162.243.61.72
64.90.183.137

Based upon early tests here are my relative mining performance by computer.

1) Digital Ocean 2 core           100%
2) 2.3 Ghz i7 Mac Mini            1000%
3) 3.4 Ghz i7 iMac                  1400%

Your milage may vary.

Since mining of ProtoShares will begin on November 5th, I thought it would be fitting to open a discussion about what the value of a ProtoShare will be and what methods can we use to estimate its value.

For starters I would like to dispense with the notion of a ProtoShare having any value without reference to the total supply of ProtoShares.   The real question is what is the value of 100% of all ProtoShares and then deriving the value of a single ProtoShare relative to the supply.   This process is very much like pricing the IPO of a new company and estimating the market cap.    Generally speaking you want to compare a company to other companies its industry and then adjust the valuation based upon relative competitive advantages each company has.

In the crypto-currency market place you would have to compare ProtoShares to other DACs such as BItcoin, Litecoin, Peercoin, Namecoin, and Primecoin.   For a complete list of other players in the market you can visit http://coinmarketcap.com/

A brief overview of the market shows that Feathercoin is worth about $1.7 Million dollars and offers little more than marketing and perhaps checking-point compared to the competition.  I feel this is a good baseline value that puts a floor on the value of ProtoShares because ProtoShares has several major competitive advantages over all other altcoins:

1) Entirely new proof of work that is better suited at achieving the goal of Litecoin that Scrypt (which is also used by Feathercoin)
2) ProtoShares comes with a social contract that bakes in the future value of all the features of BitShares
3) BitShares has the potential to provide much more value to the market than Bitcoin.

Now that we have established the baseline value we can compare it to the next contender, Primecoin with a $2 Million dollar market cap.   Primecoin has the competitive edge of a proof-of-work that is somewhat socially beneficial and is therefore a good point of comparison as the the only other proof-of-work system aside from SHA256 and Scrypt on the market.  If that was all that ProtoShares had to offer then Primecoin would be a good point of comparison.

The next point of comparison is Namecoin valued at $4 million dollars.  Namecoin is the first non-currency oriented DAC and as such provides potential utility beyond competing to be the next reserve currency.   The mere potential that Namecoin could eventually replace DNS systems is enough to justify its $4 million dollar market cap.   This shows that non-currency DACs have a baseline value of around $4 million even in the face of significant weaknesses in the pricing structure of domains and squatting prevention.   A crypto-currency that provided the services of Namecoin with a proof-of-work like Scrypt or Primecoin could have more value.  I would estimate that such a combination could have a value near $8 million.  Unfortunately ProtoShares does not yet implement these potential features and therefore the value must be discounted based upon risk of implementation and time value of money.   Even so, the feature set and value proposition of BitShares far exceeds that of Namecoin so it is hard to say what the value could be.

The next major coin is Peercoin which is a combination proof-of-work, proof-of-steak system that is also competing against Bitcoin and Litecoin to be the next generation currency.  It is up at $8.4 million dollars despite being a latecomer to the market based solely on its enhanced protection against certain classes of attack.    The Momentum proof-of-work might keep mining power decentralized enough to provide similar protections in the eyes of the market. 

So far if you compare ProtoShares to existing crypto-currencies there is easily potential justification for a $8 million dollar valuation right out the door.   But comparing ProtoShares to other crypto-currencies alone is not looking at the big picture.   What is the value of a crypto-currency that can be pegged to gold or silver while remaining decentralized and trustless?    What is the value of a way to securely store dollars and receive a positive return on investment without counter-party risk?    Well, the investors in Invictus Innovations felt that it was worth investing $600,000 dollars to build the system even with no pre-mining.    Without pre-mining the investors in Invictus Innovations are on near-equal footing with everyone else in terms of acquiring BitShares or ProtoShares and therefore that $600,000 investment in a venture that could see only the ability to acquire 1% or less of the BitShare supply could easily be counted as a bid that would value ProtoShares at $60 million dollars.  This would put it on par with Litecoin even before the first line of code was written.   It is critical to realize that Invictus Innovations doesn't get to spend $600,000 on mining hardware because we have salaries, bounties, and other business expenses to pay with that money which has to fund our company for almost a year.   In fact, the investment of $600,000 is spread out over 9 months and therefore our cash flow as a company is limited.   In order to have the opportunity to invest in 1% of BitShares someone had to pay to develop it without pre-mining and thus that 1% will cost $600,000 to acquire.   

