DAC proposal: BitMindshare -- a paid messaging service

[jimbursch]

Now let's plug our players into a payoff matrix (http://en.wikipedia.org/wiki/Game_theory#Normal_form) and see what comes up:

The Sender has two choices: send a targeted message with value attached or don't send a targeted message with value attached.
The Receiver has two choices: be honest in the profile or be dishonest in the profile.

If the Sender believes the profile is honest, he will send a message with value attached.
If the Sender believes the profile is dishonest, he will not send a message with value attached.

If the Receiver believes she will profit more from being honest, she will be honest.
If the Receiver believes she will profit more from being dishonest, she will be dishonesst.

As we see from the story of Eve, her participation as a DAC shareholder puts her squarely in the first quadrant.

We could put everybody in the first quadrant if we require everyone to be a shareholder to participate.

[jimbursch]

There is another way that the DAC can be useful to this system.

Perhaps the biggest problem that I face as the creator/administrator of this system is the problem of the dishonest Receiver. This is an entity (person or bot) that has misrepresented itself in order to receive higher value targeted messages. This is the college student sitting in her dorm at 3am pretending to be a high net worth middle aged family man who owns his home, drives luxury cars, travels business class and actively manages his stock portfolio.

Let's call our miscreant college student Eve. Let's also imagine a future when there are a wide variety of sites powered by MyMindshare serving a wide variety of communities. Because Eve is greedy, she has created a wide variety of false profiles, each one optimized to maximize the value of targeted messages.

Eve is actually in the process of killing the golden goose because the extent to which she is successful is the extent to which Senders will start abandoning the MyMindshare system.

But there is one site powered by MyMindshare on which she is meticulously honest and works obsessively to ferret out other Eves from the site. This is the site that is devoted to college students like herself, where her honesty adds value. This site was founded by a DAC and Eve was in on the IPO, so as a shareholder she has a vested interest in the overall health of the site. If the Eves of the world are able to run amuk, the share price will collapse.

[jimbursch]

Here is the lineup of players in the MyMindshare messaging system:

1. Senders of messages
2. Receivers of messages
3. The creator/administrator of the system

In the MyMindshare system, messages are transactions. Senders attach value to messages, and Receivers complete the transaction when they receive the messages. A 5% admin fee is charged by the creator/administrator of the system.

With the affiliate program, a fourth player is added to the lineup:
4. Affiliate

Think of the Affiliate as an entrepreneur who has created/identified a community of Senders and Receivers for whom the MyMindshare messaging system is useful/valuable. The Affiliate receives a 20% commission on the value of transactions sourced by the Affiliate.

My proposal is to replace the Affiliate/Entrepreneur with Affiliate/DAC/Shareholders.

The DAC is a mechanism by which a community of Senders and Receivers can act corporately and share the profits of the enterprise. It also enables them to realize future profit by trading the DAC shares.

[toast]

Some good starting points if you're going to be thinking about it:

Who are all the different people that interact with your service, what are their needs? What exactly is each person getting in return for putting in money? DACs don't do much else besides facilitate trades that people already want to make, "if only we could agree to trade by particular rules". DACs let you enforce those rules. If everyone leaves feeling like they gained value, then the DAC can be made profitable.

[jimbursch]

This is good. Now I'm being educated. I'll think this through and get back to you.

[toast]

I hate to say it but this doesn't sound like a DAC at all, it sounds like a vending machine.

Read this:  https://bitsharestalk.org/index.php?topic=3488

BitMindshare the DAC needs to be programmed to periodically cash out the bitmindshare account.

This means it has to interact with a centralized entity according to the centralized entity's rules - this is no better than just making another website.

This means that the DAC needs a bitcoin wallet. Then the DAC distributes the revenue by purchasing it's own shares and destroying them.

The whole point of a DAC is that it is not sovereign over anything except its own shares. As soon as you include "bitcoin wallet" you aren't talking about an autonomous incentive structure anymore.

[jimbursch]

This is interesting -- if the DAC shares are trading at par, then the DAC self liquidates when it distributes dividends -- it purchases and destroys all its shares.

This would happen if the market anticipates zero future revenue.

[jimbursch]

The short answer is yes, demand for the BitMindshare DAC equity is based on the dividends that are earned by BitMindshare.com powered by MyMindshare.

Here's how it looks from my end:

I have created an account in MyMindshare with the username bitmindshare. I have granted that account affiliate license #15 and created the affiliate site at http://bitmindshare.mymindshare.com/ (this is what will become BitMessage.com when the domain is registered).

Now, everyone and everything that registers at the affiliate site are tagged with #15, which means that when revenue events occur, the commission is paid to the bitmindshare account.

BitMindshare the DAC needs to be programmed to periodically cash out the bitmindshare account. This means that the DAC needs a bitcoin wallet. Then the DAC distributes the revenue by purchasing it's own shares and destroying them.

So how is demand created?

Let's say that the DAC doesn't distribute dividends. Instead it just let's the bitcoin sit in its wallet. Let's say that there are 1000 shares of the DAC. If there is 1 BTC in the DAC wallet, then each share is worth 0.001 BTC. Now let's say that it is anticipated that BitMindshare.com will generate another 1 BTC in one year, increasing the value of a DAC share to 0.002 BTC -- the overall value of the DAC increases to 2 BTC.

