Plan for introducing Privacy (STEALTH) Mode feature asap

[onceuponatime]

Once a "Privacy Mode" feature has been implemented on the blockchain, but not before, it would then be possible for future investor entrepreneurs to create FBAs and crowd fund new features by having a Private Mode account issue the FBA from an unknown jurisdiction that is presumably not subject to securities concerns. Several exist in this world of ours  .

In this scenario would you then have the problem of whoever is building the business they will have to hide who they are?  For example the devs could not go out and promote their business they are building with the funds from the crowdfund?

Anyone who buys shares in the FBA can promote use of its feature to their own benefit (a share in fee revenue). The creator of the FBA simply hires a development company, such as Cryptonomex or Bitsaphire, to produce the feature.

[jaran]

Once a "Privacy Mode" feature has been implemented on the blockchain, but not before, it would then be possible for future investor entrepreneurs to create FBAs and crowd fund new features by having a Private Mode account issue the FBA from an unknown jurisdiction that is presumably not subject to securities concerns. Several exist in this world of ours  .

In this scenario would you then have the problem of whoever is building the business they will have to hide who they are?  For example the devs could not go out and promote their business they are building with the funds from the crowdfund?

[onceuponatime]

That regulatory bs is not going to work, especially with a global blockchain.  Downward pressure on price bs is not going to work either as this feature should add value long term.

Looking at the numbers.  If stealth transfers are charged $0.50 per transaction and you get $0.30 per transaction, then your $45,000 investment will be worth $157,680 in one year at a tx rate of just 1tx per minute.  At 1tx/sec (about half of bitcoins tx rate) that is $9,460,800 per year for a $45,000 investment.  I realize current rates are much lower but that is huge opportunity cost for the community.  At the very least this should be capped as others have said.

Otherwise, I say UIA for development.  Some of the rest of us may want to get in on it. This may even help to find a true market rate for this feature.  If you want the same exact deal, then you can just buy up all the shares.

"regulatory bs"
There is no bs in my reasoning. If I wire $45,000 to Cryptnomex, first there is a mandatory report filed to a regulatory agency (anything over $10,000). If I broke it up into several payments, I would be reported by  my financial institution for possible "structuring" and my account frozen.

So, the payment to Cryptonomex automatically is under scrutiny. You can understand, can't you, that Privacy Mode is not going to be popular with those in power? If either Cryptonomex or I create an asset and offer it for sale to the public it may fall under the definition of "security" by some gung ho regulator. Cryptonomex or I then must expend resources on defending against any such allegations.

If the feature is a success, there will be a pool of funds that may excite the jealous attention of many government authorities. That will be costly to counter.

If either the feature or BTS overall is not a success, then some disgruntled investor in an asset might complain to Big Brother, and I am not willing to take on that risk.

"Looking at the numbers"
You're living in LaLa Land. My proposal is that the fee be 3x the regular transaction fee. How much is the transaction fee for a lifetime member again? And who do you think other than lifetime members is going to use such a feature? Private Mode transactions could be a tiny percentage of all transactions. And transactions now are very very few. I am risking a significant part of my life savings to help bootstrap BitShares. What are you doing?


"Otherwise, I say UIA for development.  Some of the rest of us may want to get in on it."

Go ahead and organize it!   

[merivercap]

Thanks for the proposal.  I like the name Privacy Mode.

I think the main concern I have is that the community was most likely going to vote this feature in within 6 months to 1yr anyways.  The $45,000 cost for the network was most likely not the biggest issue, it was just the feature's priority.  There are probably a handful of people that really want to implement this feature now and don't want to wait, but it does not mean that they should have access to 60% lifetime royalties when it was planned to be implemented anyways. 

Isn't the purpose of voting for the upcoming Worker Prroposal exactly for the purpose of determining this?

Most of the feedback that I have been receiving, and what motivates me to risk my capital, is the determination that many BitShares holders agree with me that this feature will draw in capital to our system and boost our market cap.

Only those who actually want to use the feature will likely do so. At current rates of transactions occurring on our blockchain it would take me lifetimes to recoup my investment. I am betting that this feature will greatly enhance the popularity of our blockchain and that Privacy Mode transactions will increase sufficiently rapidly for me to recoup my investment during my lifetime.

