This is just a Preliminary Rough Draft.
Don't read it yet unless you want to help us improve it.
When polished, this will be an ongoing multipart blog series on bitshares.org
If you are wondering what you may missed in the first year,
or want to ponder how we got to where we are, read on…
The History of BitShares
Part Two
November’s Innovation – BitShares PTSBitShares PTS (formerly called ProtoShares) was developed for an entirely different reason than what its paradigm-shattering role became shortly after launch. In fact, every one of the subsequent breathtaking innovations came about from reacting to opportunities and lessons learned from the previous month’s breakthroughs and, um, screw-ups. Necessity is the mother of invention. I wish we could say we had it all planned out in advance, but no business plan survives first contact with the market. We are merely blessed opportunists.
Initially, we were just looking for a way serve people interested in our first objective, BitShares X. A way for them to start mining and trading it early. BitShares X was first viewed as a coin backed by a built-in business that gives it more worth than the speculative value of a meme or some alternative technical implementation. In this first case, that integral unmanned business was a decentralized bank and exchange.
Yep. Your coins would now contain a bank, not the other way around.
Needless to say, this kind of second-generation crypto-company takes a lot longer to build and early adopters were growing impatient. So our plan was to just offer a plain old Bitcoin clone whose coins would be a BitShares X prototype -
upgradable into BitShares X “bitshares” when it was ready to launch. We would simply initialize the first 10% of the bitshares to match all the public keys of PTS holders, giving them instant matching control of the same number of bitshares in BitShares X. This is how the concept of a protocoin was born.
We envisioned many exciting uses for protocoins. For example, they could be used as
- A way to separate investing in an idea from investing in one or more implementations of the idea.
- An incentive for competitors to cooperate on building an implementation because they could all be common stakeholders in the idea.
- A way to vet an idea and attract venture capitalists based upon prediction market evidence that the idea has value.
- A way for developers to invest in an idea and raise funding by generating growth from showing more and more evidence that they will successfully implement the idea in a way that benefits investors in the idea.
- A way for someone with a good idea but lacking the ability to implement it to share it and benefit from its ultimate implementation by somebody else.
- A way for an entire community to participate in “pre-mining” in a way that might be deemed fair (e.g. for unmanned businesses that must start out with enough currency to operate and enough credibility to get market depth on exchanges from Day One.)
- A more graceful “soft fork” way to upgrade to version two of a DAC by instantiating the new in parallel with the old and let the owners (shareholders) not just the employees (miners) decide when and if value transitions from the old to the new.
- A way to build a community and get them to cooperate on the implementation because they all have a stake in the idea.
So you see, right off the bat we are talking about two assets: PTS and BTS. Before long, we would be talking about entire families of such assets. Second-generation crypto-currencies that we began to call
crypto-equities because the coins also seemed like “shares” in the underlying unmanned business that gave the currency value - bitshares.
Since then, we have come to prefer the inverse of this dual metaphor:
Bitcoin is a type of crypto-company that implements a coin
not
BitShares as a type of crypto-coin that implements a company.
Of course,
bitshares are something very different than shares in a government-created and therefore government-regulated organization. We are speaking
metaphorically to help people understand how they work and what gives them value. They can still be viewed as ordinary altcoins (ok, incredibly powerful ordinary altcoins) as far as their underlying technology is concerned.
Charles Evans explored this dual metaphor in this delightful blog article:
We offered a bounty for an experienced coin designer to build the PTS protocoin for us. A developer known as FreeTrade answered the call. It took him about a month to clone it from the Bitcoin library. Then, while we were still evaluating his code, another independent entrepreneur known as Super3 downloaded the open-source from FreeTrade’s library and started it running. On November 5, 2013 Super3 went down in history as the miner of the first protocoin block in crypto-equity history!
POW! The rest of the world (who had been eagerly awaiting the launch based on the several months we had been writing about it) jumped on it with everything they had. It took just a few days before the competition became so intense that people had a hard time mining solo with their individual computers. They started joining pools that several enterprising businessmen quickly set up and then everyone started renting cloud computers to remain competitive. By the end of the third week, there were hundreds of thousands of mining nodes competing. Several independent coin exchanges jumped in and listed PTS, driving it immediately into the top ten of the over 100 coins listed on
coinmarketcap.com at the time.
So you see, we really don’t own PTS.
It was launched by the industry for the industry.
We just described what ought to exist,
and a decentralized industry of entrepreneurs produced it practically overnight.
Of course, that moon shot may have had something to do with one small suggestion we made literally at the last minute: we decided to recommend PTS be the basis for more than just BitShares X. PTS should also be used to initialize all of the other second-generation assets we had been writing about.
Mine once for a whole family of assets. Why should you have to keep mining over and over again to get a “fair” distribution?
In fact, we recommended that other developers do the same thing. Suddenly BitShares PTS was backed by more than thin air. More than just one unmanned business. More than just one company’s product line of unmanned businesses. It could well become backed by a good portion of the unmanned business industry!
BitShares PTS was valuable because
as a universal prototype
it was upgradable to multiple future releases like BitShares X.
Just like a good deal on Microsoft Office 1.0 might get you free upgrades on Word, Excel, PowerPoint and all the rest …for as long as you both shall live!
To a community willing to speculate on any altcoin with a cute name, that was all it took. Now there was something tangible to speculate on. Soon crypto-currency speculators would be demanding to know every new asset’s
business case.
Imagine that! We had almost accidentally changed the crypto-currency industry forever.
It was just our opening shot.
Topic: Happy Birthday BitShares! (Read 11782 times)
