Author Topic: Burning is Still Alive and Well  (Read 10020 times)

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Offline bytemaster

My opinion...

We need to understand the two separate concepts of income (increases value of BTS) versus distribution (application of income earned).

Burning is not a source of income. It is a distribution of income. Burning is not the main goal of BTS to increase value.

Revenue is earned when money comes into the system from things such as transaction fees. It used to be that revenues and burning occurred simultaneously, thus the past confusion of the two concepts. That is, transaction fees were used to instantly buy BTS and burn any excess not payable to the delegates. This represented an instant distribution of income to all owners, because there was no way for the business to hold it as a reserve.

The new approach will change that, by holding the BTS in reserve instead of burning it. So when the fees are earned (in excess of pay to witnesses), that is earned revenue that goes into the pool, which is owned by BTS. From that expenses are paid to the workers. The remainder is the net profit of the business.

The choices from there are what to do with that profit. Do you distribute it - i.e. burn it? Or do you reinvest it - i.e. use it to fund other work or projects? Or do you even use if for strategic purposes - i.e. to fund acquisitions etc? The quality of the decisions made in these areas will ultimately determine what value the marketplace is willing to place upon BTS. So we need to ensure those are truly wise decisions. There is no point in burning for the sake of appearances as long as there exist better ways to reinvest that money, especially early in our growth cycle. At the point of saturation there is no point in reinvesting, and all profits should be burned. But its good to have both options.

There are other choices too. If we spend more on witnesses and workers than we earn in fees etc, then we are making a loss, which dilutes the business. This can make sense for a startup, but from an investors' perspective, only with a convincing plan to move it to state of future profit (or make a trade sale to another party, but I assume that's not the end goal). The notional amount of BTS to be initially allocated to the reserve pool (ie. 1.2 bn BTS) is a signal to the market as to how much we are willing to dilute the business before eventually turning a profit. From an investor's perspective, the bigger this pool, the longer the time I expect I'll have to wait before BTS is profitable. For example, if we believed we could be profitable in 3 years, there would be no need for 1.2bn BTS to exist as a dilutionary spending reserve. Of course maybe we are just being really conservative, and conservative management is not a bad thing either. I'm not sure what the right figure should be, but hopefully this gives you some idea of how investors might look at things.
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+1 

I look at is as a flywheel that can smooth out ups and downs in the business cycle.   
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Offline Ander

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The new approach will change that, by holding the BTS in reserve instead of burning it. So when the fees are earned (in excess of pay to witnesses), that is earned revenue that goes into the pool, which is owned by BTS. From that expenses are paid to the workers. The remainder is the net profit of the business.

The choices from there are what to do with that profit. Do you distribute it - i.e. burn it? Or do you reinvest it - i.e. use it to fund other work or projects? Or do you even use if for strategic purposes - i.e. to fund acquisitions etc?

Well said.

This change allows us to allocate revenues however shareholders feel is best.  Either dividend (burning), paying for workers to build Bitshares, or by saving it for later (putting it in the reserve reserve fund).  Like a real business. :)

Its important that we have the possibility of burning so that we can pay dividends in the future.  (As the ultimate end goal of a business should be to eventually make profits and distribute them to shareholders).  As you said, in the current startup phase, operating at a loss is expected and is acceptable to fuel growth.
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Offline Permie

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My opinion...

We need to understand the two separate concepts of income (increases value of BTS) versus distribution (application of income earned).

Burning is not a source of income. It is a distribution of income. Burning is not the main goal of BTS to increase value.

Revenue is earned when money comes into the system from things such as transaction fees. It used to be that revenues and burning occurred simultaneously, thus the past confusion of the two concepts. That is, transaction fees were used to instantly buy BTS and burn any excess not payable to the delegates. This represented an instant distribution of income to all owners, because there was no way for the business to hold it as a reserve.

The new approach will change that, by holding the BTS in reserve instead of burning it. So when the fees are earned (in excess of pay to witnesses), that is earned revenue that goes into the pool, which is owned by BTS. From that expenses are paid to the workers. The remainder is the net profit of the business.

The choices from there are what to do with that profit. Do you distribute it - i.e. burn it? Or do you reinvest it - i.e. use it to fund other work or projects? Or do you even use if for strategic purposes - i.e. to fund acquisitions etc? The quality of the decisions made in these areas will ultimately determine what value the marketplace is willing to place upon BTS. So we need to ensure those are truly wise decisions. There is no point in burning for the sake of appearances as long as there exist better ways to reinvest that money, especially early in our growth cycle. At the point of saturation there is no point in reinvesting, and all profits should be burned. But its good to have both options.

