Author Topic: DACs vs. Firms (Are DACs useless?)  (Read 29700 times)

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Offline Empirical1

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Also it's not related to this conversation. But I noticed in the article, you linked to some other potential uses for TruthCoin/Prediction Markets, but you didn't mention social media applications? Not that I'd be an investor in it, but I've heard Andreas Antonopoulos talk about the potential to create a crypto-currency for social media and awarding it based on positive behaviour - behaviour that agreed with & pre-emptively anticipated the consensus of a sites users.

http://www.youtube.com/watch?v=tgEDOBgYg-g             23:20 -27:00

What do you think about that idea? A currency & a prediction market that incentivizes truthful & consensus behaviour seems like a possible fit for TruthCoin or have I misunderstood it/you're not interested in that area?
It sounds like what he's talking about can already be done with Bitcoin, and an employee-scoring algo (which itself could be very similar to what I used in Truthcoin, or some audit lottery, Bayesian Truth Serum, managers, etc). So its cool to see those ideas combine, but I think that (contrary to what most people believe) it is actually very easy to think of a cool idea. As you mention, coding/testing, presenting, building support, re-testing, and all the other 'hard work' is what's actually valuable. Andreas should code a first version of his trustless-troll-police so we can all take a look.

Sometimes I worry that Andreas is just so good at talking, and invited to talk so often, that he sort of burns out and then just runs with this vapid empty-suit stuff + Bitcoin jargon + populism. These days, I rarely learn anything when he talks. It is something I worry that might happen to myself one day.

Yes well I didn't even agree with his premise in that talk, which is that even if you could get control of the system, you're not financially incentivised to abuse that power, so it's ok.

When for me a competitor could be clearly incentivised to crash a system & for Bitcoin & even Bitshares X that competitor may be various elements of the existing financial/central banking status quo. So the systems should be designed with that in mind. (Bitcoin is obv. very weak on that point imo - Ghash.io )

Offline Empirical1

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Empirical1, thanks for reading.

It is true that I think that SR is an example of firm-superiority, and the existence of SR weakens the case for DACs. I think eventually (and soon) it will be possible for many people to easily set up their own anonymous website (MaidSafe / clearskies / whatever). Multisig I think will also become widespread, and then I think there will be an explosion of entrepreneurship in anonymous / illegal goods / tax-evasion. My forecast is that this will be done predominantly (if not exclusively) through firms, although they will almost certainly use Bitcoin and may use .p2p / Quixote ("Namecoin 2.0").

Ok thanks, that's slightly different to how I was viewing your position. So then it maybe becomes more a debate between 'private and public' companies in the real world on that point. I think there are advantages to both.
(A DAC can potentially raise more initial capital & bring a wider range of useful skills and talents to the table for example.)

Also you think it will be done in Bitcoin, but I think there is a big advantage to having the transactional currency be the shares of the company because increased demand for your services creates increased demand for the stock over and above whatever you are earning from fees/charges.
I haven't done the maths or looked into it much more but that's always seemed logical to me.

« Last Edit: July 18, 2014, 02:15:07 am by Empirical1 »

Offline AsymmetricInformation

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Also it's not related to this conversation. But I noticed in the article, you linked to some other potential uses for TruthCoin/Prediction Markets, but you didn't mention social media applications? Not that I'd be an investor in it, but I've heard Andreas Antonopoulos talk about the potential to create a crypto-currency for social media and awarding it based on positive behaviour - behaviour that agreed with & pre-emptively anticipated the consensus of a sites users.

http://www.youtube.com/watch?v=tgEDOBgYg-g             23:20 -27:00

What do you think about that idea? A currency & a prediction market that incentivizes truthful & consensus behaviour seems like a possible fit for TruthCoin or have I misunderstood it/you're not interested in that area?
It sounds like what he's talking about can already be done with Bitcoin, and an employee-scoring algo (which itself could be very similar to what I used in Truthcoin, or some audit lottery, Bayesian Truth Serum, managers, etc). So its cool to see those ideas combine, but I think that (contrary to what most people believe) it is actually very easy to think of a cool idea. As you mention, coding/testing, presenting, building support, re-testing, and all the other 'hard work' is what's actually valuable. Andreas should code a first version of his trustless-troll-police so we can all take a look.

