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Offline donkeypong

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DAC Power for Offline Businesses
« on: February 24, 2014, 08:26:14 PM »

I'm intrigued by the possibility of using the DAC power for more than just the digital or transactional businesses that we've heard about. Granted, I think there is a great deal of promise with these digital ideas; DACs are a wonderful innovation and I don't mean to demean them. Nevertheless, the world of possibilities could be a great deal bigger. And forgive me for using the "DAC" term in explaining this, since I know this idea is not purely digital, but it would still require a strong digital element.

I don't see any reason why an offline business (which sells a product (e.g. coffee) or a service (e.g. tax preparation)) could not also honor, and be accepted into, the Social Contract. This Contract might become embedded in a business' partnership agreement or articles of incorporation, or some enforceable offline contract which makes it legally binding. Yes, I know, we'd all like to dream that DAC Utopia can work without courts, but as these organizations grow, some conflicts are inevitable. Disputes will be governed by contract law and contracts are enforced by courts.

The DAC end of the business could control the digital funding and shareholder aspects, including distribution and voting. It would turn the DAC investors into a VC fund, crowdfunder, shareholder, or passive investor, which is exactly the role they already play within a number of the purely digital businesses. This could even be a pure crypto-currency based business that only accepts BTC or PTS for its products/services, therefore the whole balance sheet is blockchain-verifiable. There would be some trust involved, that the business owner would deposit everything into the DAC, etc., and not jump ship, but that risk already exists in expecting a digital DAC owner to honor the Social Contract. Would my offline suggestion be any different than a corporation or a government that decides to turn over its voting to the digital blockchain, which I know DAC proponents have suggested as a future possibility?

Offline progmac

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Re: DAC Power for Offline Businesses
« Reply #1 on: February 24, 2014, 08:33:24 PM »
I'm wondering out loud about this same question in my Juice Factory thread. I still have no idea. My plan is to think about it some more.

What does it mean to honor the social contract as a traditional product- or service-driven business?  If I'm crowdfunding for my juice factory, what holds me to JuiceCoin holders after the factory is up and running? That's why it might not quite work in this application.
« Last Edit: February 24, 2014, 08:36:52 PM by progmac »
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Offline graffenwalder

Re: DAC Power for Offline Businesses
« Reply #2 on: February 24, 2014, 08:48:50 PM »
Quote
There would be some trust involved, that the business owner would deposit everything into the DAC, etc., and not jump ship, but that risk already exists in expecting a digital DAC owner to honor the Social Contract. Would my offline suggestion be any different than a corporation or a government that decides to turn over its voting to the digital blockchain, which I know DAC proponents have suggested as a future possibility?

The big difference is that an "online" DAC is open source. If the "digital DAC owner" where to decide not to honour the contract. The DAC would simply be forked(copied) by someone who will honour the social contract. The digital DAC makes this form of trust unnecessary.

Offline donkeypong

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Re: DAC Power for Offline Businesses
« Reply #3 on: February 25, 2014, 01:08:33 AM »
Thanks for your response. Here are some additional thoughts.

First, I agree it's a good place to start, yet am not sure that the potential duplication of the fork is more powerful as a deterrent than, say, being contractually obligated (via Partnership Agreement or Articles of Incorporation, etc.) to honor the Social Contract. Let's use a coffee shop as an example for an offline business idea. If the coffee shop had a DAC running its funding, distributions, and shareholder voting, etc., then another person could duplicate the open source DAC-portion of the coffee shop. And they could surely find a physical location, hire a staff, and order some beans. That's not too much different than BingoDAC, or whatever digital DAC you can imagine, because someone could theoretically copy it. BingoDAC may have first mover advantage and good will in the community, but there is probably plenty of space for more than one such corporation, perhaps branded and marketed differently. There may be spaces for hundreds or thousands of small businesses doing similar things, serving different market segments or different regions, so they are not necessarily direct competitors, except for the same pool of funding dollars (but I'm assuming there will be a large pool of potential investors on an exchange).

