Quote from: Empirical1.2 on March 20, 2016, 02:49:48 am

Quote from: CryptoPrometheus on March 20, 2016, 02:26:50 am

Quote from: Empirical1.2 on March 20, 2016, 01:08:53 am

Quote

What?  You're trusting your coins to the owner of a single exchange company with no supervision by other independent cosigners?  Really?

They're trusting registered & highly regulated companies in countries with relatively strong & effective legal systems. Their owners are also making millions of dollars and so have a financial incentive to keep making money and not go to jail.

DPOS currently has neither the same legal fallback & delegates who make only a few hundred bucks a month. While the delegates ability to damage and profit from harming BTS is limited. They could get full value from other blockchain tokens.

By increasing the incentive for delegates to misbehave and therefore the trust required in them you increase the fragility of BTS. Blockchain competition is also reducing fees to near zero so the value centre of BTS is BTS collateralised SmartCoins, UIA tokens not collateralised with BTS are much less attractive, see MaidSafe, Synereo & Agoras, collectively worth >$50 million on an Omni blockchain worth <$1.4 million...

So I don't see the value in there myself. For me the way to make BTS useful and popular now & massively grow the value of BTS is by focusing on market maker & yield subsidies to create useful liquidity & demand around the peg so that bridges can convert fairly close to 1-1.

I agree that multi-sig should be real world "dox able" entities, if we want to be able to "sell" it to the rest of the world. That said, if we make it easy enough, and they are paid well enough, I don't see too many challenges with obtaining 20 or eventually even 50+ independent entities willing to become potential multi-signatories. Again, ease of use and getting paid sufficiently are 2 things that will make becoming a multi-sig authority attractive to people. All of that said, the exchanges would be acting against their own self interest by promoting another exchange, so they might not be the best parties to approach. But independent businesses, for example, could be good. And I still think there should be a stake voting election process to choose all of them. So they can be hired or fired on the spot, like witnesses.

Another problem is say the good 'doxable' entities voted for by shareholders controlled $150 million worth of Alt-Coins & BTS was valued at $10 million. Then an anonymous attacker just needs a few $million to gain enough BTS to vote in bad witnesses and gain a very big payoff?

Using your example, at today's prices ($15 million cap) It would cost about $3.5 million to vote out all the witnesses and insert your own, assuming you were even able to purchase the almost 600 million BTS needed on the open market without driving the market cap to astronomical heights. In reality, I bet it would cost at least 10 times that (or more) to accumulate almost 1/4 of all BTS in existence into your personal possession.

If demand for such little BTS would drive up the price 10x you should implement the yield proposal immediately

The point is that there's no direct relationship between a UIA and the value of BTS, so as the value of the AltCoins held by witnesses increase a hostile BTS takeover to sell off the more valuable pieces becomes +EV. 

Stan, I'll address your points inline:

Quote from: Stan on March 20, 2016, 12:03:42 am

Just because most people are content to trust centralized tokens now, does not mean that will continue to be true in the coming collapse.  When the flight to safety starts, the value proposition of autonomously tracking the value of external assets without counterparty risk goes through the roof.

If a collapse comes, I very much doubt people will come searching for safety on the Bitshares network, with its ~$10 mil market cap, which almost nobody uses.

I even doubt people in general will go for the king of cryptos, Bitcoin.

No. They'll buy gold and silver, real estate, as they always do. I think it's very unrealistic to think that Joe Sixpack is suddenly going to think "Fake internet money" is a good idea if the world around him is collapsing.

It's a very, very tiny minority that would use things like Bitcoin as a safe haven in troubled times.
The people who would use Bitshares? We can count them on one forum.

Gold & Silver will rapidly rise ofc. But money will also rush into BTC/Other and they will increase in percentage terms higher than Gold/Silver because of their low capitalisations. See BTC response to small contained events like Cyprus/Greek banking crisis as well as the BTC premium on Euro based exchanges at the time.

Joe six-pack might not have a good grasp of BTC/crypto but those in finance do. Gold & Silver will be heavily taxed and possibly confiscated and there will be many other capital controls. Private, global, instant, limited, digital money will explode as will SmartCoins like BitGold & Silver.  (Provided we establish SmartCoins before then which requires dedicated focus and effort.)

What?  You're trusting your coins to the owner of a single exchange company with no supervision by other independent cosigners?  Really?

They're trusting registered & highly regulated companies in countries with relatively strong & effective legal systems. Their owners are also making millions of dollars and so have a financial incentive to keep making money and not go to jail.

DPOS currently has neither the same legal fallback & delegates who make only a few hundred bucks a month. While the delegates ability to damage and profit from harming BTS is limited. They could get full value from other blockchain tokens.

By increasing the incentive for delegates to misbehave and therefore the trust required in them you increase the fragility of BTS. Blockchain competition is also reducing fees to near zero so the value centre of BTS is BTS collateralised SmartCoins, UIA tokens not collateralised with BTS are much less attractive, see MaidSafe, Synereo & Agoras, collectively worth >$50 million on an Omni blockchain worth <$1.4 million...

