Bitshares dividend

[bytemaster]

Nothing has changed  with the prediction market design of dividends right.  Will dividends still be forgone by shorters and given to bit assets. Holders?

Dividends are not forgone, instead a 5% interest is charged.  Has similar effect but easier for everyone to plan for.


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[Bitcoinfan]

Nothing has changed  with the prediction market design of dividends right.  Will dividends still be forgone by shorters and given to bit assets. Holders?

[bytemaster]

im surprised you are laying to claim that dividends are principally enables the prediction market functions.  if a bitasset were to deviate signficantly from the real asset price lets say drop for this example then the dividend would reach 2x 5x 10x or eve 100 times the ratioed price.  thats according to your preious posts.  to me this follows the dividend discount model, where the price of an asset is determined by your future cash flow.  so if there is a bitasset that offers 100 times more dividend per price then the priceing of that bitssset would have to be higher according to the dividend discount model.  wasnt that the purpose of dividends or has this line of thinking changed since we now have a hardcoded five percent interest?

In the initial design setting the BitAsset rate of return to be 2x the the BitShare rate of return seemed like a simple and elegant solution for managing the blockchain.  Since then the new approach is even more simple and elegant.   The purpose of dividends is to drive the demand for holding BitShares, the purpose of interest is to introduce holding costs for short positions and to incentivize people to not 'redeem' BitUSD immediately because they are actually making a predictable yield.  If interest rates were 0 there would be little incentive to HOLD BitUSD and there would also be little incentive to COVER BitUSD early.   

In other words, the system works exactly like a bank.

[Bitcoinfan]

im surprised you are laying to claim that dividends are principally enables the prediction market functions.  if a bitasset were to deviate signficantly from the real asset price lets say drop for this example then the dividend would reach 2x 5x 10x or eve 100 times the ratioed price.  thats according to your preious posts.  to me this follows the dividend discount model, where the price of an asset is determined by your future cash flow.  so if there is a bitasset that offers 100 times more dividend per price then the priceing of that bitssset would have to be higher according to the dividend discount model.  wasnt that the purpose of dividends or has this line of thinking changed since we now have a hardcoded five percent interest?

[bytemaster]

The point of dividends is to make owning bitshares profitable for the shareholders, same as any other company.  The more profitable the DAC becomes the higher the value of the shares and the more resources that become available for growing the DAC.

Income redistribution is destructive to society and facilitates people consuming more than they produce.  Such a system is unstable and will ultimately collapse as those who are producing more than they get to consume look for better options.  Instead we should create systems where individuals acting out of their own selfish best interest end up taking actions that benefit the whole.

[Stan]

what´s the point of dividends ? are they in any way like basic income ? http://en.wikipedia.org/wiki/Basic_income - I... don´t really get them. It seems to me that if the dividend algorithm were to distribute dividends equally, they would function as basic income, but when it´s distributed proportionally as it is now (from what I´ve understood), well I don´t really get the point of that. what´s the point of dividends ?

wouldn´t it be smarter to distribute them equally, in simple terms "redistribute from the rich to the poor - a basic income system" ? I´ve been thinking about integrating something like that with Ripple or Bitcoin for a while, and got excited when I heard of Bitshares, but it seems to me that the dividend algorithm is meant to achieve something else with it´s proportional redistribution, so I just wonder what the main point of them are, and if anyone sees the value in distributing them equally instead.

In the Bitshares White Paper, Bret Allsop commented :
How about something like: "an equal share of the total mining and transaction fees given to all Bitshares in existence."
on paragraph
Dividend - a share of the mining reward and transaction fees proportional to the number of BitShares owned relative to the total number of BitShares in existence.

thence it seems like there might be more dudes who have thought about this

Also, look at this : http://darkai.org/?p=1 - TECHNOLOGICALLY ENHANCED BASIC INCOME AS A SOLUTION TO TECHNOLOGICAL UNEMPLOYMENT

sorry if this is a stupid question, maybe I´m just tired, but there´s something I don´t understand.

if this receives any feedback then we should open a thread in this forum about it. I think Bytemaster might see what I´m talking about, we seem to think alike, I saw your post about "Display all balances in the GUI as a percentage of the money supply" and that´s something I´ve thought about for a year.

Dividends are simply a share of the profits in a company.  If you own a piece of the company, you are entitled to a proportional piece of its profits.  BitShares function like shares of stock in a company, entitling you to a share of its profits.  That's why people buy any company's stock.  They are buying rights to its profits.  The more profits, the more valuable each share of stock becomes. 

(Some people also buy those shares speculating that they will become more valuable, but this usually tied to the expectation the company will become more profitable.)

If you saved up your money and bought only one BitShare, one 4-millionth of a company, would you consider yourself "rich" and be ok with somebody redistributing your share of the earnings to someone else? 

Companies are just collections of many shareholders who have all "chipped in" and bought a little piece of the company's earnings.  It may be a big company, but it is still owned by a lot of little guys who worked hard to get their little piece of the pie.