There are other choices too. If we spend more on witnesses and workers than we earn in fees etc, then we are making a loss, which dilutes the business. This can make sense for a startup, but from an investors' perspective, only with a convincing plan to move it to state of future profit (or make a trade sale to another party, but I assume that's not the end goal). The notional amount of BTS to be initially allocated to the reserve pool (ie. 1.2 bn BTS) is a signal to the market as to how much we are willing to dilute the business before eventually turning a profit. From an investor's perspective, the bigger this pool, the longer the time I expect I'll have to wait before BTS is profitable. For example, if we believed we could be profitable in 3 years, there would be no need for 1.2bn BTS to exist as a dilutionary spending reserve. Of course maybe we are just being really conservative, and conservative management is not a bad thing either. I'm not sure what the right figure should be, but hopefully this gives you some idea of how investors might look at things.
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Offline starspirit

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My opinion...

We need to understand the two separate concepts of income (increases value of BTS) versus distribution (application of income earned).

Burning is not a source of income. It is a distribution of income. Burning is not the main goal of BTS to increase value.

Revenue is earned when money comes into the system from things such as transaction fees. It used to be that revenues and burning occurred simultaneously, thus the past confusion of the two concepts. That is, transaction fees were used to instantly buy BTS and burn any excess not payable to the delegates. This represented an instant distribution of income to all owners, because there was no way for the business to hold it as a reserve.

The new approach will change that, by holding the BTS in reserve instead of burning it. So when the fees are earned (in excess of pay to witnesses), that is earned revenue that goes into the pool, which is owned by BTS. From that expenses are paid to the workers. The remainder is the net profit of the business.

The choices from there are what to do with that profit. Do you distribute it - i.e. burn it? Or do you reinvest it - i.e. use it to fund other work or projects? Or do you even use if for strategic purposes - i.e. to fund acquisitions etc? The quality of the decisions made in these areas will ultimately determine what value the marketplace is willing to place upon BTS. So we need to ensure those are truly wise decisions. There is no point in burning for the sake of appearances as long as there exist better ways to reinvest that money, especially early in our growth cycle. At the point of saturation there is no point in reinvesting, and all profits should be burned. But its good to have both options.

There are other choices too. If we spend more on witnesses and workers than we earn in fees etc, then we are making a loss, which dilutes the business. This can make sense for a startup, but from an investors' perspective, only with a convincing plan to move it to state of future profit (or make a trade sale to another party, but I assume that's not the end goal). The notional amount of BTS to be initially allocated to the reserve pool (ie. 1.2 bn BTS) is a signal to the market as to how much we are willing to dilute the business before eventually turning a profit. From an investor's perspective, the bigger this pool, the longer the time I expect I'll have to wait before BTS is profitable. For example, if we believed we could be profitable in 3 years, there would be no need for 1.2bn BTS to exist as a dilutionary spending reserve. Of course maybe we are just being really conservative, and conservative management is not a bad thing either. I'm not sure what the right figure should be, but hopefully this gives you some idea of how investors might look at things.

Offline Ander

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In the 3 way split variant we can answer the question – ‘What is this burning thing actually do’ – by saying ‘We burn part of the income generated by the DAC as a dividend for the shareholders’, while with the worker-burner the answer is less powerful - 'We are reducing the theoretical maximum supply of BTS'.

Please, consider.

I think those two are the same thing.  Reducing theoretic max supply is a dividend.

We as a community should make sure to vote in some burn workers as well.


Right now paid delegates are at less than 40% of the max possible pay of 50BTS per 10 seconds.  That is, less than 2 BTS per second. I am hoping that we will set the inflation rate in new Bitshares 2.0 at less than 2 BTS per second as well, using burn workers.

In fact, we can probably remove some marketing workers, since marketing will be paid by referrals now, so we can probably get the pay under 1.5 BTS a second.


If we want to increase it to pay for something awesome, of course, then we could do that.  But I would like to see some BTS get burned.
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Offline Ander

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Awesome, this burn worker solves the problem entirely!  (I assume it will be implemented in a reasonable way).

