Author Topic: DPOS thought  (Read 8124 times)

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Offline Empirical1.1

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I don't really know how btsx works under the hood (the code). But the way I thought it worked was this...
Right now btsx is in the hands of I3
They can pretty much do whatever they want (within reason)
Once btsx is no longer in the hands of I3 things like dilution are practically impossible even with shareholder consent.
Are my assumptions wrong?

With shareholder consent dilution is possible at any stage I think.


How? I thought delegates had very limited power.
Ok let me see if I understand this if bitcoin had shareholder (miner) consensus could they increase the 21 million bitcoin cap?

Yes is my understanding. The miners could increase it with 51% but they won't because if they did then people could no longer trust Bitcoin as limited digital money and so the miners would lose.

I think Bytemaster thinks it would be great if the actual owners of Bitcoin could vote on issues like that. (To change the supply structure.) but I think the act of changing the initial supply stucture even by consensus would change Bitcoin from people exchanging digital money into people exchanging digital shares in a company.

Right now people are evaluating Bitcoin as a digital money with 21 million max coins. If shareholders could change it, people would see Bitcoins as just shares in a company subject to short term shareholder decisions and no longer trust or value it as a decentralised form of money imo.



Dilution represents a critical move away from the key principals that original BTSX participants used to evaluate their investment. It also clearly sets a precedent within the BTSX network.

That said, If someone wants to fork the code to launch BTSXDilution, good luck to them. Conversely, if the BTSX equity holders in majority want to change BTSX to BTSXDilution, so be it. We can re-launch BTSXnodillution.

Network participants will put value where they think it should be....the overall network effect will continue to increase (based on utility) and eventually one network may become stronger than the other. There could be many versions of BTSX, all of which could keep changing the rules along with some that don't, it's all good as long as over time, more people are attracted to crypto in general and society benefits from the power of money being more widely distributed.

I'm pretty confident the way BM has been viewing Bitcoin as a DAC is incorrect. I think some of the stuff he will say in Vegas, by thinking along those lines is incorrect too.

I've really had a Eureka moment, this is really fundamental to understand...


There is a difference between crypto equity and crypto money but BitShares has been interchanging them.

BTSX has some blurred lines.

It requires a small paradigm shift but once you understand that, the world becomes clear and everything makes sense again.

There will definitely be two chains. One for BitSharesX the digital money and one for BitSharesX the crypto equity. (The digital money will need an enshrined constitution of sorts.)

Both have amazing potential! But once you get the difference you will see that they are different.

If you think shares of a blockchain are money, then you are just like all those bitcoiners whose investments ruin their vision and plug their ears. 

Shares in a blockchain are like shares in a country, they get their value thru the services which back them and the services that the country provides, BitUSD is BTSX's service like the USD is the USA's service. There is no blurred metaphor.  There is no crypto money except in the form of BitAssets. 


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Yes all your responses work perfectly when you think of a blockchain as a company.

Are metals a company? No. They are just materials that exist in limited supply that cannot be influenced by man or shareholders, as such the best of them are able to function as money.

You can replicate the properties of metals in digital money form provided you effectively remove the mechanism where their supply can be influenced by man or shareholders, & the best of them will be able to function as digital money.

Because the miners hands are tied with regard to changing the Bitcoin supply, Bitcoin is functioning effectively as a digital form of money albeit an inefficient one.

Only when you change those rules does your company metaphor come into play in that they are no longer exchanging something that could be trusted or valued as limited digital money but rather they would be exchanging shares in a company whose quantity is subject to the decisions of shareholders.
« Last Edit: October 06, 2014, 05:33:17 pm by Empirical1.1 »

Offline carpet ride

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I don't really know how btsx works under the hood (the code). But the way I thought it worked was this...
Right now btsx is in the hands of I3
They can pretty much do whatever they want (within reason)
Once btsx is no longer in the hands of I3 things like dilution are practically impossible even with shareholder consent.
Are my assumptions wrong?

With shareholder consent dilution is possible at any stage I think.

