I cannot reveal the details right now, but the DAC that I am most excited about becoming as big as BTSX is now the VOTE dac.

Yes ladies and gentlemen, we have figured out how to monetize VOTE and accrue all of that value to VOTEs in a game changing way.

And that is my tease of the day.... just so excited I couldn't keep it in. 

Back to BTSX.

Users of ebay can settle in any payment form they desire.... marketing to ebay users / merchants is likely to gain us far more users than Open Bazaar. 

Users have to create, share, distribute, and manage partially signed transactions.   This is not viable for almost all users.  Only the most paranoid and patient of users.  The infrastructure required to "get this right" is significant. 

As a general policy I think there should be no situation where a user cannot sign and submit a valid transaction to the blockchain.   Multisig is a generic tool employed by Bitcoin to solve any arbitrary voting policy on spending funds.   Being generic means it is harder to use.

I think we can identify the 2 most common use cases and make it even better than Multisig. 

These use cases are: 
1) escrow 
2) transaction confirmation via 2 factor authentication service

The 2 factor authentication service is much more complicated and will require full use of multi-sig along with a "bot" that will automatically transfer all incoming TITAN transfers to unique multi-sig accounts. 

In the case of escrow:
1) Sender Key
2) Receiver   Key
3) Escrow Agent  Key

The escrow agent should only have the power to divide amount between the Sender or the Receiver and no one else. 
The Sender only has the power to give the funds to the Receiver.
The Receiver only has the power to give the funds to the Sender. 

In this case we can create a simple state transition on who controls the funds and any user can create/sign a transaction that will update that state transition:
1) Initiate transfer
2) Sender confirms transfer *or* Receiver returns transfer
3) *or* Escrow agent resolves dispute... and divides the funds between the parties.
   
I believe this simple escrow operation is much easier for users to interact with than multi-sig.   It would involve selecting an escrow agent at time of transfer and then clicking a "release funds" when the goods arrive.    On the receiver side they can click "return funds" at any time.   In the event of a dispute they both have to contact the escrow agent and pay for dispute resolution. 


 

In February 2014 it was estimated that at most 500,000 people actually own Bitcoin... that means that Bitcoin has a market cap of $10,000 per unique user....

If you could buy users for $200 each and the same network-effect rules applied then you could reach the size of Bitcoin's user base for a total of $100 million dollars.

Suppose there was a way to identify a unique user...
Suppose there was a way to pay a pre-paid credit card with BitUSD...
Suppose there was a way to track referrals for people who sign up to use this pre-paid card...

Suppose you gave everyone 10% cash back when they pay their pre-paid card with BitUSD (limit $100 off)
Suppose you gave everyone who referred them a matching cash bonus limit $100 per referral. 

Net result:  users buy $1,000 worth of BitUSD and spends it via the pre-paid card earns $100...assuming a referral they buy $1000 worth of BitUSD and cost $200 worth of USD...

Users who recommend 10 people who and buy and spend $1000 worth of BitUSD will earn $1100...

In the process users have achieved the following:
1) learned how to buy BitUSD and created accounts with various institutions
2) learned how to download and use our wallet..
3) learned how incredible the yield on BitUSD is...
4) learned how easy it is for them to spend their BitUSD via a normal credit card...

What percent of these users hang around and put more money into the ecosystem?   Do you think BTSX market cap goes up by $100 million dollars?

For $1 million dollars you could purchase 5,000 users... who must put $5,000,000 into BitUSD prior to spending it to earn $1 million dollars.   This would boost the market cap of BTSX by $15,000,000 via the BitUSD multiple alone....  now suppose a fraction of those new users decide to stay and earn interest on USD, etc, etc... they bring in their savings....

This would be the marketing strategy that could easily pay for itself...... It would have to grow the market cap of BTSX by $50-$100 million for the development fund to break even funding it.

Suppose we had Bitcoin level inflation (10% per year)... and we put that toward the referral system...  at today's valuation that would buy 30,000 users per year... at the valuation it would quickly grow to $600,000,000 it could buy 300,000 users per year....

If user valuation is even 20% of bitcoin's network effect ratio... that would be $600,000,000....  At this valuation you could spend $60 million per year buying *new* customers with free samples... and have a user base larger than Bitcoin.

So why will this work with BTSX and not our competitors?

1) The user experience is one of 0 volatility
2) The user experience is that of a bank with a check card that earns very high interest rates
3) The user experience is one of names without addresses. 

So you see... a bitcoin user would see a foreign currency "what's a bitcoin?" no interest and high volatility. 
Our users would see a very familiar system interface with dollars and interest with lower fees...

Yes... this would be game changing... yes... inflation in this case would yield a net gain for shareholders.

Suppose we already were good friends with people offering such a pre-paid card?
Suppose these friends already owned a large percentage of BTSX?

We plan to make one last change to the market engine prior to locking it in stone for many months and changing to a much slower release cycle.

Short orders can only get filled under these conditions:

1) There is someone willing to buy BitUSD at the price feed
2) AND Your short order offers the highest interest rate
3) AND Your price limit is lower than the feed  (BTSX per USD) or you didn't specify a price limit.
4) AND You have enough collateral to provide 2x backing at the feed price (amount of USD for short sale will vary with feed price)
5) OR Your price limit is higher than the feed (BTSX per USD) and someone is willing to buy at your price limit.

