Author Topic: CPOS (cooperative proof of stake) discussion thread  (Read 19111 times)

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Offline santaclause102

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Offline fuzzy

Well bithaus was that one delulo... :/
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Offline santaclause102

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It's deferentially a trade of and there is a risk involved but it will be a tough market that might not allow to exclude dilution as a tool to build the all important network effect. https://www.youtube.com/watch?v=y9ClKzMq3n0   16:45 and on

Interesting video :)

How can we generate an unstoppable network effect with Bitshares?

Heavy mainstream marketing along these lines http://www.coindesk.com/bitcoin-needs-got-milk/  <- focus on solutions for pains and not on the technology and not on the political revolution which happens by itself...
Point of sale service for BTS X (integration into bitpay or other third party or own solution)
....
your ideas
....

Offline fuzzy

It's deferentially a trade of and there is a risk involved but it will be a tough market that might not allow to exclude dilution as a tool to build the all important network effect. https://www.youtube.com/watch?v=y9ClKzMq3n0   16:45 and on

Interesting video :)

How can we generate an unstoppable network effect with Bitshares?

Ill tell you how...DAC developers honoring pts/ags and at least one other projects "coin" share holders.  Focus kn altcoin holders whose alts have good name recognition but devs with little concern for building crypto-equity systems. 

For instance imagine blackcoin, darkcoin...and even better--litecoin holdrs getting a 10% initial stkae jn the total money supply for a DAC...and then u are seeing what I see.
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Offline jae208

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It's deferentially a trade of and there is a risk involved but it will be a tough market that might not allow to exclude dilution as a tool to build the all important network effect. https://www.youtube.com/watch?v=y9ClKzMq3n0   16:45 and on

Interesting video :)

How can we generate an unstoppable network effect with Bitshares?
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Offline jae208

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No offense luckybit, but you're not following the logic.  I want to make ROI as much as anyone else. I'm also not advocating that we delay bitshares X for this.

But keep in mind, companies do this because it works and it makes all the initial investors more money, you don't seem to be able to figure out why.

BTW: We can make you your very own copy of bitshares X that you own 100% and you can keep it all!!  Of course it will never be worth anything but rest assured you won't be diluted.

Anyway, I should probably stop because I don't know any other way to say this.  I suspect it will eventually be tried both ways and you can guess where my money will be going.

At best, companies do this because they (the management) hope it will work, and that it will make the initial investors more money.  You're acting like there's no risk involved, but of course there is.  The question is whether each should risk only his own stake, or the stake of others also.  I don't mind terribly if "freeloaders" also benefit from my contributions.  I invest for my own reasons, but I hope and expect that this technology will benefit a great many people whether they've invested or not.  Is it a punishment to contributors if non-contributors also benefit?  Don't the contributors also benefit?

As for how anyone could get taken advantage of, suppose the delegates determined that particular failing businesses based on use of the chain were in need of saving, and diluted the shares to revive them.  Suppose the delegates hired a shady marketing group in exchange for kickbacks.  A key part of the design is that even corrupted delegates could do little lasting damage to the system.  Even if they have access to all transaction fees for reinvestment, this is true, as loss of a few weeks profits before the delegate is caught and replaced is a relatively minor setback.  Dilution is permanent, and abuse would require consensus around a new fork to recover.  That's a major setback and terrible PR.

As long as the dilution of shares isn't abused this really isn't a bad idea. Agent is right that high growth companies dilute shares and it does benefit everyone in the middle to long term. They do is for the same reasons entrepreneurs take out loans or seek investment capital to start a business. Think about it, if Bytemaster chose to continue working his day job and save until he had enough money to to fund his company to create DACs by the time he has saved the money it is already too late, like years too late. Also, the net worth of the network will/should rise faster than the money lost through dilution of shares. Bitcoin has been diluted for 5 years but yet each bitcoin is worth more and more. Sure you have 12 percent dilution but you have 6,000 percent appreciation of every share.
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Offline jae208

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Shareholders definitely want the design of the DAC to protect them from each other.  That's why transactions require signatures.  This isn't about protecting them from themselves, as they can still use their shares for whatever they want.  It's about protecting shareholders from tyranny of majority.  A DAC's source code is like a nation's constitution.  In theory, constitutions should define hard limits on the power of the various actors within the governmental system, but enforcement is a problem.  With DACs, you have a business with source code that enforces its own rules.  If you write those rules such that certain actors are overly dominant, you sacrifice much of that benefit.