If you were to take the company's earnings away from its rightful owners and give it to someone else you would be committing an immoral, if not criminal, act would you not?  How would that be different than taking milk away from the owner of a cow?

 

[pinov]

Sounds very interesting

Thanks:)

[Stan]

Just to clarify for everyone, does the contract change if another chain is launched?  That is still part of the original 4MM BTS.

Here's how we addressed that question at http://invictus-innovations.com/social-concensus

For all Invictus sponsored DACs:

Allocate at least 10% of its equity to ProtoShares holders at genesis.
Allocate at least 10% of its equity to AngelShares holders at genesis.
Allocate the last 80% at the discretion of each DAC developer.

We have chosen 50-50 for our first DAC to equally honor mining-lottery and patron-donor schools of thought. 

For our first BitShares DAC:

Allocate 50% of its shares to ProtoShares holders at genesis.
Allocate 50% of its shares to AngelShares holders at genesis.

We will scale the total share count to 4 million shares, equally divided between the two schools.

This makes all of our early supporters “official BitShares distributors” for those who arrive later!
We can't think of a more fair and decentralized way to make shares available to them.

We hope you agree.

Specifications for the last 80% of other future DACs will vary with developer according to their business model and marketing strategies and shall be specified prior to their genesis.   Until they are defined formally on this page, all forum discussion is for the purpose of reaching consensus, and any sharing of our current thinking does not constitute a commitment to any specific course of action.

An "Invictus sponsored" DAC can be any third-party DAC that we endorse, support, and promote due to its compatibility with our standards and social consensus.  Long term, if we are successful at decentralizing all this, most Invictus sponsored DACs will be 3rd Party DACs.

[toast]

Would the effect enhance or dilute BTS shares.

?? Do you mean will it cause the value to go up or down? It's hard to say, a new chain will both decrease the relative value of BTS to all other BTS-subchains but also will increase the value of the BTS system as a whole.

Also

for all intensive purposes

"for all intents and purposes"

[Bitcoinfan]

Yeah that was my hunch.  Just for all intensive purposes any theories as to what similar chains will do to the original BTS chain?  Would the effect enhance or dilute BTS shares.

[toast]

Just to clarify for everyone, does the contract change if another chain is launched?  That is still part of the original 4MM BTS.

That new chain will not have bitshares. This is a point of confusion and I think we need another term. That chain will have some bitshares-like "core" asset, like bitshares are to the root BitShares chain. BM has given some examples (CurrencyShares, PreciousMetalShares, StockShares - though I think *Shares is not a great general naming scheme). There will be cross-chain trading though, to discover the price of StockShares in terms of assets on the original bitshares chain.

The new chain must honor PTS/AGS, but I think they don't have to do 100% (50pts/50ags). Otherwise there would be no incentive for someone who isn't a PTS or AGS holder to launch a new chain.

[Bitcoinfan]

Think of it this way:  If bitcoin were to limit block sizes to 1 MB every 10 minutes then transaction fees would start to rise once demand for transactions hit that limit.   Eventually they would rise to the point that many people will only use Bitcoin for savings or large purchases where they need massive liquidity and they will adopt an Altcoin that has not yet hit the block limit for performing checking transactions. 

Every BitShares chain that launches can support up to 16 assets (perhaps more) and if there are 2 BitShares chains then there will be two versions of BitUSD... each will track BitUSD independently and you could trade them via cross-chain-trading or via a centralized exchange.

Would this would open up the door to having both a external feed bitusd and a prediction market based bitusd?  Doesn't sound like it, because one with a external feed would require a whole separate DAC.  Correct me if I'm wrong here.  Nonetheless, another DAC with based on an external feed may not seem like a bad idea after considering it over.  The external feed will complement the prediction market based one by providing a authentic feedback loop.

Just to clarify for everyone, does the contract change if another chain is launched?  That is still part of the original 4MM BTS.

[bytemaster]

I was making a joke

I thought so

[toast]

I was making a joke

[bytemaster]

But wouldnt it be easier to limit the number of assets per chain to say 3 and increase the block size so that the number of different 'versions' of each asset are limited to just one.

"3 is too many, we would eventually need separate chains due to traffic. Wouldn't it be easier to limit the number of assets per chain to say 2 and increase the block size so that the number of different 'versions' of each asset are limited to just one?"

There is value in being able to trade USD vs GLD on one chain. 

[toast]

But wouldnt it be easier to limit the number of assets per chain to say 3 and increase the block size so that the number of different 'versions' of each asset are limited to just one.

"3 is too many, we would eventually need separate chains due to traffic. Wouldn't it be easier to limit the number of assets per chain to say 2 and increase the block size so that the number of different 'versions' of each asset are limited to just one?"

