Author Topic: DACs vs. Firms (Are DACs useless?)  (Read 29504 times)

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Offline AsymmetricInformation

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toast, I am confused about something. I had assumed (wrongly it seems) that, as you worked for I3, you endorsed all of the current I3 DAC ideas.

Instead, it seems that, like me, you think that most of them won't work (only BTS [if market peg works], .p2p, and [possibly] lotto). Is that a fair statement?

For example, "Insurance" and "Music" seem completely ridiculous.

I know you're very busy with BitsharesXT lanuch, but this just seems like "news", that such a key player at I3 doesn't believe in some of what is going on there. Or have I misunderstood?

Offline toast

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If your point was "all DACs that attempt to replicate existing business models can be made better with centralized companies + open ledger", then I would agree with you.

The word "DAC" is just misleading. Really it's "decentralized autonomous incentive structure that eliminates deadweight loss and thus appears to generate profit in the form of appreciating token value"


edit: for example, there is discussion about gitchain, which *is* a totally useless DAC and would be better as a centralized entity:
https://www.kickstarter.com/projects/612530753/gitchain
« Last Edit: June 12, 2014, 04:47:15 pm by toast »
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Offline toast

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But what else have you got? This community claims to be able to DAC everything, doesn't it?

The community doesn't get it =P

Quote
I admit .p2p domains might need to be digitally scarce.

Again, I'm claiming the value is not just in scarcity but in the fact that some mechanisms need a way to transmit value according to special rules. Coloredcoins do not cut it. Ethereum is enough in theory but then it's a matter of resource cost.

Network effect only matters when the service depends on having a network effect.

For .p2p you need the token to price domains properly. You *cannot* implement this in coloredcoins without a centralized entity performing some extra logic and managing an extra signature. This one relies on network effect and so the scarcity argument applies. But do you see how even if this was a tiny niche namespace you could still make the token profitable to hold?

For bts X you need the token to be able to take short positions. It's OK if there are many BTS X chains, we don't care if the token *type* is scarce, we want there to be many bts X chains. The token will still be profitable to hold on any particular chain, as long as that chain is not *shrinking* too fast. The network effect is in acceptance of BitAssets, who cares what is backing it?

For Music you need a way to tie certain operations in terms of the core assets to certain market operations on the embedded assets. This is stealth mode though so let's skip it.

Then there's the ones that deal with making stuff cheaper because you can avoid regulation:
Lotto
MAS (insurance)

Tokens can acquire value independently of their network effect. These aren't just altcoins! Some *services* are better when there is a large network, but a token can still be *profitable to hold* even if the network is tiny or even slowly shrinking. So what does scarcity have to do with this?
« Last Edit: June 12, 2014, 04:27:49 pm by toast »
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Offline AsymmetricInformation

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I admit .p2p domains might need to be digitally scarce. You might have a window there to capture the network effects, if you copy the existing DNS, but add things like silkroad.p2p .  It just screams decentralized internet consensus.

But what else have you got? This community claims to be able to DAC everything, doesn't it?

This post was partially inspired by the discussion here, started by you: https://bitsharestalk.org/index.php?topic=3488

Offline toast

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Ok I see what you're saying now.
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a2. All mechanisms where p1=p2=TRUE have p3=TRUE.
I actually don't believe this, that's my bad - my argument is the same with "all" replaced by "at least some".

Quote
I don;'t know where you are going with p3, as there are already colored coins and multisig addresses.

And this is *not sufficient* to implement some of the mechanisms we are trying to build (.p2p domain auctions, X market-pegged assets).

Quote
I am saying there may be insufficient market demand for a DAC for services other than value storage / transfer (Bitcoin) and value-escrow (Truthcoin), because consumers only demand trustless digital scarcity in the context of those services.

I think I'm also questioning the main premise which is that the primary role of blockchains is digital scarcity. I can think of transparency and resistance to corruption and manipulation as other *major* advantages of blockchain-based systems.
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Offline AsymmetricInformation

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We are still talking past each other. (Or one of us is, or something).