Sometimes I worry that Andreas is just so good at talking, and invited to talk so often, that he sort of burns out and then just runs with this vapid empty-suit stuff + Bitcoin jargon + populism. These days, I rarely learn anything when he talks. It is something I worry that might happen to myself one day.

Offline AsymmetricInformation

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Empirical1, thanks for reading.

It is true that I think that SR is an example of firm-superiority, and the existence of SR weakens the case for DACs. I think eventually (and soon) it will be possible for many people to easily set up their own anonymous website (MaidSafe / clearskies / whatever). Multisig I think will also become widespread, and then I think there will be an explosion of entrepreneurship in anonymous / illegal goods / tax-evasion. My forecast is that this will be done predominantly (if not exclusively) through firms, although they will almost certainly use Bitcoin and may use .p2p / Quixote ("Namecoin 2.0").

Offline AsymmetricInformation

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An office that can't open an Excel spreadsheet! Not buying it!  8)

Upon reflection, my argument "requires digital scarcity", does allow for Quixote (sorry, I can't spell it your way). I have a question though, if we have an Identification-Blockchain, why do we need a new blockchain for .p2p addresses (can't they just be registered as a type of 'name'). In fact, all of the "names" could be registered in a.....Namecoin.

So I suppose there are room for 3 digital scarcities: value, escrowed-value, and names. They will probably all have first-mover-advantage network-effects, but it looks like Namecoin is ripe for a superior replacement.

If your goal is to create a new world-changing blockchain, I think you'll find the following questions essential to your quest:
Can I think of a new blockchain-use, which doesn't involve digital scarcity?
Can I think of a new market-need for digital scarcity?
If so, can this be built into one of the 3 chains above, or is there an opportunity for something new?

Is it wrong that I feel you are neglecting to consider functionality?  Network effect is the be all end all, is it?
It would indeed be literally wrong because I used the word "advantage" and provided an example where functionality would defeat the network effect.

Offline Empirical1

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Also it's not related to this conversation. But I noticed in the article, you linked to some other potential uses for TruthCoin/Prediction Markets, but you didn't mention social media applications? Not that I'd be an investor in it, but I've heard Andreas Antonopoulos talk about the potential to create a crypto-currency for social media and awarding it based on positive behaviour - behaviour that agreed with & pre-emptively anticipated the consensus of a sites users.

http://www.youtube.com/watch?v=tgEDOBgYg-g             23:20 -27:00

What do you think about that idea? A currency & a prediction market that incentivizes truthful & consensus behaviour seems like a possible fit for TruthCoin or have I misunderstood it/you're not interested in that area?
« Last Edit: July 17, 2014, 11:52:00 pm by Empirical1 »

Offline Empirical1

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An office that can't open an Excel spreadsheet! Not buying it!  8)

Upon reflection, my argument "requires digital scarcity", does allow for Quixote (sorry, I can't spell it your way). I have a question though, if we have an Identification-Blockchain, why do we need a new blockchain for .p2p addresses (can't they just be registered as a type of 'name'). In fact, all of the "names" could be registered in a.....Namecoin.

So I suppose there are room for 3 digital scarcities: value, escrowed-value, and names. They will probably all have first-mover-advantage network-effects, but it looks like Namecoin is ripe for a superior replacement.

If your goal is to create a new world-changing blockchain, I think you'll find the following questions essential to your quest:
Can I think of a new blockchain-use, which doesn't involve digital scarcity?
Can I think of a new market-need for digital scarcity?
If so, can this be built into one of the 3 chains above, or is there an opportunity for something new?

For a business I would also ask -

Can I think of any business that would gain a competitive advantage through shareholders being able to conduct business anonymously?

Besides the obvious that you fail to recognise, like SR, in today's overly taxed, litigious society there's a market for many more across almost any digital marketplace you can think of & many physical ones.

+ Also businesses that can get rapid funding and listings on decentralised exchanges may have a competitive advantage over ones that have to wait many months to year + to gain a legal listing on a traditional exchange.
 

For a new blockchain I would also ask?

Is there a compelling reason to build many things on one blockchain when value can be transferred fairly seamlessly & inexpensively between different blockchains when required? 

