Short Version: The 101 delegate system + dilution isn't very effective in practice. Shareholders are unable to effectively manage dilution in a way that adds a lot of value & is viewed positively by the market.  Instead the blockchain should only have to hire  developers and block producers.

One possible idea is to use a transaction fee in the $0.02-0.05 range and split it with third parties and marketers. This way you have free market competition to bring in users or create third party services.

The merger is a problem. A competitor that didn't have that drain on their share price would be more successful and more marketable.

---------------------------------------------

BitAssets will be of value to millions of people all over the world and generate ENORMOUS wealth for shareholders of the most successful BitAsset vehicle. However for a variety of disputed reasons the current model has done the opposite. At the moment the market seems to be signalling that it is at the very least uncertain that the current BitShares is the vehicle that will bring BitAssets to the world.

Now is not the time to panic as there are a lot of great developments in the pipeline that will make it easier to attract new customers as well as initiatives like minebitshares which have shown success and could benefit from dilution to add clear value. So we could very well be nearing the bottom and about to turn a corner on the way to unprecedented success in a way that may in fact be largely thanks to dilution. 

At the same time, funding has run out and if BTS continues to fall, say down to the $10 million level, then it will be time ask some serious questions.

Are any BitAsset models more competitive or worth more than BitShares?

BitShares

Dilution Cost: circa $15000 per month
Merger Cost: circa $100 000 per month
Brand Image: Fairly Negative
Market Perfomance: Worst performing crypto in the top 10 since the suggestion of and implementation of the merger for a statistically significant period of 6 months+
 
Despite many people's belief to the contrary, dilution and the merger which add up to circa10% dilution as I predicted have proven to be fairly unpopular and costly.

On the day BTSX was at 0.000088 BTC & rising -

I know DAC's are businesses and dilution can be a standard tool but unfortunately the risk is more than the dilution by far. I love risk, if I think there's a 0.5% edge I'll put decent money down, hell if I'm bored I'll flip with reasonable sums for fun. The reason I'm highly skeptical is because I believe the risks are much greater. I've seen this kind of sales pitch from Invictus and within BitShares many times and variants of it tried all over crypto-land. This is just the same stuff in slightly different packaging.

A while ago Stan was pushing for taking the 1.6 million PTS and making it 2 million, giving it to Invictus and promising great marketing riches in return. We've guys like DA pushing the same approach as well as a decent share of this community.  Anyway you will get sold this all the time. In this case they've reached all the way out of crypto 10 years + back to a PayPal case study. They've told you to rest assured, we have KYC, everybody is unique etc. Then after the same fear and greed. 'Shit our competitors' and '10 000% plus gains, overnight bootstrapped network effect' etc.

Luckily BitShares has avoided those pitfalls and now has a no.3 in crypto-land DAC (ignore XRP) despite still being in a buggy, centralised risk stage. PTS in the top 10 and two/three other DACs have a lot of potential.

Make no mistake 10% inflation is a lot, you might look at the CAP and think how many users a bit of inflation buys, and that BTC has mining ( Actually a lot of investment has gone indirectly into BitCoin as well as free advertising that would have cost 10% this year.) but they don't realise BTSX may have its CAP because they don't have inflation.

Watch how fast the perception changes when the share price is dropping and people thinks it's others cashing in on their dime. The race for the exits will begin.

& Before the merger

Nothing is inevitable.

http://m.youtube.com/watch?v=x5m1A7zoIcc

Even if it doesn't change, if it doesn't work, I find in general developing talent tends to be weak on behavioural analysis so these kind of discussions help people understand where they might have gone wrong in retrospect and make better decisions for the future.

The way dilution is applied in a decentralised model is very ineffective. A group of largely apathetic shareholders can't be expected to manage up to 101 businesses and monitor their performance in much of a value adding way especially at this nascent stage of DPOS. It ends up being largely political, popularity contest. Ineffective delegates are often able stay employed once elected despite non-performance. Even many of our own core developers don't want to take part in this process.

You also have the problem that when the share price is constantly dropping that shareholders are obviously very unhappy. If they are being diluted in the process of the constant decline, no matter how negligible it may be, this emotion is amplified. With BTS it is hugely magnified because ineffective and poorly managed dilution coupled with a declining share price is a recipe for constant selling pressure and plus there is the unpopular, expensive merger to pay for.