Let me try again:

I don't follow. I'm talking about the network being able to enforce rules about how and when you can transfer the token. If there is a mechanism which I cannot implement using truthcoin because the blockchain's rules are not flexible enough then we are talking about totally different assets, what does scarcity have to do with this? Gold was the original scarce asset, why not use gold instead of bitcoin or truthcoin? Because you can't send it over the internet / use it within prediction markets, right? As you just said, there are some mechanisms which can't be simulated with PMs, and if they happen to also need to operate in a decentralized network, they would need their own token-on-a-blockchain. Ethereum meta-protocols would also be sufficient, but notice even then it is not Ether but the embedded token that would have demand generated for it.

Allow me to restate your position:
p1. Some mechanisms can't be simulated with PMs.
p2. Some mechanisms operate on a decentralized network (which includes blockchain as well as non-blockchain).
p3. Some mechanisms need their own token-on-a-blockchain.
a2. All mechanisms where p1=p2=TRUE have p3=TRUE.
c1. "there are some mechanisms which can't be simulated with PMs, and if they happen to also need to operate in a decentralized network, they would need their own token-on-a-blockchain"
a3. Some mechanisms where p3=TRUE will need a non-Bitcoin, non-Truthcoin blockchain.
c2. There will exist viable non-Bitcoin, non-Truthcoin blockchains.

I agree that p1 and p2 are relevant, and agree with a1. I don't agree with a2 (with, for example, 'seller activity among online auction-houses (ebay, Craigslist)', 'the FOREX market', and  'the season rules to a recreational softball league' being counterexamples), so I don't agree with c1. Even if I did, this post is mainly about arguing against a3, your assumption that new networks would require new blockchains. I don;'t know where you are going with p3, as there are already colored coins and multisig addresses.

I am talking about the most efficient way of providing a service to consumers. Improving the technical details of the Bitcoin blockchain (to make it faster or more reliable at doing what it already does, but NOT to provide new services), or copying the Truthcoin blockchain 100 times to reduce the load on each blockchain, wouldn't count as new blockchain designs, because they would not provide new services. I am saying there may be insufficient market demand for a DAC for services other than value storage / transfer (Bitcoin) and value-escrow (Truthcoin), because consumers only demand trustless digital scarcity in the context of those services.

Offline luckybit

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Why do you need to see all the transactions? In fact that's why it's the perfect solution - it solves privacy concerns as well. So long as you have proof that you own your amounts, why do you care to see other transactions?

Transparency is the only way to defend against corruption and fraud in the real world. So while you do want privacy it's also important to be able to follow the money. The same technology which facilitates secret transactions will be used later to preserve the status quo of centralization and corruption.

In the crypto community this doesn't seem to matter as much because you can decentralize a lot of things but outside of the crypto community where people aren't so quick to adopt decentralized solutions what then? What do you think the result will be for juries who can now all be bribed secretly along with judges?

How would you have a system of justice? People who don't have any money will not have any justice and people with a lot of money will be able to be above the law. So for that reason a strong case can be made for a paper trail. The only problem with Bitcoin is that everyone could see every transaction all the time but if you can obfuscate it yet maintain a paper trail there are benefits to that which you're not realizing.

So I can conclude that used inappropriately Bitcoin isn't private enough. I can also say that it is possible to have something so private that using it at all makes you corrupt in the eyes of the media, the judge, the jury, and others. Too private and it becomes a mafia or black market currency.

My solution is to not have a block chain but a DHT. Basically something like MaidSafe. However it is more of a hybrid. A very thin block chain + bigger data in a sparse DHT. The problem is that in order to ensure the data is stored it needs to be incentivized. So the solution is to either store transaction details yourself or have transaction fees pay for the storage of the data. A bit like Vitalik's idea to have a "block chain that charges rent". We are already considering things like that for DPOS here.