Do you mean your current Worker Proposal or the Worker Proposal that was offered before?  Either way if you are connected enough you can probably get the votes regardless of what people think.

That brings more of a governance issue that we should be mindful of.   We have to be careful of FBA's and the potential for cronyism, self-dealing, favoritism when we consider our DPOS governance structure.  51% of stakeholders determine the outcome of any organization and those with majority influence can always vote to shift the balance of value between the rest of the 49% to themselves.  That's the nature of DPOS.   The transparency of worker proposals does help minimize problems but we still need those in the 49% to speak out. 

Anyways stealth transactions can eventually generate interest.  Maybe sooner than later, but probably later.  A larger userbase will make stealth more valuable rather than the other way around.   We're doing a mainstream hosted wallet and stealth transactions are on the road map.  It may be needed sooner than later, but the focus is more on customer acquisition rather than features so I don't think a single feature is something that will just attract people on it's own.  Bitshares has to be attractive by itself before people want to use stealth transactions on it.   It seems the Bitcoin/crypto crowd would probably rather use Bytecoin/Monero/Darkcoin/sidechains than Bitshares.  You have to convince crypto people of DPOS before you even talk about stealth transactions. 

BTW I really want stealth transactions to happen sooner than later and think it's worth voting YES for in 6 - 12 months.  If you want it in sooner, I think the community will benefit, but it will probably be better if there is just a buy-back option.  That way it's not just you having the incentive to promote the Private Mode feature but many other individuals, businesses and hosted wallet providers.   Do you have a business plan since you are pretty much going to be in control of the Private Mode feature?

Lastly what other options are you open to?  Here are couple:

1.  I think the community will approve the original worker proposal sooner with just a little bit more convincing.  There are some that are afraid of short-term dilution.  (I'm not one of them.)  However if you purchase $45,000 worth of BTS to offset the dilution,  that might convince the anti-dilution crowd to move forward sooner than later.   You'll have more BTS and take on less of the risk of a single feature.  It will be far less complicated to do  and you'll still get Privacy Mode earlier than later.   

2  If people still want to defer the original worker proposal, why not allow the community to have a buyout option after 1yr of $67,500 and after 2yrs of $90,000.  That will give you a 50% return over one year and 100% over two if the community wants to take back control over the feature.   

[btstip]

Hey merockstar, here are the results of your tips...

• Helikopterben: has been credited 5 PERCENT

Curious about ShareBits? Visit us at http://sharebits.io and start tipping BTS on https://bitsharestalk.org/ today!

Source: https://bitsharestalk.org/index.php/topic,20499.msg264590/topicseen.html#msg264590

Created by hybridd

[unreadPostsSinceLastVisit]

That regulatory bs is not going to work, especially with a global blockchain.  Downward pressure on price bs is not going to work either as this feature should add value long term.

Looking at the numbers.  If stealth transfers are charged $0.50 per transaction and you get $0.30 per transaction, then your $45,000 investment will be worth $157,680 in one year at a tx rate of just 1tx per minute.  At 1tx/sec (about half of bitcoins tx rate) that is $9,460,800 per year for a $45,000 investment.  I realize current rates are much lower but that is huge opportunity cost for the community.  At the very least this should be capped as others have said.

Otherwise, I say UIA for development.  Some of the rest of us may want to get in on it.  This may even help to find a true market rate for this feature.  If you want the same exact deal, then you can just buy up all the shares.

#sharebits "Helikopterben" 5 PERCENT

The counterargument I see to this is that other developers are free to make their own BitShares compatible wallet/exchange, which could burn all the stealth fees if that party wanted to. Am I understanding that correctly?

[Helikopterben]

That regulatory bs is not going to work, especially with a global blockchain.  Downward pressure on price bs is not going to work either as this feature should add value long term.

Looking at the numbers.  If stealth transfers are charged $0.50 per transaction and you get $0.30 per transaction, then your $45,000 investment will be worth $157,680 in one year at a tx rate of just 1tx per minute.  At 1tx/sec (about half of bitcoins tx rate) that is $9,460,800 per year for a $45,000 investment.  I realize current rates are much lower but that is huge opportunity cost for the community.  At the very least this should be capped as others have said.