Centralization and decentralization each have different merits for different applications.  We all knew III and AGS were centrally controlled when we started contributing.
Trog, I understand your fears but I think you haven't thought it through.  Take it step by step, how does anyone get taken advantage of?

There is no getting around the fact that a DAC that can't dilute all shareholders equally to fund growth is a DAC that rewards freeloaders and punishes contributors.

Sooo do shareholders have a say in who gets hired what their salary is when and if they get fired? (DAC employee/developer)

Have you heard of the 80/20 rule? Sometimes it is 90/10 or 99/1
 There will always be a small fraction of people that will deliver the majority of the results. You won't be able to have 100 percent active and equal contribution from everyone involved in the DAC. This isn't communism or socialism.

Not against dilution of shares per say just saying that there will always be people who will benefit from the labor of others and that things won't be so equal. Just look at the the banksters in the USA, such parasites. Hmm I think a better example of the 80/20 rule is the fact that the majority of America's wealth is generated by a handful of USA states. They are generally the states of the west and east coasts and in particular California. Which to me is kind of funny because the states that consider themselves to have great fiscal policy are those that you hear nothing about. Mostly the states in the middle of the USA. Sure their taxes may be lower than in California and their debt negligible in comparison but the fact of the matter is that they don't generate the innovation that California does so in effect they are pulling us freeloaders with them.


Anyways, at the end of the day the market will decide what it wants and the DACs that are flawed will simply vanish.
There is nothing stopping people from simply forking Bitshares and calling it something different like Dogeshares or something.
All someone has to do is live somewhere where they aren't to fond of intellectual property and voila they can legally clone Bitshares and nothing can be done to stop them.
« Last Edit: June 08, 2014, 07:20:27 am by jae208 »
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Offline jae208

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I quickly skimmed through the last several posts. I think Mr. Agent said something about forking?
I agree the market will ultimately decide if they want to have their capital invested in a DAC that dilutes shareholders or not,
for whatever the reasons.

I personally would agree with the dilution of shares if it is for the benefit of the business. However, I don't
think that diluting shares so that more capital can go to marketing is such a great idea though. That seems too old school to me.
I don't think that the Bitcoin "DAC" ever had a marketing budget and it grew to a market cap of billions organically.

It may seem a bit counter intuitive but I believe that successful people and businesses are 'generous' and being a penny pincher is no way to increase net worth. When you dilute shares you are being generous and allow others to join you in the business journey. Sure your stake in the company will be diluted but in the long term that stake you have will be worth more. As you let others join the network effect grows.

just my 2 bitshares
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Offline santaclause102

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It's deferentially a trade of and there is a risk involved but it will be a tough market that might not allow to exclude dilution as a tool to build the all important network effect. https://www.youtube.com/watch?v=y9ClKzMq3n0   16:45 and on

Offline Troglodactyl

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No offense luckybit, but you're not following the logic.  I want to make ROI as much as anyone else. I'm also not advocating that we delay bitshares X for this.

But keep in mind, companies do this because it works and it makes all the initial investors more money, you don't seem to be able to figure out why.

BTW: We can make you your very own copy of bitshares X that you own 100% and you can keep it all!!  Of course it will never be worth anything but rest assured you won't be diluted.

Anyway, I should probably stop because I don't know any other way to say this.  I suspect it will eventually be tried both ways and you can guess where my money will be going.

At best, companies do this because they (the management) hope it will work, and that it will make the initial investors more money.  You're acting like there's no risk involved, but of course there is.  The question is whether each should risk only his own stake, or the stake of others also.  I don't mind terribly if "freeloaders" also benefit from my contributions.  I invest for my own reasons, but I hope and expect that this technology will benefit a great many people whether they've invested or not.  Is it a punishment to contributors if non-contributors also benefit?  Don't the contributors also benefit?

As for how anyone could get taken advantage of, suppose the delegates determined that particular failing businesses based on use of the chain were in need of saving, and diluted the shares to revive them.  Suppose the delegates hired a shady marketing group in exchange for kickbacks.  A key part of the design is that even corrupted delegates could do little lasting damage to the system.  Even if they have access to all transaction fees for reinvestment, this is true, as loss of a few weeks profits before the delegate is caught and replaced is a relatively minor setback.  Dilution is permanent, and abuse would require consensus around a new fork to recover.  That's a major setback and terrible PR.