Yeah BTSX shareholders give I3 free reign basically at this stage which is good.  But shareholders have enough voting power to control BTSX independently even now, it's just most people that own BTSX aren't voting yet because they don't need to. They know I3 & BM  will only act in their best interest and put important discussions and topics to the community like dilution etc, for discussion and feedback.
 

Diluting a company does not make it an inflationary currency, it makes it a company raising money.  It's one-time action, it serves clear purpose.  It works perfectly with the company metaphor, no need to be a bitcoiner and worry about becoming inflationary because that's not nearly the same thing


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Offline carpet ride

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Dilution represents a critical move away from the key principals that original BTSX participants used to evaluate their investment. It also clearly sets a precedent within the BTSX network.

That said, If someone wants to fork the code to launch BTSXDilution, good luck to them. Conversely, if the BTSX equity holders in majority want to change BTSX to BTSXDilution, so be it. We can re-launch BTSXnodillution.

Network participants will put value where they think it should be....the overall network effect will continue to increase (based on utility) and eventually one network may become stronger than the other. There could be many versions of BTSX, all of which could keep changing the rules along with some that don't, it's all good as long as over time, more people are attracted to crypto in general and society benefits from the power of money being more widely distributed.

I'm pretty confident the way BM has been viewing Bitcoin as a DAC is incorrect. I think some of the stuff he will say in Vegas, by thinking along those lines is incorrect too.

I've really had a Eureka moment, this is really fundamental to understand...


There is a difference between crypto equity and crypto money but BitShares has been interchanging them.

BTSX has some blurred lines.

It requires a small paradigm shift but once you understand that, the world becomes clear and everything makes sense again.

There will definitely be two chains. One for BitSharesX the digital money and one for BitSharesX the crypto equity. (The digital money will need an enshrined constitution of sorts.)

Both have amazing potential! But once you get the difference you will see that they are different.

If you think shares of a blockchain are money, then you are just like all those bitcoiners whose investments ruin their vision and plug their ears. 

Shares in a blockchain are like shares in a country, they get their value thru the services which back them and the services that the country provides, BitUSD is BTSX's service like the USD is the USA's service. There is no blurred metaphor.  There is no crypto money except in the form of BitAssets. 


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Offline Mysto

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I don't really know how btsx works under the hood (the code). But the way I thought it worked was this...
Right now btsx is in the hands of I3
They can pretty much do whatever they want (within reason)
Once btsx is no longer in the hands of I3 things like dilution are practically impossible even with shareholder consent.
Are my assumptions wrong?

With shareholder consent dilution is possible at any stage I think.


How? I thought delegates had very limited power.
Ok let me see if I understand this if bitcoin had shareholder (miner) consensus could they increase the 21 million bitcoin cap?

Offline Empirical1.1

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I don't really know how btsx works under the hood (the code). But the way I thought it worked was this...
Right now btsx is in the hands of I3
They can pretty much do whatever they want (within reason)
Once btsx is no longer in the hands of I3 things like dilution are practically impossible even with shareholder consent.
Are my assumptions wrong?

With shareholder consent dilution is possible at any stage I think.

Yeah BTSX shareholders give I3 free reign basically at this stage which is good.  But shareholders have enough voting power to control BTSX independently even now, it's just most people that own BTSX aren't voting yet because they don't need to. They know I3 & BM  will only act in their best interest and put important discussions and topics to the community like dilution etc, for discussion and feedback.
   

« Last Edit: October 06, 2014, 04:51:21 pm by Empirical1.1 »

Offline Mysto

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I don't really know how btsx works under the hood (the code). But the way I thought it worked was this...
Right now btsx is in the hands of I3
They can pretty much do whatever they want (within reason)
Once btsx is no longer in the hands of I3 things like dilution are practically impossible even with shareholder consent.
Are my assumptions wrong?

Offline Mysto

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In order to dilute BTSX what is the estimated market cap of BTSX before such dilution to take place?

"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" -BM

So I would assume the dilution would be very gradual and not effect the market cap significantly at first.