All our devs are awesome, by the way. :)

I am very impressed by the whole 2.0 plan.
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Offline Frodo

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1. There is no more BTS burning. No more dividends

....Anyway this matter is easily fixable – by setting 3 way split instead of the proposed 2 way (80%/20% for referral program/ future spending’s fund), by just adding % to be burnt

Of course there is another way to do this, another way which allows actually even more aggressively  removing/burning of BTS

https://github.com/cryptonomex/graphene/issues/37

Thanks for listening to the feed back from the community BM!  +5%

 +5%

Yes  +5%. And this is why I love this project so much.

Albeit I would prefer the three way split tonyk propsed if it can be realized with comparable resources.

Offline xeroc

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I like tony's proposal .. its jus another parameter that can be definrd by the delegates

Offline tonyk

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1. There is no more BTS burning. No more dividends

....Anyway this matter is easily fixable – by setting 3 way split instead of the proposed 2 way (80%/20% for referral program/ future spending’s fund), by just adding % to be burnt

Of course there is another way to do this, another way which allows actually even more aggressively  removing/burning of BTS

https://github.com/cryptonomex/graphene/issues/37

Thanks for listening to the feed back from the community BM!  +5%

While this proposal will certainly achieve the main goal – actual burning of BTS. I still find burning % of the fees generated more straightforward (aka 3 way split of the fees between referral/burning/retuned to the fund) – because that way the DAC will be burning some of the actually generated income of the DAC as a dividend, as opposed to some arbitrary amount from the fund in this proposal.

In the 3 way split variant we can answer the question – ‘What is this burning thing actually do’ – by saying ‘We burn part of the income generated by the DAC as a dividend for the shareholders’, while with the worker-burner the answer is less powerful - 'We are reducing the theoretical maximum supply of BTS'.

Please, consider.
« Last Edit: June 10, 2015, 02:15:09 pm by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline nomoreheroes7

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1. There is no more BTS burning. No more dividends

....Anyway this matter is easily fixable – by setting 3 way split instead of the proposed 2 way (80%/20% for referral program/ future spending’s fund), by just adding % to be burnt

Of course there is another way to do this, another way which allows actually even more aggressively  removing/burning of BTS

https://github.com/cryptonomex/graphene/issues/37

Thanks for listening to the feed back from the community BM!  +5%

 +5%

 +5% +5% +5%

Burn baby burn!

Offline fav

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1. There is no more BTS burning. No more dividends

....Anyway this matter is easily fixable – by setting 3 way split instead of the proposed 2 way (80%/20% for referral program/ future spending’s fund), by just adding % to be burnt

Of course there is another way to do this, another way which allows actually even more aggressively  removing/burning of BTS

https://github.com/cryptonomex/graphene/issues/37

Thanks for listening to the feed back from the community BM!  +5%

 +5%

Offline tonyk

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1. There is no more BTS burning. No more dividends

....Anyway this matter is easily fixable – by setting 3 way split instead of the proposed 2 way (80%/20% for referral program/ future spending’s fund), by just adding % to be burnt

Of course there is another way to do this, another way which allows actually even more aggressively  removing/burning of BTS

https://github.com/cryptonomex/graphene/issues/37

Thanks for listening to the feed back from the community BM!  +5%
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline infovortice2013

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before the burned fees means that all comisions for tranfers and trades are going back to users pocket, now go to bitshares pocket. quite sutile.
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Offline btswildpig

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So BTS are removed from the market if growth isn't occurring, but if it is those BTS get used to facilitate more growth?

Clever compromise.  +5%

I don't think that's the case .
Unless the standard for such operation is based on price feed in a period of time instead of so called shareholder votes , then the result of this operation can not always fits the actual market condition .
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So BTS are removed from the market if growth isn't occurring, but if it is those BTS get used to facilitate more growth?

Clever compromise.  +5%

Offline zhangweis

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If we have to go in pool way, at least we should adjust the fixed supply to 3.0 billion which is the estimated final supply under current delegate pay rate.
If the fixed supply is not set to 3.0 billion, I suggest to set up a burning worker account and a 0.7 billion project for it. We can achieve this by using public key from a blockchain random number + 1000(fixed number to avoid delegate cheating). The random number can be taken from a future block so that we can be confident that it will be somewhat truly random.
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Offline Thom


Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

I am with svk and many others. Recycling for reuse is not burning. And it is not just semantics.