Possible Solutions

A DAC that uses fees to pay a small group of core developers and block producers. (The current BTS is generating over a million BTS per month in fees. A more utilised BTS could easily push that up to 2 million. At $0.025 that would be a $50 000 a month which could fund a small group of core developers especially if a few were based in SE Europe/Other which may be sufficient after 1.0) 

A DAC that has a market competitive transaction fee of between $0.02 and $0.05 but gives up to 50% in revenue sharing models.


Using this model, marketers and third parties can be rewarded based on the amount of business they bring to BitShares by getting a share of the fees the customers they bring in generate. While not necessarily a fan of MLM, a third party getting to keep 50% of all fees generated through their wallet should provide ample incentive. More importantly there is very little need for shareholders to manage or control 101 small companies which is very unrealistic. Instead we only have to mainly choose core developers and consistent, trustworthy block producers. The free market though the revenue sharing model may do the rest and reward them for the value they actually add. 

If a model like this can achieve a $50-100 million CAP it's possible to be self sustaining. As I've said previously, though I'm not sure if many agree. A well distributed DAC that starts with no dilution and sticks to that can be viewed as a form of digital money, perhaps the most optimal and as a result attain a large crypto-currency following, valuation and adoption in it's own right even if many of the users don't understand or use many of the other blockchain based products and services at first.   

Option 1:  Raise funds for 40-50% of a new competing DAC that gives 50% equity to existing BTS holders.

BitSapphire have no interest in creating a competitor but they have a large team & good acumen. They are able to make $ go much further because of their geographical location. I highly recommend watching their BitSharesTV episode, I was highly impressed, where previously I had a neutral to slightly negative initial perception of them.

With the dilution, merger and negative brand image, it's hard to imagine that a new group with $1 million+, not associated with the perceived mistakes of the past could not take this technology to the next level and compete with the $15000 per month BTS is using via dilution. Possibly hiring some of our great existing developers on a competitive wage and getting BitAssets to the point that they would be more popular & successful than BTS. Possibly even without the need for  dilution and therefore be viewed as a good crypto-currency in it's own right too.

Option 2:  BitShares PTS

Merger cost: Zero
Dilution cost: Zero
Brand Image: Fairly neutral, possible rebrand needed,
Market Price: Very Low

Negatives: Zero funding and few developers.

This community and core developers have value that they can bring to any DAC. The negativity is largely attributed to past decisions made by a small group and not the community or developers as a whole.
 
A strong breakaway group consisting of a few credible developers and some of the core community could rapidly increase PTS value to the $5-10 Million range. Without a merger to pay for and neutral brand image, it's possible it could compete with BitShares and rapidly overtake it, if BTS continues to decline.

Advantages: 1000%+ gains for people that get into or already have PTS below a $1 million CAP.
A growing & popular home for BitAssets as opposed to a declining and unpopular one.

Challenges: Getting PTS to a $50 millin CAP and the point where it's able to pay developers from revenue is going to be incredibly challenging.


Option 3: Make Big Changes to BTS (Only if share price drops below $8-10 million)

Cancel the merger.
Fire all non developers and raise developers salaries.
Raise fees and try to survive on revenue with a fee sharing model to incentivise marketers and third parties instead of shareholders trying to manage 101 salaried  delegates.


Other:

It's possible that the new BTS is just finding it's true value and we may be very close to the bottom. There are a lot  of good developments in the pipeline. I hope thinking about alternatives isn't too unpopular but a model that has lost money during it's suggestion phase, creation phase and for the following 5 months in a row, during a time when the average top 10 crypto has gained 60%+ vs. BTC, even though the underlying technology and potential is huge, make it worth considering other options imo.

Well done to all you working to make this model better instead of complaining like me.

You seem to have a large talented team, good business acumen and can see the potential in what this technology can offer but at the same time you've seen how BitShares has struggled price wise these last 6 months.

Have you ever thought of starting a BitShares competitor instead?

Holy shit.... now i understand the whole disaster....

800k BTS every day? This price drop won't stop anytime soon and 1k prices are soon to be expected. All those theories about solving the problem are illusional.