So the bottom line is information is not hidden it just costs money to obtain it.
So if there is something that needs investigation money can be spent to look into it. But it is cost prohibitive to automatically watch and spy on everyone. I think this is far better than having a completely public ledger. There is the other side to the coin too - people are not happy about every single move they make being recorded and over analyzed. Also I'm pretty sure most people prefer privacy over full blown spying.

Trust me automatic full transparency will make stalking a problem and prevent mass adoption. People know that all their credit card transactions are recorded. But if EVERYONE can see your transactions that's going to be hard to swallow.

I gave you the example with a stalker sitting in a coffee shop, waiting for you to pay to see where you spend the rest of your money.

I can understand having information cost money to obtain but the problem is what if the victims don't have any money? There should be a way to obtain the information via donation or permission which doesn't require any money otherwise the majority of victims will be the people who have the least money to pay?

Or perhaps the fee could be raised too high so that some or most cannot afford?

So while I agree with it in the case of MaidSafe, who determines the cost of access? If it's MaidSafe then the individual or group determines the cost of access. You could make the cost different depending on who asks for it.

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Offline toast

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* We need a blockchain that can handle 1000x TC's transaction volume (bandwidth) at some given time for the purpose of currency exchange
* We need a blockchain that can handle 1000x TC's storage at a given time for the purpose of domain name record storage

So these two only work if resources available >> resources needed, but for any given resource bound there is a range where the specialized one can succeed and TC can't.

When you say TC, are you referring to Truthcoin? If so, I don't know what you mean, becase it doesn't exist, nor does it (yet) have transaction volume or storage specifications.
Yes I'm referring to truthcoin.
I don't see how resource *specification* has anything to do with it - if you have 100x more markets then your upper bound on transaction volume is 100x lower. When you share blockchain space you also have to share bandwidth, which is a scarce resource.

Quote
Are you claiming that all possible incentive structures that need control over their token can be somehow simulated with PMs?
No.


I think you're completely missing the point of what I am trying to say. I am saying that the use of a blockchain vs a piece of software depends on the idea of digital scarcity, so that there's no need to apply that technology (which could be designed in many different transaction volume / storage specifications) to anything else.  Money and escrowed funds are digitally scarce. Probably, domain names are as well.

But if you'd want to attack the "must be digitally scarce" argument, you'd have to come up with a blockchain use that didn't involve digital scarcity. What you're doing now is like saying that we need more than 26 English characters because Shakespeare did not use the latest version of Microsoft Word.

I don't follow. I'm talking about the network being able to enforce rules about how and when you can transfer the token. If there is a mechanism which I cannot implement using truthcoin because the blockchain's rules are not flexible enough then we are talking about totally different assets, what does scarcity have to do with this? Gold was the original scarce asset, why not use gold instead of bitcoin or truthcoin? Because you can't send it over the internet / use it within prediction markets, right? As you just said, there are some mechanisms which can't be simulated with PMs, and if they happen to also need to operate in a decentralized network, they would need their own token-on-a-blockchain. Ethereum meta-protocols would also be sufficient, but notice even then it is not Ether but the embedded token that would have demand generated for it.
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Offline AsymmetricInformation

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I just want the off-topic ramblers here to know that I am losing respect for them.

Offline AsymmetricInformation

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* We need a blockchain that can handle 1000x TC's transaction volume (bandwidth) at some given time for the purpose of currency exchange
* We need a blockchain that can handle 1000x TC's storage at a given time for the purpose of domain name record storage

So these two only work if resources available >> resources needed, but for any given resource bound there is a range where the specialized one can succeed and TC can't.

When you say TC, are you referring to Truthcoin? If so, I don't know what you mean, becase it doesn't exist, nor does it (yet) have transaction volume or storage specifications.

Are you claiming that all possible incentive structures that need control over their token can be somehow simulated with PMs?
No.