Your post lead me to a different thought though.
BTS share are made of primarily carbon.
When they are recycled they are turned to.....Graphene of course. :)

OK so I re-read the post on project funding and I see what I was missing:

https://bitshares.github.io/technology/stakeholder-approved-project-funding/

While it still doesn't qualify as what I consider burning, as long as the amount "burnt" or going into the reserve fund exceeds the amount being paid to witnesses and workers, the amount of freely available BTS will decrease. This will have the same effect as burning, as the shares will not be in circulation but held by the blockchain, however the funds may need to be released later on if the amount being "burnt" starts to decrease and falls below the sum of witness and worker pay.

In the end I think it's quite clever, it lets the blockchain build up a rainy-day fund of sorts that can be used to maintain witness and project funding in the case transaction volume falters for example.

I say shame on you BM for twisting the definition of "burning" :o You're smart enough to know the difference so why inject this confusion? Is it sophistry to manipulate people to believe a "burn fund" is a good idea or just an off the cuff remark / sloppy language? (I don't want to believe that, but it is a valid question, albeit rather bluntly stated) For the reasons well described above burning fees in BitShares 2.0 is not the same thing, that's just the cold hard facts.

But lest you walk away thinking I'm down on the idea, think again. I agree it is a rather clever way to produce a "rainy day" pool of funds which the shareholders can vote to do with as they may. Whether that is a good thing or not is debatable. It is a form of money supply control either way you look at it.

It is important to note that although BitShares 2.0 provides this new facility to divert a portion of fees into a special "recycle / rainy day" account, I don't believe it prohibits true fund burning by transferring funds to a non existent or "null" account address. BM, can you confirm that? If such a true burn address does not explicitly exist, anyone is free to create a new account and throw away the private keys, then advertise the public key :) With that in mind burning is indeed possible, whether it's alive and well is another matter.

Like it or not the BitShares ecosystem is not a true (i.e. pure, self regulating) free market economy, no matter what version you're talking about. Any type of regulation of the money supply by any "control group" (such as developers, delegates, the FED or governments) other than the market forces of supply and demand is an attempt to alter the free nature of the ecosystem. Any such control group plays god with the economy.

Theoretically, a true free market is one where the amount of money in existence is always balanced with the value of goods and services available for trade. That relationship is extremely dynamic and involves many variables. New people entering and leaving the workforce, the impact of new inventions and methods, natural disasters that destroy people and property are some of the big factors.

Until there is a way to take humans out of the control loop (god role) and replace them with some "perfect" system of automatic control to dynamically adjust the money supply based on accurate measurement of all those factors in real time, we will have to settle for human decisions that attempt to manually adjust the controls to achieve a balance that although not perfect, will be good enough to stimulate the growth of creativity and prosperity without the need for violence and aggression.

I think humanity is still far too primitive to do a good job at playing god with the economy. That doesn't mean we shouldn't strive for improvement. I believe BitShares 2.0 is a major improvement over anything prior to it in the evolution of blochchain technolgy.

Lets each take an active role and work to make it the best it can be!
« Last Edit: June 10, 2015, 04:15:13 am by Thom »
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Offline starspirit

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It seems to me more like a capital reserve (controlled by vote) than burning (requiring a hard fork to reverse). I expect how the market values that depends on how wisely they expect that capital reserve to be managed in the future.

Offline zhangweis

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Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

There might be something I'm not getting here but it doesn't seem to be the same thing at all to me, semantics or not. In BTS 1.0 or any other coin, burning means removing shares/coins from the total supply, never to be seen again. In BTS 2.0 it seems to me "burnt" funds will be recycled back to workers who are then free to release them back into circulation by selling them. What I am missing?

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Correct, you now effectively have a "paid by the job" paradigm instead of your old "paid by the hour" one

Contractor vs. employee...

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Which is why workers shouldn't be doing marketing.   I do not support using worker pay to fund marketing campaigns.   Let the marketers speculate on their cost/reward ratio.

Definitely.  The new system allows marketers to get paid based on their referral numbers, so we won't need marketing delegates anymore.  That should let us cut down a bit on inflation.
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Offline theoretical

there is a third scenario : 1000 new users come in after the hard work was done by the worker marketer who spent 30000USD per month , but each of those users only generates 20USD fees per person in this year . 