Offline Empirical1.1

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I am not going to pretend that I understand what you are saying but I like the name "ATHENA" :)

If I understand correctly you want to create an altcoin using DPOS called "ATHENA", but why would this be better than bitusd, bitbtc or any bitxyzcoin?
If I understand it correctly "ATHENA" would be the same exact thing as btsx except for the fact that it can't be diluted. So in other words there would be 2 billion "ATHENA" coins and you can't add any more to that cap.

I think BitUSD, BitGold and BitAssets are actually better.

However, I think we also need to recognise that, there is also such a thing as a digital money.

If we add dilution to BTSX then it might be good to also start a DPOS digital money, ATHENA

A DPOS crypto-money would be better than a POW crypto-money.

Also if people didn't like BTSX + dilution or if BTSX shareholders made other mistakes then Athena could be a digital money and the home of the biggest BitAsset market.

(So yes it's the same as BTSX but it can't be diluted.)

 

Offline mf-tzo

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In order to dilute BTSX what is the estimated market cap of BTSX before such dilution to take place?

Offline Mysto

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I am not going to pretend that I understand what you are saying but I like the name "ATHENA" :)

If I understand correctly you want to create an altcoin using DPOS called "ATHENA", but why would this be better than bitusd, bitbtc or any bitxyzcoin?
If I understand it correctly "ATHENA" would be the same exact thing as btsx except for the fact that it can't be diluted. So in other words there would be 2 billion "ATHENA" coins and you can't add any more to that cap.

Offline mf-tzo

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I am not going to pretend that I understand what you are saying but I like the name "ATHENA" :)

If I understand correctly you want to create an altcoin using DPOS called "ATHENA", but why would this be better than bitusd, bitbtc or any bitxyzcoin?

Offline Empirical1.1

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So now you have a case for BTSX the DAC and BTSX the money imo.

You have it backwards, BTSX is the product, and bitAssets are the moneys. BTSX is shares in a bank, it's not trying to be a currency.


No BitAssets are the product 100%.

We'd add dilution to BTSX and use it to maximise demand for BitAssets. Why? Because the more BitAssets people buy and use the better BTSX shareholders do. BTSX is the company, BitAssets the product.

So now you have a case for BTSX the DAC and BTSX the money imo.

You have it backwards, BTSX is the product, and bitAssets are the moneys. BTSX is shares in a bank, it's not trying to be a currency.

Here's what Dan says:

Thw problem with concrete limits on dilutions is that there already are: there's no dilution. Our ability to set social consensus disappears forever if we dilute btsx.

Yes.. this is why we don't want to inflate and are actively working on alternatives.

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

...
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.

You're suggesting DAs because you are concerned that DACs like BTSX could change their underlying rules unfavorably in the future. That's the premise of the thread. Is that fair to say?

Bytmaster does not see the distinction between a crypto-money and a crypto-equity. He does not see that by suggesting how great it would be if Bitcoin by consensus could switch from it's current supply structure that it would actually lose it's functionality as a crypto-money. Users would no longer have to evaluate Bitcoin as a limited crypto-money but as share in either a fiat currency/company, its supply rules subject to the whims of majority shareholders. Exactly what people don't want from a digital money.

(The requirement to be a money is to have initial supply rules that cannot be changed, like metals. So gold can be used as money, silver and even Bitcoin at this stage. Once shareholders alter the original supply then it is a fiat currency or a share in a company where you are no longer exchanging a limited money.)

In his mind Bitcoin is already a DAC, just an inefficient one and that those of us who are viewing it more as a money are stuck in a currency metaphor/paradigm.

Bytemaster thinks shareholders in BTSX are confusing dilution of a DAC with inflation of a money. Not realising that in the current model both are co-existing and to dilute BTSX the DAC would also be to inflate by consensus and thereby destroy the functionality of BTSX the digital money.

He doesn't agree that before dilution you have BTSX - A profitable digital money ecosystem, including BitAssets. Managed by shareholders but operating within the framework of a money. (Fixed initial supply rules.)

While adding dilution to BTSX only then does it create a pure Bank & Exchange DAC and a fiat currency/company share as a medium of exchange.

