Overview
 

• APShares built on a variation of BitShares
• Writers pay with APShares to submit articles once every 5 minutes
• Only one article may be submitted every 5 minutes
• Speculators bet on the value of that article relative to APShares (BitShares style Prediction Market)
• Dividends Due collateral on short positions are paid to the Writer
• 25% of all transaction fees on transactions related to the article are paid to the Writer
• Writers pay to create an individual IPO for themselves, one new writer per week.
• Articles are not copy righted and may be distributed / reproduced at will and the writer will profit by this

A case study of The Associated Press, DAC  by Daniel Larimer
Source: http://invictus-innovations.com/dacs-whats-in-a-name

8BTC is a Chinese news aggregator and blogging platform that has begun calling themselves a Decentralized Autonomous Corporation (DAC) or a set of DACs.  The core idea is that writers each have Bitcoin addresses and that revenue generated by the websites advertisements are paid to the writers via the Bitcoin addresses.   This is a centralized company with a centralized domain name that could be taken down.   8BTC also claims to have a membership DAC, but they have a centralized pre-screening process.

After hearing about 8BTC’s misuse of the DAC concept to describe their service, I decided I would sit down and define how such a service could be implemented as a true DAC.  If you are not familiar with the concept of a DAC you may want to take some time to review our prior articles on the subject.

The first step of this process is to accept that it must not have any centralized dependencies.   This means it must be free from all centralized servers and domain names and must not rely on centralized copyright enforcement.  The service must also be free of all centralized advertising revenue.  Lastly the service must be free of centralized editors or censorship.   The second step is to clearly define the purpose of the DAC in a manner that enables us to think outside the box as we consider potential implementations.

I would define the goal of 8BTC as generating revenue for the writers and to promote distribution of solid high-value content.   The traditional means of generating revenue is through advertising, tips, and paywalls.  Meanwhile valuable content is acquired by paying talented writers and using centralized editors.  None of these traditional means of achieving our desired goal are possible with a DAC, so we must think different.

For the purposes of this article, I will name this new DAC The Associated Press, DAC (AP, DAC) after the The Associated Press, Inc which is a flesh and blood corporation in the business of distributing stories across many outlets.   AP, DAC will be a dividend paying, for-profit, DAC that will derive profits for its shareholders from service fees.

If we are going to build a decentralized news distribution service then we will have to find a new way to generate revenue for writers while also filtering the best content.   We will also need a new distribution model that does not depend upon any one domain name or web host.    This is the easy part, you must allow anyone to republish the content on any domain and in any manner they wish and then provide them with financial incentive to do so.   Then you must also provide a way for the original, potentially anonymous, author to profit even as their content is being distributed far and wide.

This is where a prediction market enters the equation.   Allow any author to submit a URL to their article to the block chain.   Once the URL has been submitted (with an appropriate fee paid), the author can place a bet on the ‘value’ of that article.  Those who read the article can then bet on whether they think the value of the article will go up or down from its current price.   If they think it will go up in value they bet on the article and then work to republish the article and advertise it through their channels.   If they think it will go down in value they bet against it and focus on promoting other content instead.     All bets can be tracked and settled in the block chain in a manner very similar to how BitShares works.

The end result of this AP DAC is that market forces will conspire to create many outlets for quality news that is hard to censor.  It will result in rapid recognition of quality work and reward the authors of that work handsomely as the perceived value of the article rises.  It will reward web hosts who advertise or republish the work because they bought into the article along with the author.  Publishers also generate revenue from traditional sources such as advertising by having high-value content to distribute.   It will also automatically filter bad writers which provide low value content because they will lose money if they continually pay to submit articles that never gain any traction.

Someone might point out that a solid author who writes predictably popular articles will have a hard time buying in at bargain basement prices and thus his opportunity to profit from the rise in popularity of his articles will be hindered.   This can be addressed by giving the author a large cut of all transaction fees associated with speculating on the value of his articles.   Any article that is picked up and published far and wide will have a lot of people buying a stake in it and the author will get a cut each time this happens.  He can also rake in a royalty payment from detractors betting against his article.  In a sense, the more detractors one has the greater your royalty payments will be!

How Royalties are Paid
To fully understand the mechanics of this you will want to read the BitShares white paper and my article on Decentralized Autonomous Corporations, but I can provide a high-level summary here.    Anyone wishing to speculate on the value of an article going up must find someone willing to speculate that the value will go down.   The individual betting against an article must post collateral in the form of shares in AP, DAC to maintain a short position.  Because shares in AP, DAC pay dividends like most other DACs the dividends on the collateral can be redirected to the author of article.

Under this design there are three parties that benefit in different ways.  Someone who decides to invest in an article and ‘go long’ profits when the price rises.  Someone who decides to bet against an article and thus ‘go short’ profits when the price falls more than the dividends they would have received and lastly the author profits from these dividends.  The more people speculating on his article the greater the royalties the author earns.

All of this will work without the need for centralized advertising or donations and will provide a better news source than any existing news aggregator.   Translators would have a huge financial incentive to translate successful articles from one language to another because they have an opportunity to ride a similar growth curve in the new language.

