Author Topic: Potential flaw in referral fee system  (Read 2185 times)

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Offline Troglodactyl

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Ultimately there's no "forcing" people to create new accounts.  If a business tries to do that, they'll either lose customers who think it's irritating, or they'll successfully convince people to create new accounts, and their previous referrers will lose some potential income.  I don't see either of these options causing major problems, but I think the former is more likely.  I know personally I'd be irritated about a company trying to get me to create more redundant accounts.  BitShares login has great value as a unified account system, and I don't think people will want to give that up.

Offline Bitcoinfan

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I don't see any flaw.

As far as I know the referral program will not give the referrer any income unless the owner of the newly created account:
(1) starts paying transaction fees in pay-as-you-go mode
(2) or pays a subscription fee

Therefore creating hundreds of new accounts without anyone actually using them generates costs but no income - clearly there is no incentive to do so.
Unless I am missing something.
I agree with jakub.

Also, costumers should chose whether they are willing to have yet another account even though the network allows account sharing among different services ..
The marketing concept of business should be to bring in NEW costumers and not to fuck with existing ones

You earn nothing for a sign-up only on activity. I don't see a flaw either in this process

Power Law says that 80% of productivity and growth can be attributed to only 20% of the contributors.  We see this in the economy-- 80% of innovation is fueled by one sector, which is silicon valley.  This statistical phenomenon occurs everywhere. 

Think about it this way. The referral system can be abused like centralization of mining.  It will probably happen when it is advantageous.  A late blooming service, say a Streamium for Bitshares, may see that half of their transaction activity is not coming to them, although they comprise of 90% of the transaction volume.  That is because they came in late and half of their users are older users who were referred by some other company.  What would be the logical thing for Streamium to do if they are providing a highly sought out service?  They would of course require all accounts to be referred by them and block out those that are not.  Why would they have any reason not to mess with existing versions when its beneficial for them to do so?   Ultimately, this would highly undermine the universal usage of account names.

You might even argue if there is going to be a slate feature, then this would be more akin to centralization of mining cause these hosted wallets would pre-destinate/ default votes for the users without them even knowing it.  This would put the power not in the hands of the stakeholders, but in the companies.  With this last point, I'm sure I'm misunderstanding something about hosted wallets, so please provide insight if I am. 
« Last Edit: August 11, 2015, 12:45:03 pm by Bitcoinfan »

Offline fav

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You earn nothing for a sign-up only on activity. I don't see a flaw either in this process

Offline santaclause102

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Given one name for each account, I speculate that referrers if they are value add enough, will use their website or whatever clout they have to force even existing users to generate a new account.  Why?  Because they can.  And because they want to profit from every user that uses their platform, website, exchange, bitassets, whatever. 
Wouldn't this only happen if there would be a one time referral fee? As far as I understand the standard is that the referrer profit from a user's LIFE TIME fees. That would of course be different if the user signs up for a life time membership but that would be pretty costly.

Offline xeroc

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I don't see any flaw.

As far as I know the referral program will not give the referrer any income unless the owner of the newly created account:
(1) starts paying transaction fees in pay-as-you-go mode
(2) or pays a subscription fee

Therefore creating hundreds of new accounts without anyone actually using them generates costs but no income - clearly there is no incentive to do so.
Unless I am missing something.
I agree with jakub.

Also, costumers should chose whether they are willing to have yet another account even though the network allows account sharing among different services ..
The marketing concept of business should be to bring in NEW costumers and not to fuck with existing ones

jakub

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I don't see any flaw.

As far as I know the referral program will not give the referrer any income unless the owner of the newly created account:
(1) starts paying transaction fees in pay-as-you-go mode
(2) or pays a subscription fee

Therefore creating hundreds of new accounts without anyone actually using them generates costs but no income - clearly there is no incentive to do so.
Unless I am missing something.

Offline CLains

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Anything that would make the BitShares login as universal as possible is a high priority. Imagine one-click BitShares login to MoonStone, CCEX, CNX Wallet, BANX-EX, etc. That would be utterly amazing. As it stands I know at least MoonStone and CNX Wallet will allow importing your wallet, so I don't think the practical consequence necessarily is that gateways force users to create a new account. They will want to maintain a good public reputation and they also profit from users in other ways, e.g. the fees associated with the instant exchange, fiat deposits, and integration with other exchanges and other cryptocurrencies, as well as probably other things like website traffic and who knows what in the future.

Offline Bitcoinfan

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new users who don't want to shell out money for a wallet.

a referrer may subsidize accounts.   

Absolutely, the spammer can subsidize the creation of the new accounts if they believe that they can make money in  the future on their transaction fees. 

If a new lifetime membership is 10 cents (cost of creating a new account), then I don't see how this is going to put anybody in the poor house.  Especially considering the immense scope of the financial choices that 10 cents gives new members access to.

And at 10-20 cents per (non premium) account, I fail to see the harm in letting people spam the network nonstop.

its not clear to me how bitshares plans to deal with name squating.  If its ten cents, there is also the issue where an referrer will buy up lucrative / many names and either hold for themselves or sell at a higher premium.  This is going to drive up the prices of names beyond 10 cents, since it will be treated like a real estate address.  for example, there might be a godaddy version for names and they will offer services like an exchange on top.  these are major concerns.  You have a very unequitable system that can potentially price out those who benefit the most from using the system. 






Offline Bitcoinfan

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That's a plausible solution.  It's also a barrier to entry for new users who don't want to shell out money for a wallet.  It goes against bitshares and even crypto currency 's in general strategy.  In particular remittances, how can a person who lives on one dollar a day afford this?  There are also ways around this.  If a referrer has enough volume and clout, they may decide to subsidize accounts.  It's a good problem to have.  Maybe not. 

Offline Bitcoinfan

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Referers gain fees from accounts that they bring to their links.  I've asked the question before in monetizing smart contracts to integrate into the referrer fee system (this has yet to be addressed) but I stumbled on a possible flaw, that I'd like to get some heads on.  I'd consider this as inconvient as the bitusd interest harvesting.

Given one name for each account, I speculate that referrers if they are value add enough, will use their website or whatever clout they have to force even existing users to generate a new account.  Why?  Because they can.  And because they want to profit from every user that uses their platform, website, exchange, bitassets, whatever.  They will try to drive as many platforms as they can to themselves and prohibit any account that is not referred under their name.  Overtime this will add spam due to the increase in accounts and it will increase the costs of getting an account, since so many unique names will be taken.  Additionally this will hinder and damage the interoperability within bitshares simply because users will have to keep track of their accounts, making it extremely cumbersome to sent and receive money.  Which account is my bitusd in, or my bitbtc, or bitappl in?  Who wants to remember all these wallets.  It may not be in the same example as this, but ultimately there is potential vulnerability to the "unified" system toted around.

I think this issue stems from primary  incentives come from new account sign ups and not just activity alone.   I think this needs more thought.  If this is to be the game changing feature of bitshares and it doesn't work out, then what else is bitshares for.  Bitshares has gone into so many things without fully grasping the downside outcomes.  Could this be any case study again?  A system where referrers can reserve sub accounts that is associated but not the master username account may be a more feasible approach.  In this way the user can keep his username and will use this unique subaccount when interacting with the referrers platform.  In some way or another transactions go to the subaccount and then to the master account. 


https://bitsharestalk.org/index.php/topic,16133.msg206555.html#msg206555
https://bitsharestalk.org/index.php/topic,16318.msg227155.html#msg227155
« Last Edit: August 11, 2015, 01:03:08 am by Bitcoinfan »