Otherwise, I say UIA for development.  Some of the rest of us may want to get in on it.  This may even help to find a true market rate for this feature.  If you want the same exact deal, then you can just buy up all the shares.

[Stan]

Thanks for the proposal.  I like the name Privacy Mode.

I think the main concern I have is that the community was most likely going to vote this feature in within 6 months to 1yr anyways.  The $45,000 cost for the network was most likely not the biggest issue, it was just the feature's priority.  There are probably a handful of people that really want to implement this feature now and don't want to wait, but it does not mean that they should have access to 60% lifetime royalties when it was planned to be implemented anyways. 

If we have royalties capped at $67,500-$90,000 so investors get up to twice their investment that seems more appropriate.  The community could have an option to buy out the feature via worker proposal in 1yr or 2yrs at those amounts.  Also what about competing Privacy Modes?  If this is not exclusive, then the royalties would be less of an issue and at least the platform would be open to competition, innovation and lower cost privacy solutions.

My expectation was always that this would be a core feature, and so the cost to the Bitshares ecosystem is the opportunity cost of the revenue stream this feature would have generated.   

Note: I'm less concerned about other non-core features that people want to introduce and 'privatize'.  Stealth transactions was expected to be implemented at 2.0 or soon after. 

Note2: I don't think those that introduce the feature will be exposed to regulatory risk.  There may be more scrutiny if a private individual or company is making money out of it.  I was just thinking about that issue now with Privatized bitAssets.

Another way to look at it is:

1.  We should reserve worker funds for that which can't be funded some other way.  To turn down outside investment is penny wise and bitshare foolish.

2.  BitShares needs to grow its capabilities as quickly as possible.  Waiting for next year when we might be able to afford to build it ourselves is not a wise strategy.  Its first and foremost about network effect.  Grow the pie, don't fight over each slice.

Applying these two principles will do more for the wealth of BitShares holders than trying to take more upside away from entrepreneurs.  Entrepreneurs are scarce and hard to attract.  We want a thousand new features to bloom. Fee Backed Assets could become THE killer reason to use BitShares, but only if there are lots of them.

Imagine an "App Store" where you can invest and trade shares in the Apps.

@Stan

In response to this, it's also a risk that those who make wealth might not be able to keep it. It's about creating wealth that people can actually keep. The main risk is that people associated with this particular feature make wealth, then lose it all in court, or lose it in taxes. So I would  say the risk of backing this feature is also the risk that somehow in the future whatever wealth you do get could be confiscated.

It's best left as a private asset than a worker proposal in my opinion because not everyone wants to gamble their life savings on this feature. The people who do are the people who are willing to buy the STEALTH asset. In that way the rewards would go directly to the people who take the risks.

I agree that most new features should be financed by entrepreneurs, not paid as BitShares workers.

Not sure how owning a FBA would have risk of confiscation beyond that of more ancient coins like a denarius or a bitcoin.

[onceuponatime]

on the first proposal from bytemaster it was stated

Stealth transfers cannot participate in the referral program. The fee for a stealth transfer can be higher (premium service) at about $0.50, with $0.10 going to the network and $0.40 going to the individual who funds this improvement to the GUI.  After the first 20 Million BTS worth of fees have been paid to this individual, the split would reverse, with $0.10 going to him and $0.40 going to the network.

i can't find it anymore in your proposal. so it will not reverse after the first 20 million BTS anymore?

i would prefer the FBA solution, because it will give bitshare a new asset.

you are aware that you are creating with the multisig account a security as well with your arguments? in BTS 2.0 a account is transferable so this multisig accounts are worth something and can be sold, so this is a security as well.

point is - i don't mind your local jurisdication arguments, they only apply to you and Cryptonomex, because it seems you are also in the US.

I am purchasing software from Cryptonomex if and only if the Community votes to implement the software on the blockchain by voting in a Worker Proposal. I am the sole investor in this.  No asset is created by implementation of the Privacy Mode feature at time of implementation. I do not propose to myself create an asset. Neither Cryptonomex nor I would be or indeed could offer shares in the feature, at time of implementation,  to the public. Hence no security.

