Topic: [Announce] Project Quixote - BitShares, BitNames and 'BitMessage' - page 10. (Read 48297 times)

Regarding pre-mining, my original plan (Pre-VC money) was to pre-mine 5% and pay it to those who funded the project.    I received about $15,000 on that model when Charles found the VC funding.  A condition on the VC funding was no premining.

So, I consider a reasonable pre-mine to be around 5% or less.   It is really a balance between rate of adoption (and thus value of the coin), percent ownership, and the potential for someone to simply modify the open source code to remove the pre-mine and launch an 'alt-coin'.   

At least by avoiding pre-mining we can legally claim we are not 'issuers' of a currency.

Based upon the response and interest we I have received, I expect there to be several thousand people mining at launch and probably even more computers.  It will be a new-fashioned gold rush.

Before continuing in this thread, you should read the latest white paper.  Ideas from my early design were entirely overthrown and you will only add confusion to this thread by mixing my VERY EARLY (May) design with my June 2+ design.

This thread is being purposed to BitAssets, one to Bit ID, and one to BitDNS and they are each different enough that different people have different interests.  It is a challenge for me as well, but I think it would be more confusing to have such varied topics in a single thread.

This is correct.

As far as your 'short-term day-trading', it should be noted that all dividends earned in the last 24 hours before an output is consumed go to fees.  Thus on a 'short term' basis, dividends play no role in the economic calculation.   The reason for this is that 'dividends' are not final until the block has enough confirmations that the mining reward may be spent (in bitcoin this is 100 blocks).   It also causes all of the 'rounding, sub-satoshi' dust to accumulate in the mining reward before being applied. 

there are now like 3 active threads running and it's really hard to follow IMO. Could you please open a subreddit dedicated to your services?

I read another thread on this forum about premining, and it seemed like the consensus from the reasonable people was that a premine was okay if it was not excessive nor duplicitous, e.g. SolidCoin. Ripple hasn't released their source code.

Seems to me 1% of the 30 year forward money supply is not excessive for a premine test period?

I didn't see it as an issue, but there has been a very negative reaction to Ripple due to premining (though in this case it was 100% premined). The advantage of not premining is there is more interest in it when it launches. An advantage of premining is it is a way to incentivize as mentioned.

My personal preference would be no premine since I'm not a programmer but am very familiar with hardware and building systems. If there is premine, it would be important that it be disclosed as to the amount so those who can't can plan accordingly and decide whether or not it is worth participating. Lack of communication and secretiveness seems to often lead to suspicion and loss of interest in a project, whether justified or not.

Yes, that's basically also the outcome of my calculation (which I find not really complicated ... if you have specific questions and I did not point things out clearly let me know).  But at least I as mathematician find it much more convincing to have a calculation like that instead of just "arguments in words" as you did above (but maybe the calculation is not so easy to understand for people who don't think that way, I don't know).

What my fundamental question with that is then:  To me as non-economist it seems like a very weird situation to have such a strong incentive to buy BitUSD for BitShares and have consequently rather the expectation that the price rises over time ... also from my calculation it follows that the price of BitUSD will increase to 1.5 the average price at which it was issued.  Thus whenever someone issues BitUSD at the current market rate (which is higher than the average issuance price before), it raises this average price which leads to further increase in the market rate.  On the other hand, this means that I'm encouraged to issue BitUSD as long as I believe someone else will do that after me again - which somehow means that people will issue BitUSD until they (or "the market") thinks that the amount of BitUSD issued so far is "correct".  Maybe this leads to exactly the correct structure (decentralised control over the BitUSD supply), but it gives me a weird gut feeling as mentioned already.  (I feel like this could easily lead to bubbles, because everyone profits who's not the last to issue BitUSD - like a Ponzi scheme.)

I am conflicted on premining. I don't believe in socialism. Opensource doesn't mean you can't reward yourself for the investment you put in.

What you need is to incentivize people to work with you early on to help you. So they should participate in the premine. During the premine, you can agree to reset, if there is some serious problem of unfairness that had to be fixed.

