No, I won't cry "BS".
In fact, I wrote the same thing in a draft press release that became obsolete before it could be released. (I love the press release format because I get to quote myself.)
Here it is, for the record. The rationale still applies even if some of the predictions are already overcome by events:
BitSharesX Targets #2 Rank in the Bitcoin Industry
Blacksburg, Virginia, August 12, 2014
BitShares X made its first appearance at Number 6 on Monday, briefly bumping the venerable Peercoin from that rank among the 462 crypto currencies listed at coinmarketcap.com.
“Not a bad first month,” said Stan Larimer, president of Invictus Innovations, Inc., “but we think second place behind Bitcoin is just as likely by the end of its rookie year.”
Invictus sees itself as a technology developer and advocate for this second-generation of crypto-equities — coins that contain “unmanned companies”. But its founder, Daniel Larimer would rather view things the other way around. “Bitcoin itself is just a first-generation unmanned company that implements a crypto-currency”, he said. “Once you start thinking of these coins as potentially profitable companies, the sky is the limit for what you can do with them. Thanks to our open source software development toolkit, we expect to see a lot of unmanned companies launched in coming months. BitShares X is just the first.”
Invictus doesn’t develop or launch such companies itself. Instead, it supplies a library of innovative software called the BitShares Toolkit which it encourages third-party startups to customize for themselves. Potential applications include banking, exchanges, insurance, music, gaming, voting, and namespace registration services to name a few. “Any business that manages digital assets can likely benefit from the low overhead and robotically honest integrity of an unmanned company,” said Stan Larimer. "We are just happy to serve as a behind-the-scenes industry advocate and start-up incubator. We provide the enabling software tools, advocate our vision of their potential, and help start-up entrepreneurs tailor the technology for their unique markets, business models and legal jurisdictions."
DAC Sun Limited of Hong Kong is the first such startup to release a derivative from the BitShares Toolkit. BitSharesX is their new unmanned bank and exchange as described on their BitShares-x.info web site. BitSharesX is a crypto-company designed to be regulated not by bureaucrats, but by transparent business rules implemented in open source software and operating on an incorruptible public ledger. "This is a powerful new model for regulators," said Larimer. “Now they can simply do a one-time audit of the hard-coded business logic of a company and know that it will remain in permanent compliance with those regulations. It also provides new levels of consumer protection in unbanked parts of the world and places plagued by government corruption or inadequate rule of law."
But why does Larimer think the #2 slot on coinmarketcap.com is easily within reach for BitSharesX?
“There are several good reasons”, said Larimer. “First, there are unprecedented new levels of performance, ease of use, and privacy. BitSharesX transactions are confirmed in 10 seconds, not the hour it can take for Bitcoin. BitSharesX has a fresh new interface where users can refer to their accounts by name, not some unsightly crypto-address. And all transactions are private with no relationship visible to the public between parties to a transaction. So the whole system just feels better. I find it invigorating.”
“Another reason is the value proposition”, he continued. "Until recently, coins reached the top ten based mostly on their marketing. They were designed to appeal to certain technical, philosophical, or meme-loving constituencies and gained market share by appealing to their hope of adoption by speculators seeking the next Bitcoin bonanza. Now investors can begin to analyze new offerings rationally, based on their service features, business model and profit potential. This is what excites us about BitSharesX.
It reached number six with almost no marketing at all.
All of its promotional growth still lies ahead of it! We don’t think it will be hard at all to triple the number of people competing to own it. That would move it into third place behind Litecoin. Once that happens, it will become obvious that Litecoin is only in second place because it has always been in second place. Marketing it as “the silver to Bitcoin’s gold” will only work until something with the metaphorical utility of real silver comes along. With that insight, the market will know what to do. Tripling the level of awakening market interest at that point to take over second place seems like a no-brainer — assuming investors focus on fundamentals.”
“As for Bitcoin”, he concluded, “It will have an unassailable role for a long time because of name recognition, the network affect and its growing acceptance among merchants. This makes it the natural crypto-currency to use like a checking account. You put money into Bitcoin just in time — when you are about ready to spend it.
What’s about to change is what you do with your crypto savings.
You want your savings to be safe from volatility and/or to earn you a rate of return. Bitcoin doesn’t do that, but that’s the complementary role I see for BitSharesX.
Come to think of it, I only keep a few percent of my money in my checking account. If a viable crypto savings account were to become available, I wonder where most of Bitcoin’s current market cap is going to flow?”
This makes it the natural crypto-currency to use like a checking account. You put money into Bitcoin just in time — when you are about ready to spend it.