Yeah, I believe it's around 800k

Quote from: Empirical1.2 on March 12, 2015, 03:25:51 pm

Does anyone know how much of the merger allocation is being claimed on average?

There's up to 650k merger BTS being released a day in addition to the up to 100k via delegate dilution which is a significant amount relative to the average BTS buy walls which could be having an impact on BTS sustaining it's price at this stage. http://www.btc38.com/trade_en.html?btc38_trade_coin_name=bts

 129,427.20    currant daily new BTS  from delegates
  694,444.44    daily from superDAC merger
  823,871.64    total New BTS daily

How much is claimed daily is not so significant as they can be claimed the next day and the next... so the safe assumption is "upto 823K BTS must be bought on average, each and every day...for the next about 20mo."

[edit] I think buying about 1/3 of the above amount (on average) is what we need to keep the price from going down.

But only some people are selling their merger allocation, so it's a lot less than 800k everyday but probably still enough to have an impact. 

Dilution + The Merger is releasing up to 800 000 BTS per day onto the market. Looking at the buy walls on BTC38, it’s possible that could be having some impact on the price.

My personal view is the following…

When viewed purely as a form of money, BTSX was the strongest on the market, even if you didn’t understand BitAssets. Despite the sometimes abrasive personalities of key actors, it was very easy to develop network effect and build a supportive community because it was very hard to argue that any other offering was superior.  (No inflation, profitable, best blockchain, most effective decentralisation, money in the bank to get to 1.0 and the best developers.) As a result a lot of our popularity, growth and valuation was derived purely from the fact that we could be a crypto-currency that challenges Bitcoin. 

The new BTS has variable dilution decided by shareholders and an expensive merger to pay for. ‘Decided by shareholders’ is great for a company but never popular as a form of money. As a result we’ve lost a lot of our popularity, growth and BTC Challenger (As a widely adopted money) value. You can view BTS as a money, just the nature of DPOS, variable dilution and the merger to pay for make it one of the weakest on the market from that perspective. The new BTS is now viewed as a crypto-company exactly as Stan recently described.

BitShares is a profitable company that produces smart-currencies as its products. Products that are better in every way with none of the drawbacks you mention.  There is no inflation in BitAssets at all (relative to their underlying peg) and the underlying BTS can produce those stable currency products whether is gaining or falling in value.  BTS is not intended to be a currency itself, so a tiny amount of dilution has zero affect on the value proposition of its smart currency products.

This new company BTS is valued very much the same way a BitReserve would be valued & you can see they’re solely interested in their BitAsset growth and metrics.  https://changemoney.org

If you track our BitAsset growth month over month there is very little. So our valuation is fair considering our product is not selling.

So BTS is in a position where it will trend to zero if the product doesn’t sell whereas as crypto-currencies have values independent of that and they can choose to add a BitAsset this year if they wish.

Also people didn’t like the way the merger was handled. Personally I feel ‘Vote’ was presented as a threat because it was more competitive. But I never felt it was more competitive, the market valued it at <$1 Million at snapshot time, the product was not popular and there was no secret sauce. It was only a threat because the lead BTSX developer and largest shareholder was keen to work & spend money on it and add a competing BitAsset before BTSX was at 1.0 stage, which would have crippled BTSX. A low value DAC using dilution to pay bills was no threat to BTSX imo and BTSX was already earning a comparable amount in fees that BTS is currently accessing through dilution. (But the dilution is more expensive as it represents a bigger % of the CAP than fees at a higher valuation did.) There were no easy answers though.

Ideas

- Wait for moonstone, 1.0, CryptoSmith and other upcoming developments to see if they can reverse the adoption trend.

- Liquidity - consider all possible options for ways to add liquidity even using the DAC as the market maker in a limited capacity if the downtrend continues.

- Give people something to do with BitAssets. Music/Gaming/Gambling/DNS auctions or even a prediction market might be worth a shot too.
 
Other:

World Events - Banks confiscations and charges on bank deposits are becoming more and more widespread, there are still no decentralized BitAsset competitors on the market, so the world may give you an opportunity that makes BitAssets worth the risk to more people.

If all else fails,  consider raising funds for a no inflation crypto-currency that also honours BTS.

Quote from: Empirical1.2 on April 03, 2015, 04:36:23 pm

Why? It is a popular crypto-currency with unchangeable supply rules.