[MrJeans]

Think of it this way:  If bitcoin were to limit block sizes to 1 MB every 10 minutes then transaction fees would start to rise once demand for transactions hit that limit.   Eventually they would rise to the point that many people will only use Bitcoin for savings or large purchases where they need massive liquidity and they will adopt an Altcoin that has not yet hit the block limit for performing checking transactions. 

Every BitShares chain that launches can support up to 16 assets (perhaps more) and if there are 2 BitShares chains then there will be two versions of BitUSD... each will track BitUSD independently and you could trade them via cross-chain-trading or via a centralized exchange.

Ok that makes sense now.

I see the potential need for multiple chains having the same asset. But wouldnt it be easier to limit the number of assets per chain to say 3 and increase the block size so that the number of different 'versions' of each asset are limited to just one.

[bytemaster]

Think of it this way:  If bitcoin were to limit block sizes to 1 MB every 10 minutes then transaction fees would start to rise once demand for transactions hit that limit.   Eventually they would rise to the point that many people will only use Bitcoin for savings or large purchases where they need massive liquidity and they will adopt an Altcoin that has not yet hit the block limit for performing checking transactions. 

Every BitShares chain that launches can support up to 16 assets (perhaps more) and if there are 2 BitShares chains then there will be two versions of BitUSD... each will track BitUSD independently and you could trade them via cross-chain-trading or via a centralized exchange.

[MrJeans]

Trying to get a deeper understanding of this:

Does this mean sending 100 BITUSD to a friend or ecommerce store will be fairly cheap, because it is in a parallel blockchain?  But to sell/ buy/ short it on the Bitshares Exchange would require a higher fee-- due to a fixed space in the block chain?

BitUSD is not a separate block-chain.  But there many be multiple chains with BitUSD and buy/sell/short kind of like having multiple banks.   When fees become too high on the first chain, an alt-chain will startup to give competition.  It will have a smaller network, but lower fees. 

I do not expect fees to be very high compared to the current banking system.   Lots of opportunity for the market to adapt to bring fees down.

This is rather confusing, someone please elaborate.
So there will be multiple chains upon which people will be able to short and buy bitUSD? Can bitUSD be traded between chains? I've defiantly hit an understanding block here 
Or perhaps is there a thread or part of the bitshares white paper I can read to help

[bytemaster]

Trying to get a deeper understanding of this:

Does this mean sending 100 BITUSD to a friend or ecommerce store will be fairly cheap, because it is in a parallel blockchain?  But to sell/ buy/ short it on the Bitshares Exchange would require a higher fee-- due to a fixed space in the block chain?

BitUSD is not a separate block-chain.  But there many be multiple chains with BitUSD and buy/sell/short kind of like having multiple banks.   When fees become too high on the first chain, an alt-chain will startup to give competition.  It will have a smaller network, but lower fees. 

I do not expect fees to be very high compared to the current banking system.   Lots of opportunity for the market to adapt to bring fees down.

[Bitcoinfan]

Trying to get a deeper understanding of this:

Does this mean sending 100 BITUSD to a friend or ecommerce store will be fairly cheap, because it is in a parallel blockchain?  But to sell/ buy/ short it on the Bitshares Exchange would require a higher fee-- due to a fixed space in the block chain?

[bytemaster]

Very interesting.  Limiting the blockchain and the number of transations into one creates a supply and demand market.  However, arguably then there will always be a need for bitcoin for commerce transactions because of its lower costs. 

I guess Bitshares are in it to complement bitcoin, rather than supplant it?  No bitcoin killer here...

No it just means BitShares will have parallel chains and remain decentralized, where as bitcoin will become very centralized. 

[Bitcoinfan]

Very interesting.  Limiting the blockchain and the number of transations into one creates a supply and demand market.  However, arguably then there will always be a need for bitcoin for commerce transactions because of its lower costs. 

I guess Bitshares are in it to complement bitcoin, rather than supplant it?  No bitcoin killer here...

[bytemaster]

The dividends are not only from transaction fees, but also from the loan interest for short position during trade, and many other fees, like accrount inactive fee. That could account for a big part of dividends. Maybe you can follow this post to learn more:
https://bitsharestalk.org/index.php?topic=1306.15

Exchanges will have much higher transaction volume that BTC which will bid up the fixed space in the block chain.  Bitcoin level transaction fees are not expected here because we intentionally limit block-chain size to keep it decentralized and it is this limited space that is the scarce resource.

[ripplexiaoshan]

The dividends are not only from transaction fees, but also from the loan interest for short position during trade, and many other fees, like accrount inactive fee. That could account for a big part of dividends. Maybe you can follow this post to learn more:
https://bitsharestalk.org/index.php?topic=1306.15

[Bitcoinfan]

Therefore having a dividend rate of 3x 20x 50x 100x wouldn't really matter because it is so small


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[Bitcoinfan]

How large can dividends be?  And would it be hard codes -- bitcoin has been known for low transaction fees.  .0001.  If bitshares transaction fees are that low, then the dividend rate would be indifferent. 


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