A while ago there was discussion if BTS should be made non-transferable. A lot of good arguments have said in defence of the idea, but it has also some problems (mainly how it would be difficult to implement). Here I'm trying to find a reasonable, step-by-step process how non-transferableness could be enabled.
This has become important when chinese exchange Yunbi started an attack against Bitshares development by voting with it's customers BTS to stop all development (including documentation and bug fixes).
Badly behaving exchanges are not anymore just a theoretical threat to Bitshares. It's real threat, already in use. To make Bitshares more resilient against attacks like this we should disable transferableness of BTS. It will force users to withdraw their BTS out from exchanges and solves the problem.
1. Free transactions for shareholders
Free transactions feature is probably coming in the near future because it has a lot of support in the forum. Thanks to abit we already have a simple and elegant implementation proposal. This will mean that users can make free transactions depending on how much they own BTS.
2. Creation of BitBTS
BitBTS is a derivative of BTS that is backed with 100 % of BTS so it tracks the price of BTS. The biggest difference is that BitBTS owner doesn't have voting power.
BitBTS is borrowed into existence just like any other smartcoin. Borrowers can use more than 100 % collateral if they want to decrease the risk of force settlement.
Borrowers will retain the voting power for the collateral. When they sell BitBTS for BTS they will have double voting power and BitBTS owner has none.
If BitBTS owner wants to vote, he must either force settle or buy BTS with BitBTS (exchange rate will be very close to 1:1).
When BitBTS is created, we can inform all other exchanges that it will replace BTS everywhere else exept Bitshares internal exchange, so they have time to make necessary changes.
BitBTS is also elegant solution for the voter apathy problem. There are lots of investors who just want to make profit when BTS price goes up, but they are not interested in voting because they don't have time to keep up with everything that's happening in Bitshares. With BitBTS they will give up their voting power for those who borrow BitBTS into existence. It is becoming clear by now that proxies alone are not a sufficient solution for voter apathy, disinterested shareholders don't use even those.
3. Disable free transactions feature for BTS
We can reduce the incentive of using BTS as a currency by disabling the free transactions feature for it's transfers. Users could use the subvention credits for BTS trading in the DEX but not for transfers. This will reduce a little bit the incentive to send BTS to traditional, centralized exchanges.
4. Raise the price of BTS transfers
This will create bigger incentive to use BitBTS for everything outside our internal exchange. If users want to trade in other exchanges, they would rather send BitBTS for free than BTS with expensive fee. Little by little we will make it more expensive.
5. Make BTS non-transferable
When most of the transfers outside our internal exchange are happening with BitBTS, it won't be difficult to just disallow BTS transfers entirely.