Counter argument:

Why? Its the first real cryptocurrency and has been around the longest, nothing to do with supply rules.

To quote Come-from-Beyond:

Quote

You took Bitcoin weakness (necessity to pay money to electrical companies) and transformed it into your strength (self-funding). That was a smart engineering solution.

https://bitcointalk.org/index.php?topic=940298.msg10895809#msg10895809

CfB is absolutely right. Bitcoin is vastly inefficient with high and largely wasteful inflation. BTSX offered more effective decentralisation without the need for any inflation and was even profitable. With additional funds capable of being directed to developers and marketers. That was a genius engineering solution.

However I doubt Cfb is pushing to dilute NXT even though they could certainly use more funding. 

Counter argument:

Why? Its the first real cryptocurrency and has been around the longest, nothing to do with supply rules.

Do you think Bitcoin would have gained popularity if the Bitcoin foundation or early adopters got to decide on how much dilution Bitcoin should have the following year and where it should be directed? I highly doubt it. 

Q. You know that really successful, widely adopted form of money that shareholders choose the supply of?  (That isn't controlled by force)
A. No, me neither.

While shares in traditional companies have been used as a form of payment/exchange through history, this is not how those companies derive their value. Those companies derive their value based on their products and services. Traditional companies that can create shares exactly the way BTS does have been around for centuries, yet none have been widely adopted and gained value purely as a form of money. Bitcoin is different. Why? It has no product or service, yet it has a $3.5 Billion valuation and is used exclusively as a money. It's because unlike traditional shares, the supply of Bitcoin is pre-defined and can therefore be widely adopted purely as a form of money, very similarly to the reasons why gold and silver were adopted as a form of money.

Quote from: bytemaster on April 03, 2015, 04:36:28 pm

I have gotten more done for the future of BTS in the past month than in the 3 months prior and everyone on the core team knows it.

Hey, if keeping off the forum really is allowing you to bang out development like that then that's awesome. I'll take a more-or-less quiet but busting-ass BM if it means development pace is accelerated. 

And @ Empirical: I think you're really, really overestimating the impact that dilution and the merger et al had on the BTS price. Just about every crypto in general has gone through the same phases: huge hype and price blowout followed by slow bleed. If nothing had changed supply-wise with BTS but the same promises remained unfulfilled (fiat on-ramps, marketing blitz, etc) I can pretty much guarantee we'd still be in about the same position price wise as we are today. Honestly it's just kind of how the markets work. Without real adoption it's nothing more than mass speculation, regardless of dilution etc.

I personally think the self-funding method of dilution is an incredible idea, and if the devs can truly knock out some key aspects/features in the next few months to raise the market cap, the self-funding will take on a life of its own.

The BTSX share price clearly reflects a strong rise up until dilution became a serious reality after which we lost 50% of our value in less than a month. The forum posts at the time also show huge turmoil and division over dilution at the time. Going from debating when we would pass Litecoin to whether we would lose most of our value as a result of the move. It has proved to be the latter. It is hard to argue that it was not the major factor in the breaking of the strong uptrend and the cause of the huge decline in the BTSX price. Though there are many other contributing factors to speed of the decline in the months proceeding. 

I agree that a self funding BitAsset machine can be successful even without being backed by something structured like a limited form of money it's just a much harder task and because the products aren't patentable a crypto-currency can copy them very cheaply if they prove to be useful.
Also in favour of your argument, BTS is still at no.5 with lots of positive development all coming through in the next few months.

I see your points there, but there is no proof of what you are saying. NXT at one point had a market cap around 100 million there was not any major change since then and they are at 10 millions right now. No proof that  the inflation change created the decline. There are many factors that cause it, like  "pump and dump", btc price, poor marketing, not any major business deal, bad PR, bad wallet etc. I for one  thing that the self-funding model invented by Bitshares will be the used in every DAC in the future, I think it is absolutely genius. You forget also that if the market cap is big enough the dilution could practically disappear, in other word this could only be temporary on the startup phase of a DAC, the time where money are most need it and hard to come by. Even if Bitshare will not be the DAC that we all hoped it would be , they introduce so much innovation in the space that I'm pretty sure will stand the test of time.

