Close to calling this done. Just wanted to post it to see if there's any feedback I overlooked.
DACs: A new breed of business
The BitShares community and Invictus Innovations are all about supporting the creation of new Decentralized Autonomous Corporations, DACs. A DAC is essentially a new way of thinking about how to use a blockchain, the revolutionary new technology pioneered by Satoshi Nakamoto. Some may think of Bitcoin as the first DAC, it's a currency that people hold shares in. Thinking about Bitcoin as a metaphor for a corporation brings to light ideas for new ways a blockchain can be put to use.
The thing about Bitcoin is that once its market has achieved maximum saturation it will no longer earn its shareholders money, in fact, at that point it will cost society because mining hardware, which has a tremendous carbon footprint, would still have to be run to secure the network. At a certain point in the future mining will be so unprofitable that if Bitcoin is still dominant then governments or other publicly funded institutions would have to pick up the tab on securing the network.
Due to the existence of blockchain technology, it's now possible for a set of rules to be created and executed in the context of a distributed peer to peer network that constitute an online business. An example of such a rule may be that when a balance being held by the protocol has been there a certain number of years, it can be released to an address. This might be useful someday in automating inheritances. Online businesses like these will be unique in that no direct human oversight will be necessary to achieve their goals.
DACs, in combination with Delegated Proof of Stake
aim to solve the problem of the carbon footprint created by Proof of Work schemes, making these companies self sustaining. With the right set of rules, these self-sustaining companies can generate profit for shareholders and provide online services to the general public.BitShares-PTS and Angelshares - A means to an end
These two assets, BitShares-PTS, and Angelshares are the means by which new social consensus
honoring DACs will implement initial distribution through an airdrop
BitShares-PTS was the first product released by Invictus. It is a cryptocurrency by day and an investment vehicle by night. When a new DAC is released a snapshot (see airdrop link above) is taken and, per the social consensus, PTS holders will proportionally receive at least
10% of the initial share distribution of the new DAC. BitShares-PTS has been around for about half a year now, and that length of time and amount of proliferation ensure that everybody who might be interested in this as an investment has had plenty of time do their due diligence and make an informed decision.Angelshares
were a means to provide Invictus with some extra funds to carry out their mission to create DACs, and support third party developers who do the same. If you're reading this in early July of 2014, you might still have some time to donate before the window closes. I deliberately choose the word donate, because when you're buying Angelshares you're donating money to help bolster the concept of DACs.
Because it's a donation, nobody is obligated to provide any kind of a return on your investment. Invictus writes and helps develop the code that makes these new kinds of networks possible, but they don't establish those networks themselves. Third parties are the folks who take the code produced by Invictus, and put them to use. This means that honoring the social consensus, and providing a return on Angelshare purchases and PTS snapshots is their responsibility, but they are not obligated to do so. But there are a good many reasons
why the folks who operate these DACs would be compelled to honor the social consensus.
After the time limit for donating to Angelshares expires PTS will be the only way to buy into future social consensus honoring DACs before they're released. Angelshares are shares in future DACs which can be purchased for PTS or BTC. A certain number are issued everyday for PTS and BTC investors, and distributed proportionally to the people who invested that day, because the PTS equivalent of the amount being donated daily is usually less than the available supply of Angelshares investors get a bigger stake by buying Angelshares than they would just by holding PTS.
The disadvantage of holding Angelshares compared to PTS though is that Angelshares aren't liquid, once you've sent money to the Angelshares account you're an investor for life. When the window for buying Angelshares closes it's likely to cause increased demand for PTS as a means to buy into future DACs before they're released. One will be able to claim their share when a new social consensus honoring DAC is released by using the private key corresponding to the donation address.
Do you have a great idea for a company that can function on a blockchain? Present it to the BitShares community, agree to honor the social consensus, and you can gain the support of a multi-million dollar venture capitalist funded corporation and one of the largest and most diverse communities in the Bitcoin 2.0 world.
What follows is a broad overview of some of the DACs currently being worked on by Invictus or within the BitShares community. They may not be every DAC currently in production, any third party may release a DAC of their own, it's just code so there's no telling what may be brewing out there. Expect these kind's of businesses to become more more widely embraced after the release of the BitShares toolkit, a set of tools designed to simplify the creation of DACs and allow people to create their own business protocols on the blockchain!BitShares X - A transparent bank and exchange
This is one of the first DACs slated for release by Invictus. As of the time of this writing it's nearly ready for release after delays caused in part by the invention of DPOS
. It has the potential to reinvent banking as we know it. It will make possible the ability to store a cryptocurrency that is pegged to a stable, government regulated fiat currency on the blockchain through the process of market pegging
, effectively rendering moot the arguments against the use of cryptocurrency due to their temporary price instability resulting from underdeveloped market capitalization.
