How much is a new user worth?

[James212]

* Any type of direct payment for user adoption will generate very bad PR

Another very important effort is to sponsor and have a strong presence at Bitcoin conferences (which we are currently doing). Having Dan as a keynote speaker at Inside Bitcoins does more in terms of marketing than anything I can think of. Many people in the Bitcoin community (and especially the shibes) know nothing about the advantages of BTSX. We need short, powerful, and pervasive messaging at these events.
[\quote]


Need to think bigger than this.  We need to attract FAR more than the Bitcoin crowd for Bitshares to succeed like it should.  This product has far far more potential than you are giving it credit for. 

[bytemaster]

Perhaps if we had not done the inflation and marketing (or just did less marketing), we could have grown to a market cap larger than BTC anyway but just 1 year later than with the excessive marketing. Would getting to the same point 1 year earlier be worth the additional dilution of shares? I don't know, it depends on what the shareholders want (and a large fraction of the shareholders, preferably at least 50% share approval).

1 year in the crypto world is comparable with 10 years or more in other sectors... Don't you have the same feeling?

I agree with the primary point that "throwing money at the problem" without looking at the "best use of funds" is foolish.

Generally speaking there is a "natural rate of growth" that Bitcoin has adopted... means we will get there in 3 to 5 years absent competition.

I think it all hinges on competition and speed to market.   There are so many derivative based solutions on the horizon that we want to grow... there is also the fact that jumpstarting can greatly accelerate your n^2 network effect growth.   The first 100,000 users take a lot longer to get than your second 100,000 users.   

So obviously everything we do we consider "cost/benefit" and "alternatives" and "opportunity cost".       

[Empirical1.1]

I would be in favor of inflation for any type of referral program. Call it "market mining" or whatever. As long as it's generating users (who are also bringing more money into the ecosystem) the inflation is totally justifiable. Ultimately, users are what determine the per share value.

EDIT: After further consideration, I'm no longer in favor of debasing the currency because of the precedent it would set. I am, however, supportive of a referral program similar to my original proposal. It's much less gimicky.

I'm glad even the main referral program cheerleader gets it.

So is this a Christmas Present?

No it's Pandora's Box.

There are so many ways to do incredible marketing.  Can someone explain the fervent push on all fronts this week to inflate the currencies before ANY marketing campaign AT ALL has launched and the effects thereof can be evaluated?

 

Brilliant.   I love the idea.

Although just curios about your 500k Bitcoin user estimation.

I have heard 5 Mill.   With Coinbase having 1.5 million wallets, Blockchain having over 2 million, I think there would be lots more than that.

The last I saw was 1 million Bitcoin users, extrapolated from MtGox leaked info.  But 90% of Bitcoin users are have less than $3500 worth of Bitcoin.  The average amount within that 90% group would be a lot less than that. https://bitcointalk.org/index.php?topic=316297.0

 http://www.coinreporting.com/globalstats.php?c=USD#value has 12000 users who actually take the time to track their portfolio. 90% of them have on average less than $600 in Crypto.

Bear in mind they're investors at least. This strategy proposed here is attracting 'spenders' not savers.

Regardless, you won't even get the right demographic anyway imo, with those kind of returns, you will get a network of families, social groups & scammers  recycling an initial investment of a few thousand dollars and fleecing us for 100% returns in less than a month.

Of course, imagine for a second that the numbers were right and added up. The real question is the one Coinhoarder nailed.

What is the cost to BTSX of adding inflation.

I'm not sure what I think about this yet, but my immediate thoughts are not good. We need to think about all the possible implications, be 99% sure it will work, and go over all of the dynamics and economics of it. I think a lot of things could possibly go wrong, it will hurt our image in the cryptocurrency community, and as someone else already mentioned it will give the detractors more ammo to unload on us with.

It could make the rest of the Cryptocoin community look poorly on us as if we will print money at will on a whim. If we do it this once, what's to stop it from happening multiple times?

I have been using the fact BTSX is pretty much the only deflationary Cryptocoin in existence as a selling point. If we are printing money that selling point disappears and anyone that has been saying this looks foolish or like a liar.

If it doesn't work as well as intended it could end up being very expensive advertising, along with Oall of the other negative side effects as mentioned above. The new users getting free money could just dump it all on the market and it backfire on us.

Edit: Of course BTSX is a DAC not a crypto-currency but the potential negative impact could still be catastrophic.

If there are any Chinese speakers could you do a poll or start a thread on the Chinese section and get some feeback there.