The idea behind the multi-sig Maintenance account is to give to trusted Community members a 3 of 5 voting authority over funds accumulated for upgrading or extending the capabilities of the feature if and as necessary. Three of five signatories helps compensate for sickness, accident or death risks and provides me with an advisory board to compensate for my skill deficiencies. I would be only one of five. Therefore I can be very easily outvoted on use of these funds.

Bytemaster has other ideas of how this could be accomplished. Perhaps he will be able to explain them here when he gets time.

[Shentist]

on the first proposal from bytemaster it was stated

Stealth transfers cannot participate in the referral program. The fee for a stealth transfer can be higher (premium service) at about $0.50, with $0.10 going to the network and $0.40 going to the individual who funds this improvement to the GUI.  After the first 20 Million BTS worth of fees have been paid to this individual, the split would reverse, with $0.10 going to him and $0.40 going to the network.

i can't find it anymore in your proposal. so it will not reverse after the first 20 million BTS anymore?

i would prefer the FBA solution, because it will give bitshare a new asset.

you are aware that you are creating with the multisig account a security as well with your arguments? in BTS 2.0 a account is transferable so this multisig accounts are worth something and can be sold, so this is a security as well.

point is - i don't mind your local jurisdication arguments, they only apply to you and Cryptonomex, because it seems you are also in the US.

[38PTSWarrior]

Just make it so that it's fair for everyone. I don't think that your risk is very high Onceuponatime. Merivercap is right when he says that it would have been done anyway.
First I thought it doesn't matter if Onceuponatime will get all the income, just do it, ..
Now I see all the contract making and ..
I would have liked if Onceuponatime would just send the money and that's it. That's how I would do it. Why make such a contract, bytemaster proved that he is a good man.
I don't really have the knowledge to write here, but why not make it 33% for everyone? Just make it fair. I don't know what numbers would be fair.

[merivercap]

Thanks for the proposal.  I like the name Privacy Mode.

I think the main concern I have is that the community was most likely going to vote this feature in within 6 months to 1yr anyways.  The $45,000 cost for the network was most likely not the biggest issue, it was just the feature's priority.  There are probably a handful of people that really want to implement this feature now and don't want to wait, but it does not mean that they should have access to 60% lifetime royalties when it was planned to be implemented anyways. 

If we have royalties capped at $67,500-$90,000 so investors get up to twice their investment that seems more appropriate.  The community could have an option to buy out the feature via worker proposal in 1yr or 2yrs at those amounts.  Also what about competing Privacy Modes?  If this is not exclusive, then the royalties would be less of an issue and at least the platform would be open to competition, innovation and lower cost privacy solutions.

My expectation was always that this would be a core feature, and so the cost to the Bitshares ecosystem is the opportunity cost of the revenue stream this feature would have generated.   

Note: I'm less concerned about other non-core features that people want to introduce and 'privatize'.  Stealth transactions was expected to be implemented at 2.0 or soon after. 

Note2: I don't think those that introduce the feature will be exposed to regulatory risk.  There may be more scrutiny if a private individual or company is making money out of it.  I was just thinking about that issue now with Privatized bitAssets.

Another way to look at it is:

1.  We should reserve worker funds for that which can't be funded some other way.  To turn down outside investment is penny wise and bitshare foolish.

2.  BitShares needs to grow its capabilities as quickly as possible.  Waiting for next year when we might be able to afford to build it ourselves is not a wise strategy.  Its first and foremost about network effect.  Grow the pie, don't fight over each slice.

Applying these two principles will do more for the wealth of BitShares holders than trying to take more upside away from entrepreneurs.  Entrepreneurs are scarce and hard to attract.  We want a thousand new features to bloom. Fee Backed Assets could become THE killer reason to use BitShares, but only if there are lots of them.

Imagine an "App Store" where you can invest and trade shares in the Apps.

I'm fine with the privatized model in general, but there is a balance between what is considered a core feature and what is not.  There is a balance between what is on the road map that will likely be funded and what is unlikely to be funded.  There is a balance between supporting the integration of a feature from a private entity with outside money and being needy.   I don't think we should use the FBA model for stealth transactions.  Other features that are niche are better to start FBA's with.  The referral program should be the predominant incentive structure to build the network effect.  If the referral system is not compelling enough we have bigger problems with the core product, not the incentive structure. 