To technical folks, the digital verification of everything is extremely important. But I think when these DACs initially become successful, a lot of businesspeople will start looking at them. And at that point, they are going to recognize different business possibilities that don't live entirely on the blockchain. You could think of it as the Napster of crowd-funding/micro-investing with the built in trust of the blockchain's voting and distribution system. 

Second, you can collateralize anything. A person starting an offline coffee shop could secure the DAC-end of the business with the real property (if owned) or with personal assets such as a car or some PTS/BitUSD, etc. in addition to the online + offline contracts, which are legally enforceable. So there might be ways the DAC would have somebody by the balls and be pretty sure of preventing fraud or voluntary default.

Offline bytemaster

Re: DAC Power for Offline Businesses
« Reply #4 on: February 25, 2014, 01:37:06 AM »
I think the key to DACs and the future of all business is what I call the post-contract economy.    What is at the HEART of a contract?   If you really boil it down the conclusion is...   "do what you said you would or I will go tell big brother and he will make you do it at gun point."   

This poses an interesting problem because it assumes that you can alienate your will in the future.  It presupposes that today you can say something that will make you a slave tomorrow.

If the goal is to make governments unnecessary and irrelevant to doing business, then obviously we cannot depend upon the use of force to BACK contracts.   I recognize that not everyone agrees with my philosophy here, but from an economic perspective contracts are terribly inefficient when relied upon as anything other than a record between honest people about what they agreed to.   

Having had contracts and arbitration decisions overturned in court I have learned to have no respect at all for contracts.    Instead assume the people you are doing business with are independent nations with their own courts and assume that if they back out of a deal there is nothing you can do about it  *except* share the information with others. 

DACs cannot rely upon contracts and this is what makes them beyond reach of any government. 
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Offline donkeypong

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Re: DAC Power for Offline Businesses
« Reply #5 on: February 25, 2014, 03:49:29 AM »
Thank you. Bytemaster, I am honored by your response. Even though this is my first series of posts here, I'm a big supporter of what you are doing at Invictus + I'm an investor in PTS and Bitshares. Power to you for what you guys are trying to do; I love the transparency, the profit focus, the lack of reliance on mining. Between NXT, Mastercoin, Ethereum, etc., you guys have the best chance and you are doing it right.

For better or for worse, I am also a licensed attorney (purely private, don't worry; not with any part of the government and not the kind who files lawsuits!). Sadly, I cannot disagree with what you said about contracts and (dis)trusting the government with enforcement. It is an inexact science, especially when you are blazing new trails like this. Invictus is right to stick to real digital DACs for now. But I don't think business will stop there.

Nevertheless, I need to respond to a point you made. You mentioned that DACs will be the future of business. I agree that they can be. But when you are talking about business, most commerce involves trading goods and services that cannot be totally encrypted into the blockchain. There is plenty of money to be made in futures contracts, hedging, gambling, crowdfunding, and financial transactions that do not involve regulated or licensed fields. But what about the future for the rest of the economy and the rest of the people who are still bound to serve greedy corporations? I believe we can "Napster" P2P a lot of things while securing them with the blockchain. It would spread the equity out and allow for more profit sharing, less waste and needless costs into the pockets of the elites.

I guess I see that coming, whether Invictus ever moves beyond the digital DAC concept or not. If DACs work, someone will harness their power for offline business. It's too good a concept to limit it to only the digital sector of the economy. But I totally understand where you are coming from. Better to be safe and get this right first. I'm rooting for you all the way.
« Last Edit: February 25, 2014, 03:51:32 AM by donkeypong »

Offline luckybit

Re: DAC Power for Offline Businesses
« Reply #6 on: February 25, 2014, 09:32:56 AM »
I think the key to DACs and the future of all business is what I call the post-contract economy.    What is at the HEART of a contract?   If you really boil it down the conclusion is...   "do what you said you would or I will go tell big brother and he will make you do it at gun point."   

