Author Topic: Is dilution a coercive tax? - and voluntary alternatives  (Read 7896 times)

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Offline bytemaster

Coercive means something very specific to me... threat of violence and violation of property rights.

If the definition of "property" and "ownership" is the "ability to control, destroy, or restrict access to" then all shared ownership systems have the challenge that a minority player infringes on the majority by denying them ability to have full control.  Likewise a majority can harm the minority.  Unless there is unanimous consent then you have a problem.

So for the purpose of a DAC joining the DAC is voluntary and your property rights are not absolute and are subject to the right of the majority to use their property rights.   Because ownership is not forced nor compelled you cannot claim it is coercive.   It is voluntary and everyone who buys or sells a stake does so voluntarily under this "majority rule" system.

For those that want a system that does not allow someone or some group to make poor judgements and manipulate the value we have BitAssets tied to commodities.   This is how you free yourself from bad group dynamics.


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Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline starspirit

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There are certainly times when dilution makes sense, but there are also times it does not. But it is always coercive, especially for the many smaller stakeholders whose vote counts for less than larger stakeholders. (Note the method of voting is fair, just not the consequence of this type of vote).

If one thinks of BTS as a share of the accumulated capital within the bitshares ecosystem, then it makes sense that if there is some sort of capital infusion into the ecosystem, such as the merger of another network, that dilution ensures everyone maintains a fair share of the new capital base. In such a case, I think dilution is warranted. That is similar to a situation under the gold standard where new notes are produced in the economy in exchange for new participants adding gold to the capital base, and destroyed when part of the capital base is redeemed.

However, even in the case of a capital infusion, where the value of that new capital may be evaluated differently by different stakeholders, a fixed dilution voted by stakeholders will be coercive upon all other stakeholders, and not voluntary. As a result for some people it will be a gift, for others theft. Might a theoretical alternative be for everybody in the system to publicly state the amount they are willing to dilute their own stake by, which is transparent in their community reputation going forward? A practical mechanism would be required to ensure nobody is diluted by more than this percentage. (I know this is practically difficult, but in principle).

Then we have the situation where people do work within the system, but for the benefit of the community at large rather than specific stakeholders (the latter is accommodated by simple payments). Rather than force everyone in the system to pay for this work whether they want to or not, what if we had a voluntary system where:

- delegates put up a proposal for value add
- donors can voluntarily contribute to the cause, proving funding and salary to the delegate to accomplish the goal
- if the delegate's production adds real value to the system, anybody within the system can donate to the delegate
- the delegate will reward their donors for their support from the contributions they receive
- reputations for donating, contributing etc affect how everyone is regarded in the system, keeping them fair and honest

In a way, each delegate is then like a mini-DAC. And this does not have to be restricted to delegates, but actually could be anybody (or any group of people?) in the system. It avoids dilution and coercion.

If we think of bitshares as a country, by allowing coercive dilution for these many circumstances we have set a precedent for the replication of traditional government structures (and a burgeoning "public sector") that coercively taxes the people. Whether that's voted upon is not the issue - one should not be able to vote to take wealth from other people. I would rather see if we can create an economy of voluntary human action.

BM and others - what do you think?

Edit 4 Nov 14: I improperly framed this discussion with misuse of the word coercive in the subject header, which is not true because there is no threat of violence. My mistake. But dilution is still involuntarily imposed on all individual participants whether they agree its to their benefit or not. My key point was to consider whether there are voluntary alternatives that could be considered instead of blanket dilution, at least in some situations. My view has evolved somewhat to the point that in principle voluntarism is better, but in practice its better to keep it simple but effective for now. When the system grows there will be better was of doing things as long as we don't lose sight of basic principles like the rights of individuals to choose what is best for them.
« Last Edit: November 04, 2014, 02:18:03 am by starspirit »