The current owners of the DAC shares are not willing to sell for less than 0.001 BTC, but they would be willing to sell for something more than 0.001 BTC. Believing that the value of a share is going to double in one year, how much would you pay today to own a share? If anyone is willing to pay something, then we have demand. If anyone is willing to pay more that 0.001 BTC, then we have a market for BitMindshare DAC shares.

[toast]

I suppose an explanation of #2 is what I'm looking for. The "glorified spreadsheet" vs "For Real DAC" question can be asked like this: How does the DAC generate demand for its shares? For BTS X, it is, "you are *required* to purchase the underlying share in order to go short BitUSD". What operations will *require* you to buy shares in the DAC? (Besides normal transaction fees). How will you turn demand for your service into demand for the equity? Just the fact that the centralized company will pay dividends to those shares?

[jimbursch]

I think that the fundamental question that my proposal raises is:

"Can BitMindshare.com as described and implemented (see http://bitmindshare.mymindshare.com) produce a revenue stream for BitMindshare the DAC?"

Actually, this is two questions, one speculative and the other technical.

1. Can BitMindshare.com produce revenue?
2. Can that revenue accrue to the DAC?

As the developer of the MyMindshare messaging system, in cooperation with Bitshares developers (or the Bitshares toolkit), I can confidently answer the second question affirmatively.

As to the first question, of course my answer is yes, and I am prepared to make my case to anyone who can make a counter argument.

[jimbursch]

the DAC's business model seems like nothing more than a glorified accounting spreadsheet on behalf of a centralized company.

That is indeed a legitimate concern, however I would caution against undervaluing the value of a "glorified accounting spreadsheet" that has all the attributes that are so eloquently described and being developed by the Bitshares community. We are talking about a "glorified accounting spreadsheet" that is entirely outside of the control of the centralized company -- it is distributed and trustless, and perhaps most importantly, it is trade-able (or, rather, it is a record of trades that is distributed and trustless and outside the control of the centralized company).

Again, I'm just beginning to understand Bitshares, so I may be wrong, but let's take a look at BitUSD, which by my understanding is a unit of digital asset that is designed to trade at par with the U.S dollar. One could argue that BitUSD is a "glorified accounting spreadsheet on behalf of a centralized" government or central bank.

[tonyk]

You have ‘a toolkit for creating a DAC with all the functionality that his proposal requires'?

GREAT!
 Great know that fact too.

[toast]

But you expect for granting free license someone to do all the development work  needed to put his pretty complicated centralized idea on a blockchain

I am not asking anyone to do development work. I have already done the development work creating the MyMindshare messaging system. My understanding (however limited) is that Invictus is developing the toolkit for creating a DAC with all the functionality that my proposal requires, and I am ready willing and able to do the further development work that is needing to hook up the BitMindshare DAC with BitMindshare.com powered by MyMindshare, including the coding of business rules that makes all this operational in code in a distributed and trustless manner.


Thanks for the feedback!!! Your take is valuable to the process.

-If you want to do all the work -  I do not think anybody will/can stop you.

-'My understanding (however limited) is that Invictus is developing the toolkit for creating a DAC with all the functionality that my proposal requires' - Not the expert on that, but highly unlikely

Actually I think nothing he has suggested is outside the realm of possibility for a blockchain. My concern/question/confusion is about the fact that the DAC's business model seems like nothing more than a glorified accounting spreadsheet on behalf of a centralized company. That's a perfectly valid application, by the way - I just prefer DACs that generate revenue on their own by providing some sort of service.

[tonyk]

But you expect for granting free license someone to do all the development work  needed to put his pretty complicated centralized idea on a blockchain

I am not asking anyone to do development work. I have already done the development work creating the MyMindshare messaging system. My understanding (however limited) is that Invictus is developing the toolkit for creating a DAC with all the functionality that my proposal requires, and I am ready willing and able to do the further development work that is needing to hook up the BitMindshare DAC with BitMindshare.com powered by MyMindshare, including the coding of business rules that makes all this operational in code in a distributed and trustless manner.


Thanks for the feedback!!! Your take is valuable to the process.

-If you want to do all the work -  I do not think anybody will/can stop you.

-'My understanding (however limited) is that Invictus is developing the toolkit for creating a DAC with all the functionality that my proposal requires' - Not the expert on that, but highly unlikely

[jimbursch]

But you expect for granting free license someone to do all the development work  needed to put his pretty complicated centralized idea on a blockchain

I am not asking anyone to do development work. I have already done the development work creating the MyMindshare messaging system. My understanding (however limited) is that Invictus is developing the toolkit for creating a DAC with all the functionality that my proposal requires, and I am ready willing and able to do the further development work that is needing to hook up the BitMindshare DAC with BitMindshare.com powered by MyMindshare, including the coding of business rules that makes all this operational in code in a distributed and trustless manner.

all that work for unconvincing profit potential

Pretty much everything we are doing here is speculative, and the whole point of this post is to make a convincing argument for profit potential. If you are not convinced, can you tell me why?

which is benefit for you not for them

My proposal will benefit the users and shareholders of BitMindshare, which includes myself, and can include you if I am successful.

Thanks for the feedback!!! Your take is valuable to the process.