[onceuponatime]

Thanks for the proposal.  I like the name Privacy Mode.

I think the main concern I have is that the community was most likely going to vote this feature in within 6 months to 1yr anyways.  The $45,000 cost for the network was most likely not the biggest issue, it was just the feature's priority.  There are probably a handful of people that really want to implement this feature now and don't want to wait, but it does not mean that they should have access to 60% lifetime royalties when it was planned to be implemented anyways. 

Isn't the purpose of voting for the upcoming Worker Prroposal exactly for the purpose of determining this?

Most of the feedback that I have been receiving, and what motivates me to risk my capital, is the determination that many BitShares holders agree with me that this feature will draw in capital to our system and boost our market cap.

Only those who actually want to use the feature will likely do so. At current rates of transactions occurring on our blockchain it would take me lifetimes to recoup my investment. I am betting that this feature will greatly enhance the popularity of our blockchain and that Privacy Mode transactions will increase sufficiently rapidly for me to recoup my investment during my lifetime.

[luckybit]

Thanks for the proposal.  I like the name Privacy Mode.

I think the main concern I have is that the community was most likely going to vote this feature in within 6 months to 1yr anyways.  The $45,000 cost for the network was most likely not the biggest issue, it was just the feature's priority.  There are probably a handful of people that really want to implement this feature now and don't want to wait, but it does not mean that they should have access to 60% lifetime royalties when it was planned to be implemented anyways. 

If we have royalties capped at $67,500-$90,000 so investors get up to twice their investment that seems more appropriate.  The community could have an option to buy out the feature via worker proposal in 1yr or 2yrs at those amounts.  Also what about competing Privacy Modes?  If this is not exclusive, then the royalties would be less of an issue and at least the platform would be open to competition, innovation and lower cost privacy solutions.

My expectation was always that this would be a core feature, and so the cost to the Bitshares ecosystem is the opportunity cost of the revenue stream this feature would have generated.   

Note: I'm less concerned about other non-core features that people want to introduce and 'privatize'.  Stealth transactions was expected to be implemented at 2.0 or soon after. 

Note2: I don't think those that introduce the feature will be exposed to regulatory risk.  There may be more scrutiny if a private individual or company is making money out of it.  I was just thinking about that issue now with Privatized bitAssets.

Another way to look at it is:

1.  We should reserve worker funds for that which can't be funded some other way.  To turn down outside investment is penny wise and bitshare foolish.

2.  BitShares needs to grow its capabilities as quickly as possible.  Waiting for next year when we might be able to afford to build it ourselves is not a wise strategy.  Its first and foremost about network effect.  Grow the pie, don't fight over each slice.

Applying these two principles will do more for the wealth of BitShares holders than trying to take more upside away from entrepreneurs.  Entrepreneurs are scarce and hard to attract.  We want a thousand new features to bloom. Fee Backed Assets could become THE killer reason to use BitShares, but only if there are lots of them.

Imagine an "App Store" where you can invest and trade shares in the Apps.

@Stan

In response to this, it's also a risk that those who make wealth might not be able to keep it. It's about creating wealth that people can actually keep. The main risk is that people associated with this particular feature make wealth, then lose it all in court, or lose it in taxes. So I would  say the risk of backing this feature is also the risk that somehow in the future whatever wealth you do get could be confiscated.

It's best left as a private asset than a worker proposal in my opinion because not everyone wants to gamble their life savings on this feature. The people who do are the people who are willing to buy the STEALTH asset. In that way the rewards would go directly to the people who take the risks.

[onceuponatime]

Another factor to keep in mind is that under this proposal, besides getting what many consider to be a necessary feature for greater capital inflow in the short term,  there would be no downward pressure on BTS market cap. Cryptonomex would receive the feature's development funding in $US, which they can use to pay their bills. The alternative is to wait for quite an extended period for the community to pay for a Worker Proposal and thyen Cryptonomex receiving the funding in BTS. They would have to sell BTS on the market to pay their real world bills. Big downward pressure on our market cap.