Topic: Mining and the Fakeblock Chain (Read 1091 times)

I mostly said to make sure other people didn't think the conversation was over.  I would like to hear feedback from others as well.

I definitely agree that pre-orders without proof of development and a published best-case worst-case timeline are a big problem.  A lot of the other things you've described are very context sensitive.

The mining gear investment angle is a bit tricky, since time literally is money in the mining game.  An earlier prerder becomes and earlier delivery which translated to better ROI.  Having a concrete collateral against that delivery date (a la BitMine's CPP) would go a long way to boost consumer confidence that the manufacturer isn't mining with their equipment and shipping after they've recovered their manufacturing costs.  That doesn't keep the manufacturer from adjusting their expected delivery date to account for that mining time, however, but that may be outside the scope of this conversation.

So, yes.  A collateral against missed deliver would be amazing.  It's not something we can really enforce with the template, but having it there would create credibility.  Knowing they'll honor it is something else entirely.  And now we're back to Escrow systems.

Maybe it's my own inherent distrust, but all my proposed solution seem to involve a factor external to this community.  External Vetting.  External Escrow.  I'm surprised a more robust version of these services hasn't sprung up yet, given their necessity here.

Cheshyr,

You didn't stagnate the discussion - I got busy with work and didn't come back the thread until today (Sat.).

I like your list - let's build on it. Hopefully others will contribute, and from there we can put together a ideal product announcement/company disclosure checklist for folks to use in making product announcements as well as evaluating said announcements.

Just to summarize (for others): The practice of taking pre-orders has contributed to a lot of bad behaviors (unrealistic representations, scams, etc.). To me, it is outrageous that companies take in millions of dollars (BTC too) upfront, including their profits, without an operating history, definitive product development progress, or providing consumers any security for their pre-orders (stock, promissory note, etc). Consumers should steer product manufacturer behavior by identifying, promoting and practicing certain norms. One type of norm worth developing is disclosure practices by mining companies.

Additional commentary:I read a post this morning by ProfMac on the HashFast thread where he suggested avoiding pre-orders unless the orderer received stock in the company as collateral for the order (to be clear, it wasn't necessarily a position he was advocating, mainly just a comment among several).  This is similar to the point I was making in my original post (#5). ProfMac's post made me think about the process of making various types of investments because, for many miners, buying mining gear is a several thousand dollar investment.

First, when I'm evaluating stock, I tend to look at  fundamentals.  I want to see balance sheets, etc. Similarly, in the Bitcoin mining world where pre-orders are common, it might be useful to know what assets and liabilities are on a producer's balance sheet before throwing more cash at them - financial data would communicate a degree of legitimacy and viability about the operation. Second, from my professional life I know that banks, lenders, and investors are unlikely to put money with a project when the company and/or its principals have no skin in the game themselves. It would be useful to know what skin the mining companies have in the game before placing a pre-order (consumers should not be the only ones taking the risk). Finally, this past week I have been helping some people buy the assets of a paper company. We discovered through a search of our state's UCC database that the seller had failed to disclose that the assets were encumbered by liens. Obviously, this new information impacts my clients' desire to invest their capital into acquiring the seller's assets. Again, similar info might be useful to Bitcoin miner buyers before they pony up thousands of bucks for pre-orders from an untested company (or even a tested one for that matter).

More food for fodder...

 

I did not mean to stagnate this conversation.  As an engineer who may one day want to release a small run of mining product, it'd be nice to have these expectations hammered out.

As a buyer, there are things I'd like to see in a company I'm going to buy from, many of them you already expressed.

NAME
CONTACT INFORMATION
PLACE OF BUSINESS
PRODUCTS
TIMELINE TO MARKET
EVIDENCE OF DEVELOPMENT (NON-RENDERED IMAGES, VIDEO)
REFERENCES  (AT LEAST 2 QUALIFIED MEMBERS OF THE FORUM)

There is more they could do, but that feels like the bare minimum for establishing any sort of credibility.

Most honest companies aren't dealing with the particular nuances of this community either, but I think we're debating semantics when we both agree on the general concept. 

We need better vetting than we have now.  A standard template of information would be excellent, and the more fields they completed accurately, the more credibility they'll have.  These profiles could be linked to by the company, and searched against by consumers.  It's not a hard deterrent, but if it became standard practice, it could protect a few people from fraud and give the scene a little more respectability.

I agree that stalking-like behavior should be discouraged, but most honest companies do not hide their officers and credentials from public view.

I wonder to what extent that behavior would stop if companies provided adequate disclosure about their officers and their credentials? Dunno, honest question.

That said, there's probably some middle-ground between privacy and adequate disclosure. 

I can agree with that; the template would be very useful, especially if there was a way to make it easily searchable.

The personal information disclosure makes me nervous.  Have you seen what people do with personal information here?  Spend a few minutes looking through past threads on AMT, or the recent banter surrounding CTSMiner.

https://bitcointalksearch.org/topic/official-thread-amt-304605
https://bitcointalksearch.org/topic/bitcoin-miners-429513

I don't care if they're a scam or not; stalking their homes is not acceptable, nor is offering to pay for cleavage shots in a press release announcement thread.  And these are some of the less threatening witch-hunts I've seen here.

If we need that information, I'd rather it go to a private database for validation by trusted people.  This leads back to the Credibility Rating idea, perhaps in its own subforum dedicated to just product announcements or perhaps offsite with filtering options and links back to product threads and announcements here.

Thanks for the feedback - just random thoughts.  I think the most important practice that could be adopted in the short-term is generating a template for how one makes their initial announcement (i.e., what initial information do we expect?).  The bar could be low enough for DIYers, but high enough filter out noise.

