October Newsletter - Halloween Edition

[Ander]

Remember when ripple was below litecoin? 

Oh yeah that was a couple weeks ago.

[Stan]

Declaring a destination is necessary for planning your route. 

[xeroc]

史上最屌牛皮大王——STAN.
Cheers

you forgot to mention that the image above shows the 24h change ..
Stan thinks bigger ..

[lzr1900]

BitShares Reloaded

Now that the enabling technology behind BitShares is proven and we have settled in to a comfortable pre-launch point at Number 4 on the charts, it is time to Reimagine Everything as we approach next month’s epic assault on Number 2.  Everything about BitShares has been

80% impossible.

83.7% of all people believe in the correctness of numbers if they are made up quickly enough!

Welp, next month is already almost over with, and we're quite a ways from epically assaulting number 2 (grin). When does the epic assault commence? Can we hit a $330 million market cap in the next 4 days? lol that would be awesome...

An epic assault begins from a base camp near the bottom of the mountain. 

史上最屌牛皮大王——STAN.
Cheers

[Stan]

BitShares Reloaded

Now that the enabling technology behind BitShares is proven and we have settled in to a comfortable pre-launch point at Number 4 on the charts, it is time to Reimagine Everything as we approach next month’s epic assault on Number 2.  Everything about BitShares has been

80% impossible.

83.7% of all people believe in the correctness of numbers if they are made up quickly enough!

Welp, next month is already almost over with, and we're quite a ways from epically assaulting number 2 (grin). When does the epic assault commence? Can we hit a $330 million market cap in the next 4 days? lol that would be awesome...

An epic assault begins from a base camp near the bottom of the mountain. 

[nomoreheroes7]

BitShares Reloaded

Now that the enabling technology behind BitShares is proven and we have settled in to a comfortable pre-launch point at Number 4 on the charts, it is time to Reimagine Everything as we approach next month’s epic assault on Number 2.  Everything about BitShares has been

80% impossible.

83.7% of all people believe in the correctness of numbers if they are made up quickly enough!

Welp, next month is already almost over with, and we're quite a ways from epically assaulting number 2 (grin). When does the epic assault commence? Can we hit a $330 million market cap in the next 4 days? lol that would be awesome...

[starspirit]

Joe and Mary decide they will pay half their existing shares (together being 50 shares) to Sam for his 100 BTC of capital, and with that they now buy their second donut machine, which doubles their sales.
Joe and Mary now each have 25 shares, Sam has 50, and the split is the same as per dilution.
But each share is worth double the amount, and everybody's economic outcome is exactly the same as per dilution.

So dilution is not required for growth (at least in this example). But there is a practical issue potentially. This is an easy example where Joe and Mary can easily agree on the payment. If there were thousands of owners it would be more difficult to ensure everyone pays their share and administer this. And maybe thats where dilution helps.

Exactly, it is much easier to issue some more shares rather than to take a portion of everyone's shares and give them to the new partner.  Especially when those shares are tokens on a blockchain, and you need private keys to move them!  Especially when it happens not one time, but a tiny bit, once every 10 seconds when a block is created.

There is also a cost in that the majority holders force the hand of everyone else. That's not unlike any traditional company.

Yes, its just like a company in that regard.  If small holders disapprove of the decision their option is to sell.

Good, so we agree the benefit of dilution is a pragmatic one of achieving self-funded growth in an administratively feasible manner, and not necessarily the only way of achieving self-funded growth. It has to stay simple and practical for now, but this recognition at least opens up the possibility for complementary growth mechanisms down the track.

[Xeldal]

BitShares Reloaded

Now that the enabling technology behind BitShares is proven and we have settled in to a comfortable pre-launch point at Number 4 on the charts, it is time to Reimagine Everything as we approach next month’s epic assault on Number 2.  Everything about BitShares has been

80% impossible.

83.7% of all people believe in the correctness of numbers if they are made up quickly enough!

Reminds me of a Todd Snider song - Statistician Blues
https://www.youtube.com/watch?v=IUK6zjtUj00

[Ander]

Joe and Mary decide they will pay half their existing shares (together being 50 shares) to Sam for his 100 BTC of capital, and with that they now buy their second donut machine, which doubles their sales.
Joe and Mary now each have 25 shares, Sam has 50, and the split is the same as per dilution.
But each share is worth double the amount, and everybody's economic outcome is exactly the same as per dilution.

So dilution is not required for growth (at least in this example). But there is a practical issue potentially. This is an easy example where Joe and Mary can easily agree on the payment. If there were thousands of owners it would be more difficult to ensure everyone pays their share and administer this. And maybe thats where dilution helps.

Exactly, it is much easier to issue some more shares rather than to take a portion of everyone's shares and give them to the new partner.  Especially when those shares are tokens on a blockchain, and you need private keys to move them!  Especially when it happens not one time, but a tiny bit, once every 10 seconds when a block is created.

There is also a cost in that the majority holders force the hand of everyone else. That's not unlike any traditional company.

Yes, its just like a company in that regard.  If small holders disapprove of the decision their option is to sell.

[xeroc]

BitShares Reloaded

Now that the enabling technology behind BitShares is proven and we have settled in to a comfortable pre-launch point at Number 4 on the charts, it is time to Reimagine Everything as we approach next month’s epic assault on Number 2.  Everything about BitShares has been

80% impossible.

