Privatizing BitAssets

[joele]

Guys, you are stuck with the idea of alternative BitUSDs. In this point of time, nobody would even try to compete with the original BitUSD. It just makes no sense.

Instead try to imagine User Pegged Assets as a feature, which enables creation of BitIndexes and BitStocks. Wouldn't this be useful?

[hrossik]

Guys, you are stuck with the idea of alternative BitUSDs. In this point of time, nobody would even try to compete with the original BitUSD. It just makes no sense.

Instead try to imagine User Pegged Assets as a feature, which enables creation of BitIndexes and BitStocks. Wouldn't this be useful?

[Bitcoinfan]

Agreed. You'd be splitting up the network effect in exchange for an incentive to make markets and advertise your pet asset. But "Dell is now accepting UncleJimbosUSD!" will never be a headline. And it will be confusing. Normal people aren't going to use a currency because you're advertising it.

that's the irony of all of this-- in an effort to promote bitasset (and correspondingly bitshares), you've created awful looking bitassets like UncleJimbos USD.   The marketing efforts have been overshadowed by the its own anti-marketing effects!

[maqifrnswa]

I think this is a bad idea.

The counterparty risk is too high and it has negative externalities onto people who have not opted into the particular private bitAsset.

A much better way to increase liquidity and collection of fees would be synthetic order books and Minimum Spanning Tree pathfinding between order books on the blockchain itself, similar to how Ripple does it. Arbitrage income could be turned into income for shareholders.

After all, BitShares is technically an advanced FIFO dealer, not an exchange in the traditional sense, we would a dealer want to leave potential arbitrage opportunities up for grabs for non-shareholders?

i agree with you, technically, but practically who should do that work? Is that delegate work? If assets were privatized, the group that figures out the "safest" (legally/technically), "easiest," and "most accurate" will be rewarded for their work.

I think the problem isn't a technical one, but an economic incentive challenge

EDIT: I think this is addressing more than just a marketing problem, but a fundamental problem over platform governance and innovation

[btswildpig]

Where is the wheel of the bike ..........
Is it lack of incentive to promote the bike , or it's really hard and deep labor cost to promote a bike without a wheel ( hence higher customer support cost) ......

Let's not forget someone had huge marketing bonus incentive before .......

[Volker]

The peg Assets is 2 products and 2 private companies competing.  Like same toothpaste, but different company Colgate and Pepsodent.

Like Bitcoin, litecoin, peercoin, dogecoin, feathercoin, justacoin, weiredcoin, all the NXT clones, etc.

Yes, and Bitshares is the Blockchain, all these are Assets and they pay fees.

BitReserve have their own BitGold, so will BitGold.com and soon many 2.0 crypto-currencies including Ethereum will probably have their own decentralised versions. (There are also multiple USD products on the market.) They will all be competing to become the dominant digital gold.

It will probably end up with the same type of distribution as Bitcoin where the market leader has 80%+ market share.

Introducing BitGold competitors onto our own blockchain would mean our BitAssets would not only have to try and get market share from every other contender on the market but will even have to cannibalize the BitShares customer base.

I think BM realises this, but hopes free market competition would rapidly find the best BitAsset model for BTS which will then also be competitive against all the other competitors. 

Ultimately the market would settle on one or two variants and the rest would die off or be special purpose.   

New BitGold on Bitshares blockchain is part of the team of Bitshares, this BitGold will only compete with other BitGolds and not with Bitshares, the success of any of these BitAssets is also the success for Bitshares and its holders.

Imagine on the Dogecoin blockchain, there was no Dogecoin but instead 'Doge1', 'Doge2', 'Doge3' & 'Doge4'. All of them trying to promote themselves to a similar market as Dogecoin used too. The results might be that combined their CAP's might be greater (unlikely because of the way network effect works) but individually they could all be weaker and have no chance of being widely adopted. The only possibly way it could be good, if say 'Doge3' was such a popular, good model that all the other Doge's died and then Doge3 then started competing against Bitcoin. But otherwise distributing your user base among multiple versions of the same product (Like BitGold1, BitGold2, BitGold3 etc.)  instead of getting the community and DAC to focus on developing one is probably not advisable.

