be transferred. 

Bottom line, proof-of-work in this form is incompatible with Invictus' goal of decentralization.

I understand.

The everyday user (like me) see bitcoin as a way to earn quickly and with huge profits.  Bitshares has a challenge on its hands if we are going to compete or play along side?  Yes it isn't totally decentralized so for it to work with Invictus, what do you purpose?
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Offline bytemaster

Re: Decentralized Autonomous Countries
« Reply #4 on: December 15, 2013, 01:21:59 AM »
Decentralized Continuous Election of Trustees

Suppose we were to accept the notion that it may be beneficial to have a handful of “trusted” individuals around to certify the official block-chain.   We would want to ensure that these trustees are indeed trust-worthy and not simply self-appointed opportunists who had enough capital to corner the voting market.   Everyone should have a an opportunity to vote without having to purchase special hardware or spend billions every year in electricity just to cast their vote.  Lastly, only those who currently own the currency should have a vote proportional their investment in the currency instead of giving the vote to foreigners who have no current interest in the currency.

Fortunately such a voting system is easy to setup by utilizing a concept known as coin-days-destroyed by a transaction to vote for trustees.  Coin-days-destroyed is calculated as your account balance multiplied by the length of time you have held that balance.    When you create a transaction to make a purchase you also include the address of the Trustee you would like to vote for using the coin-days destroyed by the transaction.

Each trustee would accumulate coin-days-destroyed in their voting balance, and when they vote on a block they consume some of their accumulated coin-days.  The best block is the one which has been voted upon by the most trustees.    While Bitcoin block creation is centralized in one person at a time, this new system would require several unique individuals as elected by the shareholders to approve every block.  As a result not even a single block is centralized into a single user.

The trustee’s could use a consensus model based upon the Ripple algorithm to agree on which blocks to create.    This means that in theory blocks could be produced multiple times per minute.   

Trusting the Trustees in an otherwise Trust-less system. 

The major innovation of Bitcoin was that it claimed to create a trust-less currency; however, as we have seen recent developments have reintroduced trust focused on the mining pools.   Does electing Trustees to certify the network open the network up to abuse of power?  In our opinion there is no such risk as the Trustee cannot create transactions that violate the rules of the block-chain and they have their signature on every block they produce.  Any trustee that signed two different blocks that would result in a double spend could be held accountable and of course as long as there are more honest trustees than dishonest trustees this is not a problem.
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Offline Stan

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Re: Decentralized Autonomous Countries
« Reply #5 on: December 15, 2013, 01:29:18 AM »
Nice read but I don't understand.  Its a bit above me but, are you saying that Bitcoin will eventually be controlled by governments in a country some day no matter what?  I may not have understood.

I am saying that Proof-of-Work based upon consumption cannot achieve decentralization.  I am also saying that the current Bitcoin ecosystem is rather corrupt and while existing players are acting in a benevolent manner, we are ultimately at their mercy and thus living under a dictatorship without any checks and balances built into the protocol.  Two players could effectively enforce that tainted coins could not be transferred. 

Bottom line, proof-of-work in this form is incompatible with Invictus' goal of decentralization.

I understand.

The everyday user (like me) see bitcoin as a way to earn quickly and with huge profits.  Bitshares has a challenge on its hands if we are going to compete or play along side?  Yes it isn't totally decentralized so for it to work with Invictus, what do you purpose?

Let Bitcoin go on its merry (and very successful) pathfinding way.  Just don't blithely copy everything about it in new applications if you are serious about decentralization. 

Naturally we wouldn't say this if we weren't in hot pursuit of a better way...   :)


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Offline phoenix

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Re: Decentralized Autonomous Countries
« Reply #6 on: December 15, 2013, 01:31:36 AM »
Decentralized Continuous Election of Trustees

Suppose we were to accept the notion that it may be beneficial to have a handful of “trusted” individuals around to certify the official block-chain.   We would want to ensure that these trustees are indeed trust-worthy and not simply self-appointed opportunists who had enough capital to corner the voting market.   Everyone should have a an opportunity to vote without having to purchase special hardware or spend billions every year in electricity just to cast their vote.  Lastly, only those who currently own the currency should have a vote proportional their investment in the currency instead of giving the vote to foreigners who have no current interest in the currency.