The problem is the marketer's pay needs to be based on his performance.  In particular, $20,000 needs to be an upper bound on what this particular marketer gets paid.  Letting this marketer be a worker means their pay is less tightly coupled to their performance, which is why bytemaster says:

workers shouldn't be doing marketing.   I do not support using worker pay to fund marketing campaigns.   Let the marketers speculate on their cost/reward ratio.

If some marketer brings in 1000 users with $20 in transaction volume per year, then they will get paid less than $20,000 per year from the referral program.  (How much less depends on what the referral split is.)

If that marketer's costs are $30,000 per month, those costs are coming out of the marketer's own pocket.  An imbalance can still occur, but the pain will be limited to the marketer's own funds.  The referral program allows each individual marketer to reap the rewards of their success without socializing the risk of their failure.
« Last Edit: June 09, 2015, 07:43:17 pm by theoretical »
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Offline clayop

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I'm with BM. The issue is not an inflationary model but how we can increase the income by expanding bts ecosystem. We are at the early stage that reqiures lumpsum of investment (inflation). If we are doing properly, we will have returns (increasing reserved fund).
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Offline bytemaster

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

The total amount of BTS in circulation will be far less under this model.  If BTS survives for the next 3 years and gains any traction what so ever then transaction fees will far exceed the daily spending limit and should continue to do so forever.

So the pool can keep growing so long as fees can cover network costs? In an extreme example where BTS is worth $1000/share (hey, it happened to BTC :P ) there may be 1 billion BTS in circulation and 2.7 billion BTS in the pool?

The pool is like a pond with a maximum drain rate of 5 bts per second.  The stakeholders can plug the drain at just enough to cover witness pay (no workers).   Any time fees are above 5 bts/sec the pool is growing but the rate at which it can drain is shrinking. 

The only time where dilution will be a problem is if the protocol has no traction and yet BTS holders still vote to pay workers.   If the network has no traction and doesn't pay workers it is dead.   If the network has traction and is gaining users then it will be deflationary. 

So fear of dilution is completely misplaced because it will either by deflationary in the long-run or it will die.

there is a third scenario : 1000 new users come in after the hard work was done by the worker who spent 30000USD per month , but each of those users only generates 20USD fees per person in this year . 

Gaining traction != the sheet is balanced . It all depends on if the income > the cost . Some business has tons of users and still losing money .

Which is why workers shouldn't be doing marketing.   I do not support using worker pay to fund marketing campaigns.   Let the marketers speculate on their cost/reward ratio.

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Offline btswildpig

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How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

The total amount of BTS in circulation will be far less under this model.  If BTS survives for the next 3 years and gains any traction what so ever then transaction fees will far exceed the daily spending limit and should continue to do so forever.

So the pool can keep growing so long as fees can cover network costs? In an extreme example where BTS is worth $1000/share (hey, it happened to BTC :P ) there may be 1 billion BTS in circulation and 2.7 billion BTS in the pool?

The pool is like a pond with a maximum drain rate of 5 bts per second.  The stakeholders can plug the drain at just enough to cover witness pay (no workers).   Any time fees are above 5 bts/sec the pool is growing but the rate at which it can drain is shrinking. 

The only time where dilution will be a problem is if the protocol has no traction and yet BTS holders still vote to pay workers.   If the network has no traction and doesn't pay workers it is dead.   If the network has traction and is gaining users then it will be deflationary. 

So fear of dilution is completely misplaced because it will either by deflationary in the long-run or it will die.

there is a third scenario : 1000 new users come in after the hard work was done by the worker who spent 30000USD per month , but each of those users only generates 20USD fees per person in this year . 

Gaining traction != the sheet is balanced . It all depends on if the income > the cost . Some business has tons of users and still losing money .

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Offline bytemaster

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

The total amount of BTS in circulation will be far less under this model.  If BTS survives for the next 3 years and gains any traction what so ever then transaction fees will far exceed the daily spending limit and should continue to do so forever.

So the pool can keep growing so long as fees can cover network costs? In an extreme example where BTS is worth $1000/share (hey, it happened to BTC :P ) there may be 1 billion BTS in circulation and 2.7 billion BTS in the pool?

The pool is like a pond with a maximum drain rate of 5 bts per second.  The stakeholders can plug the drain at just enough to cover witness pay (no workers).   Any time fees are above 5 bts/sec the pool is growing but the rate at which it can drain is shrinking. 

The only time where dilution will be a problem is if the protocol has no traction and yet BTS holders still vote to pay workers.   If the network has no traction and doesn't pay workers it is dead.   If the network has traction and is gaining users then it will be deflationary. 