Offline Agent86

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No offense luckybit, but you're not following the logic.  I want to make ROI as much as anyone else. I'm also not advocating that we delay bitshares X for this.

But keep in mind, companies do this because it works and it makes all the initial investors more money, you don't seem to be able to figure out why.

BTW: We can make you your very own copy of bitshares X that you own 100% and you can keep it all!!  Of course it will never be worth anything but rest assured you won't be diluted.

Anyway, I should probably stop because I don't know any other way to say this.  I suspect it will eventually be tried both ways and you can guess where my money will be going.
« Last Edit: June 01, 2014, 08:17:29 pm by Agent86 »

Offline luckybit

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Shareholders definitely want the design of the DAC to protect them from each other.  That's why transactions require signatures.  This isn't about protecting them from themselves, as they can still use their shares for whatever they want.  It's about protecting shareholders from tyranny of majority.  A DAC's source code is like a nation's constitution.  In theory, constitutions should define hard limits on the power of the various actors within the governmental system, but enforcement is a problem.  With DACs, you have a business with source code that enforces its own rules.  If you write those rules such that certain actors are overly dominant, you sacrifice much of that benefit.

Centralization and decentralization each have different merits for different applications.  We all knew III and AGS were centrally controlled when we started contributing.
Trog, I understand your fears but I think you haven't thought it through.  Take it step by step, how does anyone get taken advantage of?

There is no getting around the fact that a DAC that can't dilute all shareholders equally to fund growth is a DAC that rewards freeloaders and punishes contributors.
How on earth do you jump to this conclusion? It's not a matter of if a DAC can it's a matter of if a DAC should. I think we should look for every possible means to accomplish the same thing without diluting.

If we are talking about inflation would we say the same thing about the dollar? Do we need inflation because it rewards contributors and punishes freeloaders?

Now if these were voting shares and it were a proven business model which is profitable then I could understand but I don't think this sort of business is the kind of business which you can easily make a case for dilution. The main selling point for people to buy Bitshares is the fact that it's not diluting and the whole business is based on getting a lot of people to buy/use Bitshares or BitAssets.

Asset appreciation is how people can make a profit if they have a lot of patience and with some luck. It's not like a brick and mortar bank or credit union.

The first Bitshares X DAC is such a risk just to invest in the new business model that asking people to dilute is asking for too much from investors. In the long term if we find this business model is immensely profitable then you can dilute to expand the business.

But right now it's a horrible idea to treat it like an ordinary startup because most startups are bad investments specifically for these sorts of reasons.

Bitshares X has to be a successful investment or no one is going to invest in future chains. The market is also crowded and success is probably going to be measured by the sharp rise of the price on coinmarketcap or something similar.

Down the road success can be measured in user adoption. So the opinion is that depending on the business model it might make sense to dilute or not. I think for Bitshares it's a bad idea.

A better idea is to take something which is guaranteed to be profitable like the Bitshares Lotto DAC and dilute that to pay for development. Another way to do it is to take a group of DACs or chains and have some which dilute and some which don't. Bitshares X for example could never dilute but nothing stops Bitshares X from merging with Bitshares Y in such a way that the dilution from Bitshares Y pays for development of Bitshares X & Y.

So the answer is you can have some DACs which dilute and which send the money to a development fund for the entire ecosystem if you want to do it that way but the truth is I don't think you can create any new value by diluting/inflating. You're basically asking for credit on the back of the investors when you dilute. The investors have to hope that it's worth it because if its not then it's a loss. A lot of businesses during the dot com bubble have done stuff just like that.

« Last Edit: June 01, 2014, 06:55:20 pm by luckybit »
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Offline Agent86

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Shareholders definitely want the design of the DAC to protect them from each other.  That's why transactions require signatures.  This isn't about protecting them from themselves, as they can still use their shares for whatever they want.  It's about protecting shareholders from tyranny of majority.  A DAC's source code is like a nation's constitution.  In theory, constitutions should define hard limits on the power of the various actors within the governmental system, but enforcement is a problem.  With DACs, you have a business with source code that enforces its own rules.  If you write those rules such that certain actors are overly dominant, you sacrifice much of that benefit.