Fortunately such a voting system is easy to setup by utilizing a concept known as coin-days-destroyed by a transaction to vote for trustees.  Coin-days-destroyed is calculated as your account balance multiplied by the length of time you have held that balance.    When you create a transaction to make a purchase you also include the address of the Trustee you would like to vote for using the coin-days destroyed by the transaction.

Each trustee would accumulate coin-days-destroyed in their voting balance, and when they vote on a block they consume some of their accumulated coin-days.  The best block is the one which has been voted upon by the most trustees.    While Bitcoin block creation is centralized in one person at a time, this new system would require several unique individuals as elected by the shareholders to approve every block.  As a result not even a single block is centralized into a single user.

The trustee’s could use a consensus model based upon the Ripple algorithm to agree on which blocks to create.    This means that in theory blocks could be produced multiple times per minute.   

Trusting the Trustees in an otherwise Trust-less system. 

The major innovation of Bitcoin was that it claimed to create a trust-less currency; however, as we have seen recent developments have reintroduced trust focused on the mining pools.   Does electing Trustees to certify the network open the network up to abuse of power?  In our opinion there is no such risk as the Trustee cannot create transactions that violate the rules of the block-chain and they have their signature on every block they produce.  Any trustee that signed two different blocks that would result in a double spend could be held accountable and of course as long as there are more honest trustees than dishonest trustees this is not a problem.

So, other than setting up a computer to verify blocks, what is the role of a Trustee in the network itself? Obviously they have an incentive to work on promoting the network, but this doesn't directly impact their role in verifying blocks.
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Offline bytemaster

Re: Decentralized Autonomous Countries
« Reply #7 on: December 15, 2013, 01:32:32 AM »
Trustee has no additional role other than running a server.
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Offline luckybit

Re: Decentralized Autonomous Countries
« Reply #8 on: December 15, 2013, 01:58:54 AM »
Decentralized Continuous Election of Trustees

Suppose we were to accept the notion that it may be beneficial to have a handful of “trusted” individuals around to certify the official block-chain.   We would want to ensure that these trustees are indeed trust-worthy and not simply self-appointed opportunists who had enough capital to corner the voting market.   Everyone should have a an opportunity to vote without having to purchase special hardware or spend billions every year in electricity just to cast their vote.  Lastly, only those who currently own the currency should have a vote proportional their investment in the currency instead of giving the vote to foreigners who have no current interest in the currency.

Fortunately such a voting system is easy to setup by utilizing a concept known as coin-days-destroyed by a transaction to vote for trustees.  Coin-days-destroyed is calculated as your account balance multiplied by the length of time you have held that balance.    When you create a transaction to make a purchase you also include the address of the Trustee you would like to vote for using the coin-days destroyed by the transaction.

Each trustee would accumulate coin-days-destroyed in their voting balance, and when they vote on a block they consume some of their accumulated coin-days.  The best block is the one which has been voted upon by the most trustees.    While Bitcoin block creation is centralized in one person at a time, this new system would require several unique individuals as elected by the shareholders to approve every block.  As a result not even a single block is centralized into a single user.

The trustee’s could use a consensus model based upon the Ripple algorithm to agree on which blocks to create.    This means that in theory blocks could be produced multiple times per minute.   

Trusting the Trustees in an otherwise Trust-less system. 

The major innovation of Bitcoin was that it claimed to create a trust-less currency; however, as we have seen recent developments have reintroduced trust focused on the mining pools.   Does electing Trustees to certify the network open the network up to abuse of power?  In our opinion there is no such risk as the Trustee cannot create transactions that violate the rules of the block-chain and they have their signature on every block they produce.  Any trustee that signed two different blocks that would result in a double spend could be held accountable and of course as long as there are more honest trustees than dishonest trustees this is not a problem.