I think there's ample proof that our specific decline was largely caused by dilution. I think NXT is a good example though in favour or your argument. I think NXT is vastly inferior though yet they are getting closer and closer to us with every passing month when dilution theory states the opposite, that we should be pulling further and further away. I think if NXT pass us in CAP that will be time to seriously re-evaluate the current model imo.

You're right that dilution could disappear once the CAP increases, this will be very positive for the share price. I'm unconvinced though that BTS will gain a large BTC comparable valuation and widespread adoption as a form of money in it's own right because there is always the spectre that someone may come up with an 'innovative' idea for diluting shareholders at a later stage.

Quote from: wasthatawolf on April 03, 2015, 03:09:22 pm

correlation != causation

I miss seeing posts from BM and Toast too but let's not get ahead of ourselves


Sent from my iPhone using Tapatalk

I don’t think there’s anything wrong with BM posting more however the loss of value is primarily due to the introduction of inflation & subsequent loss of crypto-currency status.

Bitcoin is an inefficient company that is wasteful and which can’t fund it’s own development and marketing. It doesn’t have any products on its blockchain.  Yet this ‘company’ is worth $3.5 Billion. Why? It is a popular crypto-currency with unchangeable supply rules. That is the product, a popular form of money with supply rules that aren’t changeable by man can become extremely valuable as Gold and Silver have shown.

BitSharesX was a Bitcoin challenger. It’s incredibly difficult to usurp the market leader but BTSX was on track to do it. With no inflation, more effective decentralisation and an incredibly fast blockchain that might also disintermediate centralised payment processors like BitPay, BTSX was arguably the strongest Bitcoin challenger on the market & was correctly valued as such. In addition it had a team of highly talented developers, money in the bank and was also developing the potential killer app, BitAssets which would allow people to move freely between a wide range of assets in a way that would benefit and generate revenue for holders of BitSharesX. It was also already hugely popular in Asia & growing in size by every community metric. It was amazing. The market correctly valued it at 0.00093 BTC and rising. It’s hard to imagine that with that trajectory and all the subsequent development we’ve enjoyed including web and mobile wallets and now a direct PM gateway too that BTS would be valued any less than $250 million at this stage and given the BTC capitulation at the beginning of the year may even as far-fetched as it sounds been in a much stronger position than even that.

Then the market realised the largest shareholder, main developer and overall leader was very serious about introducing dilution to turn BTSX into a self funding competitive company to maximise our ability to develop BitAssets & other blockchain based products and services. BitShares has since lost over 75% of it’s BTC & $ value. It is now viewed as a company and the market is evaluating the development, progress and adoption of BitAssets as the key valuation metric. Currently I would say BTS is valued fairly by the market for what it is now at the current stage. This unfortunately puts a lot of pressure on developers to constantly deliver.  It’s quite sad because BTSX as a crypto-currency was already largely developed and generating a bigger following every single month as opposed to our current constant state of value and community decline.

There are positive developments coming along and I wouldn’t be surprised to see a small reversal, potentially a bigger one if BitAssets can attract a niche market or create a popular product which uses BitAssets.

Quote from: davidpbrown on March 29, 2015, 01:42:45 pm

Sellers will accept currency that is useful to them.. it's the same as is occurring with Bitcoin currently but the difference with a debit card it that would be the great equaliser..

The sea-change will come when mass consumers have a reason to hold and value bitUSD.  When this becomes the case the merchants, seeking sales and profits, will find ways to make it easy for consumers to spend their value (bitUSD).  It is not the merchants that drive adoption.  The merchant adoption is simply a response to consumer adoption.  No matter how inciting one makes it for merchant to use crypto, its use will not be popular unless consumers have a reason to use it for transactions in place of fiat.  This is were Bitcoin is currently getting it wrong.  It has merchant adoption greatly exceeding consumer adoption.  This can not be sustained, and is currently being reflected in the stagnation of the bitcoin price.

I agree that is a factor in Bitcoin's stagnation but I believe there are possible tax benefits using stable BitAssets for merchants especially as well as businesses that might have difficulty getting a standard account. So while customer adoption is usually the main route to merchant adoption, I think if BitAssets were further developed some merchants might find value in using them in their own right, not just because their potential customers are.  Darkcoin/Dash already has a bit of that market, so they might be best placed currently to add a DRKUSD to their blockchain.