So what is a ProtoShare worth?   Eventually it could be worth more than Bitcoin, but starting November 5th the market will get to price ProtoShares and we will soon find out!

What are your thoughts?   How much are you investing in mining? 


 

The unSYSTEM crew are aiming to achieve the same goals as Invictus Innovations and in the spirit of working together to build the best, interoperable technology I felt they deserved their own forum.

We are dedicated to creating popular tools that promote privacy, independence, and integrity in contradistinction to those used for mass surveillance and suppression.

We are building a separate world, connecting projects and resources across continents and outside the tainted spheres of “legitimacy.”

In our thought and debate we aim to transcend particular ideologies and merit those most passionate and world-bending efforts.

The future is bright. The future is crypto.
We haven't even begun to explore the possibilities that the blockchain brings us. The purpose of this project as we develop our technological capabilities will be to explore blockchain hyperspace creating p2p, crypto and opensource software that delivers this new world to you, the user, the king, the pioneer.

• Auto-anonymiser for your Bitcoins.
• Broadcasters to avoid triangulation of your financial transactions.
• Automatic fee discovery. Ability to set a tradeoff between confirmation time and fee size.
• Decentralised market discovery mechanisms.
• Distributed identity.
• Distributed reputation.
• Encrypted messaging.
• Private asset issuance.
• Decentralised trading.
• Semi-persistant storage mechanisms. Such things could lead to an uncensored fast encrypted web. The holy grail of cipherspace.
• Timestampped proof of ownership.
• Encrypted shop-fronts.
• Contracts, escrow, cooperatives, alternate ownership models, ...
• Decentralised market places (ala Silk Road).
• Uncensorable crowdfunding platforms, stock platforms and information blackmarkets.
• Highly scalable blockchain infrastructure.

We want to start an exploration in turning these rough concepts into usable privacy products for the people. Working tools (not prototypes) that are useful and relevant. Bring on the future!

For more information: https://darkwallet.unsystem.net/

This bounty will be paid once a working mining pool is deployed to a server provided by Invictus Innovations.

ProtoShares supports the GetWork protocol which should scale better given the harder hashing algorithm that limits the hash rate to about 1hz per computer.   Because of the different nature of this proof of work you should not run out of nonce search space.

The bounty will be paid in BTC at the BitStamp price at the time of payment.

EDIT:  I am canceling this bounty now that it is obviously more profitable to run your own pool than to be paid by me

Here is a presentation I produced that gives a high-level overview of Keyhotee.

http://www.youtube.com/watch?v=3pZaTdEtK-8

BitShares as a Decentralized Autonomous Bank
by Daniel Larimer, CEO, Invictus Innovations Incorporated
http://invictus-innovations.com/bitshares-as-dac-bank

Stan and I were discussing BitShares one evening and I was trying to describe how BitShares is different from an altcoin.   I used an analogy that described bitshares as a crypto-equity in a decentralized bank and exchange called BitShares.  The shareholders of the bank are those who own bitshares.   I then went on to explain how this decentralized bank can lend dollars into existence just like their centralized counterparts.   I will review this analogy here for the benefit of others who would like to engineer their own Distributed Autonomous Corporations (DACs).



All banks these days operate on what I like to call a fictional reserve basis.  When you approach the bank for a loan to buy a house, the bank creates new dollars from thin air backed by your collateralized promise to pay back the loan.  In this case, your house is the collateral and the bank may call your loan and foreclose if you stop making the required payments or if the value of the house falls too much.   When you pay off your loan the dollars are destroyed and the bank keeps the interest payments and the lean is removed from your house.   The key thing to remember here is that these dollars are nothing more than an IOU from the bank.   People trust the value of the IOUs because they trust the bank to honor their promise to pay a dollars worth of value.