[liondani]

Perhaps if we had not done the inflation and marketing (or just did less marketing), we could have grown to a market cap larger than BTC anyway but just 1 year later than with the excessive marketing. Would getting to the same point 1 year earlier be worth the additional dilution of shares? I don't know, it depends on what the shareholders want (and a large fraction of the shareholders, preferably at least 50% share approval).

1 year in the crypto world is comparable with 10 years or more in other sectors... Don't you have the same feeling?

[arhag]

It is not enough to just look at potential market cap gains by subsidizing new users. We also have to look at opportunity cost. If we need to dilute BTSX shareholder's stake by 50% in order to fund marketing that grows BTSX value by over 100% is it rational to take that approach? It depends on if we could have gotten that kind of growth without needing to spend as much through the dilution.

If we are not strategic about this we may just end up spending a lot of money on marketing and having BTSX market cap grow larger than BTC, but at the cost of too much BTSX inflation. Perhaps if we had not done the inflation and marketing (or just did less marketing), we could have grown to a market cap larger than BTC anyway but just 1 year later than with the excessive marketing. Would getting to the same point 1 year earlier be worth the additional dilution of shares? I don't know, it depends on what the shareholders want (and a large fraction of the shareholders, preferably at least 50% share approval).

Bytemaster, you shouldn't be seriously considering your proposal until you first:

• Build a stable, user-friendly, lightweight client on major desktop/laptop/mobile platforms.
• Enable important security features such as: cold storage with offline transaction signing, multisig with companies that support it in the style of BitGo, user-friendly ways of setting up the cold storage and paper backups and even splitting and sharing backup keys to trusted friends and family using secret sharing cryptography.
• Get more exchanges in various jurisdictions around the world (especially in the US) that allow direct exchange of Currency/BitCurrency pairs.
• Allow BTSX shareholders to vote on hard inflation rate caps where the threshold of stake approval needs to be above some fixed percentage limit.

Sure, you may think if you can grow the value of BTSX early, I3 will have more money available to spend on developing the above. But in my view your proposal is a complete waste of money (and can actually create a negative effect, reducing user's perception of our product) if you first haven't solved the above points.

The best way to increase the amount of money I3 has to quickly fund development of the above points is to direct the money from interest paid by BitAsset shorts to I3 or other entities who will wisely spend the money to grow the ecosystem. That money could also later be used to pay for your proposed new-user cashback subsidy / referral system rather than having to pay for all of it through BTSX inflation (which is not very palatable to most people).

So this means that the most important thing you need to do in BitShares X development (besides critical bug fixes) is to provide the mechanisms to: allow shareholders to vote on entities to receive incomes paid for by the DAC revenue; and allow the DAC to convert revenue it collects in various forms (BTSX, BitAssets) into the form it needs to pay the specified entities their income. The simplest way of doing this is the following:

• capture market fees in all BitAsset exchanges as BTSX rather than the BitAsset;
• make shorts cover through a BitAsset buy order paid for by BTSX held in collateral in order to determine a proper BitAsset/BTSX price, and during the cover capture the interest portion of the BitAsset debt as BTSX;
• pay that extra BTSX captured during the cover operation to the delegates as you do currently and hope they send it back to I3 for development;
• make it convenient to burn BitAssets (that way delegates can take some of their BTSX income, convert it to BitUSD, and burn it so that those funds go to the BitUSD yield fund and thus create some yield on BitUSD which will stimulate some demand for it, if we think that is still important at this stage).

A slightly more elegant way of doing it is the following:

• let shareholders vote on proposals that set delegate pay rates and hire workers and set their income (denominated in BitUSD);
• use the BTSX fees collected as described in the previous list to first pay the delegates and then pay the workers (use the BitUSD/BTSX price from the internal exchange to determine how much BTSX to pay everyone, and if there is not enough BTSX to pay all the workers then scale their pay down proportionally until it can);
• or alternatively, if you don't like the strategy of item 2 in the previous list, then the DAC can collect short interest revenues as the BitAssets as it does currently and then have it just pay those BitAssets (and also BitAssets and BTSX captured through other fees) directly to the workers (figure out appropriate amount based on BitAsset/BitUSD price at time of payment) and let the workers later trade those BitAssets/BTSX received for BitUSD or just regular USD if needed.

An even more elegant way to do it is the following:

• do everything as mentioned above but also allow the DAC to do direct conversion between BitAssets and BTSX through the internal exchanges, so that this way all fees, even regular BitAsset transfer fees, can be captured as delegate/worker income but paid to them in a convenient form such as BitUSD;
• dynamically adjust how the value from network revenue is stored in BitAsset and BTSX reserve funds in order to pay delegates/workers their income directly in the BitUSD they asked for rather than BTSX and also this functionality allows the later feature I will talk about which is flexible yields on BitAssets.

