How much is a new user worth?

[Method-X]

The goal of this idea is that no dilution occurs unless a user signs up and first buys 1000 bit usd.  Then the dilution is used to purchase bit usd, not sold for real usd. 

As long as the referral program is growing there would be no sell pressure at all. 

If it works the the users who stick around will provide more than enough new inflow of capital.

While I'm not necessarily against issuing more shares to fund marketing (share metaphor vs. coin), I'm against this $100 bonus. It's a complete waste of money and will not lead to the kind of adoption you think it will.

Let's use PayPal's early marketing strategy as a case study.

a) They focused on one marketplace (eBay) to build a real user base.
b) They used bots to simulate demand on eBay.

Here's a summary (source):

For a period of time, Paypal effectively gained a following by offering new users a $10 credit for registering and another $10 for referrals. However, this strategy also burned through its cash reserves pretty quickly. To separate itself from the competition, Paypal had to build and control a proprietary distribution channel that their competitors could not easily detect, much less duplicate.

When Paypal figured that eBay was their key distribution platform, their marketing team came up with a creative marketing campaign to simulate demand. They created a robot – a script that could spider eBay’s site looking for certain types of auctions – that bid on items and then, insisted on paying for the auction using Paypal.

Here's a quote from Peter Thiel, co-founder of PayPal:

“Poor distribution, not product, is the number one cause of failure. If you can get even a single distribution channel to work, you have great business. If you try for several but don’t nail one, you’re finished… People say it all the time: this product is so good that it sells itself. This is almost never true. These people are lying, either to themselves, to others, or both. “

If I were in charge of marketing strategy at BitShares, I'd focus on a strategic partnership with OpenBazaar. The only users willing to put up with Bitcoins volatility will be drug related users (because they have no other choice); for OpenBazaar to attract "legitimate" users they need a stable crypto for their merchants and users to transact in. They need BitUSD (or NuBits) just as much as BitShares needs ONE solid distribution channel as a catalyst for organic adoption.

a) Focus on making BitUSD easy for merchants to integrate into pre-existing online marketplaces that currently need the product (i.e. OpenBazaar).

b) Seed the marketplace with BitUSD to kickstart the BitUSD economy.

Whichever stable crypto taps into a popular online marketplace first will gain network effect and spread organically from that point on. This is called a "viral insertion point" and is absolutely critical.

Focusing on attracting a "mainstream" audience (that doesn't even need/care about crypto to begin with) as opposed to already existing marketplaces that legitimately need our product will be a fatal error.

[GaltReport]

The goal of this idea is that no dilution occurs unless a user signs up and first buys 1000 bit usd.  Then the dilution is used to purchase bit usd, not sold for real usd. 

As long as the referral program is growing there would be no sell pressure at all. 

If it works the the users who stick around will provide more than enough new inflow of capital.

I personally think a $100 is way too much. If we are going to do a $100 then it should be for like 2 weeks or something. Personally I think $50 is a great place to start.


"Open Bazaar announces revolutionary decentralized global marketplace. Sign up today and receive up to $100 bitUSD!"

For those not already following, the Open Bazaar comment ties directly to this thread:

https://bitsharestalk.org/index.php?topic=9651.0

For me, Open Bazaar plus a referral program sounds like gold.

I've been following that as well.  Sounds like a great opportunity.

[hpenvy]

The goal of this idea is that no dilution occurs unless a user signs up and first buys 1000 bit usd.  Then the dilution is used to purchase bit usd, not sold for real usd. 

As long as the referral program is growing there would be no sell pressure at all. 

If it works the the users who stick around will provide more than enough new inflow of capital.

I personally think a $100 is way too much. If we are going to do a $100 then it should be for like 2 weeks or something. Personally I think $50 is a great place to start.


"Open Bazaar announces revolutionary decentralized global marketplace. Sign up today and receive up to $100 bitUSD!"

For those not already following, the Open Bazaar comment ties directly to this thread:

https://bitsharestalk.org/index.php?topic=9651.0

For me, Open Bazaar plus a referral program sounds like gold.

[Mysto]

The goal of this idea is that no dilution occurs unless a user signs up and first buys 1000 bit usd.  Then the dilution is used to purchase bit usd, not sold for real usd. 

As long as the referral program is growing there would be no sell pressure at all. 

If it works the the users who stick around will provide more than enough new inflow of capital.

"Open Bazaar announces revolutionary decentralized global marketplace. Sign up today and receive up to $100 bitUSD!"