For Example:

NAME
CONTACT INFORMATION
PRINCIPAL OFFICERS AND CREDENTIALS
BUSINESS STRUCTURE (Corporation, LLC, etc.)
PLACE OF BUSINESS
MISSION
PRODUCTS
TIMELINE TO MARKET

etc.

For the most part, I think the premise of this post is sound.  I do have some concerns about the impact your proposed procedures would have on the DIY community though.  If nothing else, having a flexible but well defined process for validating and/or classifying the risk associated with a product offering would be useful.  Maybe something like Moody's or Standard and Poor's credit rating systems.  Preferably something deterministic, since there are a lot few questionable strong opinions on these forums that have nothing to do with a companies ability to deliver a product.

(pardon the typos, I’m writing this between meetings at work; also pardon the length)

Anybody here a fan of the show Arrested Development?

Last season we learned a little about George Michael’s software project, “Fakeblock.” You may recall that Fakeblock was a farce (read up on Fakeblock if you need a little more background:
http://arresteddevelopment.wikia.com/wiki/Fakeblock). Incidentally, there are two issues related to Georege Michael’s Fakeblock con that are worth noting as a preface to my larger point: 1) George Michael did not intend to let the con continue because he always planned to deliver; and, 2) despite the intentions, the con was profitable – he gained some riches overnight.

Where am I going with this? There appear to be many threads announcing Fakeblock-like products, or worse (I will call them “Fraudblocks” for now – scam companies), in the Mining Forum (and elsewhere in the Bitcointalk community). In other words, many companies introduce products with good intentions, but no realistic plan for sticking to their representations (which may have been unrealistic to begin with); and, many companies seem to be announcing fake products in hopes of scamming the community. Despite the number of Fakeblock and Fraudblock product announcement threads, there are not many threads promoting uniform strategies for deterring or reducing said announcements. My aim is to use this thread to discuss and debate various strategies for deterring and reducing the amount of Fakeblocks and Fraudblocks being promoted on Bitcointalk.

I’ll go first; feel free to lend your support, critique, offer new ideas, etc. 

THE CASE FOR PROACTIVE ACTION BY IDENTIFYING, PROMOTING, PRACTICING COMMUNITY NORMS

It is easy for individuals to join the community and promote their company or products without disclosing any verifiable background information about their project or credentials. Sometimes the lack of information is harmless, but other times it is not.  It seems that harmless instances have made lack of disclosure acceptable thereby increasing the prevalence of harmful instances.

At a micro-level, the harm is that some innocent community members lose fiat, coin, time, or some combination thereof. At a macro-level, an inefficiency in decentralized digital currency is exposed (that’s not to say this inefficiency is unique to Bitcoin), possibly hindering Bitcoin’s widespread acceptance (e.g., negative press about Bitcoin being a vehicle for bad actors). Finally, sometimes the harm is inflicted unintentionally and sometimes intentionally.

Scam threads are one way of shaming bad or negligent actors into good behavior. Tough questions on product announcement postings are another way of dealing with Fakeblocks and Fraudblocks. However, scam threads and tough questions may have limited effectiveness because they are REACTIVE NOT PROACTIVE. In other words, they come after damage has possibly been done. Some might argue that Newbie requirements are proactive, but I disagree. Newbie restrictions are not that effective because they don’t deter bad behavior after said restrictions are lifted. Further, I think we should welcome and encourage newbie participating throughout the forum, not erect artificial barriers to entering the community.

From what I have been able to find in searching the forum (very slowly by the way, the search feature is frustrating), there is nothing much to deter the Faceblocks and Fraudblocks from posting at Bitcointalk. In my humble Newbie opinion, this is a gap that can and should be filled. Obviously, filling this gap on Bitcointalk will not end Faceblocks and Fraudblocks per se, but it will help to limit their exposure on this particular forum and possibly save a few folks some fiat, coin, and time.

One way we can proactively deter Faceblocks and Fraudblocks is by identifying, promoting and practicing community norms. I searched the website for threads with “Norms” in the title and found nothing quite like what I have in mind (if my research was not thorough enough, I apologize), so please keep reading and offer your feeback. Here are few practices that could be adopted to produce new norms:

1.   Product announcement privileges being contingent on disclosing information necessary for a consumer to make an informed choice about the product (i.e., officers and their credentials; whether the company has signed a production contract/has partners; to what extent it is capitalized) – we could draft a standard form/template that has to be reviewed by a mod or other trusted person before posting.

2.   Appointing a panel of trusted and knowledgeable individuals to investigate new companies or products with the intent of evaluating their viability through a ranking system (mining pool directors might be good panel members) –like analyst reports for public stocks.

3.   Campaigning against the practice of pre-orders by encouraging community members to avoid placing pre-orders without certain protections (see #5 below, escrow, etc.).

4.   Campaigning for certain caps on the amounts of pre-orders (i.e, 50% of unit’s cost - many building contractors only get half up front, the other half a the end).

5.   Campaigning for alternatives to pre-order structure. It has occurred to me that pre-orders could be restructured as loans (bonds) or ownership positions (with payoff by refund or producing the product). I don’t see why it’s acceptable for companies to get wealthy overnight without having a firm plan for producing their products – I cannot think of another industry where this is acceptable. There does not seem to be a good incentive for a company to deliver as promised in the current pre-order scheme. Changing this practice via changing consumer expectations offers a vehicle for change.

6.   Commissioning a few folks to study product/service announcements made to highlighting some common practices of legit companies as well as bogus companies.  From there, best practices and consumer resources might emerge.

To summarize, to me it is clear that without defined community-wide standards, Fakeblocks and Fraudblocks will continue on this forum. Deterring product offerings by Fakeblocks and Fraudblocks by employing community norms, including standards for product announcement and pre-orders, might help the community – including those George Michaels out there that have good intentions but let their excitement get in the way of realistic representation.

Thanks for reading.