83.7% of all people believe in the correctness of numbers if they are made up quickly enough!

[lzr1900]

BitShares Reloaded

Now that the enabling technology behind BitShares is proven and we have settled in to a comfortable pre-launch point at Number 4 on the charts, it is time to Reimagine Everything as we approach next month’s epic assault on Number 2.  Everything about BitShares has been

80% impossible.

[cass]

Where can I find the non-draft version of this?  http://bitshares.org/bitshares-reloaded/ points to an under construction page.

Seems to work for me...

https://bitsharestalk.org/index.php?topic=10844.msg142757#msg142757

http://us3.campaign-archive2.com/?u=ac6976e87d9e9f0eac4bbf19c&id=2484998d34

[starspirit]

I'm still trying to understand the economics of this concept of self-funded growth. In theory, if there were no dilution, and everybody agreed to pay existing BTS in proportion to their stake for the same expense, wouldn't the economic outcome be exactly the same as for dilution, except that the market cap of all shares would be spread over a different supply of shares?

If so, is the real benefit of dilution not an economic one, but a political/administrative one because it provides a more graceful mechanism for an expense to be shared without any enforcement of transactions?

I ask this not out of any negativity toward the power to dilute when appropriate (and I'm sure it has its place), but just wondering how dilution facilitates a higher level of growth.

It has an economic benefit too:

Joe and Mary decide to form a donut company and each put in 50 BTC of their own money.
They issue themselves 1 share per BTC so they each have 50 of the 100 shares, each worth 1 BTC and 1% of the company.
This buys them one donut making machine.

Sam joins them and adds another 100 BTC of his own money.
They issue him 100 new shares to represent his contribution.
This seems fair to everyone since they each got one share for each BTC they contributed.
They buy another donut machine and double their sales.

Now Joe and Mary still have 50 shares, but out of 200, or 1/2 % of the company.  But each share is still worth 1 BTC.
Sure, their percentage of the shares has been diluted by 50% but their value remains unchanged.

If Sam hadn't joined them, they could not double their sales.  So dilution was worth it and everybody gains.

Sam didn't dilute their wealth, he just diluted their percentage of a pie that he helped make twice as big.

If Joe and Mary had not diluted, it would have taken a long time to save up for that second machine. 

Time for competitors to emerge and gain a foothold in their lucrative donut market. 

Thanks Stan. I agree with all that you have said, but they could also have accomplished the deal without dilution in this way:

Joe and Mary decide they will pay half their existing shares (together being 50 shares) to Sam for his 100 BTC of capital, and with that they now buy their second donut machine, which doubles their sales.
Joe and Mary now each have 25 shares, Sam has 50, and the split is the same as per dilution.
But each share is worth double the amount, and everybody's economic outcome is exactly the same as per dilution.

So dilution is not required for growth (at least in this example). But there is a practical issue potentially. This is an easy example where Joe and Mary can easily agree on the payment. If there were thousands of owners it would be more difficult to ensure everyone pays their share and administer this. And maybe thats where dilution helps. There is also a cost in that the majority holders force the hand of everyone else. That's not unlike any traditional company.

Edit: It may be that the impracticalities of sourcing funds from every shareholder is what does not allow a business to easily self-fund in this way, and maybe that still argues for dilution being the only practical way to self-fund, at least for now. Down the track i would be interested in considering other methods of self funding that could complement or maybe one day replace dilution, depending on the need to be met.

[Stan]

I'm still trying to understand the economics of this concept of self-funded growth. In theory, if there were no dilution, and everybody agreed to pay existing BTS in proportion to their stake for the same expense, wouldn't the economic outcome be exactly the same as for dilution, except that the market cap of all shares would be spread over a different supply of shares?

If so, is the real benefit of dilution not an economic one, but a political/administrative one because it provides a more graceful mechanism for an expense to be shared without any enforcement of transactions?

I ask this not out of any negativity toward the power to dilute when appropriate (and I'm sure it has its place), but just wondering how dilution facilitates a higher level of growth.

It has an economic benefit too:

Joe and Mary decide to form a donut company and each put in 50 BTC of their own money.
They issue themselves 1 share per BTC so they each have 50 of the 100 shares, each worth 1 BTC and 1% of the company.
This buys them one donut making machine.

Sam joins them and adds another 100 BTC of his own money.
They issue him 100 new shares to represent his contribution.
This seems fair to everyone since they each got one share for each BTC they contributed.
They buy another donut machine and double their sales.

Now Joe and Mary still have 50 shares, but out of 200, or 1/2 % of the company.  But each share is still worth 1 BTC.
Sure, their percentage of the shares has been diluted by 50% but their value remains unchanged.

If Sam hadn't joined them, they could not double their sales.  So dilution was worth it and everybody gains.

Sam didn't dilute their wealth, he just diluted their percentage of a pie that he helped make twice as big.

If Joe and Mary had not diluted, it would have taken a long time to save up for that second machine. 

Time for competitors to emerge and gain a foothold in their lucrative donut market. 

[Stan]

Where can I find the non-draft version of this?  http://bitshares.org/bitshares-reloaded/ points to an under construction page.

Seems to work for me...

https://bitsharestalk.org/index.php?topic=10844.msg142757#msg142757