I personally think a $100 is way too much. If we are going to do a $100 then it should be for like 2 weeks or something. Personally I think $50 is a great place to start but even that is a little high.

[oldman]

The goal of this idea is that no dilution occurs unless a user signs up and first buys 1000 bit usd.  Then the dilution is used to purchase bit usd, not sold for real usd. 

As long as the referral program is growing there would be no sell pressure at all. 

If it works the the users who stick around will provide more than enough new inflow of capital.

"Open Bazaar announces revolutionary decentralized global marketplace. Sign up today and receive up to $100 bitUSD!"

[Shentist]

The goal of this idea is that no dilution occurs unless a user signs up and first buys 1000 bit usd.  Then the dilution is used to purchase bit usd, not sold for real usd. 

As long as the referral program is growing there would be no sell pressure at all. 

If it works the the users who stick around will provide more than enough new inflow of capital. 

maybe you should explain your idea more in detail. now i understand it better

new user is signing up, provides 1000 USD who are converted in 1000 bitUSD, after he spend the amount via merchants etc. the blockchain will create 100 bitUSD for this user.

1. the system will buy 1000 bitUSD for say 30.000 BTSX worth creating buying pressure
2. after he spend his 1000 bitUSD on merchants the system will now create 100 bitUSD without change 3.000 BTSX worth

now i understand it better and it is absolute ok with me.

to counter the "dilution" we can introduce a new "burnfee" who is in place if the BTSX supply growth over 2Bn.

on a bitUSD /BTSX rate of 30 BTSX for 1.000.000 User we will get 1.000.000.000 USD new money in the system and will only increase the BTSX base with equivalent of 100.000.000 million bitUSD. The dilution in this case it is worth to take if

1. we can identify the wallet creators via creditcard (we don't want to pay more then 1 time)

[merockstar]

The goal of this idea is that no dilution occurs unless a user signs up and first buys 1000 bit usd.  Then the dilution is used to purchase bit usd, not sold for real usd. 

As long as the referral program is growing there would be no sell pressure at all. 

If it works the the users who stick around will provide more than enough new inflow of capital.

There's still room for doubt about the efficacy. One could do it to take advantage of the referral bonus, then never use bitUSD again.

[bytemaster]

The goal of this idea is that no dilution occurs unless a user signs up and first buys 1000 bit usd.  Then the dilution is used to purchase bit usd, not sold for real usd. 

As long as the referral program is growing there would be no sell pressure at all. 

If it works the the users who stick around will provide more than enough new inflow of capital. 

[merockstar]

I'm okay with a referral program of some kind.

I'm on the fence about funding it with btsx dilution. That could serve to alienate Bitcoin supporters, our most likely early adopters. Also if the program ends up not achieving its stated aim through some kind of unforeseen circumstance then we just diluted everybody's shares for nothing. That option should be pursued only if it's absolutely necessary, and only if we're 100% sure the referral program will increase adoption enough to justify it.

[Shentist]

Suppose there will be this oppertunity we will just consider the chances and the risk.

facts

1. to be successful we need as grow as fast as possible. Anybody would agree?

- so maybe we offer something anybody want, so no marketing is needed (not likely).

2. to get bitUSD working (and the peg) we need people who doesn't care about BTSX and only interested to save their USD value and use it.

- something like OpenBazaar could be nice
- some merchants who want to get rid of the creditcard transaction fees (Bitcoin would be a big competitor)

to achieve this, maybe dilution will be a good solution, but maybe we can find better ones.

1. increase the fees (double them) and the new fees will flow in a marketing address controlled from I3 for a needed time (maybe with voting)
2. BTSX was always supposed to be the first of more Exchanges, so maybe we can do new snapshots and take a cut for marketing (something to give what you didn't get in the past, is much easier to agree)
3. create the first "marketing DAC as Asset" on the blockchain with some special rights
- all referrals will pay this marketing bitAsset a lifetime fee
- shorting as the first in line
-->you can fund is like any startup
4. just make a referral programm with lifetime fee payment and maybe some big guys will already be interested to pay money for wallect registration

many possiblities without dilution, but we should take action now to have funds ready when the opportunity comes.

[bytemaster]

Any decision will be shareholder approved and capped.  There is a difference between desperate and seeing an opportunity that is beyond our current means. 

Dividends still apply even with a capital infusion.   

You don't see shareholders of other companies voting to dilute unless it is going to grow or save the business. 

Once again I fear we are letting the currency metaphor cloud our thinking.   

If you want a dilution proof asset then go with gold or silver. 