So we disagree. That is fine. Despite loving BM and the team, often experiencing hero worship and having invested 80%+ of my crypto portfolio in BitShares, I have often disagreed with Bytemaster on what the product and business actually is -

It was my understanding before BitAssets started Bytemaster saw the consensus forming around the idea that a BitUSD is worth 1-1 long term where I felt, the consensus would form around 1-1 being the benchmark on which a BitUSD would be valued relative to risk and utility. Perhaps the jury is still out on that one.


BitUSD has been seeded with the consensus that the value of one BitUSD should be equal to the value of one US dollar.  Therefore, unless something happens to change this consensus the most profitable trade to make is to buy BitUSD when it is under 1 USD and sell BitUSD when it is over 1 USD.  If you trade against this then you are predicting others will do the same and as far as I know there is no rationale for any other price.



I'm not hot with this stuff, but from my perspective a BitUSD may be worth less than a USD in the beginning to me, because of system risk, lack of utility and the cost+effort of converting via a centralised exchange to say real USD for example.

I think once the system has proved robust, it has more utility, it's other advantages,  as well as if traditional banking risk factors increase. A BitUSD may be worth more than a normal USD to me.

Is that irrational. Is that not how it works?

Quote
I think once the system has proved robust, it has more utility, it's other advantages,  as well as if traditional banking risk factors increase. A BitUSD may be worth more than a normal USD to me.

Is that irrational. Is that not how it works?

These factors are irrelevant to the consensus... Initially shorts will probably be paying interest (by having BitUSD available at a discount) to attract new people (like yourself) to hold BitUSD.   However, everyone who recognizes the opportunity to buy BitUSD cheap can get some free gains when it returns to mean.   Provided it returns to the mean faster than BTSX climbs in value.

Thanks for the explanation, sure you're right. It still seems in my head that even though you can seed it with a consensus of 1-1, the actual consensus could form around what is a BitUSD worth relative to a $, that will find a mean but not necessarily 1-1.

Also before trading started, despite not having shorted, I watched a short video on shorting and with that I could already see that we would need to limit trading below the peg. They had not anticipated that outcome and dismissed it. (I would also say I envisaged the interest system pretty much like the one we are settling on now.)

Quote
I think lots of people will be willing to short BitUSD, not a lot willing to go long at the start.

Might make BitUSD price trade too far below peg. But this will hurt BTSX price causing the situation to correct itself...

Seems like it may need interest rates if you really want to keep it at 1-1. Because a short may be willing to short BitUSD and pay X% interest to entice a long to trade.

You lost me here...why this will hurt BTSX price? If a lot of people go short bitusd, wouldn't bitusd fall relatively to BTSX price. Therefore BTSX will rise and will be worth more bitsud..

I think a lot of people are hoping BitUSD may track USD fairly close to 1-1 most of the time.

However because people are so bullish on BTSX and shorting BTSX lets you take a leveraged position on BTSX. BTSX bulls may be willing to short still at $0.70, this trading range will be so far from the peg that it could damage the credibility of the peg. This could make people sell BTSX. This will mean less BTSX bulls willing to short below the peg and the situation will correct itself.

I don't mind a BitUSD like that but it might not appeal as much to retailers and savers.

It seems to make it stable you should introduce free market interest rates.
Then you still short 1-1 but when most people are bulls like now you will pay a higher interest rate to short BitUSD as opposed to shorting very far below the peg.
The premium for shorting below the peg will be proportional to the interest rate paid for going long....  the farther from the peg, the higher the effective interest rate.

Yes this is kind of my understanding. I was just worried BTSX bulls would be willing to pay such a high interest rate to short right now it could move the price too far away from the peg but hopefully it will be fine.

I think Bytemaster was always going to add interest anyway & though they veered off course a bit experimenting with a full collateral based shorting system, they now have settled on what I think is a lean mean BitAsset machine, pretty much along the lines of what I envisaged before trading started despite not understanding PM's, shorting etc.
 
Now I have made a ton of wrong assumptions and been shown the light by BM. With those examples, I'm trying to make the point that before you jump head long into dilution because BM says  its good, recognise that just like the rest of us, for him a lot of this is brand new territory, adapt and evolve stuff & also that I do have a track record however small being half decent at  anticipating behavioural outcomes. 