Agreed. You'd be splitting up the network effect in exchange for an incentive to make markets and advertise your pet asset. But "Dell is now accepting UncleJimbosUSD!" will never be a headline. And it will be confusing. Normal people aren't going to use a currency because you're advertising it.

[Empirical1.2]

The peg Assets is 2 products and 2 private companies competing.  Like same toothpaste, but different company Colgate and Pepsodent.

Like Bitcoin, litecoin, peercoin, dogecoin, feathercoin, justacoin, weiredcoin, all the NXT clones, etc.

Yes, and Bitshares is the Blockchain, all these are Assets and they pay fees.

BitReserve have their own BitGold, so will BitGold.com and soon many 2.0 crypto-currencies including Ethereum will probably have their own decentralised versions. (There are also multiple USD products on the market.) They will all be competing to become the dominant digital gold.

It will probably end up with the same type of distribution as Bitcoin where the market leader has 80%+ market share.

Introducing BitGold competitors onto our own blockchain would mean our BitAssets would not only have to try and get market share from every other contender on the market but will even have to cannibalize the BitShares customer base.

I think BM realises this, but hopes free market competition would rapidly find the best BitAsset model for BTS which will then also be competitive against all the other competitors. 

Ultimately the market would settle on one or two variants and the rest would die off or be special purpose.   

New BitGold on Bitshares blockchain is part of the team of Bitshares, this BitGold will only compete with other BitGolds and not with Bitshares, the success of any of these BitAssets is also the success for Bitshares and its holders.

Imagine on the Dogecoin blockchain, there was no Dogecoin but instead 'Doge1', 'Doge2', 'Doge3' & 'Doge4'. All of them trying to promote themselves to a similar market as Dogecoin used too. The results might be that combined their CAP's might be greater (unlikely because of the way network effect works) but individually they could all be weaker and have no chance of being widely adopted. The only possibly way it could be good, if say 'Doge3' was such a popular, good model that all the other Doge's died and then Doge3 then started competing against Bitcoin. But otherwise distributing your user base among multiple versions of the same product (Like BitGold1, BitGold2, BitGold3 etc.)  instead of getting the community and DAC to focus on one is probably not advisable.

[joele]

The peg Assets is 2 products and 2 private companies competing.  Like same toothpaste, but different company Colgate and Pepsodent.

Like Bitcoin, litecoin, peercoin, dogecoin, feathercoin, justacoin, weiredcoin, all the NXT clones, etc.

Yes, and Bitshares is the Blockchain, all these are Assets and they pay fees.

BitReserve have their own BitGold, so will BitGold.com and soon many 2.0 crypto-currencies including Ethereum will probably have their own decentralised versions. (There are also multiple USD products on the market.) They will all be competing to become the dominant digital gold.

It will probably end up with the same type of distribution as Bitcoin where the market leader has 80%+ market share.

Introducing BitGold competitors onto our own blockchain would mean our BitAssets would not only have to try and get market share from every other contender on the market but will even have to cannibalize the BitShares customer base.

I think BM realises this, but hopes free market competition would rapidly find the best BitAsset model for BTS which will then also be competitive against all the other competitors. 

Ultimately the market would settle on one or two variants and the rest would die off or be special purpose.   

New BitGold on Bitshares blockchain is part of the team of Bitshares, this BitGold will only compete with other BitGolds and not with Bitshares, the success of any of these BitAssets is also the success of Bitshares.

[Volker]

So the reasoning for this is that people don't have an incentive to market bitassets, right? Lack of marketing is not the reason why people aren't using bitassets.

Here's something from Elon Musk that might be relevant:
https://www.youtube.com/watch?v=NU7W7qe2R0A&t=1m52s

EDIT: Time was wrong.

[Bitcoinfan]

Yes, and the best marketed/supported one would emerge the winner and gain huge profits from trading fees.

In some capacity this will be needed.  However, this is different from saying that Bitusd in the future will be able to work without feeds; not to mention how in the past you argued that bitshares would function without pegged assets.  Now your proposing a system that is entirely reliant on feeds.  This a farcry from a year ago.   

