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Offline fuzzy

Deadloch.com bitShares Draft -- Initial Critique Thread!
« on: April 30, 2014, 06:10:43 AM »

The following is an excerpt from the message I received tonight.  Feel free to critique.  I will direct him to this thread as I believe the entire community will better serve this purpose than I ;)

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Anyway, I have been tapping away and have a Bitshares draft ready to go. If you've got time, have a read and let me know if I've got anything dead wrong! Any suggested improvements will be highly appreciated. Nothing like getting a grilling from a member of the Bitshares community. I decided that Bitshares X (and perhaps DPOS mining) should be separate posts in themselves.
 
Go hard man!
 
Explain Bitshares

Bitshares is a broad term which encompasses all Distributed Autonomous Companies that spawn from ideas and code put forward by Invictus Innovations.

Invictus Innovations is a (regular) company fronted by Co-Founder, Daniel Larimer. Invictus creates Distributed Autonomous Companies (DACs) under the Bitshares banner. These DACs are released to the public and honour Bitshares PTS and Bitshares AGS holders with part ownership in these DACs.

What is a Distributed Autonomous Company (DAC)?

Bitcoin solved the problem of creating a distributed trust-less network and can be considered the world’s first DAC.

DACs are abstract, self-regulating, unmanned companies. They provide services that are intended to be valuable to their customers and do so in a predictable, automated way. Naming something a DAC is an attempt at defining any project that uses software made popular by bitcoin, to become self-organizing and self-enforcing.

The concept of a DAC serves as a useful analogy that helps people form a mental picture of what software does or intends to do. It aids people with the understanding that peer to peer, cryptographic blockchain technology is not limited to the field of digital currency.

As a result, people within the Bitshares crowd prefer to define crypto-currencies as crypto-equities. The only mental step needed to do so is referring to the unit of account as ‘shares’ instead of ‘coins’. Using the analogy of shares is an interesting way of changing people’s perceptions of such technologies and encourages people to form the same expectations on crypto-equities as they would a regular company. Namely, to be enriched as shareholders from the process of the company generating profits.

Bitcoin’s business model of distribution and payment through minting new coins is a beautifully elegant way of encouraging resources to be committed to the security of the network while distributing coin supply globally and equitably. As a new concept this model was completely necessary in order for bitcoin to bootstrap itself into existence. Despite this, bitcoin and related technologies are not profitable from an economic understanding when the network is viewed as a whole. This is because bitcoin’s expenses of securing the network through mining are significantly more than revenues generated from transaction fees. The shortfall is covered through the issuance of new shares (bitcoins) that dilute the value of existing shares. This is not a desirable business model as bitcoin is continually generating a loss and tapping its equity to cover expenses.

DACs created by Invictus will use bitcoin’s revolutionary technology and attempt to improve upon its economic efficiency and functional scope. It is proposed that all DACs should attempt to operate profitably, and distribute these profits to shareholders as dividends. Dividends are allocated to shareholders on the basis of their percentage holding in the DAC and are effectively generated through the process of destroying shares, thereby gradually increasing an individual’s percentage stake in the DAC over time. Shares are destroyed through the process of the DAC charging for transaction fees or other services it provides.

Many different DACs are planned to be launched under the Bitshares banner that will target industries Bitshares believes can be profitably decentralized. These industries include, but are certainly not limited to:

·         Banking/exchange
·         Insurance
·         Domain name registration
·         Voting
·         Lending
·         Gaming
·         Music

At first glance it seems as if Bitshares has taken bitcoin, renamed it a DAC and announced that it will release lots of new DACs that do really cool stuff. All talk no walk right? We’ve seen this sort of thing before and we tend to avoid it in the pursuit of substance. That could prove to be the wrong assumption to make with Bitshares.

So what value does Bitshares intend to bring to the game?

First and foremost, Bitshares claims to use a more efficient method of securing a blockchain and processing transactions while still providing profit incentive for participating nodes. It claims to be able to deliver these services (that bitcoin provides through mining) at a fraction of the traditional cost, without the risk of consolidation of mining pools and associated loss of decentralization.

Miners have votes, holders of bitcoins do not! Hold equity but no vote

Replace proof of work with proof of stake, give profits to shareholders. Suddenly instead of rewarding employees, you reward shareholders

The proposed system could reduce overheads by orders of magnitude and make it economically feasible for thousands of secure, independent DACs to spring up overnight. This innovation is absolutely vital when you propose having a separate blockchain for each new company, as opposed to a single blockchain like Ethereum is attempting to develop.