The features described in the previous paragraph are necessary to allow I3 to start capturing the value that, even with the new market engine that will make shorts pay interest, is currently going to BitAsset holders. Right now yield is not interesting to anyone other than the people who already support BitShares. High yields are unlikely to bring in new users until I3 solves the issues I listed in the bullet points at the top of this post. After those features are ready, then it makes sense to pay BitAsset holders high yields to make attracting new users easier. Even then, it is important to not just provide yield rates carelessly. Every dollar spent as a yield is a dollar that isn't going to some other purpose (such as funding development of additional features or funding marketing that could be more effective than high yields in bringing in new users like your proposal in the OP). So, that is why I recommend the following further improvements/features in the DAC (after implementing the features mentioned in the previous paragraph, especially a proposal system, this shouldn't be too difficult):

• The proposal system should allow shareholders to vote for a delegate pay rate (denominated in a BitAsset, such as BitUSD).
• The proposal system should allow shareholders to vote for specific workers (BTSX account keys) and their income (denominated in BitAssets) as well as flagging whether the income is hard or soft.
• The proposal system should allow shareholders to vote for a hard cap and a soft cap on the inflation rate (optionally with an expiration time on the proposal that returns the caps back to zero unless renewed with a new proposal).
• The proposal system should allow shareholders to vote on yield rate caps on each BitAsset.
• The proposal system should allow shareholders to vote on a prioritization list ranking the importance of DAC expenses.

The DAC should take the revenue from all its various fees and use it to first pay the delegates their essential incomes (approved by shareholder vote) to keep the DAC functioning and then working down the prioritization list it should pay workers their specified income and BitAssets their yield up to the yield rate cap. Here is a typical prioritization list:

• pay all delegates their incomes;
• then, pay workers 1 to 4 their incomes;
• then, pay BitUSD/BitCNY/BitEUR yields up to 5%;
  
• then, pay worker 5 and 6 their incomes;
• then, pay worker 7 their income;
• then, pay BitGLD/BitSLV yields up to 1%;
• then, pay remaining BitAssets yields up to 1%;
• then, pay worker 8 their income;
• finally, pay any remaining revenue as a dividend to shareholders.

Perhaps worker 1 and worker 5 are the same person/organization; that is fine, it is just a way of distinguishing between mandatory vs discretionary income. The DAC can print BTSX to pay for these expenses but it is constrained by the hard and soft caps on inflation rate. Each worker's income can be flagged as hard or soft. If a worker's income is hard it will be paid as long as the DAC can afford to pay it even if it needs to inflate BTSX to do so (within the hard inflation rate cap limits of course). If a worker's income is soft, it will only be paid if it does not require inflating BTSX to do so. So worker 6 might have had hard income but worker 7 might have soft income. If these are the same person it just means that person has a maximum income they can receive assuming the DAC is profitable, but even if the DAC is currently unprofitable and has to dilute shares, the person can still receive their minimum income as long as it does not require the DAC to inflate shares faster than the hard inflation rate cap. Worker 8 might also have soft income but its order comes at the end of the prioritization list right before dividends to shareholders. So it is more important to pay workers 1 to 4 their incomes than it is to pay BitAsset yields, and it is more important to pay workers 5 to 7 their income than it is to pay yields to BitAssets other than the currencies (BitCurrency yields are more important than the incomes of workers 5 to 7 however), and finally it is important to pay worker 8's income as long the DAC doesn't have to inflate BTSX to do so. If the DAC was profitable enough to pay all workers' incomes and still have revenue left over, that revenue would be burned as a dividend to the shareholders.

With the functionality described above, we would then have a way of making BitShares X attractive to new users and likely with higher yields on their stored currencies than what they get in the traditional financial system, and still have extra money coming in to fund development and marketing. Perhaps that extra money would be enough to fund your proposal in the OP (or maybe more strategic marketing plans that provide more user adoption for less cost). Or perhaps we might want to inflate a little to pay for it, we can do that as well with the above system but we have hard caps on the inflation rate approved by the majority of shareholders and enforced by the DAC. Other decisions like reordering the prioritization list or changing workers or their pay rates could be done with less shareholder approval necessary. I'm a fan of a voting rule I mentioned in an earlier post where shareholders vote yea/nay on a proposal and a proposal with less requirements could pass if at least 15% of the BTSX share supply has voted on the proposal AND the net approval, ((shares approving of proposal) - (shares disapproving of proposal)), are larger than 15% * (100% - (percentage of shares voting)). This system avoids gridlock of requiring all decisions to have majority consensus and allows the DAC to be agile to change in response to the strategic desires of the shareholders, but it also has strong constraints to respect the wishes of the shareholders such as putting hard limits on how much inflation can happen. The system allows the shareholders to direct the revenue of the DAC to the programs or organizations that the shareholders think will best grow the value of the DAC.