So fear of dilution is completely misplaced because it will either by deflationary in the long-run or it will die. 
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Offline Riverhead

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

The total amount of BTS in circulation will be far less under this model.  If BTS survives for the next 3 years and gains any traction what so ever then transaction fees will far exceed the daily spending limit and should continue to do so forever.

So the pool can keep growing so long as fees can cover network costs? In an extreme example where BTS is worth $1000/share (hey, it happened to BTC :P ) there may be 1 billion BTS in circulation and 2.7 billion BTS in the pool?

Offline Pheonike

I can understand having the reserve pool for those times when fees wont cover worker pay. Could the reserve size be dynamic but have max size say 5% of total supply? Or maybe the reserve constantly adjust to have no more than 1 years worth of worker pay max at any given time.

Offline bytemaster

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

The total amount of BTS in circulation will be far less under this model.  If BTS survives for the next 3 years and gains any traction what so ever then transaction fees will far exceed the daily spending limit and should continue to do so forever. 

The total BTS outside the reserve fund will likely never hit 3B let alone 3.7 and if I were a betting man will hit a long-term decline taking it well below 2.5B.
« Last Edit: June 09, 2015, 06:25:02 pm by bytemaster »
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Offline Riverhead


Quote

In a Stan moment it reminds me of how airships control altitude. Helium is only lighter than air at near atmospheric pressure. Compress it into tanks and it is not lighter than air. By controlling the portion of helium in the gas bags vs what's in the tanks the buoyancy of the ship can be tightly controlled.

Continuing the Stan style... keep in mind that we in the early stages of flying [blockchains in this case] and we are still using hydrogen...highly flammable!

Touche :) . The Hindenburg was an inside job!

Offline Riverhead

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

It amounts to the same thing just at a different rate. Since BTS is used to short assets into existence the higher demand for the assets the more BTS is taken out of circulation as collateral. The effective reduced supply increases the value of BTS; the dividend you mention. While true also burning BTS supply would hasten this it would just be increasing the rate of what would already be happening in a growing market.

Offline BTSdac

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what is the benefit of being a BTS holder again ? I fail to see that yet in this model .

Growth...right ..... but even if you bring 10 million people in the system , there is still a question : which form of dividend  is given to every shareholder ?

If you are betting on tons of people buy fixed amount of share resulted in the rise of price .... then XRP could claim the same thing .
you can use bts to create bitusd.
if it is become a 100000tps system , if the fee is 1cent per tx, it would been1000$ per second,3.600,000 per hour, 31.5 B $ per year? 
am I wrong?
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Offline tonyk

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I get the opposite point of view in this thread...well kind of.

The big problem is - Lesson NOT learned from 1.0 - Perceived inflation is worse than actual inflation.

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

In a Stan moment it reminds me of how airships control altitude. Helium is only lighter than air at near atmospheric pressure. Compress it into tanks and it is not lighter than air. By controlling the portion of helium in the gas bags vs what's in the tanks the buoyancy of the ship can be tightly controlled.

Continuing the Stan style... keep in mind that we in the early stages of flying [blockchains in this case] and we are still using hydrogen...highly flammable!
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Ander

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How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.
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Offline Riverhead

I get the opposite point of view in this thread...well kind of.

The big problem is - Lesson NOT learned from 1.0 - Perceived inflation is worse than actual inflation.

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

In a Stan moment it reminds me of how airships control altitude. Helium is only lighter than air at near atmospheric pressure. Compress it into tanks and it is not lighter than air. By controlling the portion of helium in the gas bags vs what's in the tanks the buoyancy of the ship can be tightly controlled.
« Last Edit: June 09, 2015, 05:26:18 pm by Riverhead »

Offline Ander

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BTS holders are in complete control over how fast things are burnt.   Their is a max daily spending limit hard coded and unchangeable.   

Sustainability and "fixed supply" makes accounting checks easy.

The max daily spending limit being hard coded is important.

Burning feels a lot better than putting BTS in the reserve pool.  When it is burned, it can never exist again, but with the reserve pool, it could. 

The goal of BTS is to reach a state where the supply is decreasing, thus providing dividends and showing a profit. 


In the BTS 0.x system, the spending limit was going to be cut in half every 4 years.  Is that still the case in BTS 2.0?   
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Offline tonyk

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I get the opposite point of view in this thread...well kind of.