Pseudo-anonymous random elections may be the only way (similar to a draft or a grand jury system). If their identities are known they will be corrupted eventually (they won't remain trusted for very long). Just look at what happened recently with the shut downs of many centralized trusted exchanges like Bitfunder or BTCT. Look at Mike Caldwell the maker of Casascius fame. I don't think there is any way to do it without an acceptable level of anonymity for voters and trustees. I also don't think any trustee should be in a position for too long. The longer we must trust them the more risk there is for us.

I think it's a bad idea to put our trust in human beings for long periods of time. Power corrupts the human being and it's only a matter when not if it will happen.
« Last Edit: December 15, 2013, 02:08:32 AM by luckybit »
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Offline phoenix

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Re: Decentralized Autonomous Countries
« Reply #9 on: December 15, 2013, 02:05:15 AM »
The best way to limit the Trustees power would be to make it as easy as possible to become a Trustee, thereby allowing almost anyone to become one. This would then spread out the power among the people, hopefully preventing the formation of political parties.
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Offline luckybit

Re: Decentralized Autonomous Countries
« Reply #10 on: December 15, 2013, 02:21:53 AM »
This thread reveals the gist of the problem with relying exclusively on PoW.
The problem is that Proof of Work consistently results in concentration of power around whomever can develop the best chip or whomever has the money to buy the best / most chips. ASIC companies control Bitcoin because they can generate them exclusively if they choose.

Governments (whether the United States, China, or their friends) and corporations (Apple, Nvidia, Intel, AMD, and their friends) will always have a strategic advantage which is insurmountable. They will always have the technological advantage (they will always be the most technologically sophisticated people at the table), and they'll also always have the most financial might. This is assuming they are fair players and are not going to cheat.

Assuming they'll use any advantage to win, then you can see that Bitcoin in itself isn't free from political, state, or corporate influence. Bitcoin disperses the problem from being a centralized problem which governments and corporations can solve into being a decentralized problem with much greater complexity.

So a good strategy would be to decentralize as much as possible and increase complexity as much as possible for Eve (Byzantine adversary) and as expensive as possible for the computationally unbounded adversary.

It should be assumed in the design that perfection is not possible, that if an adversary is big enough and determined enough that they can break it. Bitcoin can be broken but the ease of which it can be broken is what matters. If it's so hard to break that its not worth it then it is a deterrence against breaking it. If it were a World War scenario then for sure it would be broken by various militant forces who would compete for control of it but it will still be useful even if it were broken because none of them would admit if they could break it.
 

« Last Edit: December 15, 2013, 02:28:22 AM by luckybit »
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Offline bytemaster

Re: Decentralized Autonomous Countries
« Reply #11 on: December 15, 2013, 02:24:33 AM »
This thread reveals the gist of the problem with relying exclusively on PoW.
The problem is that Proof of Work consistently results in concentration of power around whomever can develop the best chip or whomever has the money to buy the best / most chips.

Governments (whether the United States, China, or their friends) and corporations (Apple, Nvidia, Intel, AMD, and their friends) will always have a strategic advantage which is insurmountable. They will always have the technological advantage (they will always be the most technologically sophisticated people at the table), and they'll also always have the most financial might. This is assuming they are fair players and not going to cheat.

Assuming they'll use any advantage to win, then you can see that Bitcoin in itself isn't free from political, state, or corporate influence. Bitcoin disperses the problem from being a centralized problem which governments and corporations can solve into being a decentralized problem with much greater complexity.

So a good strategy would be to decentralize as much as possible and increase complexity as much as possible for Eve (Byzantine adversary) and as expensive as possible for the computationally unbounded adversary.

It should be assumed in the design that perfection is not possible, and that if an adversary is big enough and determined enough that they can break it. Bitcoin can be broken but the ease of which it can be broken is what matters. If it's so hard to break that its not worth it then it is a deterrence against breaking it. If it were a World War scenario then for sure it would be broken by various militant forces who would compete for control of it but it will still be useful even if it were broken because none of them would admit if they could break it.

Proof of Stake makes it democratic and early adopters (not the government or companies) would end up owning the stake.   
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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 luckybit

Re: Decentralized Autonomous Countries
« Reply #12 on: December 15, 2013, 02:34:01 AM »
This thread reveals the gist of the problem with relying exclusively on PoW.
The problem is that Proof of Work consistently results in concentration of power around whomever can develop the best chip or whomever has the money to buy the best / most chips.

