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Offline bytemaster

Decentralized Autonomous Consensus - The End of Contracts
« on: December 19, 2013, 02:08:18 AM »

The ProtoShares  "Social Contract" is so strong that it would be enforced even if Invictus ceased to exist.

Now lets explore why.

Over the past several days there has been a great debate about how shares in future Decentralized Autonomous Companies should be allocated.  This debate was sparked by an idea I floated regarding the issuance of Angel Shares to people who contributed to the cause.   Some people pointed out that the ProtoShares value could be dramatically impacted by any change to the social contract and that Invictus should not change anything.  I would like to take this opportunity to introduce a new perspective on the nature of Social Contracts as they relate to Decentralized Autonomous Companies. (DACs)

When we launched ProtoShares we made the statement that you did not have to trust Invictus to honor the Social Contract.   The reality is that Invictus does not have the ability to either honor or not honor the social contract because the initial allocation in the genesis block is beyond our control.  Our software is open source and anyone can come along and create an AltShare that honors a different initial distribution, mining schedule, proof-of-work scheme, etc.   No DAC can gain traction in the market place without the consent of the majority and resulting network effect.  Everyone has the ability to propose alternative genesis blocks and which ever initial distribution has a vote of confidence by the majority of the market will grow.  It is even possible for two different distributions to grow and compete against each other for market share like Bitcoin and Litecoin.   

Based upon the widespread adoption of ProtoShares and significant investment people have made into mining or buying PTS, Invictus will be unable to launch any new DACs that do not honor PTS holders with at least 10% of the shares in each new DAC.  Our code is open source and if we do anything perceived by the market as unfair then someone else will take our work and create a fair alternative.   The only reason for someone to worry about the value of their PTS is if there was fear that Invictus would not deliver a solid implementation of our DACs.   

Because words have a powerful way invoking the wrath of government regulators we would like to avoid the use of the term Contract in anything we do.  Wikipedia defines a contract as: "a written or spoken agreement, esp. one concerning employment, sales, or tenancy, that is intended to be enforceable by law."   The critical aspect here is that it is intended to be enforceable by law, aka Government.  When you enter into a contract you seed authority over both parties to the government, the ultimate form of centralization.   Contracts subject you to the regulation of the state and so long as you can avoid the use of contracts almost everything you do is outside the reach of government.   This is the core concept behind why BitShares is so powerful, BitShares replaces all of the contracts between people and exchanges with a decentralized consensus forming process beyond the control of any party.  Without a contract BitAssets, BitOptions, etc are not securities according to the SEC. 

The term Social Contract typically addresses the questions of the origin of society and the legitimacy of the authority of the state over the individual.   Given the history and baggage associated with the terms Contract and the phrase "Social Contract" we feel they do not accurate represent the nature of what we are trying to achieve as a movement.   Instead what we would like to introduce is a new concept we have dubbed "Decentralized Autonomous Consensus" which is a non-violent market based alternative to contracts.  With Decentralized Autonomous Consensus every market participant gets a vote on whether or not to support a particular DAC.   All that is required for this decentralized consensus process to have a more binding power than any government-enforced contract is for the majority of the market to agree by voting with their time, money, and public outcry. 

We hereby submit that no one will be able to take the code or ideas produced by Invictus and launch an alternative DAC based upon it that does not honor ProtoShares at 10%, even if Invictus were to be forced out of business by dark forces.  To launch a DAC based upon Invictus' ideas without honoring ProtoShares would be interpreted by the market with the same harsh judgment as someone launching a Bitcoin alternative with a 99% premine.   Sure someone could try, but it would never gain market acceptance without some other value proposition behind it.   

Given this reality we would like to encourage people to move beyond contracts through which the government gets is nose into our business.  All interactions between parties must be done on the basis of non-binding cooperation.  So long as we can cooperate without the use of contracts the government has much less authority over our interactions and we can move one step closer to a free society.

For more background on contracts please see Chapter 19 of The Ethics of Liberty by Murray Rothbard.
 
http://mises.org/rothbard/ethics/nineteen.asp
19. PROPERTY RIGHTS AND THE THEORY OF CONTRACTS

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Offline rysgc

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Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #1 on: December 19, 2013, 02:51:18 AM »
The 10% rule seems a good thing and although it might force new DAC's into honoring Protoshares if done right it might add more value to the DAC since it's backed by a trusted community and might even turn into a 'quality seal'.
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Offline luckybit

Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #2 on: December 19, 2013, 07:33:19 AM »
Let's call it a social norm or even better a decentralized cultural tradition. Traditions are very hard to break once set.
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Offline devilfish

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Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #3 on: December 21, 2013, 08:55:31 AM »
Totally support this, it's good to see Invictus put a figure into stone, I think it's only fair considering they delivered PTS that they define the social contract.
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Offline pgbit

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Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #4 on: December 21, 2013, 12:55:56 PM »
or just 'Social Consensus'...

Offline phoenix

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Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #5 on: December 21, 2013, 03:26:29 PM »
Basically a gentleman's agreement to follow the guidelines :)
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Offline cogitativecurve

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Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #6 on: December 22, 2013, 03:53:07 AM »
It is obviously desirable for the new DAC to honor ProtoShares since it hits the ground running with an already established economy. If I understand what you are writing here, we should aim to honor the Social Consensus because of the benefits derived therefrom and the harsh market consequences for deviating from it. As Invictus moves forward gaining acceptance for the Social Consensus, it looks like there would be too much start-up time and development difficulty to be worth doing something DAC-like without ProtoShares. Someone correct me if I am wrong.
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Offline Stan

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Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #7 on: December 22, 2013, 05:05:49 AM »
It is obviously desirable for the new DAC to honor ProtoShares since it hits the ground running with an already established economy. If I understand what you are writing here, we should aim to honor the Social Consensus because of the benefits derived therefrom and the harsh market consequences for deviating from it. As Invictus moves forward gaining acceptance for the Social Consensus, it looks like there would be too much start-up time and development difficulty to be worth doing something DAC-like without ProtoShares. Someone correct me if I am wrong.