[hpenvy]

Marketing btsx as a currency is a mistake.   Market it as a virtual company that is raising money to grow.   

This statement makes a lot of sense to me.

[Riverhead]

I would consider using some cash to increase interest rate on bitAssets first year or two so as well, it would be a delayed cost that when finally paid would (if all goes well) be trivial.

While I understand how this could work the pundits would rake us over the coals for funding returns for new users with existing user (all be it dev) funds.

[CLains]

Great! Thinking big like this is the only way to survive.

Just like BitShares X the detail required to do this project is gonna fractalize all over you.

I would consider using some cash to increase interest rate on bitAssets first year or two so as well, it would be a delayed cost that when finally paid would (if all goes well) be trivial.

[bytemaster]

Btsx need not inflate, but our competitors will.   

Btsx can stick to a fees only approach....   But those are so small they barely pay for delegates right now. 

Btsx product is bit usd and the like. 

How much per user did google pay for utube or Microsoft for Skype?   

Assume all we did was print, Internet, tv, etc.  we would have a very low conversion rate.  We have a complex product that depends on trust.   Direct referrals from people who have done it before have a much higher conversion rate. 

What is missing here is that this also buys critical infrastructure.   This helps more than btsx, it helps bring on board partners. 

So we can do this with our dev funds without inflating. 

Marketing btsx as a currency is a mistake.   Market it as a virtual company that is raising money to grow.   

There is another way to fund this without inflation.   Btsx can borrow the usd required backed by inflation. Ie...  The collateral is provided by inflation and destroyed when paid off.   This way there is only inflation in the event of a margin call.   

There are options. This post was supposed to get us thinking about possibilities. 

[Empirical1.1]

FUBAR

[Method-X]

I'm not sure what I think about this yet, but my immediate thoughts are not good. We need to think about all the possible implications, be 99% sure it will work, and go over all of the dynamics and economics of it. I think a lot of things could possibly go wrong, it will hurt our image in the cryptocurrency community, and as someone else already mentioned it will give the detractors more ammo to unload on us with.

It could make the rest of the Cryptocoin community look poorly on us as if we will print money at will on a whim. If we do it this once, what's to stop it from happening multiple times?

I have been using the fact BTSX is pretty much the only deflationary Cryptocoin in existence as a selling point. If we are printing money that selling point disappears and anyone that has been saying this looks foolish or like a liar.

If it doesn't work as well as intended it could end up being very expensive advertising, along with Oall of the other negative side effects as mentioned above. The new users getting free money could just dump it all on the market and it backfire on us.

It is possible the community could fork after making controversial decisions such as this.

It sounds like there will be some counter-party risks in this. If the printed money is stolen it could be dumped on the market, create a lot of bad press, or be used to attack the network.

These are all very good points. If we can print money on a whim now, what's stopping us from debasing the currency further in the future? I'm in favor of a referral program but I think it can be done with fees and not inflation as previously outlined in my first post (my proposal is based on traditional referral programs and is much less gimicky). Perhaps since BitShares X wasn't designed from the start to be market mined with inflation, it can't reasonably be done now.

[donkeypong]

I'm not sure what I think about this yet, but my immediate thoughts are not good. We need to think about all the possible implications, be 99% sure it will work, and go over all of the dynamics and economics of it. I think a lot of things could possibly go wrong, it will hurt our image in the cryptocurrency community, and as someone else already mentioned it will give the detractors more ammo to unload on us with.

It could make the rest of the Cryptocoin community look poorly on us as if we will print money at will on a whim. If we do it this once, what's to stop it from happening multiple times?

I have been using the fact BTSX is pretty much the only deflationary Cryptocoin in existence as a selling point. If we are printing money that selling point disappears and anyone that has been saying this looks foolish or like a liar.

If it doesn't work as well as intended it could end up being very expensive advertising, along with all of the other negative side effects as mentioned above. The new users getting free money could just dump it all on the network and it backfire.

It is possible the community could fork after making controversial decisions such as this.

It sounds like there will be some counter-party risks in this. If the printed money is stolen it could be dumped on the market, create a lot of bad press, or be used to attack the network.