This poses an interesting problem because it assumes that you can alienate your will in the future.  It presupposes that today you can say something that will make you a slave tomorrow.

If the goal is to make governments unnecessary and irrelevant to doing business, then obviously we cannot depend upon the use of force to BACK contracts.   I recognize that not everyone agrees with my philosophy here, but from an economic perspective contracts are terribly inefficient when relied upon as anything other than a record between honest people about what they agreed to.   

Having had contracts and arbitration decisions overturned in court I have learned to have no respect at all for contracts.    Instead assume the people you are doing business with are independent nations with their own courts and assume that if they back out of a deal there is nothing you can do about it  *except* share the information with others. 

DACs cannot rely upon contracts and this is what makes them beyond reach of any government.

Some people have no honor and wont keep their word. For those people force may be necessary to make them stay true to their word. The government shouldn't be the first group of people that everyone runs to but some people would exploit the whole "no contract" idea.
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Offline luckybit

Re: DAC Power for Offline Businesses
« Reply #7 on: February 25, 2014, 09:34:44 AM »
Thank you. Bytemaster, I am honored by your response. Even though this is my first series of posts here, I'm a big supporter of what you are doing at Invictus + I'm an investor in PTS and Bitshares. Power to you for what you guys are trying to do; I love the transparency, the profit focus, the lack of reliance on mining. Between NXT, Mastercoin, Ethereum, etc., you guys have the best chance and you are doing it right.

For better or for worse, I am also a licensed attorney (purely private, don't worry; not with any part of the government and not the kind who files lawsuits!). Sadly, I cannot disagree with what you said about contracts and (dis)trusting the government with enforcement. It is an inexact science, especially when you are blazing new trails like this. Invictus is right to stick to real digital DACs for now. But I don't think business will stop there.

Nevertheless, I need to respond to a point you made. You mentioned that DACs will be the future of business. I agree that they can be. But when you are talking about business, most commerce involves trading goods and services that cannot be totally encrypted into the blockchain. There is plenty of money to be made in futures contracts, hedging, gambling, crowdfunding, and financial transactions that do not involve regulated or licensed fields. But what about the future for the rest of the economy and the rest of the people who are still bound to serve greedy corporations? I believe we can "Napster" P2P a lot of things while securing them with the blockchain. It would spread the equity out and allow for more profit sharing, less waste and needless costs into the pockets of the elites.

I guess I see that coming, whether Invictus ever moves beyond the digital DAC concept or not. If DACs work, someone will harness their power for offline business. It's too good a concept to limit it to only the digital sector of the economy. But I totally understand where you are coming from. Better to be safe and get this right first. I'm rooting for you all the way.

There are Open Value Networks which basically do what a DAC does in a lot of ways but does it more in the offline business world. I suggest you Google that.
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Offline progmac

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Re: DAC Power for Offline Businesses
« Reply #8 on: February 25, 2014, 01:53:29 PM »
Having had contracts and arbitration decisions overturned in court I have learned to have no respect at all for contracts.    Instead assume the people you are doing business with are independent nations with their own courts and assume that if they back out of a deal there is nothing you can do about it  *except* share the information with others. 
Does this mean that a company would be completely reliant on its reputation? In normal contract negotiations, two honest parties can have disagreements about what it is they originally agreed to. It isn't as simple as people or companies being 'good' or 'bad.'

Like if I contract with you to rebuild a wall and I assume you know that I want the wall to be brick, but you come in and rebuild the wall with stone, because you assumed that I wanted stone. I'm pissed that I have a stone wall instead of brick but you aren't going to redo all of your work. We both proceeded in good faith from the start, but here we are, pissed at each other and ready to shred each others reputation.
« Last Edit: February 25, 2014, 01:55:11 PM by progmac »
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