32:22: fuzzy : How will wallet host be compensated?
32:59: bytemaster : Wallet host will end up registered the most users and will be compensated by the referral program.
I worry about the referral program being used as the only funding method for wallet hosts. I presume a user can always take their identity with them and go to another wallet host. A user will likely to keep their account and associated metadata (web-of-trust, reputation) for life. But it is silly to think they will use the wallet provided by the same wallet provider for life, or perhaps even for more than a year. However, the wallet host that first signs up that user will be the one to get 80% of all the fees that account pays for life (or 80% of the lifetime member upgrade fee). What happens if a user signs up with one wallet provider, uses it for a few months and then switches to another wallet provider that the user uses for years? All of the transactions during those years will have 80% of their fees still go to the original wallet provider even though they are no longer the ones provide the service the user uses or investing in the development of the wallet to keep the user using their wallet. The incentives are broken.
This is why I suspect that wallet providers will still need to create (and only accept) transactions that also pay an additional small fee to the provider with each transaction (like the LightWallet did) as a better aligned revenue source. This is a little troubling because the fees are already pretty high for the sake of funding the referral program (although I guess the stakeholders can always reduce it). But if my suspicions are true, the high fees of the referral program will only be used to compensate marketers bringing in the new users (which is fine and what the purpose of the referral program should be) but not as a long-term solution for funding wallet providers.
In today's mumble, BM clarified that wallets will rely on other monetization strategies (subscriptions, ads, security/services) and will want to avoid charging extra tx fees. The referral program is a bonus.
There are plenty of different bitcoin wallets around so a referral program will give the best bitshares wallets even more profit to build into a better wallet/UX.
How do bitcoin wallets make money anyway?
Edit: Why will the user choose to download the wallet from a referral code rather than quickly search the app store?
Does the referred user get something extra? If you're telling your friends about bts over the phone or some other situation where you don't have your respective phones right next to eachother then it's potentially easier to just search the app-store for 'BitShares wallet' than to enter any referral codes. Maybe I've missed something but I can't see a referral benefit to the newly referred user (User #2).
Maybe User #1 can choose a variable % of his referral fee that will be paid back to referred User #2 if they use his code, with the caveat that for every % paid back to User #2 an equal % must be returned to the funding pool ("burned").
User #1 would obviously prefer to give User #2 0% (as it comes out of his pocket and not BitShares) and the referral code when presented to User #2 post-% decision should not indicate that it could have been possible to get up to 40% cash-back for User #2 (leaving User #1 with no referral bonus of course).
The remaining 60% in this situation would be sent to the funding-pool.
The more User #2 receives as cash-back the higher percentage of total fees are paid to the BitShares network and less to individual users in referral-related fees.
The cash-back is only returned when User #2 upgrades to an annual or lifetime membership anyway, so it would be a net benefit to BitShares however much User #1 gets paid in referral fees wouldn't it?
EDIT: I forgot all about the cost to create an account!