So I don't see the value in there myself. For me the way to make BTS useful and popular now & massively grow the value of BTS is by focusing on market maker & yield subsidies to create useful liquidity & demand around the peg so that bridges can convert fairly close to 1-1.

https://bitshares.openledger.info/#/explorer/markets

We can't expect new users to know the difference between various type of assets, it looks incredibly confusing. They should be grouped separately with a clear description of what each group of assets represents and then described individually within that grouping too imo.

This page is currently sub-divided into currency groups BTS, BTC, USD, CNY, Others

I would group them as...

Smartcoins         Decentralized price stable currencies collateralized by BTS
MetaExchange   (Description of MetaExchange assets)
OpenLedger       (Desrcription of open ledger assets)
BlockTrades       (Description)
Etc.
 
Next to each individual entry, I would also add a description similar to that found on cryptofresh http://cryptofresh.com/assets & they should be listed by Market Cap/Volume. (ie. most popular first, paretto principle)

You could also have sub-headings for UIA's and PMA's on this page again with a description.

Other

People buying SmartCoins are interested in what % above/below the peg they're buying or selling.

So a line above showing  0.98  0.98 0.99 1.00 1.01 1.02 1.03 would let people easily calculate their orders and track them.

If it was possible this would be pretty good,  DACs in particular are having a really good start to 2016, not sure many people would want to short it though.

What currency does Augur betting volume actually flow through?

If it's similar to what TruthCoin was proposing and REP only receives 0.5-1% of each bet then a BitUSD based version on BTS would be much more valuable. (Would you rather own REP that received 1% in fees from $1 Billion worth of betting or would you rather own the share through which all the betting volume was flowing?)

I have a feeling that having the trading volume coming into a 0% inflation share system starting from a low cap, while the product/service is in it's growth cycle (which could last years) is > than a lot/all of 1% transaction fees.

Example: Truthcoin is planning to let people bet in Bitcoin but charge 1% transaction fees which gets paid to Truthcoin holders. 
But I'm wondering whether if they had $100 million in trading volume going into Truthcoin instead over the course of the year (which would start from a low market cap) how much of the $1 million in fees they were planning to charge they could offset?

If the betting volume flows through another currency other than REP then a BTS based fork, using BitUSD as the betting unit could potentially gain a much higher value with a fraction of the betting volume.

Similar to the BitAsset yield proposal, while the prediction market is in the growth phase, BTS could pay more to 'judges' and charge less than 1% because it is benefiting from BTS for BitUSD demand. (REP would receive $10 million from $1 Billion worth of betting if the betting volume flowed through another unit, while BTS (BitUSD) would receive the benefit of $1 billion in betting volume.)

REP currently values Augur at $180 million  (Though it's probably over-valued due to small amount of IOU trading)

(Other thought: If Augur/Eth doesn't have a dollar stable currency yet, maybe we can offer Augur based PM's for BitUSD. Whoever becomes the de facto betting unit will probably benefit more than REP if REP isn't actually the betting unit.)

OK, next thought experiment.

How much of a (properly used) investment would it take to drive the market cap of BitShares to equal Bitcoin?
(I don't think it would take 6 billion in new cash to get there.  What do you think it would take?)

How much actual investment did it take to drive ETH to 1 Billion?

Step 1: Acquire 100 million BTS, currently valued at $650 000 but probably end up costing $1 million.

Step 2: Stagger 50 million BTS in SmartCoin yield in year 1

In the first year 10% interest on SmartCoins will conservatively be very attractive, so 50 million BTS could create 500 million of SmartCoin demand and tie up 1 billion in BTS. That BTS for SmartCoin demand will raise the price of BTS. (Given how little BTS is tied up in SmartCoins ATM, the reward should be staggered in over a few months to create more even demand and to determine the impact on the peg/shorts/other.)

Step 3: Between a $1-200 million valuation sell 25 million BTS so you have $1.5 million that can be used as an incentive if needed which is independent of the BTS price.

Step 4: 25 Million BTS to yield in year 2.

Our goal is probably for SmartCoins not to be worth much more than 20-25% of BTS so that even when BTS falls significantly in price, BTS has a valuation which could conceivably support them.

By year 2 when SmartCoins are more established, 5% interest may be appealing so only 25 million BTS per year will attract 500 million BTS worth of SmartCoin demand and tie up 1 billion worth of SmartCoins.

So a virtuous cycle is created where BTS for SmartCoin yield, creates new SmartCoin demand, raises the BTS price which creates even more SmartCoin demand & less & less BTS is required to do it as SmartCoins become established, liquid and with greater utility.

Step 5: Pattern Interrupted

If the pattern was working well and BTS had $40 million worth of SmartCoins & a valuation of $200 million which temporarily spiked to $400 million and then halved again to $200 million the growth cycle would be unaffected because few new SmartCoins would have been created during a short temporary spike.