Previously  I haven't been particularly worried because the Dev team are living Gods in my eyes with regards to how fast they can adapt, evolve and implement things that my brain thinks must take ages.

The reason why I'm so loud about this dilution subject is that the implications of not seeing crypto-money differently to crypto-equity and not have a good anticipation of behavioural outcomes makes dilution a high risk play. It's not an adapt and evolve situation. If BTSX adds dilution then the negative feedback loop especially after one incorrect BitDrop could kill BTSX. 

BTSX+dilution could be

-so unpopular to the crypto-money market it significantly impairs BTSX before the dilution program starts (5%).

-The dilution program* could be so unsuccessful (20%) that it destroys BTSX.

-The medium term mistakes of shareholders could make  a crypto-money preferrable as backing for BitAssets than a crypto-equity. It will also appeal more to the libertarian market who make up 35%+ of the Bitcoin demographic. 

(*While working with marketing gurus, the gurus are  not familar with the crypto-market, the demograhic and have no track record in this space. The 'gurus' are likely to try cross-over strategies that are no directly applicable to this field. It's the same mistake BitShares made hiring Brian early on imo. While I absolutely LOVE what Brian is doing now and what he brings to the table, particularly with regard to what it takes for a mainstream user to want to interact with this space and what it takes to make that happen and his passion for it. He was a poor choice when the majority of our market, which is still the case today is the alt-coin market. The opportunity cost to me of not hiring a crypto-currency immersed, passionate person with a bit of a track record here, that  communicated, debated and actively informed other forums & avenues in this space and in the process fine tuned and simplified the BitShares message would have created a simpler more succint BitShares with a lower learning curve and much greater Western Alt-coin market penetration imo.)

So considering I view BTSX with no dilution as a DAC but operating within the constrains of a limited digital money what do I think is the best solution?

Honestly I'm not sure. By diluting you also turn BTSX the crypto-money into a fiat currency/company share but by not diluting you potentially limit BTSX the crypto-equity which should be operating as a company to maximise the BitAsset product line. 

What I can see is that it does open the door for a separate DPOS crypto-money. Lets call it Athena for the example. It would likely be a pretty small affair but could act as a small hedge. 

---------------------------------------------------

ATHENA - The goddess of wisdom, courage, inspiration, civilization, law and justice, mathematics, strength, strategy, the arts, crafts, and skill.

ATHENA is a crypto-money not a crypto-equity.

A Decentralised Autonomous Guardianship (DAG)

A DAG is defined by its initial supply rules and has them enshrined it its constitution - It therefore becomes a digital money that will struggle to be changed even by the majority because it's supply rules are what explicitly defines it. A crypto-money that is built on the principal that it's a well 'money'.

It doesn't have BitAssets to start, just a DPOS chain and wallet. It's very simple to understand for the alt-coin market. It's a digital limited money.

Athena can replace Bitcoin. It has no inflation, it is decentralised, anonymous, fast & even profitable. (However it ceases to be digital money when its supply rules can be changed easily by shareholders, then it is a company not a money.

Many BTSX holders who like the idea of a digital money may increase their snapshot position in Athena. If Dilution is added to BTSX, more of the digital money crowd will like it. If dilution is added and the sharedrop fails, then definitely they will move to Athena. You may even have in the future customers feeling more comfortable having their BitAssets backed and controlled by ATHENA, a crypto-money vs. BTSX a crypto-equity which is subject to the short term whims of the majority of shareholders. So Athena could add BitAssets too and still function as a a money, DAG, provided shareholders were limited & could only act within the initial supply rules on which Athena was founded. 

Even with more limited resources a good form of money attracts demand and infrastructure around it like gold and even Bitcoin was best at it's job for a while. (However a G(uardian)POS crypto-money that is decentralised, fast, profitable and anonymous is far superior to Bitcoin.)

Also if you are someone that loves mankind and feels human controlled monetary systems often exploit society, even with a gold standard, then you may see the benefit to humanity of trying to create a decentralised, anonymous, fast digital money with no inflation that is founded on the initial rules with an enshrined constitution designed to protect the easily exploited from themselves for as long as possible and who knows perhaps even create something ultimately that does that job better than gold. 