If Bitshares does develop such a system that is secure and able to survive the demands of the real world, it will be a game-changer. No doubt.

On top of this, Bitshares have some really cool plans for new DACs, and a growing pool of resources to pull these plans off. One of the first DACs to be launched will function as a bank/exchange that plans to allow for asset value tracking, similar in scope to mastercoin’s proposed contracts-for-difference feature, but without the use of a third party data feed.

You had my curiosity… But now you have my attention.

How do you get in on this? – Bitshares PTS

Bitshares PTS is the rebrand of the original ‘protoshares’. Bitshares PTS is a fork of bitcoin’s code that was launched on the 5th November 2013. There is nothing remarkable or innovative about Bitshares PTS, other than the fact that holders are guaranteed at least 10% stake in any future DAC that Invictus makes. Because ownership of Bitshares PTS is constantly changing hands, there need to be pre-defined moments where balances are noted for the purpose of share allocations of new DACs. These moments are called ‘snapshots’ and if you hold Bitshares PTS during a snapshot, you are able to redeem your proportion of shares in the new DAC.

Bitshares PTS can be held or they can be traded. Due to the fact that they represent ownership in future DACs, their value can be seen as a proxy for the market’s prediction of the combined value of these future DACs.

How do you get in on this? – Bitshares AGS

AGS stands for Angelshares. Bitshares AGS is not a blockchain like Bitshares PTS and shares are not easily tradeable (although they may be in the future). Like Bitshares PTS, Bitshares AGS holders will also secure at least 10% ownership of all future DACs that Invictus makes. To claim your shares in a DAC using Bitshares AGS ownership, you simply need to prove you have the corresponding private key of the address you used to send the funds.

Bitshares AGS was started in order to raise proceeds for future Bitshares development work. 10,000 Bitshares AGS are available for purchase per day, over a 200 day period, for either bitcoin or Bitshares PTS. The amount you receive out of the 10,000 released on a day is dependent on the percent of the day’s funds total you personally contributed.

Once the Bitshares AGS crowd sale is over, people wanting to get a stake in future DACs would simply purchase Bitshares PTS on the open market, as they have exactly the same function as Bitshares AGS, only with tradability.

Currently it is cheaper to secure future ownership in DACs using Bitshares AGS, although if you buy, you’re in for the long haul, and will find it very difficult to liquidate.

What about DACs made by third parties?

Specifically, why would a third party that creates a DAC using the Bitshares toolkit https://github.com/BitShares/bitshares_toolkit decide to honour Bitshares PTS and Bitshares AGS with ownership? First understand that Invictus is the only entity currently doing any significant work in the Bitshares space, and has declared that it will reward PTS and AGS holders with ownership of at least 10% each (this is a minimum, shares in Bitshares X were allocated 50/50). It is quite likely that Invictus will be the first to release a DAC within most sectors. This means that any competitor that wants to offer a similar service will have to try and convince an invested community to move, and to do this it is likely they will need to offer incentives. The best way to do so is by giving a portion of equity to PTS and/or AGS holders. I imagine this will be how it goes for quite some time, but eventually I can see PTS and AGS holders having less influence on product success over time as the market grows, meaning they may not get allocated equity in new ventures far into the future. But if this is indeed a correct interpretation of the future, I’m fairly certain by then early PTS and AGS holders wouldn’t be disappointed with their ROI.

Bitshares: the full picture

Put picture of product tree here

So Bitshares is an over-arching name for all DACs that originate from Invictus’ ideas and code, that reward Bitshares PTS and Bitshares AGS holders with ownership. Currently no DACs have been launched, the first, operating within the banking/exchange field will be released in the very near future. The successful implementation of this DAC could prove Bitshares to be a powerful player in the bitcoin 2.0 space.

It is intended that there will be many DACs in the future operating under the Bitshares banner. Each an independent project with different creators, blockchains, goals and communities. Bitshares PTS and Bitshares AGS give you a chance to invest in these projects before they are even dreamed up, which is certainly unique.

It seems Bitshares strength (and weakness) is in its proposed fragmentation. Good DACS will rise to the top while bad ones will wither and die (I’ll cover the exciting ones in separate posts). The scope for innovation is broad, and the playing field will hopefully prove to be diverse.