The big problem is - Lesson NOT learned from 1.0 - Perceived and possible inflation is worse than actual inflation.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Riverhead

BTS holders are in complete control over how fast things are burnt.   Their is a max daily spending limit hard coded and unchangeable.   

Sustainability and "fixed supply" makes accounting checks easy.

So if the fees are sufficient to pay the workers the max allowed pay what happens when the pool is full? Do the funds that are normally redirected to the pool go elsewhere? Or does it just keep building and building until it reaches an equilibrium of spendable supply?

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I am with svk and many others. Recycling for reuse is not burning. And it is not just semantics.

Your post lead me to a different thought though.
BTS share are made of primarily carbon.
When they are recycled they are turned to.....Graphene of course. :)
--
this. however, we could just setup a worker dedicated to burning BTS.
--
No we cannot. All we can set up is a worker that recycles the BTS back to the fund for reissuance..

of course we can.

how about this setup:

I (or someone else) will setup a worker
x-funds
each month the funds will be vested.
worker will send bitshares to a multisig address
multi sig address holders will be:
4 trusted people from the forum + each will promise to create a random name and "forget" the private key (via webwallet or something) + 10 random names from recent registers

correct me if I'm wrong please.
« Last Edit: June 09, 2015, 05:18:50 pm by fav »

Offline bytemaster

BTS holders are in complete control over how fast things are burnt.   Their is a max daily spending limit hard coded and unchangeable.   

Sustainability and "fixed supply" makes accounting checks easy.
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Offline tonyk

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Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

I am with svk and many others. Recycling for reuse is not burning. And it is not just semantics.

Your post lead me to a different thought though.
BTS share are made of primarily carbon.
When they are recycled they are turned to.....Graphene of course. :)

OK so I re-read the post on project funding and I see what I was missing:

https://bitshares.github.io/technology/stakeholder-approved-project-funding/

While it still doesn't qualify as what I consider burning, as long as the amount "burnt" or going into the reserve fund exceeds the amount being paid to witnesses and workers, the amount of freely available BTS will decrease. This will have the same effect as burning, as the shares will not be in circulation but held by the blockchain, however the funds may need to be released later on if the amount being "burnt" starts to decrease and falls below the sum of witness and worker pay.

In the end I think it's quite clever, it lets the blockchain build up a rainy-day fund of sorts that can be used to maintain witness and project funding in the case transaction volume falters for example.

Clever...as  self-chained bike


Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

I am with svk and many others. Recycling for reuse is not burning. And it is not just semantics.

Your post lead me to a different thought though.
BTS share are made of primarily carbon.
When they are recycled they are turned to.....Graphene of course. :)

this. however, we could just setup a worker dedicated to burning BTS.

No we cannot. All we can set up is a worker that recycles the BTS back to the fund for reissuance..

Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline bytemaster

Under BitShares 2.0 the "reserve fund" is just another way of looking at "burned funds".    The maximum spending rate has not changed.   Therefore the "available supply" is technically unchanged.   Except perhaps we could claim 3.7 Billion shares and pump coin market cap ;)

No don't do that, everyone would think BTS had diluted again and would dump.

Right :)
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Offline clayop

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I think the basic burning structure of 1.0and 2.0 is the same. In the case of 2.0, dividened means increasing amount of reserved fund.
 
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Offline Ander

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Under BitShares 2.0 the "reserve fund" is just another way of looking at "burned funds".    The maximum spending rate has not changed.   Therefore the "available supply" is technically unchanged.   Except perhaps we could claim 3.7 Billion shares and pump coin market cap ;)

No don't do that, everyone would think BTS had diluted again and would dump.
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Offline fav

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Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

I am with svk and many others. Recycling for reuse is not burning. And it is not just semantics.

Your post lead me to a different thought though.
BTS share are made of primarily carbon.
When they are recycled they are turned to.....Graphene of course. :)

this. however, we could just setup a worker dedicated to burning BTS.

Offline svk


Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

I am with svk and many others. Recycling for reuse is not burning. And it is not just semantics.

Your post lead me to a different thought though.
BTS share are made of primarily carbon.
When they are recycled they are turned to.....Graphene of course. :)

OK so I re-read the post on project funding and I see what I was missing:

https://bitshares.github.io/technology/stakeholder-approved-project-funding/

While it still doesn't qualify as what I consider burning, as long as the amount "burnt" or going into the reserve fund exceeds the amount being paid to witnesses and workers, the amount of freely available BTS will decrease. This will have the same effect as burning, as the shares will not be in circulation but held by the blockchain, however the funds may need to be released later on if the amount being "burnt" starts to decrease and falls below the sum of witness and worker pay.