However let's say the process was going well and $40 million worth of SmartCoins had been created and BTS had a valuation of $200 million. If BTS lost 60% of its value due to some really bad news and fell to $80 million then the virtuous pattern would be interrupted. The 50 million BTS would be just 4% yield not 10% that was driving new SmartCoin demand in year 1. People would likely still hold their SmartCoins knowing the yield is variable but there may start be concerns about under-collaterilization. So there would not be a lot of new SmartCoin demand driving up the price and it would probably not be in our interests to encourage SmartCoin creation when they are such a large % of BTS value.

Here Company Z may take some of the $1.5 million it gained by selling 25 million and create some sort of temporary additional short/collateral incentive. This has the same impact as a SmartCoin incentive but on collateral. It drives up the demand to provide SmartCoin collateral and this demand drives up BTS price. At an increased BTS price with higher levels of collateral, the BTS to SmartCoin yield growth pattern would reassert itself more rapidly. The $1.5 million would probably be sufficient to provide a temporary 3 month collateral incentives a few times if required in the goal was a rapid fairly uninterrupted ascent to a Bitcoinesque valuation.

In a few years SmartCoins should be fully bootstrapped, established, liquid and with great utility. Traditional banks may be well into negative interest territory. So at that stage extremely low/no yield would be attractive on SmartCoins especially combined with their other advantages like privacy etc. At that stage SmartCoin demand and BTS's valuation can start to grow more organically. During this time many many businesses will have been attracted to the BTS blockchain & the bustling SmartCoin economy, to the point they will have a large, positive and independent impact on BTS valuation.

They should buy BTS and pay it out as SmartCoin interest including on their own IOU.USD.

Example Basket: IOU.USD, BitUSD, BitGold, BitSilver

Current BTS valuation $20 million

Company Z purchase 24 million BTS. Cost $200 000

They put the BTS in fund which directs 2 million BTS per month as yield possibly with a taper at the end.

Assuming the market is attracted by 10% p.a. on SmartCoins This will stimulate the rapid demand for 240 million BTS worth of the basket, tying up 500 million BTS. Including up to 60 million BTS, $500 000 worth of demand for their product. (though possibly less depending on their credibility if it's an uncollateralized IOU)

Increased SmartCoin demand increases BTS demand which raises the price of BTS so that the BTS they are directing to yield is able to incentivise an even higher $ amount of SmartCoins and IOU.USD creation.

Whereas if for example they offered a $50 sign up bonus for buying $100 IOU.USD it would cost them $200 000 to have customers create just $400 000 of their own product and have no impact on bootstrapping themselves or SmartCoins as people would claim the bonus and then sell their IOU.USD back. (This bonus would also have a positive impact on BTS price when they initially funded it but a negative price effect once people started dumping.)

Negative consequences of SmartCoin interest

1. SmartCoins would trade above the peg.

- Lower forced settlement to 95%.
- Introduce the liquidity subsidy already proposed. (let the subsidy stimulate  the weak side of the order book around the peg, this will probably be the short side. Though it's possible the rapid increase in BTS value could balance out short and long demand.)
- Possibly direct some of the 2 million per month BTS to short yield.

2. Offering Yield on an IOU.USD could create up to $500 000 worth of IOU.USD demand even in a 4 SmartCoin basket that they only put $200 000 of BTS yield towards. Them selling this BTS or a larger amount as they expand could be a threat which is why I think given the benefits BTS should fund it itself.

Other:

They could increase/extend the promotion based on it's success &/or try something else.

Some form of unique identification may be necessary if you wanted to maximise the amount of unique individuals.Then you could also just pay yield for the first year and mimic teaser rate on savings accounts marketing strategy.

You could also stagger it so it starts at 500 000 BTS a month in yield and then slowly rises to 3 million a month, this could make the demand for SmartCoins increase more steadily over the period as opposed to creating a large % of the new demand very early on.

My traditional bank recently sent me two $50 Visa gift cards at 3 months and 1 year (if memory serves accurate) to keep a higher balance in savings with them.  Further, I had to set an auto deposit to fund the account on an increasing basis.

Takeaway: Today I have a higher balance in savings with this bank and continue to utilize an auto deposit monthly to increase my savings.  They rewarded me for learning how to save in their bank.

Perhaps this model can be adopted/modified by a partner willing to invest in BitShares users.

This is similar to the yield promotion. This got you to create an account and keep it with them for at least a year probably with >$1000.

Customers are fairly sticky & first year bonuses are very successful at creating long term account holders for a very low cost.  In the UK it is/was controversial but very successful...

The Fair Banking Foundation reckons that 3.78 million savers over the past five years had money in accounts paying attractive short-term bonuses, but who failed to move their cash once the deal ended.

Hopefully we could keep ours going for many years during the growth phase and once it's fully tapered traditional banks will be well into negative territory and zero yield would actually be attractive especially once SmartCoins had greater utility and combined with all their other great features as well.