-------------------------------------------------------------------------

In my opinion BitAssets are the gold mine. BitAssets are $100 Billion+ baby if you get it right.

I would say BTSX + the option of dilution may be optimal to maximise the business of BitAssets especially in the short to medium term.
 
However given the risks of adding dilution, if it can be avoided I would, and if dilution cannot be avoided I would give serious consideration to a crypto-money that could act as a small hedge on which you can build on if BTSX+dilution turns out to be catastrophic.

Athena right now would be worth < $1 million & the good news it is even if someone else starts it you can probably hedge your BTSX position very cheaply if we don't do a BTSX snapshot.  Athena could potentially add BitAssets later and pick up the pieces if BTSX failed but had done the hard job of marketing them to the world. So I'd like a piece of both if we added dilution.

The bad news is there's no guarantee that a BTSX failure won't instead open the door for another pegged asset system from say Ethereum.

I love BTSX, BM & the team and am heavily invested in BTSX and have added to my holdings despite these concerns. I also think the things they seem to be working on the background are freaking awesome. But I've said it before and I'll say it again, BTSX + dilution could be a pandora's box or a humpty dumpty if you don't see the difference between crypto-money and crypto-equity and if you don't anticipate behavioural implications well. The huge response from even within the community to even the mention of dilution is a testament to that - https://bitsharestalk.org/index.php?topic=9603.0
« Last Edit: October 06, 2014, 03:59:56 pm by Empirical1.1 »

Offline roadscape

So now you have a case for BTSX the DAC and BTSX the money imo.

You have it backwards, BTSX is the product, and bitAssets are the moneys. BTSX is shares in a bank, it's not trying to be a currency.

Here's what Dan says:

Thw problem with concrete limits on dilutions is that there already are: there's no dilution. Our ability to set social consensus disappears forever if we dilute btsx.

Yes.. this is why we don't want to inflate and are actively working on alternatives.

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

...
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.

You're suggesting DAs because you are concerned that DACs like BTSX could change their underlying rules unfavorably in the future. That's the premise of the thread. Is that fair to say?
http://cryptofresh.com  |  witness: roadscape

Offline Empirical1.1

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I don't think btsx is a Decentralized Autonomous Anything (DAA) at the moment. btsx is centralized at the moment and the rules are being changed all the time. Right now I would consider btsx to be in an open beta phase so rules and other things can be change. But when it is finally finished it will be a DAC. All the rules will be final and the cap will be unchangeable.

How is it centralized?  In order for the official chain to fork, there has to be a majority of people voting for delegates which agree to fork.  If delegates do not agree to the fork, they can say so and people can vote for them.  Sure, anybody can change the ruleset for the currency, but it is up to the delegates to implement the change.

Many people aren't voting during this rapid development phase and so the developer block stake largely dictates delegate selection. Also it's centralised because it's so complicated if anything happened to the awesome pretty centralised dev team we'd be pretty screwed.

I don't think btsx is a Decentralized Autonomous Anything (DAA) at the moment. btsx is centralized at the moment and the rules are being changed all the time. Right now I would consider btsx to be in an open beta phase so rules and other things can be change. But when it is finally finished it will be a DAC. All the rules will be final and the cap will be unchangeable.

That's an interesting perspective. Setting precedent is a powerful thing though & given the feedback in the other thread, even 'just this one major change and that's it' may not work for the non dilution crowd.
« Last Edit: October 05, 2014, 06:50:49 pm by Empirical1.1 »

Offline pariah99

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I don't think btsx is a Decentralized Autonomous Anything (DAA) at the moment. btsx is centralized at the moment and the rules are being changed all the time. Right now I would consider btsx to be in an open beta phase so rules and other things can be change. But when it is finally finished it will be a DAC. All the rules will be final and the cap will be unchangeable.

How is it centralized?  In order for the official chain to fork, there has to be a majority of people voting for delegates which agree to fork.  If delegates do not agree to the fork, they can say so and people can vote for them.  Sure, anybody can change the ruleset for the currency, but it is up to the delegates to implement the change.