While the content will be distributed, the author also builds brand recognition and drives traffic to his own website as a result.   People start following his work directly so that they can get a heads up on new articles to invest in.   This gives authors many indirect means of profiting from their work.

In addition to speculating on the value of individual articles, users can speculate on the value of individual writers.   In this event an individual can invest in themselves early on and then work to build their own brand through publishing quality articles.  As they establish a solid track record they make a large return on their investment.  It is like having a mini IPO for every author.  Once again, those who go short in order to bet against a particular writer have the dividends on their collateral redirected to the writer and as a result generate a steady stream of revenue for the writer.

Scalability of AP, DAC
Clearly there is a lot of overhead associated with creating a market for articles.  There must be a large number of players before efficient markets can take effect.  Fortunately, AP, DAC doesn’t need to process every possible blog like Digg or Reddit.  Instead AP, DAC is in the business of producing the highest quality articles by the best possible writers.

To keep the markets deep and focused on the highest quality articles, AP, DAC must limit the number of submissions it allows every day.  This is easily accomplished by only allowing one submission per block.  Therefore the first obstacle an article must overcome is getting included in the block chain in the first place.   Miners will obviously pick the articles that pay the highest fee and as a result the first step in the process is an auction.   The best writers bid against each other to get their articles published by AP, DAC by paying highest transaction fees.

Likewise, there must be a limit on the number of writers who have a personal market. This could be limited to one new writer per week and they would also have to pay the highest transaction fee to have a market created to speculate on their value as a writer.

These transaction fees add to the profits of owning AP, DAC.

Conclusion

AP, DAC is a new way to align market forces to promote the production and syndication of the highest quality of news content in an entirely decentralized manner that richly rewards authors, readers, and publishers who participate in the system without having to rely on ads, donations, or micro-payments.   It is truly decentralized and autonomous and will automatically provide market incentives to produce quality articles while earning a hansom profit for its decentralized owners.

Owning BitShares PTS is a way to acquire future BitShares and speculate on their value today!


What is BitShares PTS?
BitShares PTS is a class of crypto-currency that let you capture a position in one or more cool new DACs before they are ever implemented. The speculative value of PTS is a subjective mix of three market
perception pillars. These pillars are the market’s assessment of:

• The speculative value of a future DAC share.
• The probability that the DAC can and will be successfully fielded.
• Confidence that the PTS will map to an equitable share in the implementation.

... summed across all DACs that announce there intention to honor PTS holders with shares when launched.

Developers use BitShares PTS to capture early adopter interest in their new idea.

Investors use PTS to get in on the ground floor of an entire new industry.  Instead of enduring the hassles and costs of mining every new DAC into existence, they focus on acquiring PTS once and for all, and thereby claim a stake in every new DAC that honors BitShares PTS.

Developers and Investors start on a level playing field for obtaining BitShares PTS. They are being slowly mined and easily accessible from public exchanges as one of the top crypto-currencies on the market.

What about that Third Pillar?

The third Public Perception Pillar is confidence that owning a DAC’s PTS will translate into
actual ownership of an equitable share in the objective DAC. It is up to the DAC developer to convince
the market that this will happen using whatever social consensus the market will accept. The PTS Social Consensus is simply:

At our DAC’s pre-published launch time, a DAC’s genesis block shall be initialized
to precisely match the current unspent outputs of the corresponding BitShares PTS blockchain.

For every BitShares PTS proto-share you hold at that launch time, you now have a corresponding
share in the DAC accessible via the same public address to which you hold a private key.

That’s it. Simple. Easy to understand. Real hard to renege.

You can read about the latest, more general form here:  http://invictus-innovations.com/social-consensus/

What do you mean “real hard to renege” on your social consensus?

Who would want to abandon the entire universe of informed early adopters by reneging on their rights as
founding shareholders? In this business, the network effect of market share is everything. Besides, if
someone deploys an open-source DAC without honoring the social contract to its PTS holders,
someone else will simply fork the open source code, and honor that contract. Bingo, they’re in business!
The network effect of informed early adopters will do the rest and the reneging developer’s implementation
will go into the dustbin of history.

BitShares PTS were designed to be mined into existence according to the curves below.  This has been considerably accelerated in practice by the overwhelming amount of interest from the mining community.

I am looking for a graphics designer who can help us brand Keyhotee which is our ID, Wallet and Communication client.   It is named after Don Quixote because of our idealistic goals of decentralizing everything and slaying the dragon of tyranny.   We are thinking a theme of Honor, Nobel, Virtue, Knights, Security, Windmills, Dragons, Medieval, Horses, etc.

This bounty will accept submissions of draft ideas over the next 2 weeks after which I will select the top contenders for a poll and then award the bounty to the winner who will have 1 week to tweak the designs and send me the source images.

In addition to paying the bounty to the winner, I will award every individual who provides a meaningful submission with 0.25 BTC toward a Genesis Block Keyhotee ID of their choosing:  http://invictus-innovations.com/genesis-block-founder

The bounty will be paid in BTC using the BitStamp price for conversion.

The splash screen should be high resolution, detailed, and pretty at resolutions up to 640x640.   The icon should be simple and elegant but fit in the theme.   For inspiration on the current Icon I am using a Shield because it denotes protection and security.