I think you're completely missing the point of what I am trying to say. I am saying that the use of a blockchain vs a piece of software depends on the idea of digital scarcity, so that there's no need to apply that technology (which could be designed in many different transaction volume / storage specifications) to anything else.  Money and escrowed funds are digitally scarce. Probably, domain names are as well.

But if you'd want to attack the "must be digitally scarce" argument, you'd have to come up with a blockchain use that didn't involve digital scarcity. What you're doing now is like saying that we need more than 26 English characters because Shakespeare did not use the latest version of Microsoft Word.

Offline Stan

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Once a strong delegate network is established, many developers will want their DACs to join it and it will be up to the elected delegates authorize an upgrade to let them in.

Some will not get in for whatever reasons, and they will band together to form other such DACling nurseries.

From here on out, Invictus will have plenty of competition - as we have always intended.  There is nothing stopping others right now from forming their own trust fund - except the courage to try and success at convincing others that the donations will be used faithfully and wisely.

I have nothing against someone defining a trust fund to be run under different rules.  But, as others constantly remind us, you can't change the rules once the donations have begun.  The BitShares Trust is based primarily on bytemaster's judgement, skills, philosophy and reputation.  Other funds are free to compete based on their own better mix of these things.

It is this decentralization that protects us all from seduction or coercion at central points of attack.

Is it possible for a group of delegates to form a DAC to turn delegates into a " delegate firm" which can then operate multiple DACs?

What I mean is if we see delegates a similar to a board of directors and a delegate can serve on multiple boards (operate multiple DACs), then what would stop delegates from creating a decentralized firm which specifically functions to operate DACs? That firm could then standardize the whole process as the same group of delegates could provide the delegation service to dozens or even hundreds of DACs.

Also what would stop delegates from forming unions or other power structures? I would think if delegates are being paid even if they are voted in they may still acquire some power even if not directly over the DAC they deal with it could be social power across multiple DACs where the selection process of delegates becomes influenced.

Maybe I'm just thinking about this too much?

The toolkit makes multi-DAC blockchains possible and probably desirable - especially to give small DACling nurseries the market depth they need to get started.

As to how delegates interact - they will always have to keep the employee-owner-voters happy.
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Offline bitmeat

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Why do you need to see all the transactions? In fact that's why it's the perfect solution - it solves privacy concerns as well. So long as you have proof that you own your amounts, why do you care to see other transactions?

Transparency is the only way to defend against corruption and fraud in the real world. So while you do want privacy it's also important to be able to follow the money. The same technology which facilitates secret transactions will be used later to preserve the status quo of centralization and corruption.

In the crypto community this doesn't seem to matter as much because you can decentralize a lot of things but outside of the crypto community where people aren't so quick to adopt decentralized solutions what then? What do you think the result will be for juries who can now all be bribed secretly along with judges?

How would you have a system of justice? People who don't have any money will not have any justice and people with a lot of money will be able to be above the law. So for that reason a strong case can be made for a paper trail. The only problem with Bitcoin is that everyone could see every transaction all the time but if you can obfuscate it yet maintain a paper trail there are benefits to that which you're not realizing.

So I can conclude that used inappropriately Bitcoin isn't private enough. I can also say that it is possible to have something so private that using it at all makes you corrupt in the eyes of the media, the judge, the jury, and others. Too private and it becomes a mafia or black market currency.

My solution is to not have a block chain but a DHT. Basically something like MaidSafe. However it is more of a hybrid. A very thin block chain + bigger data in a sparse DHT. The problem is that in order to ensure the data is stored it needs to be incentivized. So the solution is to either store transaction details yourself or have transaction fees pay for the storage of the data. A bit like Vitalik's idea to have a "block chain that charges rent". We are already considering things like that for DPOS here.

So the bottom line is information is not hidden it just costs money to obtain it. So if there is something that needs investigation money can be spent to look into it. But it is cost prohibitive to automatically watch and spy on everyone. I think this is far better than having a completely public ledger. There is the other side to the coin too - people are not happy about every single move they make being recorded and over analyzed. Also I'm pretty sure most people prefer privacy over full blown spying.