In the end I think it's quite clever, it lets the blockchain build up a rainy-day fund of sorts that can be used to maintain witness and project funding in the case transaction volume falters for example.
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Offline btswildpig

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Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

There might be something I'm not getting here but it doesn't seem to be the same thing at all to me, semantics or not. In BTS 1.0 or any other coin, burning means removing shares/coins from the total supply, never to be seen again. In BTS 2.0 it seems to me "burnt" funds will be recycled back to workers who are then free to release them back into circulation by selling them. What I am missing?

you are not missing anything .
the rough design assumes "it's totally logical for workers having the option to tap the fees instead of burning it  because the worker would work harder to get more people to use the system thus generate more fees for other workers to tap in order to get more new users providing fees for the next batch of worker to attract the next ,......"  sorry , my English is to bad to display such confusing image .... 
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Offline tonyk

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Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

I am with svk and many others. Recycling for reuse is not burning. And it is not just semantics.

Your post lead me to a different thought though.
BTS share are made of primarily carbon.
When they are recycled they are turned to.....Graphene of course. :)
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline svk


Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

There might be something I'm not getting here but it doesn't seem to be the same thing at all to me, semantics or not. In BTS 1.0 or any other coin, burning means removing shares/coins from the total supply, never to be seen again. In BTS 2.0 it seems to me "burnt" funds will be recycled back to workers who are then free to release them back into circulation by selling them. What I am missing?
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Offline Riverhead


Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.


Offline xeroc

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I think the difference is that previously burned fees are now added to the funding pool. It's only once it has passed through this pool that the shareholders decide whether or not to burn it by paying a worker proposal to burn the income.
So, are you proposing to reduce the initial reserve fund to the max reachable NOW! instead of max supply every been possible since the merger?
Sounds like a reasonable idea

Offline Permie

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I think the difference is that previously burned fees are now added to the funding pool. It's only once it has passed through this pool that the shareholders decide whether or not to burn it by paying a worker proposal to burn the income.
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what is the benefit of being a BTS holder again ? I fail to see that yet in this model .

Growth...right ..... but even if you bring 10 million people in the system , there is still a question : which form of dividend  is given to every shareholder ?
IMHO you don't need to pay a dividend to shareholders ..
also recall that every bitasset shorted will require BTS as collateral .. or any other bitasset  as collateral that is collateralized with BTS in the end ..

//edit: also, it may happen that MORE funds that go INTO the reserve fund than OUT of it!

Offline btswildpig

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what is the benefit of being a BTS holder again ? I fail to see that yet in this model .

Growth...right ..... but even if you bring 10 million people in the system , there is still a question : which form of dividend  is given to every shareholder ?

If you are betting on tons of people buy fixed amount of share resulted in the rise of price .... then XRP could claim the same thing .

« Last Edit: June 09, 2015, 03:30:14 pm by btswildpig »
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No bro burning is not alive, available bts no trend to cero more time. or i dont understand it.
If the reserve fund runs empty no one will get paid any longer ..
however, there are streams that refill the reserve fund again .. like transaction fees etc ..

Offline infovortice2013

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No bro burning is not alive, available bts no trend to cero more time. or i dont understand it.

 its new model that  should revenue and growth both be dramatically increased, ok.
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Offline xeroc

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Except perhaps we could claim 3.7 Billion shares and pump coin market cap ;)
only if shareholders approve though :D

let's pull a ripple :D

edit: you meant it differently I guess ... only the workers can claim funds from the reserve fund .. and only under shareholder approval ..
but the "available supply" (what ever that means) .. could be set to 3.7B ... i like that idea ..

Offline bytemaster

Under BitShares 2.0 the "reserve fund" is just another way of looking at "burned funds".    The maximum spending rate has not changed.   Therefore the "available supply" is technically unchanged.   Except perhaps we could claim 3.7 Billion shares and pump coin market cap ;)

Assuming no workers are hired and witnesses are paid $100 per month and there are 101 witnesses then the network is "burning" shares assuming we can sign up 101 life time members per month (3 per day). 

So under the new model revenue and growth should both be dramatically increased.   
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