Especially when there is an advantage to using more than one blockchain or more than one system in terms of diversifying risk?

Or when they may be an advantage to tweaking the structure of a blockchain for speed or price depending on your product/services requirements.

Edit: I have read your original article. I already gathered you see DAC's as only beneficial for store of value type uses but not 'purposefully' storing value or value transfer whereas I see ownership of a business as a 'store of value' use and the advantages I've listed (Privacy, legal, compliance, time, tax, no confiscation/seizure)  mean lots of businesses could potentially use DAC ownership models. As a result we may have a range of businesses that are based on DAC ownership models across a range of industries imo.

Your final conclusion that we haven't seen many yet is misplaced imo -

Quote
It is quite early in the game, but the empirical evidence is piling up on my side. Many firms have sprung up to use/accept Bitcoin, yet still (to date) no other useable "DAC" or "Ethereum" has been born, let alone seen its first birthday (Bitcoin is 5 and a half). How long will it be until that changes? 6 months? 5 years? Forever?

While correct from an emperical perspective few who approached business from a practical perspective would agree.

Despite being around for 5.5 years. Bitcoin only began taking off from a financial and public awareness standpoint in early 2013 surpassing $1 Billion CAP for the first time in 04/2013. It was only at this point that crypto-currency investment and development interest in DAC's as well as centralised areas began to take off as well.

http://launch.co/story/107-bitcoin-startups-have-raised-292m-incl-176m-raised-so-far



So concluding your argument by pointing to the non existence of DAC's in this space despite Bitcoin's age as evidence of their non viability is false imo because in terms of a significant business investment opportunity, Bitcoin is barely a year old.

Also I would have thought you would know from your own Truthcoin, which I concede is pretty cool, that the time period from you presenting the idea, to generating interest, getting funding, developing and releasing could also easily take a year from start to finish?

« Last Edit: July 17, 2014, 11:59:00 pm by Empirical1 »

bitbro

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An office that can't open an Excel spreadsheet! Not buying it!  8)

Upon reflection, my argument "requires digital scarcity", does allow for Quixote (sorry, I can't spell it your way). I have a question though, if we have an Identification-Blockchain, why do we need a new blockchain for .p2p addresses (can't they just be registered as a type of 'name'). In fact, all of the "names" could be registered in a.....Namecoin.

So I suppose there are room for 3 digital scarcities: value, escrowed-value, and names. They will probably all have first-mover-advantage network-effects, but it looks like Namecoin is ripe for a superior replacement.

If your goal is to create a new world-changing blockchain, I think you'll find the following questions essential to your quest:
Can I think of a new blockchain-use, which doesn't involve digital scarcity?
Can I think of a new market-need for digital scarcity?
If so, can this be built into one of the 3 chains above, or is there an opportunity for something new?

Is it wrong that I feel you are neglecting to consider functionality?  Network effect is the be all end all, is it?


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Offline AsymmetricInformation

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An office that can't open an Excel spreadsheet! Not buying it!  8)

Upon reflection, my argument "requires digital scarcity", does allow for Quixote (sorry, I can't spell it your way). I have a question though, if we have an Identification-Blockchain, why do we need a new blockchain for .p2p addresses (can't they just be registered as a type of 'name'). In fact, all of the "names" could be registered in a.....Namecoin.

So I suppose there are room for 3 digital scarcities: value, escrowed-value, and names. They will probably all have first-mover-advantage network-effects, but it looks like Namecoin is ripe for a superior replacement.

If your goal is to create a new world-changing blockchain, I think you'll find the following questions essential to your quest:
Can I think of a new blockchain-use, which doesn't involve digital scarcity?
Can I think of a new market-need for digital scarcity?
If so, can this be built into one of the 3 chains above, or is there an opportunity for something new?

bitbro

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AI, I did not realize the T-Coin market would have shorts and "longs" on continuously-priced assets.  Would you expect these assets to become pegged to their real world counterpart?
Check out this Excel sheet, Scaled Claims tab, to get the general idea here. I absolutely would expect them to become pegged, through the magic of arbitrage. Especially if the markets matured very soon (low basis / technical risk), or if there were many evenly-spaced markets. I plan to build in a sort of "arbitrage viewer", which calculates the implied annual interest rate, to encourage this as much as possible.

is linux as a whole experiencing software rot?
I don't see rot as "happening" to one thing or another. Any organism, including ourselves, would rot if we did not perform essential maintenance (food, exercise, rest, immune system, etc) on it. Linux is alive and not rotting. I'm simply trying to say that software has maintenance costs just like a firm has operating costs, so when people say "software will be cheaper long run" they aren't always right.