As a bank, this will create a safe store of value for any kind of asset imaginable which can be taken advantage of by anybody without any sort of prejudice or regulation. Additionally the destruction of collateral from margin calls on shorts, and transaction fees from trading will cause the value of each asset stored in the blockchain to increase annually, effectively creating a form of interest that will outpace the legacy banking system. A portion of transaction fees will also go to delegates for the purpose of supporting the interests of the platform itself.
This will also become one of the first decentralized exchange platforms, allowing people to short or trade for any asset they need, eliminating the need to pay for the services of a middleman or escrow service.BitShares DNS - Helping to solve online censorship
BitShares DNS will function as a registry for decentralized top level domains, similar to Namecoin, but with a domain name issuance system built in that will profit investors, and a price discovery process similar to an auction designed to help mitigate the problem of cyber-squatting, and assign a true market value to each individual domain name within the network.
Traditionally this has been the role of an American company, ICANN, since 1998 and preceded by Jon Postel, one of the scientists who helped bring the internet into existence by developing ARPANET. Being a centralized registry, the company selling the domain to you through ICANN, or the government assigned to the top level domain has the ability to censor people at will by switching off domains. By keeping track of everything on a decentralized peer to peer network, no single entity will have the ability to turn off a website running on a .p2p top level domain, which will help to facilitate free speech.
Having a secured public ledger also provides a more effective means of preventing man in the middle attacks, since the owner of a domain name can put their SSL key directly into the blockchain, eliminating the need for a third party to provide the service of signing certificates.
End result: want to make a website? Create the server, purchase the domain name for its fair market value, and away you go! Less regulation is better for the whole internet.Keyhotee - Defining online identity and redefining privacy
Keyhotee is a decentralized platform that will provide a way for parties to confirm each other's identities, and communicate securely.
Keyhotee, unlike traditional e-mail, doesn't exist in a cloud, which means no third party would be able to read your data, unless you want them to be able to do so. This is pertinent because it means governments and bad guys would be unable to read anything you send out without your permission.
Communication methods in Keyhotee will not be limited to just e-mail type messages. The keyhotee protocol will support going to web sites, chatting over VOIP, sending e-mail type messages, and can be adapted to just about any kind of communication that might be necessary.
Not only that but when communicating through keyhotee both parties are able to verify the identity of who they're talking to on the blockchain through their publically available key. Because you can't fake a blockchain, and you can't fake a signature matching a public key, you know for your that you're talking to the person who published that private key.
Combining those two facts means that websites will be able to verify their identity without using verisign to sign a certificate. This equates to no more man in the middle attacks, if you're accessing Amazon through Keyhotee for example. This means you're able to limit the amount of information you send to any one party to only what they need to know. You could send your address to FedEx for example, and because of Bitcoin, you could theoretically order something without a credit card online, without even transmitting your address or credit card number, just an invoice and a payment. With third parties like governments and identity thieves only being able to see encrypted gibberish, you could potentially send you address and credit card information safely, if you preferred.
Ultimately, Keyhotee minimizes the risk of doing business online, and allows for you to be able to log in to different websites securely, without sending a password.BitShares ME - Invest in people
BitShares ME, another one of the first DACs planned to be developed, will be a platform that will facilitate the issuance of a cryptocurrency that will function like shares in basically anything for which one would want to track shares. A person could issue something comparable to a stock in himself, or an idea.
Say for example, a scientist theorizes a way to cure autism, but the solution is so simple that he decides to open source the information and anybody can use it for free, removing the possibility for him to profit from monetizing his idea.
Nonetheless, in order to facilitate initial research he needs some startup cash. He could issue shares in himself and speculators, knowing that a large demographic of people would like to see a cure for autism, would buy the shares as well anticipating the price to go up. The price bubbles, speculators begin to sell off, and the price evens out a bit or just plain goes down-- the scientist still has his initial startup cash since he would have sold before the price went down. Then if he makes his breakthrough other speculators may buy, seeing the guy's talent, and banking on future scientific success from a great mind.
Conversly, somebody with a great idea for how to monetize something could create incentive for people to buy his stock by promising to return a certain percentage of future profit back to shareholders, by purchasing back a certain percentage of the issued shares and destroying it. Say for example Occulus Rift, the new 3d gaming hardware that was recently purchased by Facebook for 2 billion dollars, had crowdfunded itself on ME instead of Kickstarter. They could have issued shares in themselves, and kept a certain percentage of them, say fifty percent. Then people wanting to fund this project could buy these shares, causing the market price per share to increase. As the price increases the issuer of these shares now has the option to sell and acquire the startup funds he needed.