I don't think it is smart to advertise Bitcoin as a better checking account than BitShares X. I understand it has the network effect for now, but the technology is inherently inferior for consumer spending. First, 10 second block confirmation time means that merchants can directly accept the BitShares X tokens from customers as in-person payment for goods/services without needing to rely on third parties to protect them from any potential double-spend attacks. Second, if the BitAsset market peg works as is hoped, BitUSD protects the merchant from the volatility risk of accepting cryptocurrency. They could directly accept BitUSD and not have to rely on third parties like BitPay to immediately convert BTC to USD at the point-of-sale. I'd like to see the press releases accentuate these benefits not shy away from them.
I completely agree with you, but that final step will become obvious once 97% of BTC has been moved from checking to savings - folks will ask themselves "why do I want transactions at the checkout counter to take 10 to 30 minutes when my savings account only takes 10 seconds?"
But, to get there let current BTC lovers get used to the two-account checking-savings paradigm they already know. Once they have a non-disloyal reason to try us... the rest will take care of itself.
When over half of the BTC users also have a BTSX savings account, merchants will face the "Visa vs. Mastercard" choice and eventually support both with the aid of third party abstraction services. Once its possible to use BitShares everywhere, then it will be no contest to use BTSX for everything.
Meanwhile, no point in selling point-of-sale functions before they are widely available. So early marketing messages emphasize why people need both.
-- The preceding is the untrained opinion of a non marketing professional and may or may not contain valuable strategic insights.
They can try to clone things but a clone isn't going to do any good if the innovation comes from the main chain and the clone just copies.
The problem is that the innovation is a public good since it is all open source software (I am making the assumption that one will not be able/willing to use state coercion to enforce copyright law to ban clones that do not follow the social consensus). So if the BTC community were to all come to a consensus that the BitShares toolkit is superior, they could clone and immediately get every benefit we have in addition to the very important added benefit of network effect. Further innovation can also be copied, and besides, the likelihood of further innovation being funded by the smaller chain's stakeholders decreases because of the free rider problem.
I agree that if Bitcoin decided to implement some features of Bitshares that it could really hurt the adoption and thus how successful Bitshares will be. However, I think that is unlikely Bitcoin will do this, as I will explain after the next point. If a smaller chain does copy Bitshares innovation, then I don't think there will be any problems as no one has near the network effect of Bitcoin, not even Litecoin which would arguably be the crypto with the 2nd largest network effect.
I think Bitcoin is unlikely to copy off of Bitshares innovations thus far:
1. DPOS - The Bitcoin community largely hates PoS with a passion. I think most of it is ignorance and they read someone they think is smart analyzing older methods of PoS say its bad, and then the rest don't see the issues with ASICs and the centralization it will bring. Don't count on them copying DPOS anytime soon. I think a lot of them don't realize that PoS has had many iterations in recent history, and judge them based on prior implementations.
2. TITAN - This is a no go for Bitcoin, they are trying to play nice with governments everywhere. I think implementing something like TITAN would hinder that.
3. Bitassets - The Bitcoin community pretty much regards any added features to the client as "gimmicks" or "uneeded bells and whistles". I think they are unlikely to implement anything like that as well. IMO- the joke is on them because some people do want added features and bells and whistles. I mean... obviously, this is why the bitcoin 2.0 movement is gaining so much traction and raising so many funds for development. If you don't like a feature or don't want to use it, then just ignore it and don't use it. They don't understand that some people do want these features and in some cases these features will bring in users that wouldn't have otherwise partook.
4. Am I forgetting something? I haven't honestly looked into future DACs past BitsharesX yet..
In summary, I think there is a risk of someone copying features from Bitshares. However, as we can see with Bitcoin's success (as luckybit mentioned) the first mover advantage and the network effect that comes with it is quite powerful.
The value comes from everyone (merchants and consumers) adopting a particular token. BitAssets complicate the network effect a bit. BitUSD can exist on multiple chains and thus be backed by different tokens as collateral. Nevertheless, there is still a tendency for people to keep most BitAssets on a single blockchain for convenience (cross-chain transactions are inconvenient); also, centralizing the BitAssets to one chain increases the market value of that one chain which increases its security (since the cost of a 51% attack goes up). If the blockchain that the world converges on is the one whose tokens are distributed to current BTC holders, then they are the ones who capture all that value. Now why would the world converge on one particular chain versus another? I am really not sure. I think it is very sensitive to how the initial adoption grows. Once the network effect is fully in place though, it becomes very difficult to displace it (unless another new significant innovation comes out on another chain and the incumbent chain's stakeholders are too slow to realize its potential such that the clone's market cap drops drastically due to shareholders dumping).