Flipping a switch from no real world test to the entire community, seems a bit abrupt.

Thoughts from others?

I am very curious how people feel about this, because it affects how I might launch a coin and/or contribute to this effort.

I believe the only entities that should premine are the programmers who are contributing. First of all, they did most of the word. Second, they know the issues well if there is a bug, so the process can be most efficient and of short duration.

One problem then is their coins aren't anonymous, unless they were anonymous from the beginning, which isn't the case here.

A benefit is then the developers have an additional strong incentive to continue to maintain the project.

My thoughts are that your math is very hard to follow. 

The carrying cost of shorting BitUSD is the dividend rate on the collateral.
The benefit of holding BitUSD is  1.5 to 2.5 x the dividends per unit value.
Thus, it is only wise to short BitUSD if the expected rise in the price of BitShares is greater than 1.5 to 2.5x the dividend rate. 

Assuming a stable exchange rate (or growth rate below the dividend rate), it is wise to sell (not short) BitShares for BitUSD because you would get 2x the rate of return.

This creates buying pressure for BitUSD that will bid the price of BitUSD UP and push BitShares DOWN  until an equilibrium is reached where no one is willing to switch from BitShares to BitUSD because it is 'over-priced' and the risk of a correction outweighs the 2x return.     As the price rises, it will also increase selling pressure from shorts which will tend to increase the supply as needed to keep prices near equilibrium.

If BitUSD is extremely under priced, it makes sense for shorts to cover and for holders of BitShares to buy, wait for the correction, and sell. 

Now how does one know whether BitUSD is over or under priced relative to BitShares?   It doesn't really matter because anyone can look at the market and look at the ratio of BitUSD to BitGold vs USD to Gold and do ratio trading with the value of BitShares being irrelevant.   If a large number of speculators adopt the ratio trading strategy then I believe it is self-evident that the value of BitUSD will track USD because the entire network would have to be off by a 'constant' factor and thus gains and losses in BitUSD would be proportional to change in the price of BitUSD.

Yes, we will be mining like everyone else, we would be crazy not to.    Though with the current popularity and people like you out there ready to jump in on day one, it will be a challenge for us to acquire significant numbers of bitshares through mining. 

Again, thought I'd ask again since the question probably got lost in all the technical discussion. Thanks.

Our goal is to have as much Anon. as possible.  Including using things like CoinJoin, ZeroCoin, etc.   Ultimately privacy is protected at a higher level than the block chain based upon how clients generate transactions and use the chain.

Don't forget the loss of fungibility argument for anonymity:

Here is another suggestion for improvement:

In the white paper you propose:

You do not have to include the full merkel-tree in your block header, but just some nodes of the tree. If you have a merkle tree with depth N, then it is enough to include only N hashes in each individual blockchain, but at the same time you can merge mine in parallel in 2^N chains. So i hope you realize that the problem of space in the block headers, what you describe, is not really such a big problem.
*EDIT: see https://en.bitcoin.it/wiki/Merged_mining_specification for more in depth explanation

So if you discount the block reward by block-reward / 2^(merkel-branch-depth), as you suggest in the white paper, then you give incentives to miners to not do merge mining, because it wouldn't generate more reward but would require more bandwidth and storage. This is a very serious security issue, because this will lead to maybe 1000+ chains eventually (as proposed in your paper) with miners distributed across all chains not merge mining. In this distributed mining environment, it is very easy for an attacker with less than 1% of the total hashing power to control over 50% of the hashing power in one of the individual chains.

So you really should either remove the discounting based on the merkel-tree-branch or at least do the discounting proportional to the space requirements by merged mining. So instead the reward could be:
block-reward / merkel-branch-depth

Edit: i.e. if you do merge mining on 4000 chains, then you just have to include 12 hashes in the block headers. This is really not so much space, if you evaluate the benefit of much improved security and the benefit of more miners running full nodes in all chains if their bandwidth allows it.

Oh cool. He was hoping for some more serious tasks, I'll have him check back in due time.