Those are good points. On a broader scale, I wonder if there may be a point approaching where we need to make a decision on our future market: crypto or no crypto? Certainly, we can squeeze more out of the Bitcoin/altcoin communities. But we know the potential base for BTSX is much larger and the marketing effort seems squarely pointed at people who may never have heard of Bitcoin or exchanges. Maybe it's a false dilemma and we can have both. While I agree there is a danger of alienating some folks with this, the potential is so much more massive than those folks. Do we need to make some trade-offs and sacrifices? I say yes; once this effort is well-defined, I'd like to see it happen.

[Shentist]

guys i think i had a brilliant moment to solve the funding problem, but maybe i am just stupid 

suppose we have a friend like bytemaster discribed.
suppose we can fund this marketing stunt and everyone has a chance to profit from it.

suppose our friend will make this kind of card available and he gets people interested to buy 1.000 bitUSD for 1.000 USD and with his promise to pay them for using the card 100 bitUSD

his customer will transfer 1.000 USD and he needs to buy 1.000 bitUSD to load the card up.
- he needs a way to change his fiat Dollar in bitUSD, so this is a job maybe Invictus needs to handle
- the friend will send the USD to Invictus and Invictus will load the just opend customer card with 1.000 bitUSD

so far nothing special

but how will Invictus fund the whole operation?

- so Invictus needs 1.000 bitUSD but if they use 1.000 bitUSD of their own funds they will loose a lot of money, because they wanted to hold BTSX for the expected rise

but we have a source of untouched bitUSD - so overhang on SHORTS

at the moment a short can only be done at the feed price. for the marketing stunt we need an option to make it 20% above the feed price.

lets make an example

- Invictus needs for the deal 1.200 bitUSD for the created possible liabilities
- at they moment they could just buy 1.200 bit USD (suppose for 31,5 BTSX ) 37.800 BTSX at the open market
- but Invictus got only 31.500 BTSX worth from the friend
- so now we need a "marketing" SHORT (i suggest as long as the deal works only marketing shorts are accepted) to buy 1.200 bit USD for 31.500 BTSX while the real price is 37.800 BTSX
- the SHORT position will be greated with a "marketing price" of 26.5 BTSX and not on the feedprice of 31.5

- Invictus holds now 1.200 bitUSD and can easily fund the liabilities without risk
- done

Assumptions

- Invictus finds a solution for the fake user problem (maybe it is possible to create a new kind of account. If Invictus pays 1.000 bitUSD on this account, the account will be granted 100 bitUSD via spending. Like yield?)
- same problem is with our "friend" it needs to be a reliable source, because we could easily fund with this way his entry into BTSX and not the entry of many.
- SHORTS are willing to create with this discount, and in the beginning we had this problem, because anyone was really bullish, now with this bullish mind set you can support BTSX with only loosing 5 BTSX each created bitUSD. Would a SHORTER be willing to do it? I think yes, because from the created buying pressure BTSX will rise in value and the short will easily cover his position with a profit.
- for this kind of short no time restrictions wanted

I think this could be a solution for the egg and the hen problem and it is a really win- win situation.

At the moment we have only the problem that we have not many who are willing to buying bitUSD from the creators the shorts. Now we match them and the SHORT creators are willing to go into risk, but say will profit from the rise of BTSX big time.

what do you think?

[CoinHoarder]

I'm not sure what I think about this yet, but my immediate thoughts are not good. We need to think about all the possible implications, be 99% sure it will work, and go over all of the dynamics and economics of it. I think a lot of things could possibly go wrong, it will hurt our image in the cryptocurrency community, and as someone else already mentioned it will give the detractors more ammo to unload on us with.

It could make the rest of the Cryptocoin community look poorly on us as if we will print money at will on a whim. If we do it this once, what's to stop it from happening multiple times?

I have been using the fact BTSX is pretty much the only deflationary Cryptocoin in existence as a selling point. If we are printing money that selling point disappears and anyone that has been saying this looks foolish or like a liar.

If it doesn't work as well as intended it could end up being very expensive advertising, along with Oall of the other negative side effects as mentioned above. The new users getting free money could just dump it all on the market and it backfire on us.

It is possible the community could fork after making controversial decisions such as this.

It sounds like there will be some counter-party risks in this. If the printed money is stolen it could be dumped on the market, create a lot of bad press, or be used to attack the network.

[donkeypong]

Oh another important consideration... Do you have to give up your personal details to get the card or is privacy kept in tact.   If it is then this would be a huge win and a very unique solution for the crypto world.

Or can you go with Ignatius Throckmorton, 123 Main Street, Barrow, Alaska 54321?