Centralization and decentralization each have different merits for different applications.  We all knew III and AGS were centrally controlled when we started contributing.
Trog, I understand your fears but I think you haven't thought it through.  Take it step by step, how does anyone get taken advantage of?

There is no getting around the fact that a DAC that can't dilute all shareholders equally to fund growth is a DAC that rewards freeloaders and punishes contributors.

Offline luckybit

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I think this is a great discussion and wanted to add my two cents.

1) I am neutral with respect to the moral aspect of issuing new shares to raise capital because for the time being the whole process appears voluntary by all parties assuming all parties knew the conditions under-which it may happen.

2) Property rights under shared-ownership are already stretched because obviously no one party is free to do with his fraction of the company as he chooses.  It can be said that while you may have 100% property rights in your shares, you have no property rights in the system because no-one has the ability to control the system.   I am using the 'control' == 'ownership' definition of property rights.  So all parties 'own' the data controlled by their private key, but they do not own the wider system. 

3) Under this premise we can say that if 99.999% of the shareholders want to dilute to raise capital and grow, then the other .001% is effectively getting a free ride (something for nothing) by refusing to be diluted.   Assumptions here are that this is a simple capital infusion for new shares and the value of the cash infusion is greater than the value of the shares issued.   Thus in the name of defending the property rights of the .001% the 99.999% have lost their property rights because they are no longer in control of the system they have invested in.   

4) Based upon this principle the argument against dilution is that no one is in control of the system.  This is indeed a goal of our decentralization effort and in the name of having a truly decentralized and corruption free system it is the ideal we should strive for.

5) While dilution can help you grow, it is not a sustainable model in the long run.  Eventually all systems must fund themselves from profits and not capital infusions. 

6) The proper way to do a dilution is to fork a new DAC, honor 90% of the old shareholders and give 10% to the new source of funding.   Then let the market sort out which DAC will survive.

http://www.reddit.com/r/Bitcoin/comments/2711t6/multibit_to_fund_development_by_charging_users/

This is relevant.
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Offline Troglodactyl

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For there to be any dilution, the majority of stakeholders would have to want it.  To me it seems strange for us to say: "even if the majority of stake/shareholders want it, we know what's best for them better than they do, so we should protect them from themselves."  I don't think your co-owners want you to protect them from themselves, I think they want to be empowered and have their stake and voice respected.

A DAC that can issue shares attracts developers with fair compensation and customers with low fees.  A DAC that is waiting for the day they collect enough fees to start reinvesting in their growth would get SMOKED in comparison.  Or again, a DAC that is expecting volunteers/charity and creating all the wrong incentive structures is going to get SMOKED.  Not everyone with something to contribute has time to work for free; why would people volunteer to develop and promote this DAC when they can work for a reasonable DAC that is willing to compensate them for their time?

Taking a hard line against leveraged growth is like teaching your kid financial responsibility by making them work at Walmart until they've saved enough for college.

Do you think Zuckerberg could build Facebook into a company with 1000s of employees out of his dorm room by waiting for advertising revenue to come in to buy a couple more computers and maybe hire someone down the road? Not one chance in a million years.

The only companies paying dividends and not leveraging their market value are companies that are already peaking in their growth or have achieved market saturation or dominance.  Bitshares is a world away from this.

We talk about decentralization, empowerment, and creating the right incentives and then ignore it completely to trust that AGS funds controlled by a handful of people is enough to grow our "decentralized" businesses.

The devil is in the details and implementation. But rest assured someone will implement this and then watch out if they are HIRING while we are running on volunteer labor, transaction fees, and fumes.

Shareholders definitely want the design of the DAC to protect them from each other.  That's why transactions require signatures.  This isn't about protecting them from themselves, as they can still use their shares for whatever they want.  It's about protecting shareholders from tyranny of majority.  A DAC's source code is like a nation's constitution.  In theory, constitutions should define hard limits on the power of the various actors within the governmental system, but enforcement is a problem.  With DACs, you have a business with source code that enforces its own rules.  If you write those rules such that certain actors are overly dominant, you sacrifice much of that benefit.

Centralization and decentralization each have different merits for different applications.  We all knew III and AGS were centrally controlled when we started contributing.