Governments (whether the United States, China, or their friends) and corporations (Apple, Nvidia, Intel, AMD, and their friends) will always have a strategic advantage which is insurmountable. They will always have the technological advantage (they will always be the most technologically sophisticated people at the table), and they'll also always have the most financial might. This is assuming they are fair players and not going to cheat.

Assuming they'll use any advantage to win, then you can see that Bitcoin in itself isn't free from political, state, or corporate influence. Bitcoin disperses the problem from being a centralized problem which governments and corporations can solve into being a decentralized problem with much greater complexity.

So a good strategy would be to decentralize as much as possible and increase complexity as much as possible for Eve (Byzantine adversary) and as expensive as possible for the computationally unbounded adversary.

It should be assumed in the design that perfection is not possible, and that if an adversary is big enough and determined enough that they can break it. Bitcoin can be broken but the ease of which it can be broken is what matters. If it's so hard to break that its not worth it then it is a deterrence against breaking it. If it were a World War scenario then for sure it would be broken by various militant forces who would compete for control of it but it will still be useful even if it were broken because none of them would admit if they could break it.

Proof of Stake makes it democratic and early adopters (not the government or companies) would end up owning the stake.

This is a very good point but Proof of Stake eventually shifts the point of failure onto whichever human beings hold the biggest stakes. For that reason I don't think pure Proof of Stake is good enough.

Assume we took the richest list of Protoshares and froze it in time as the Proof of Stake. It might not happen overnight but over time some of the people with high stakes will change their political views or become corrupted somehow and then with it would go everything beneath them.

Basically the concentration of power into too few people will result in the exact same outcome whether it's Proof of Work, Proof of Stake or the government of a traditional country. I don't have the solution to it but I know anonymity would be necessary, along with randomization so that power isn't predictably in the addresses of the richest list. If it is known where the power is and the protocol is not anonymous then the power will be corruptible, will shift, etc.

Flatten the power structure out as much as possible and if some people do rise in power let it be momentary and not permanent so that the system also attempts to be incorruptible from the bottom up. Anything top down is easily corrupted and that is why governments typically favor top down systems.
« Last Edit: December 15, 2013, 02:37:29 AM by luckybit »
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Offline phoenix

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Re: Decentralized Autonomous Countries
« Reply #13 on: December 15, 2013, 02:43:15 AM »
This thread reveals the gist of the problem with relying exclusively on PoW.
The problem is that Proof of Work consistently results in concentration of power around whomever can develop the best chip or whomever has the money to buy the best / most chips.

Governments (whether the United States, China, or their friends) and corporations (Apple, Nvidia, Intel, AMD, and their friends) will always have a strategic advantage which is insurmountable. They will always have the technological advantage (they will always be the most technologically sophisticated people at the table), and they'll also always have the most financial might. This is assuming they are fair players and not going to cheat.

Assuming they'll use any advantage to win, then you can see that Bitcoin in itself isn't free from political, state, or corporate influence. Bitcoin disperses the problem from being a centralized problem which governments and corporations can solve into being a decentralized problem with much greater complexity.

So a good strategy would be to decentralize as much as possible and increase complexity as much as possible for Eve (Byzantine adversary) and as expensive as possible for the computationally unbounded adversary.

It should be assumed in the design that perfection is not possible, and that if an adversary is big enough and determined enough that they can break it. Bitcoin can be broken but the ease of which it can be broken is what matters. If it's so hard to break that its not worth it then it is a deterrence against breaking it. If it were a World War scenario then for sure it would be broken by various militant forces who would compete for control of it but it will still be useful even if it were broken because none of them would admit if they could break it.

Proof of Stake makes it democratic and early adopters (not the government or companies) would end up owning the stake.

This is a very good point but Proof of Stake eventually shifts the point of failure onto whichever human beings hold the biggest stakes. For that reason I don't think pure Proof of Stake is good enough.

Assume we took the richest list of Protoshares and froze it in time as the Proof of Stake. It might not happen overnight but over time some of the people with high stakes will change their political views or become corrupted somehow and then with it would go everything beneath them.