Social Consensus is a two-way street.  Developers will offer what the market demands.
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Offline Liberty

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Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #8 on: December 23, 2013, 11:48:17 PM »
Thank you for the links. I'll have to follow up on that to see if Rothbard had spoken in favor of the mob rule of a pure democracy. At first read it seems like you prefer pitchfork resolution over the judgement of a court, or at least the ability avoid impartial judgement for non-performance. It is as if the main problem with your proposal to devalue ProtoShares was that laws exist to hold Inviticus accountable for promises made to investors. If such changes had been forced a year from now and without "contract" then Inviticus could have used market dominance to violate the social contract without fear of market reprisal. A system of laws attempts accountability in a way that respects your rights; you should not be so quick to abandon that.

"The reality is that Invictus does not have the ability to either honor or not honor the social contract because the initial allocation in the genesis block is beyond our control. "

Inviticus wrote the rules and was proposing a hard-fork to change them. Please explain which rules Inviticus is now unable to honor, and more details about why. A hard-fork would be accepted so long as it does not undermine PTS value. It seems you are now claiming an inherent design flaw that can't be fixed without undermining PTS value, but are also bemoaning that someone else could honor the original agreement.
« Last Edit: December 24, 2013, 12:27:36 AM by Liberty »

Offline bytemaster

Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #9 on: December 24, 2013, 12:51:53 AM »
Thank you for the links. I'll have to follow up on that to see if Rothbard had spoken in favor of the mob rule of a pure democracy. At first read it seems like you prefer pitchfork resolution over the judgement of a court, or at least the ability avoid impartial judgement for non-performance. It is as if the main problem with your proposal to devalue ProtoShares was that laws exist to hold Inviticus accountable for promises made to investors. If such changes had been forced a year from now and without "contract" then Inviticus could have used market dominance to violate the social contract without fear of market reprisal. A system of laws attempts accountability in a way that respects your rights; you should not be so quick to abandon that.

"The reality is that Invictus does not have the ability to either honor or not honor the social contract because the initial allocation in the genesis block is beyond our control. "

Inviticus wrote the rules and was proposing a hard-fork to change them. Please explain which rules Inviticus is now unable to honor, and more details about why. A hard-fork would be accepted so long as it does not undermine PTS value. It seems you are now claiming an inherent design flaw that can't be fixed without undermining PTS value, but are also bemoaning that someone else could honor the original agreement.

I think there is too much implied attitude given to my words.  I do not bemoan this, but rather see it as a huge benefit to everyone holding PTS and we have more PTS than just about anyone.  In fact, I see Decentralized Autonomous Consensus as being superior to Contracts.

I actually prefer neither violence nor monopoly (socialized) courts which are in turn backed by violence without the consent of those they presume to judge.

I have never once made a proposal intended to devalue PTS. 

I have one piece of advice for you Liberty, when you deal with me assume the best rather than to worst because everything I do is for the benefit of mankind and the promotion of freedom.  I give away all of my ideas, earn just enough money to get by, and play by the same rules as everyone else.   
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Offline cogitativecurve

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Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #10 on: December 27, 2013, 11:57:39 AM »
It is obviously desirable for the new DAC to honor ProtoShares since it hits the ground running with an already established economy. If I understand what you are writing here, we should aim to honor the Social Consensus because of the benefits derived therefrom and the harsh market consequences for deviating from it. As Invictus moves forward gaining acceptance for the Social Consensus, it looks like there would be too much start-up time and development difficulty to be worth doing something DAC-like without ProtoShares. Someone correct me if I am wrong.

Social Consensus is a two-way street.  Developers will offer what the market demands.

I am currently reading the works of Rothbard, having recently discovered him, and looking forward to revisiting this theme after thoroughly investigating these works.
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Offline danielauhlig

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Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #11 on: December 28, 2013, 09:19:49 PM »
I am still not clear how we get the 10% stake this does not seem automatic one has to be market aware on every new dac in oder to benefit, there is not just an automatic share distribution without the involvement of the PTS holder..or is incorrect

Offline bytemaster

Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #12 on: December 28, 2013, 09:55:08 PM »

I am still not clear how we get the 10% stake this does not seem automatic one has to be market aware on every new dac in oder to benefit, there is not just an automatic share distribution without the involvement of the PTS holder..or is incorrect

It is automatic. Your shares will be ready for you when you decide to claim them.   Take memory coin as an example.  Your shares are there even though you did nothing. 


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Offline danielauhlig

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Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #13 on: December 28, 2013, 11:47:46 PM »
Ok but you need to know that they are even there to be claimed where do such announcements happen? Should the system not be set up to automatically credit PTS holders without their constant involvment;

What I mean is I should be able to invest in the product walk away and have nothing further do do with it   

Offline bytemaster

Re: Decentralized Autonomous Consensus - The End of Contracts
« Reply #14 on: December 28, 2013, 11:59:16 PM »
You can do that as long as you keep your private keys there is nothing to do. 


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