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