Basically the concentration of power into too few people will result in the exact same outcome whether it's Proof of Work, Proof of Stake or the government of a traditional country. I don't have the solution to it but I know anonymity would be necessary, along with randomization so that power isn't predictably in the addresses of the richest list. If it is known where the power is and the protocol is not anonymous then the power will be corruptible, will shift, etc.

Flatten the power structure out as much as possible and if some people do rise in power let it be momentary and not permanent so that the system also attempts to be incorruptible from the bottom up. Anything top down is easily corrupted and that is why governments typically favor top down systems.

Any system will have some weakness. The advantage of POS is that the people with the greatest power to topple the system are usually the people with the most to loose. This will definitely keep out individuals and small groups that want to destroy the system, and the government probably won't bother to mess with it unless they can link it to drugs or tax evasion. So, can we just all form a social contract and all agree not to use any DACshares to purchase drugs or avoid paying taxes?
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Offline bytemaster

Re: Decentralized Autonomous Countries
« Reply #14 on: December 15, 2013, 02:55:38 AM »
This thread reveals the gist of the problem with relying exclusively on PoW.
The problem is that Proof of Work consistently results in concentration of power around whomever can develop the best chip or whomever has the money to buy the best / most chips.

Governments (whether the United States, China, or their friends) and corporations (Apple, Nvidia, Intel, AMD, and their friends) will always have a strategic advantage which is insurmountable. They will always have the technological advantage (they will always be the most technologically sophisticated people at the table), and they'll also always have the most financial might. This is assuming they are fair players and not going to cheat.

Assuming they'll use any advantage to win, then you can see that Bitcoin in itself isn't free from political, state, or corporate influence. Bitcoin disperses the problem from being a centralized problem which governments and corporations can solve into being a decentralized problem with much greater complexity.

So a good strategy would be to decentralize as much as possible and increase complexity as much as possible for Eve (Byzantine adversary) and as expensive as possible for the computationally unbounded adversary.

It should be assumed in the design that perfection is not possible, and that if an adversary is big enough and determined enough that they can break it. Bitcoin can be broken but the ease of which it can be broken is what matters. If it's so hard to break that its not worth it then it is a deterrence against breaking it. If it were a World War scenario then for sure it would be broken by various militant forces who would compete for control of it but it will still be useful even if it were broken because none of them would admit if they could break it.

Proof of Stake makes it democratic and early adopters (not the government or companies) would end up owning the stake.

This is a very good point but Proof of Stake eventually shifts the point of failure onto whichever human beings hold the biggest stakes. For that reason I don't think pure Proof of Stake is good enough.

Assume we took the richest list of Protoshares and froze it in time as the Proof of Stake. It might not happen overnight but over time some of the people with high stakes will change their political views or become corrupted somehow and then with it would go everything beneath them.

Basically the concentration of power into too few people will result in the exact same outcome whether it's Proof of Work, Proof of Stake or the government of a traditional country. I don't have the solution to it but I know anonymity would be necessary, along with randomization so that power isn't predictably in the addresses of the richest list. If it is known where the power is and the protocol is not anonymous then the power will be corruptible, will shift, etc.

Flatten the power structure out as much as possible and if some people do rise in power let it be momentary and not permanent so that the system also attempts to be incorruptible from the bottom up. Anything top down is easily corrupted and that is why governments typically favor top down systems.

Any system will have some weakness. The advantage of POS is that the people with the greatest power to topple the system are usually the people with the most to loose. This will definitely keep out individuals and small groups that want to destroy the system, and the government probably won't bother to mess with it unless they can link it to drugs or tax evasion. So, can we just all form a social contract and all agree not to use any DACshares to purchase drugs or avoid paying taxes?

1) Someone with 5% ownership in any network could sell their stake and buy enough mining power to control it all via PoW 51% attack
2) Someone would require 51% ownership in a network to perform a 51% attack... but if you think of it as a company, 51% ownership means you effectively control the company... no difference than with a DAC.
3) The trustees in power only has one option at their disposal: include a trx or don't include a trx.   That is IT! 
4) It would be little different than Ripple consensus model.   
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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