Trust me automatic full transparency will make stalking a problem and prevent mass adoption. People know that all their credit card transactions are recorded. But if EVERYONE can see your transactions that's going to be hard to swallow.

I gave you the example with a stalker sitting in a coffee shop, waiting for you to pay to see where you spend the rest of your money.

Offline luckybit

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Once a strong delegate network is established, many developers will want their DACs to join it and it will be up to the elected delegates authorize an upgrade to let them in.

Some will not get in for whatever reasons, and they will band together to form other such DACling nurseries.

From here on out, Invictus will have plenty of competition - as we have always intended.  There is nothing stopping others right now from forming their own trust fund - except the courage to try and success at convincing others that the donations will be used faithfully and wisely.

I have nothing against someone defining a trust fund to be run under different rules.  But, as others constantly remind us, you can't change the rules once the donations have begun.  The BitShares Trust is based primarily on bytemaster's judgement, skills, philosophy and reputation.  Other funds are free to compete based on their own better mix of these things.

It is this decentralization that protects us all from seduction or coercion at central points of attack.

Is it possible for a group of delegates to form a DAC to turn delegates into a " delegate firm" which can then operate multiple DACs?

What I mean is if we see delegates a similar to a board of directors and a delegate can serve on multiple boards (operate multiple DACs), then what would stop delegates from creating a decentralized firm which specifically functions to operate DACs? That firm could then standardize the whole process as the same group of delegates could provide the delegation service to dozens or even hundreds of DACs.

Also what would stop delegates from forming unions or other power structures? I would think if delegates are being paid even if they are voted in they may still acquire some power even if not directly over the DAC they deal with it could be social power across multiple DACs where the selection process of delegates becomes influenced.

Maybe I'm just thinking about this too much?
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Offline luckybit

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Why do you need to see all the transactions? In fact that's why it's the perfect solution - it solves privacy concerns as well. So long as you have proof that you own your amounts, why do you care to see other transactions?

Transparency is the only way to defend against corruption and fraud in the real world. So while you do want privacy it's also important to be able to follow the money. The same technology which facilitates secret transactions will be used later to preserve the status quo of centralization and corruption.

In the crypto community this doesn't seem to matter as much because you can decentralize a lot of things but outside of the crypto community where people aren't so quick to adopt decentralized solutions what then? What do you think the result will be for juries who can now all be bribed secretly along with judges?

How would you have a system of justice? People who don't have any money will not have any justice and people with a lot of money will be able to be above the law. So for that reason a strong case can be made for a paper trail. The only problem with Bitcoin is that everyone could see every transaction all the time but if you can obfuscate it yet maintain a paper trail there are benefits to that which you're not realizing.

So I can conclude that used inappropriately Bitcoin isn't private enough. I can also say that it is possible to have something so private that using it at all makes you corrupt in the eyes of the media, the judge, the jury, and others. Too private and it becomes a mafia or black market currency.

« Last Edit: June 11, 2014, 06:03:59 am by luckybit »
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Offline toast

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Quote
I'm arguing FOR one blockchain to rule them all. If someone argued against it, I would expect them to (at a bare minimum) describe one hypothetical situation where a blockchain would be required that did NOT involve the storage of money (Bitcoin) or escrow of money (Truthcoin).

Hmmm...

* We need a blockchain that can handle 1000x TC's transaction volume (bandwidth) at some given time for the purpose of currency exchange
* We need a blockchain that can handle 1000x TC's storage at a given time for the purpose of domain name record storage

So these two only work if resources available >> resources needed, but for any given resource bound there is a range where the specialized one can succeed and TC can't.

The more important one:

* We need a blockchain where the value of the equity reflects the service performed by the nodes running the network to attract more such "useful" nodes, which means mapping core asset creation/destruction to particular operations.

Are you claiming that all possible incentive structures that need control over their token can be somehow simulated with PMs?
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.