Short orders are forced to cover after 30 days by taking the best offers at the time.  No fee is charged.
Short orders are forced to cover when 75% of their collateral is required to cover, leaving the short with 25% of the collateral minus a 5% fee. 
The 5% fee is assessed as a percent of the collateral left over after covering.

The maximum interest rate shorts can pay is 1000% APR
The initial collateral ratio will be 3x rather than 2x  (2x from short + 1x from long)

Interest charged will accumulate to the yield fund.

How is this better than *everything else* we have tried before it? 
1) First attempt charged a *fee* for short overlap, this fee basically bid up the spread and the amount of time a short would have to wait to cover profitably and made market makers unprofitable.
2) Second attempt (currently implemented) has shorts bid up collateral, but this provides less and less benefit to the network as prices go higher... ie: 10x collateral only provides 5% more downward protection than 5x collateral. 

How can I be sure we "have it right now"? 
1) It only makes sense that if you are borrowing USD you should be paying interest....
2) It only makes sense that if you are borrowing USD there is a fixed repayment time...
3) We are not price fixing the interest rate, it is being set at "auction" at the current price feed.
4) Time based fees encourage covering sooner rather than holding forever which improves liquidity.
5) It only makes sense that the creditors (holders of it BitUSD) be compensated for their risk at market rates.
6) BitUSD supply will rise to meet the demand of the shorts and the market activity will be more robust

It has been very tricky to figure out this market with two dimensions (price and interest) and we have been evolving toward steadily improving systems.   The great thing about this latest solution is that it realizes almost all of my original goal of interest paying BitUSD funded by the shorts.   BTS with market based interest rates..... you know those two upgrades we talked about 6 months ago that were being postponed until we tried the interest-free version.    Well in just 1 month we have learned, adapted, and deployed a system that does what I thought would take 6 months and a new DAC to implement. 

We have only had to make one compromise so far:  price feeds. 

The remaining weaknesses are: 
  1) shorts don't get to pick the price, just a limit and the rate 
  2) the price feed is slow to update and does not allow internal price discovery.
  3) the market is asymmetric (you cannot short BTSX backed by USD)
  4) you cannot short BitGLD backed by BitUSD (or any other combo)
 
We have a roadmap for addressing all of these:

1) Implementing a bond market that allows USD longs to LEND to shorts for fixed term with a bid/ask system setting the interest rate.  This will create no new BitUSD but will give shorts freedom to set their price without respect to the feed and hold for longer than 30 days.

2) Implementing a prediction market that trades on the ERROR in the price feed.  This prediction market will then allow continuous, real time, price discovery on the blockchain by continuously discovering the % delta between the price feed and real price.  It can be speculated on without losing any exposure to BTSX and with limits that can be used to halt trading on the USD/BTSX market if the feed error is too great.   The USD/BTSX market can then use FEED_PRICE * PERCENT_ERROR.   In this way delegates are only responsible for "getting close" with their feeds and a free market will continuously update the price at which shorts can execute.

These last 2 items are not critical and price feeds are likely more accurate than a thin error market.   For this reason we will not be implementing them until after BitAssets have proven themselves for 3+ months *AND* we have done a very careful test network.   Getting BitUSD right has required rapid tweaking and updates, but the rate of change is not healthy for BTSX or others and has many risks due to bugs.   So I think these last two enhancements are not high priority and we will instead focus on light weight clients, multi-sig, etc.

We are working to make BTSX and the toolkit the most robust financial platform we can with as little trust as possible in anything but the market.

Based upon the current BitUSD supply and reserve fund BitUSD is paying 1.5% APR on average *IF* no new transactions were made and all BitUSD were held for duration.

Obviously some of that USD is tied up in market orders, some is traded before yield can accumulate, and some yield is claimed before it fully matures leaving more yield for others and it will likely generate more fees before the end of the year.... *so* if BitUSD supply remains constant you can expect more than 1.5% APR.

If BitUSD supply increases then that means the peg is holding and things are trading and you don't have to worry about the PEG much.   



 

When your short order is executed you will be given 30 days until a mandatory cover (without fee) is executed.

This is done to enhance the Nash Equilibrium that will cause shorts to take opportunities to cover at a profit anytime there is deviation from the peg.  After 30 days this will create continual buying pressure on BitUSD.  This will reduce the demand for shorts that are only "long-term" bullish and cause them to be more "medium term" speculators.   If you want to go "long term short" then you will have to cover and re-short monthly.   You maximize your profits by covering and re-shorting when there is the greatest deviation from the peg.

This is in line with traditional financial instruments such as futures contracts that always have a maturity date.   

Older shorts entered before this hard fork will be grandfathered in with a 1 year deadline.   

This also provides liquidity from shorts that have lost their keys and are unable to cover and forces shorts that are losing ground to "re-up" their collateral. 

Last year after Vegas I made a post on this forum quoting the CEO of an ASIC manufacture that said something along the lines of "it is a good thing Bitcoin is centralized in the hands of a few small pools because it allowed us to quickly resolve the March 2013 hard fork."

I am looking for that post... can you help me find it?