Please elaborate on [1] in regards to this:  If some bets Yes/No, then that person will need to wait until the event occurs to receive payout.  How will people deal with opportunity cost of betting Yes/No? 
I'm not sure opportunity cost was the phrase you meant to use. You might find this FAQ answer helpful.

Can't read that right now as I'm at the office.

Is it instead that people can buy and sell positions of Yes/No and that the price of Yes/No fluctuates?  So if I hold Yes and suddenly more people want Yes, then I can probably sell Yes at a higher price?  So the market is always liquid and Your "bet" is never locked in, which would hurt you through opportunity cost?


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Offline AsymmetricInformation

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AI, I did not realize the T-Coin market would have shorts and "longs" on continuously-priced assets.  Would you expect these assets to become pegged to their real world counterpart?
Check out this Excel sheet, Scaled Claims tab, to get the general idea here. I absolutely would expect them to become pegged, through the magic of arbitrage. Especially if the markets matured very soon (low basis / technical risk), or if there were many evenly-spaced markets. I plan to build in a sort of "arbitrage viewer", which calculates the implied annual interest rate, to encourage this as much as possible.

is linux as a whole experiencing software rot?
I don't see rot as "happening" to one thing or another. Any organism, including ourselves, would rot if we did not perform essential maintenance (food, exercise, rest, immune system, etc) on it. Linux is alive and not rotting. I'm simply trying to say that software has maintenance costs just like a firm has operating costs, so when people say "software will be cheaper long run" they aren't always right.

Please elaborate on [1] in regards to this:  If some bets Yes/No, then that person will need to wait until the event occurs to receive payout.  How will people deal with opportunity cost of betting Yes/No? 
I'm not sure opportunity cost was the phrase you meant to use. You might find this FAQ answer helpful.

bitbro

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bb, I think you are referring to a difference between...
[1] " Yes/No the price of gold will be above $1000 on date D? "
and
[2] "The price of gold on date D".
...but even markets with [1] have "flow", if you define that as "a continuously changing price". Out of the money binary options still have a continuously changing price, which can be translated into an index.

Moreover, the Truthcoin markets I designed can allow you to "go long" or short continuously-priced assets such as [2].

I share toast's confusion, though. If the above guess was wrong I haven't the slightest idea what you are talking about!  :)


That meme is fantastic.


Another thing.

Please elaborate on [1] in regards to this:  If some bets Yes/No, then that person will need to wait until the event occurs to receive payout.  How will people deal with opportunity cost of betting Yes/No? 

Offline jae208

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Right. I didn't mean to imply that BitsharesX could be replicated for $5. In fact I'm nearly suggesting the reverse: that what you guys are doing is very, very, hard. So hard that I predict that like-minded entrepreneurs will actually decide that they don't want to try it anymore (except perhaps for the challenge, or for the public good), and will instead do the traditional thing, and set up shop and sell their labor.


You do understand this is open source software, don't you? Now that the basic code is nearly complete, anyone can build their own DAC relatively easily; they will not be deterred by some great cost. I recently took a train ride up a mountainside in Alaska. It took a huge team of men many months and lots of black powder to blow apart the mountainside, at the cost of many lives. But today, I can buy a ticket and ride to the top comfortably in less than an hour. With the open source software toolkit that Invictus has created, anyone will be able to make their own DACs pretty easily. Does the price of my train ticket factor in how hard it was to blast that track out of the mountain? Does the simplicity with which anyone will be able to create a DAC factor in the difficulty and delays in getting the basic code built? Factor in that initial groundwork if your formulas and theories so demand, but don't be surprised if they don't quantify the relatively light burden remaining for anyone wishing to jump off from this platform.

The experienced software professionals I know (and I"m not saying that they are infallible) don't believe you. Instead, they believe in something called software rot, whereby the environment changes too quickly for the inputs of the software to remain relevant. Even though the mapping from inputs to outputs improves constantly, the benefit of performing that mapping at all falls quickly and unexpectedly.