Lets step back one step further and consider that a dollar use to be defined as  412.5 grains of 99.9% pure silver.   When you received a bank note it was a promise to pay  one dollar worth of gold and the law defined the fixed ratio of gold to silver required to give the bank note a tie to the real world.

As you can see the promise to pay is denominated in dollars which are defined as a weight in silver, and yet what is paid out upon redemption is gold.   This example demonstrates that a dollar is just an arbitrary label assigned to a certain amount of value.  Just like you could have a dollar of silver or a dollar of gold, you could also have a dollar of corn, a dollar of oil, or a dollar of anything including a dollar of bitcoin!   When the United States left the gold standard entirely the dollar began to float against all other goods and services and now has value for its own sake even though it is no longer price-fixed against gold or silver.  The dollar is nothing more than an arbitrary measure of value and is still redeemable for $1 worth of silver at the current market price (not the price fixed 412.5 grains of silver).

Lets go back to the world of DACs and consider how a decentralized bank can lend dollars into existence just like their centralized counterparts.   First the bank must identify someone who would like to borrow dollars as it is the collateral behind the borrowers promise to repay that backs the value of the dollars.    Just like real banks,  BitShares requires collateral for the loan and the only collateral BitShares has the ability to foreclose upon is its own equity.    When you borrow money for a house the bank usually requires at least 20% down to protect the bank in the event your house loses value.   In the case of the BitShares DAC the bank requires a 50% downpayment.
Someone wishing to borrow $100 dollars from the BitShares DAC must find $200 worth of equity (bitshares) to back the loan.  Lets assume they have mined $200 worth of equity, they can mortgage this equity and receive 100 BitUSD in exchange for a lean on their equity that can only be cleared by paying back 100 BitUSD.   

BitUSD is the equivalent of the old bank notes that promised to pay $1 worth of value on demand.  In the case of the old bank notes, this value was denominated in gold or silver.  In the case of the BitShares DAC this value is $1 worth of equity, aka bitshares.   The BitShares DAC can almost always make good on this promise because when someone comes to redeem a note and is unable to sell it on the market directly the value of the BitUSD in terms of bitshares will rise until the decentralized bank has the authority to call a loan and repurchase the BitUSD. 

Most people understand why someone would borrow money to buy a house, but why would someone mortgage their BitShares for BitUSD?   The reason someone would borrow BitUSD is so they could sell it and take what is called a short position.  A short position is a speculative bet that BitUSD will go down in value relative to bitshares.  If the value does go down then the speculator can repurchase the BitUSD for fewer bitshares in the future and then pay off the loan while pocketing a nice profit.  This is how speculators on Wall Street make money when stocks go down: they borrow the stock, sell it for $100, and then repurchase it later for $50 and return the stock while making a $50 profit.

Dividends & Interest Payments
All banks attempt to operate for a profit and therefore charge interest on loans along with transaction fees and inactivity fees.  The bank profits are the distributed to the shareholders as dividends.  In the case of the BitShares DAC there are also transaction fees, inactivity fees, and margin-call fees and the profits that result from charging these fees are paid to the shareholders.

When someone wishes to borrow BitUSD from the bank they do not get to borrow this money interest-free.  Instead they pay interest equal to the dividends they would have received on their collateral.    Anyone holding a bank note is effectively lending value to the bank by not redeeming it and anyone holding a balance at a bank is traditionally paid interest.  Likewise, those who hold BitUSD are effectively lending the value of a dollar to the decentralized bank by not redeeming it.  In exchange for lending this dollar the bank pays them interest.  In the case of the BitShares DAC the bank does not take a cut of the spread between the interest paid by the borrower and interest paid to the lender.

It is through this explanation of BitShares that the concept of a DAC was born and a new take on the nature of Bitcoin as a decentralized autonomous corporation rather than just a crypto-currency came to be.