Note:  I specifically made the share supply 2 billion because 10 billion is the maximum round number that can fit in a 53 bit double.  Increasing the supply beyond the 20:80 social consensus is significantly more challenging than simply having shareholders vote. 

I started this thread not because of desperation, but because it is a serious issue that need discussed. 

I am reading this thread a fully sympathies with both sides of the debate. 

[Troglodactyl]

Can someone help to clarify a question:   The way I understand it, BTSX will eventually be a fully independent autonomous DAC.  That means at some point I3 will no longer be managing the operations. Therefore, the issue regarding dilution for project financing is only valid for the growth/experimental phase of BTSX in which I3 and BM are managing the development decisions because once BTSX is fully mature and released to the wild as a complete autonomous operation there can be no way to manage/control how additional shares will be used.  Therefore the proposal for dilution is not an option that will remain indifferently, but is only a option to be used during the ramp-up/initial creation of BTSX.   Correct?   If is otherwise, I may be totally against it.

A hard fork is and always will be an option provided sufficient support for it, but in the early development phase that support is quite easy for I3 and BM to obtain.  There have been suggestions to allow permanent unbounded dilution as its approved by voting, but there are also suggestions to have "capped" dilution so that an additional hard fork would be required to exceed that cap.

I don't like this focus on marketing. It makes it seem like the BTSX team is desperate for money.

We should be focused entirely on making the system as robust and bug-free as possible. If the pegged assets system works as intended, then the market will speak for itself and users will come on of their own accord.. Trying to draw in new users with big promises should not be a priority, and it makes this whole thing look scammy...

IMHO, we do not have the option not to market as we need speed to win the race of network effect.  We are no longer in the days of early-bitcoin when know one knew of the technology.  The competitors are coming out of the wood work.  Also, remember this is open source.  It can be forked by anyone at any moment.  The technology does not provide a barrier to entry.  The network effect will. 

The thing is there are already marketing plans.  Everyone just seems to be panicking and getting desperate because they don't see most of what Brian is doing yet.  A lot of the marketing is being held off until there's a stable system to market, but just as we get close to stability we start talking about destabilizing it and shaking the very foundation of the social consensus to pay for marketing...

[James212]

I don't like this focus on marketing. It makes it seem like the BTSX team is desperate for money.

We should be focused entirely on making the system as robust and bug-free as possible. If the pegged assets system works as intended, then the market will speak for itself and users will come on of their own accord.. Trying to draw in new users with big promises should not be a priority, and it makes this whole thing look scammy...

IMHO, we do not have the option not to market as we need speed to win the race of network effect.  We are no longer in the days of early-bitcoin when know one knew of the technology.  The competitors are coming out of the wood work.  Also, remember this is open source.  It can be forked by anyone at any moment.  The technology does not provide a barrier to entry.  The network effect will. 

[James212]

Can someone help to clarify a question:   The way I understand it, BTSX will eventually be a fully independent autonomous DAC.  That means at some point I3 will no longer be managing the operations. Therefore, the issue regarding dilution for project financing is only valid for the growth/experimental phase of BTSX in which I3 and BM are managing the development decisions because once BTSX is fully mature and released to the wild as a complete autonomous operation there can be no way to manage/control how additional shares will be used.  Therefore the proposal for dilution is not an option that will remain indifferently, but is only a option to be used during the ramp-up/initial creation of BTSX.   Correct?   If is otherwise, I may be totally against it. 

[Troglodactyl]

The "no dilution" folks aren't jumping ship. They just want to see this proposal limited to a hard and fast number. Because they're right; BTSX is supposed to decrease, not increase. I think this dilution will be very limited in scope, but it does need to be defined/capped.

And anybody who is smart will stick with BTSX, not AcmeFork DAC, since AcmeFork DAC will be too rigid. It will not have the business development potential that will now be possible with BTSX. We just need to see a capped limit on the dilution.

 

Edit: and "Dance with the BM that brought you"...

There's already a cap on dilution that's harder than any new cap will be.  If that cap is broken, everyone will know the new one is meaningless also.

I don't like this focus on marketing. It makes it seem like the BTSX team is desperate for money.

We should be focused entirely on making the system as robust and bug-free as possible. If the pegged assets system works as intended, then the market will speak for itself and users will come on of their own accord.. Trying to draw in new users with big promises should not be a priority, and it makes this whole thing look scammy...

I agree.  There are already great marketing efforts under way from my understanding, but much of this discussion seems like the sort of desperation I would expect if the project were to be a failure on technical merits, which is definitely not the case.