This is why I wrote, in the OP (over a month ago): """Software development/maintenance requires a great deal of highly-skilled work, and then the software "rots" as it gradually becomes obsolete."""

is linux as a whole experiencing software rot?
http://bitsharestutorials.com A work in progress
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https://www.youtube.com/user/BitsharesTutorials

bitbro

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bb, I think you are referring to a difference between...
[1] " Yes/No the price of gold will be above $1000 on date D? "
and
[2] "The price of gold on date D".
...but even markets with [1] have "flow", if you define that as "a continuously changing price". Out of the money binary options still have a continuously changing price, which can be translated into an index.

Moreover, the Truthcoin markets I designed can allow you to "go long" or short continuously-priced assets such as [2].

I share toast's confusion, though. If the above guess was wrong I haven't the slightest idea what you are talking about!  :)


That meme is fantastic.


@toast  That meme made my day.  I was sitting at my desk laughing for 15 minutes. Anyway, I should have defined market place "flow" as "continuously changing price", and I also should have used proper grammar.  :)

AI, I did not realize the T-Coin market would have shorts and "longs" on continuously-priced assets.  Would you expect these assets to become pegged to their real world counterpart?

« Last Edit: July 16, 2014, 11:32:50 pm by bitbro »

Offline AsymmetricInformation

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I read the OP and vastly agree with it. But where does it contradict with one of the DACs developed based on the Bitshares toolkit (lottery, me, music, dns, insurance)? With Bitshares Music I see your point. Not with the rest.
Insurance I personally don't get. I think ME can be replaced with colored coins. Lottery I think is a little unambitious, actual prediction markets or legal gambling institutions (that you could sue if they cheated you) could replace. DNS I get although it might also be replaceable by colored coins.

What do you mean by
Quote
'real estate' storage
?
Simply that .p2p is sort of like storing real estate instead of cash. Its a different asset (web namespace) where digital scarcity would be important. I can't think of any others.

Quote
We'll see if that market cap lasts. I'm betting it won't.
As you refered to BTS X. This falls into the same category as Bitcoin: value transfer. At least one side of it. Based on your assessment the market cap should not fall (in case it works).   
[/quote]
You are right, based on this assessment it would have an opportunity to be very successful, and probably actually replace BTC with a superior currency. However, separate from this, I'm afraid I personally do not expect the market peg to work, and I expect liquidity to fall suddenly and unexpectedly. I'm reasonably confident of this, but as excited as anyone to see the software turn on and do its thing.


bb, I think you are referring to a difference between...
[1] " Yes/No the price of gold will be above $1000 on date D? "
and
[2] "The price of gold on date D".
...but even markets with [1] have "flow", if you define that as "a continuously changing price". Out of the money binary options still have a continuously changing price, which can be translated into an index.

Moreover, the Truthcoin markets I designed can allow you to "go long" or short continuously-priced assets such as [2].

I share toast's confusion, though. If the above guess was wrong I haven't the slightest idea what you are talking about!  :)


That meme is fantastic.


Here is another proposition:
 
Transparency for companies can (only) be enhanced if the respective company does ALL it's value transfer (receiving and spending) using crypto currency. A charity for example receives all it's money via a crypto currency which let's people see how much money the received. If they spend it all via a the same crypto currency then it is all traceable. If they have to exchange it to fiat and spend it then it is not tracable anymore.

What do you think? How else could a company enhance transparency (if the company is not a DAC itself)?
I think that transparency is hard, even with software and blockchains. There are many businesses, even small ones with professional accountants, where even the people running the business don't know exactly where all of their money is. I can sign a message from an address, but what does that really accomplish? I could transfer the coins to my personal BTC account and keep signing messages, or I could build a plan to steal the coins in one quick moment. What's the difference between an inside/outside job?

These features favor putting the whole process on a blockchain, but as I said before, security/accounting audits are a lot of work. If you trust the charity enough to donate to it at all, why check and see what it is doing with the money? The true audit is for the real-world results of their operations, which makes the blockchain transparency irrelevant. Charities do not need to store your money, so they can just use Bitcoin.