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General Discussion / Re: Dynamic Burning
« on: October 21, 2015, 05:47:37 pm »When has it not worked to increase price? Scarcity is the only mechanism to increase price. Reduced supply with sustained demand results in an increase in price. It is possible that demand might increase very slowly, so having more scarcity would be potentially less risk for long term BTS holders in terms of opportunity cost.
The theory (at best) that value rises as supply is diminished does not necessarily work well in practice.
To increase "value" you just have to keep adding value to it. For example Mastercoin never had as much value as Bitshares 2.0 has right now, but the price was higher because there was more scarcity.
The more tokens you have, the higher the market cap will have to be before you can have $1 per BTS. Why wouldn't you want to burn BTS so that it takes less market cap to reach $1 per BTS?
Deflation is in the form of burning is even better than a stock buy back and also because Bitshares was was diluted, it is now owed to the community of loyal supporters and the network to return the loaned BTS back to parity and the only way to do it is to burn. Burning is the only way to reverse the dilution and bring Bitshares back into deflationary status.
No, Bitshares is not like gold. BitGold is mapped to gold. Bitshares is like Bitshares and should not be compared to a precious metal. Bitshares is stake in the network and the only thing that should matter to you as a member is the percentage of stake you own.
Burning is kind of like burying perfectly good gold in the ground and throwing away the treasure map in an attempt to make gold holders richer,
How do you lose if there are fewer tokens each year? I'm starting to see a bizarre trend lately where people seem to not want Bitshares to be profitable. Lower the fees? Reverse the burning and increase the dilution? But you were here for the debates and saw the effect on the market the dilution had? The merger? The moment Bitshares became inflationary and stopped being deflationary, a lot of people started dumping, and it's now at bottom.
Now that you don't have the 5% dividends the only thing you have to get people to hold BTS is the burning. There is no other reason to hold onto it. BTS isn't a currency, it's not Bitcoin, it's not supposed to be the cash for activists in the developing world. It's meant to be stake in a profitable decentralized exchange.
while that gold still has perfectly good industrial uses. Imagine if that gold could still be used in an industrial setting but not available to be sold on the open market.
No let's not imagine that. Bitshares is not gold and never was marketed as gold. BitGold was marketed as gold, but that is because it tracks the value of gold. If you want to hold the value of gold then hold BitGold. Bitshares is a stake, and you gain absolutely nothing from "industrial uses", it's just a stake which you use to vote and pay transaction fees with. It's more like fuel, to power the network, combined with share properties, to make you into a member/owner.
Ownership requires an entirely different way of thinking from the consumer like thinking you're doing. An owner wants to increase the price of whatever he or she owns. If BTS is a digital asset then you want the price to rise along with the value. If the price rises we all win, all of us, including developers who could quit their full time jobs at Google, including the witnesses, including the early adopters who would now be able to become professional investors in the global blockchain industry.
One example of an asset that does not necessarily add value when the asset is burned is gasoline. Gasoline is an asset of limited supply that is burned, both literally and figuratively.Bitshares is meant to be more like fuel, like gas, not like gold. You're confusing Bitcoin which is maybe based off Bitgold, with Bitshares which was never trying to be a currency, or precious metal. Bitshares in the beginning was described as a DAC, it was always to be a share, and shares are supposed to APPRECIATE.
No one buys a share in the hope that it will gain in "value" while the price gets cheaper. Bitcoin is gaining value while the price gets cheaper because miners keep inflating by adding new Bitcoins but this is because it was the only way to secure the network. Even still, Satoshi Nakamoto do slow the inflation down over time, until finally it's just transaction fees.
Bitshares doesn't have mining at all and one of the ways Bytemaster made that case is specifically the fact that mining is inflation and Bitshares can be the first deflationary DAC.
Many bitshares users will not choose to buy, hold, or use bts. They will only want to trade bitassets.When you hold a Bitasset you are holding Bitshares. Bitassets are made up of BTS. And if you trade then you're spending transaction fees.
Furthermore, many users who do decide to hold bts will not choose to short bitassets into existence. Therefore, there may be a potential shortage of bitassets. The network will need these bitassets for liquidity and the way I see it, more bitassets in the system adds to liquidity, which attracts more users.
To add more bitasset liquidity, I propose that instead of burning bts, those bts be used to generate bitassets using a special transaction where the only redemption of those bts can occur through a liquidation event (margin call).
This is bad economics. You're talking about treating Bitshares like the dollar and doing some sort of fed like QE propopsal to help the Bitshares economy? That kind of central planning is horrible for something like Bitshares and should be avoided. There is no reason to do it right now and if the network can grow naturally it should be allowed to.
If liquidity is necessary, the best way to get it is to do it the right way. Attract people to Bitshares exchange, attract people to hold BTS because BTS is appreciating in price over time, and show people that they can make money by participating. If you show people they can lose money, either by inflation, dilution, or some complex scheme they cannot understand, then they will not hold BTS.
Why would people leaving their national currency choose to hold BTS if BTS is inflating too and even faster? This is why it has to be deflationary. If it is deflationary then it's a lot easier for people to hold it without feeling it is risky. The higher the deflation rate the less risk the long term BTS holder will feel they are taking.