To make people more interested in funding their project they could promise to pay a certain percentage of their profits to shareholders. Say they go this route, promising 1% of any profits he makes from the idea back to the shareholders who supported him initially. There's no way to ensure that he keeps this promise, so there's an element of shareholder trust involved in this situation, but if he wanted to make good on such a promise, he could easily do so by buying the initial shares that he had sold back from the open market. In this case, he could buy 20 million dollars (one percent of 2 billion) worth of the stock he issued, then destroy it. Destroying a limited asset results in a proportional increase to the value of any of the same asset that still exists.
This system would make trading shares in all sorts of different things more transparent and accessible to the general population, and removes the risk of having to deal with a third party like a stock exchange to buy shares in a project.
Anything for which a person might want to issue shares for can now happen. Except shares in songs and artists, that's the next DAC on the list...Bitshares Music - Own your music, don't just buy it
The music DAC will use the same kind of platform as ME, based on the issuance of stocks. Except this platform is going to be paired with a traditional music store like iTunes, and a free streaming playlist generator type of site. This will allow artists to issue stocks in themselves, stocks in their albums, and stocks in their songs. It will allow consumers to go to the website, and listen to various offerings for free. Then if they hear a song they like they can buy the song, and optionally buy stock in the song in the same location.
If an artist wants to an additional way to promote any given title certain title, album, or himself he could offer to give back a certain percentage of profits to the people who hold his stock. This means the people holding their stock would have added incentive to market their product for them, and the best kind of marketing is word of mouth.BitShares Lotto - A lottery that supports charity
BitShares Lotto is a blockchain based replacement for the government sanctioned lotteries, being developed by HackFisher. The benefits of using a blockchain for a lottery service are that the lottery would be transparent and provably fair, and wouldn't profit middle men.
One neat thing about BitShares Lotto is that it will be one of the first DACs to implement a system where some percentage of the profits will go to charity. This will likely help in promoting DACs in general, and this DAC will potentially start with a more positive, less profit oriented public image to promote. Thanks to DPOS, DAC developers have two different means of being able to support charities if they see fit. First is the BitShares Lotto method, where a percentage of the fees that would go to shareholders instead go to a fund that gets used to support various worldwide charities. The other way is that delegates who are entrusted to make optimal use of the fees they get from the DAC can use charitable donations to help improve marketing and public relations. This makes it so that any DAC at any point in time could potentially be helping to support charities in the background.
Additionally, HackFisher is looking to implement other types of gambling than just lotto in this blockchain. When fully developed, this project could turn into a complete online casino.LottoShares - A for-profit worldwide lottery
This DAC is nearly finished, and may make it to the market before BitShares X. This would distinguish it as the first third party developed social consensus honoring DAC. Like BitShares Lotto it would function to replace government sanctioned lotteries with something not restricted to borders. It is being developed by FreeTrade, who also created BitShares-PTS. This DAC is different from most DACs that will come out because it is not being designed with the bitshares toolkit, and is being designed around the Satoshi client.
LottoShares holders could use their LottoShares to gamble like an ordinary lottery ticket, or they could just hold and earn dividends in the form of transaction fees that get destroyed, as is the case with most DACs.
This one wouldn't be for charity, it would be to profit shareholders, but the option for delegates to take some of the transaction fees and apply them to charity where they see fit would still exist, as it would in every DAC.
An interesting aspect of this, and the impending slew of other theoretical gambling DACs that could become reality in time, is that this will present to the world the first type of casino in which the gambler also has the option of owning part of the house, without have to trust that house. Like all DACs this lends a self-marketing aspect to the whole set up, as more people own LottoShares those people will be more likely to encourage friends and family to ditch government lottos to fulfill their gambling desires. This might also work against it by discouraging use of the LottoShares for gambling when holding them is an easy option that promises a small return on the investment, so it will be interesting to see the experiment play out.
This will also be the only DAC other than BitShares X whose snapshot will have been taken before the end of the AngelShare donation period, meaning that if you're just now learning about this DAC you'll have to wait until its official release to score some LottoShares for yourself.Insurance - Fair insurance of all kinds. Yes, really.
Something about DACs and DPOS that really excites me that I haven't touched up on yet is the potential they create for the good of mankind. When the use for a public, cryptographically verifiable ledger presents itself in some area, it means there's a specific need it fulfills. This is something I plan to write about soon. If you look over this list you can spot how the status quo centralized solution is inadequate in one way or another.
That's why I can't wait to see how the concept of delegates spending their funds to oversee the hiring of employees to fulfill those roles in a DAC plays out. One of the first examples of this will be the BitShares Insurance project. An insurance claims adjustor is the only role in an insurance company that can't be written into a blockchain as a predetermined set of rules, every aspect of an insurance company can be automated.
Since DPOS will enable DACs to hire employees, BitShares Insurance promises to make a splash in the insurance scene. By creating good paying jobs for people around the world, and providing competition to traditional insurance companys, DACs like these have the ability to noticeably change the world. I personally would like to become a claims adjustor.
The complexities of how an Insurance DAC would work are beyond the scope of this article. To learn more, watch this video