I think your confusing marketing for a viable business model.  Feeds are a commodity.  This service is in perfect market.  In a perfectly competitive market there is little differences between producers.  What drives your sales (eg. trading feeds is lower costs) is cost cutting.  There will not be a move towards providing better quality service.  The mantra will always be lower the cost by any means.  Even if a team did spend money for marketing and support, via high acquisition costs, they would have brought eyes to Bitshares eco-system, opening up the door for that customer to find a cheaper alternative.  If the customers use bitshares enough, they will hear about the cheaper alternative.  The switching costs are low, threat of substitutes are high.  Therefore marketing and support does not add value. Your acquired customers will just leak it to the opponent. I think it is just something you will have to consider. 

[wuyanren]

I do not think this is desperately needed.

[luckybit]

There needs to be some minimum number of people providing a feed for any asset. And they should not have any incentives to collude.

If it's groups of people instead of people then you reduce the probability of collusion. It's rare for entire groups of people to collude but it's not rare for two people to collude.

Yes. It's also not rare for 1 person to pretend to be 10 people.

This is why you use a DCO so that each person is a unique member of the DCO and each DCO is a trusted entity but not individuals. Why should we be asked to trust individuals when we can trust groups of individuals under DCO?

It's just a matter of having both the technical foundation and then putting the legal structure on top of that foundation. We have a good technical foundation which can be expanded upon but we don't have a legal foundation. We should build the legal foundation and use that.

This way you can have the decentralized identity service, then you can have people become members in the DCO and give the DCO a reputation instead of just giving individuals a reputation. Then the most trusted DCO which probably would be the main one (Bitshares DCO) would be in a position to be a private issuer.

If some random corporation comes along we don't trust that. Also a corporation by law cannot do it, it has to be a DCO.

Swarm is actually transitioning to the DCO model now. Why shouldn't we follow that model ourselves for our own purposes? It would allow every one of us to become members in the DCO so that we can all benefit from legal protections. We could also have discounts, vouchers, patronage points and all the sort of benefits you normally see in a cooperative or on a blockchain but legal.

https://swarm.fund/projects/WoodShares

Why can't we do stuff like this? ^^^^^^

[Empirical1.2]

The peg Assets is 2 products and 2 private companies competing.  Like same toothpaste, but different company Colgate and Pepsodent.

Like Bitcoin, litecoin, peercoin, dogecoin, feathercoin, justacoin, weiredcoin, all the NXT clones, etc.

Yes, and Bitshares is the Blockchain, all these are Assets and they pay fees.

BitReserve have their own BitGold, so will BitGold.com and soon many 2.0 crypto-currencies including Ethereum will probably have their own decentralised versions. (There are also multiple USD products on the market.) They will all be competing to become the dominant digital gold.

It will probably end up with the same type of distribution as Bitcoin where the market leader has 80%+ market share.

Introducing BitGold competitors onto our own blockchain would mean our BitAssets would not only have to try and get market share from every other contender on the market but will even have to cannibalize the BitShares customer base.

I think BM realises this, but hopes free market competition would rapidly find the best BitAsset model for BTS which will then also be competitive against all the other competitors. 

Ultimately the market would settle on one or two variants and the rest would die off or be special purpose.   

[Volker]

There needs to be some minimum number of people providing a feed for any asset. And they should not have any incentives to collude.

If it's groups of people instead of people then you reduce the probability of collusion. It's rare for entire groups of people to collude but it's not rare for two people to collude.

Yes. It's also not rare for 1 person to pretend to be 10 people.

[luckybit]

If BitUSD were a privately owned asset then the manager of that asset (responsible for publishing the price feed) could make money directly proportional to adoption. 

I feel this experiment has been tried in the past, think eGold.  In my untrained opinion, the "manager" in the OP is an Issuer of a security and will be exposed to the full extent of the regulatory enforcement efforts of the pegged asset Issuer.   

The BitShares BitUSD is not issued by anyone; it is included as a feature of released P2P software.  The market for that pegged asset is between individuals with a protocol supporting their transactions. 

Overall I feel the OP introduces too many risks and does not enhance our collaborative community.

Respectfully,
Fox

This is why the issuer must not be an individual or a company. The issuer must be a DCO and specifically set up legally for this purpose.

There must not be any securities issued. Just data feeds.