I would like to see some discussion on what will cause one clone to succeed over another (assuming stake distribution is their only difference). I think if the stake of a chain is more broadly distributed to more consumers willing to spend money, then merchants may elect to go with that chain since it maximizes their potential revenue. And consumers are more willing to buy stake in that chain since those tokens are the ones they are more likely to be able spend on goods/services. This is a positive feedback loop that would cause that chain to grow compared to the alternatives until it reaches clear dominance. But I think this is very sensitive to many other factors. Hence, I think marketing and initial deals made can make or break the future of a particular chain.
At least this is how I see it. Please correct me if there is a flaw in my reasoning. It would most likely be a huge relief.
IMO- merchants will adopt whatever token consumers are using, so it is more important to attract users of the crypto currency than merchants. Once enough people are using a certain token, a merchant would be stupid not to accept it because they would be losing business. That being said, one of the ways to attract users is having places for them to spend the crypto, so they kind of go hand in hand.
Attracting users can be done several ways.. I like the method of making new and innovative features they want to use along with making improvements to old features, and Bitshares is already doing both.
The rest of your post as to worrying about cloning, I am guessing you are worried about someone making something like Aethereum that is planning on cloning Ethereum and distributing it to Bitcoin holders. I have my doubts this is going to work. I actually posted this in the Aethereum thread the other day and I truly believe what I wrote:
No I've not invested in Ether at all actually. I don't like the current business model but I might invest at a later stage depending.
I have looked at airdrops before and it's pretty unanimous so far that it just crushes the price and doesn't create user adoption. So I thought the Ethereum airdrop planned here was fine, just futile. Considering the proportion of miners involved in Bitcoin and the number of POW fanboys, trying to bootstrap an ethereum clone based on DPOS onto Bitcoin seemed even more implausible. I think it would just be free advertising for the real Ethereum. Just my opinion, you're entitled to yours.
I think this is a solid post and makes sense to me. I have always looked at Aethereum as a potential threat to Ethereum, but you have now convinced me I was wrong all along about it.
You are certainly correct that all "air drop" coins have been a huge failure thus far. There is no incentive to hold onto the coins and as soon as the are "air dropped" mass dumping ensues.
Ethereum will not suffer from that problem, as all Ethereum owners will have invested something of value to get their portion of Ether. This will provide a deterrent from all Ethereum owners dumping on the market for anything less than what they invested in it, which will uphold the value 1000x better than getting Aethereum for free will.
Just look at how hard all the air drop coins have failed, and how the free distribution Nxt clones have failed. It doesn't take much logical reasoning to deduce that that is what will happen to Aethereum too.
Did I miss anything? I hope that was helpful. :)
This is good stuff!
I would add these observations from my previous posts to your comprehensive treatment just for completeness...
Bitcoin will have an unassailable role for a long time because of name recognition, the network affect and its commanding lead in the number of people who will accept it. This makes it the natural crypto-currency to use like a checking account. You put money into Bitcoin just in time — when you are about ready to spend it.
What’s about to change is what you do with your crypto savings.
You want your savings to be safe from volatility and/or to earn you a rate of return. Bitcoin doesn’t do that, but that’s the complementary role I see for BitSharesX.
Come to think of it, I only keep a few percent of my money in my checking account. If a viable crypto savings account were to become available, I wonder where most of Bitcoin’s current market cap is going to flow?
and this:
The final step (of adopting BTSX for checking as well as savings) will become obvious once 97% of BTC has been moved from checking to savings - folks will ask themselves "why do I want transactions at the checkout counter to take 10 to 30 minutes when my savings account only takes 10 seconds?"
But, to get there let current BTC lovers get used to the two-account checking-savings paradigm they already know. Once they have a non-disloyal reason to try us... the rest will take care of itself.
When over half of the BTC users also have a BTSX savings account, merchants will face the "Visa vs. Mastercard" choice and eventually support both with the aid of third party abstraction services. Once its possible to use BitShares everywhere, then it will be no contest to use BTSX for everything.
Meanwhile, no point in selling point-of-sale functions before they are widely available. So early marketing messages emphasize why people need both.
A key part of our marketing plan is to teach this simple idea to more crypto outsiders than there are current Bitcoin insiders. No other crypto asset or BitShares clone will have this going for them. So no worries.
The rest will be history! :)