I’ll keep my eye on you, Bitshares.
WhaleShares==DKP; BitShares is our Community! 
ShareBits and WhaleShares = Love :D

Offline fuzzy

Re: Deadloch.com bitShares Draft -- Initial Critique Thread!
« Reply #1 on: May 01, 2014, 01:55:13 PM »
anyone?  It looks pretty good to me, though I think he missed something with regard to the reasons for upholding the social consensus...but suppose I could be wrong.
WhaleShares==DKP; BitShares is our Community! 
ShareBits and WhaleShares = Love :D

Offline CLains

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Re: Deadloch.com bitShares Draft -- Initial Critique Thread!
« Reply #2 on: May 01, 2014, 02:32:26 PM »
Looks good aye. Seems like the author has a great overview.

"Miners have votes, holders of bitcoins do not! Hold equity but no vote"

[?]

"Replace proof of work with proof of stake, give profits to shareholders. Suddenly instead of rewarding employees, you reward shareholders"

perhaps replace with something like: "instead of rewarding employees who are wasting billions of dollars each year to secure the network, you can now reward shareholders since the network is secured in a cost-efficient way."
Vote for BTS-2 witness: spectral (1.6.30)

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Offline bytemaster

Re: Deadloch.com bitShares Draft -- Initial Critique Thread!
« Reply #3 on: May 01, 2014, 05:57:55 PM »
Please clarify that AGS represents a no-strings attached donation and does not represent a promise from Invictus Innovations to provide anything in return. 

III will be producing software that users can use to start new DACs and recommends that the new DACs be initialized to recognize AGS holders with an equal stake to PTS holders.    Those who give to AGS recognize that III has no ability to enforce this behavior and that they are depending upon the good will of market participants to give back to those who gave to make these companies a reality.

It would be very helpful if everyone could be more pro-active about spreading and clarifying these points.... namely we cannot offer a promise of anything in return for donations received.   We have attempted to make this clear since the beginning, but obviously people's faith in the market honoring their AGS donations that it is easy to be lazy with language and turn it into a promise from III.   

PTS falls under the same guidance, namely, we cannot promise 10% for your PTS.  AGS and PTS are social consensus between and among every member of this community and are not promises from me, III, or any of our partners to deliver.    Obviously if we launch something that doesn't then someone else will launch something that does.   

Thanks for understanding the importance of this clarification.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline mint chocolate chip

Re: Deadloch.com bitShares Draft -- Initial Critique Thread!
« Reply #4 on: May 01, 2014, 07:25:31 PM »
Please clarify that AGS represents a no-strings attached donation and does not represent a promise from Invictus Innovations to provide anything in return. 

III will be producing software that users can use to start new DACs and recommends that the new DACs be initialized to recognize AGS holders with an equal stake to PTS holders.    Those who give to AGS recognize that III has no ability to enforce this behavior and that they are depending upon the good will of market participants to give back to those who gave to make these companies a reality.

It would be very helpful if everyone could be more pro-active about spreading and clarifying these points.... namely we cannot offer a promise of anything in return for donations received.   We have attempted to make this clear since the beginning, but obviously people's faith in the market honoring their AGS donations that it is easy to be lazy with language and turn it into a promise from III.   

PTS falls under the same guidance, namely, we cannot promise 10% for your PTS.  AGS and PTS are social consensus between and among every member of this community and are not promises from me, III, or any of our partners to deliver.    Obviously if we launch something that doesn't then someone else will launch something that does.   

Thanks for understanding the importance of this clarification.

With all due respect, I think the statement 'making this clear since the beginning' maybe is a bit of a stretch. III claimed all DACs that used their code and/or the funding resources were going to at least give 10% to AGS holders and PTS holders, but at some point - after funding started - III chose - probably as a result of legal considerations - to transfer III DAC development concepts to third party developers or partners and changed the language from will honor to will recommend.

Honoring AngelShares only applies to anyone who uses our code (paid for by the Angels) to develop their DAC. 
Honoring AngelShares only applies to anyone who uses our code (paid for by the Angels) to develop their DAC.  Obviously they have very different value propositions.

1) PTS is liquid and allows you to speculate on not just Invictus but all DACs
2) AngelShares is much closer tied to Invictus and we encourage other DAC development teams to form their own funding method or perhaps simply copy the AngelShares model.
3) If you don't like how the project is going you can sell PTS... AngelShare holders are in it for the long run. 

Obviously the market will sort it all out and price them accordingly.   Note that AngelShares creates DEMAND for PTS as a means of purchasing AGS on part with BTC.

Does this mean that there is no way BitShares will be released before 200 days into 2014, and possibly later?
Is Invictus signing a social contract now that says AGS holders will get access to at least 10% of ALL future DACs (I know you said that on the website, but just confirming again)?

BitShares will be released when development is complete which we think will be about 100 days.   Of course estimating software development times is hard.   At the time we launch BitShares the AngelShares will be mapped proportionally to 2M BTS and the PTS will be mapped proportionally to 2M BTS.   It is obviously in everyone's interest to get BTS done as soon as possible which is why BTS is #1 priority for me.  Keyhotee has been assigned its own development team which has a good amount of funding from the Keyhotee Founders.   BTS and Keyhotee are now on parallel development tracks.


Yes, 10% of all DACs that use our code which will share a lot in common with BTS.

These statements from the AGS allocation announcement: https://bitsharestalk.org/index.php?topic=1631.0

Offline liondani

Re: Deadloch.com bitShares Draft -- Initial Critique Thread!
« Reply #5 on: May 01, 2014, 07:26:39 PM »
Please clarify that AGS represents a no-strings attached donation and does not represent a promise from Invictus Innovations to provide anything in return. 

III will be producing software that users can use to start new DACs and recommends that the new DACs be initialized to recognize AGS holders with an equal stake to PTS holders.    Those who give to AGS recognize that III has no ability to enforce this behavior and that they are depending upon the good will of market participants to give back to those who gave to make these companies a reality.

It would be very helpful if everyone could be more pro-active about spreading and clarifying these points.... namely we cannot offer a promise of anything in return for donations received.   We have attempted to make this clear since the beginning, but obviously people's faith in the market honoring their AGS donations that it is easy to be lazy with language and turn it into a promise from III.   

PTS falls under the same guidance, namely, we cannot promise 10% for your PTS.  AGS and PTS are social consensus between and among every member of this community and are not promises from me, III, or any of our partners to deliver.    Obviously if we launch something that doesn't then someone else will launch something that does.   

Thanks for understanding the importance of this clarification.

you speak like a lawyer now

- 5%


PS After this I must reconsider my AGS donation strategy...   :(
« Last Edit: May 01, 2014, 07:30:55 PM by liondani »
  https://bitshares.OPENLEDGER.info/?r=GREECE  | You are in Control | BUY | SELL | SHORT | SWAP | LOAN | TRADE |  

Offline onceuponatime

Re: Deadloch.com bitShares Draft -- Initial Critique Thread!
« Reply #6 on: May 01, 2014, 08:09:17 PM »
Please clarify that AGS represents a no-strings attached donation and does not represent a promise from Invictus Innovations to provide anything in return. 

III will be producing software that users can use to start new DACs and recommends that the new DACs be initialized to recognize AGS holders with an equal stake to PTS holders.    Those who give to AGS recognize that III has no ability to enforce this behavior and that they are depending upon the good will of market participants to give back to those who gave to make these companies a reality.

It would be very helpful if everyone could be more pro-active about spreading and clarifying these points.... namely we cannot offer a promise of anything in return for donations received.   We have attempted to make this clear since the beginning, but obviously people's faith in the market honoring their AGS donations that it is easy to be lazy with language and turn it into a promise from III.   

PTS falls under the same guidance, namely, we cannot promise 10% for your PTS.  AGS and PTS are social consensus between and among every member of this community and are not promises from me, III, or any of our partners to deliver.    Obviously if we launch something that doesn't then someone else will launch something that does.   

Thanks for understanding the importance of this clarification.

you speak like a lawyer now

- 5%


PS After this I must reconsider my AGS donation strategy...   :(

Stop being childish. Do you want all III's accounts to be seized the way some exchanges' accounts have been seized?  I lost a lot of my investments in the past because regulators claimed that an exchange was "an unlicensed money transmitter".

Bytemaster is attempting to bring this project to fruition in a way that protects YOUR investment by not giving any reguilator the chance to treat III as an unregulated securities issuer.

Offline liondani

Re: Deadloch.com bitShares Draft -- Initial Critique Thread!
« Reply #7 on: May 01, 2014, 08:13:35 PM »
sounds better  (of course I don't expect other comments... the last one was very solid, thanks)
« Last Edit: May 01, 2014, 08:20:35 PM by liondani »
  https://bitshares.OPENLEDGER.info/?r=GREECE  | You are in Control | BUY | SELL | SHORT | SWAP | LOAN | TRADE |  

Offline AAdamsDL

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Re: Deadloch.com bitShares Draft -- Initial Critique Thread!
« Reply #8 on: May 02, 2014, 12:27:30 AM »
Thank you everyone for your feedback.

The article is posted here: http://deadloch.com/understanding-bitshares/

I can still make changes, keep sending them in if necessary!
BTSX: deadloch

 

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