BitsharesX Catapults to No. 3, Leaves Ripple Behind(coinsetter.com)
coinsetter.com
BitsharesX Catapults to No. 3, Leaves Ripple Behind
http://www.coinsetter.com/bitcoin-news/2014/08/25/bitsharesx-catapults-3-leaves-ripple-behind-1416
5 comments
And what about altcoins that issue an unlimited number of coins at a fixed annual inflation rate? If we price them as you describe, their value is infinite.
The correct strategy is somewhere in the middle. Shares with pre-programmed future distribution (as happens in traditional mining-based coins) should contribute less to the calculated market cap as they recede further into the future, using some discount function that produces a finite, reasonable present value for coins with unlimited exponential growth of the coin supply.
For coins with a central authority issuing distribution, the function has to be weighted by the credibility of the authority's plans. If some coin authors convince you that some portion of their coin will never enter circulation (e.g., if they publicly destroy them by sending to a vanity address so improbable that they could not possibly have a corresponding private key), you should drop those coins from your calculation of the cap entirely. If they merely promise to only release the coins slowly over many years, as with Ripple, your estimate of the market cap varies substantially based on how much you trust Ripple.
The correct strategy is somewhere in the middle. Shares with pre-programmed future distribution (as happens in traditional mining-based coins) should contribute less to the calculated market cap as they recede further into the future, using some discount function that produces a finite, reasonable present value for coins with unlimited exponential growth of the coin supply.
For coins with a central authority issuing distribution, the function has to be weighted by the credibility of the authority's plans. If some coin authors convince you that some portion of their coin will never enter circulation (e.g., if they publicly destroy them by sending to a vanity address so improbable that they could not possibly have a corresponding private key), you should drop those coins from your calculation of the cap entirely. If they merely promise to only release the coins slowly over many years, as with Ripple, your estimate of the market cap varies substantially based on how much you trust Ripple.
>And what about altcoins that issue an unlimited number of coins at a fixed annual inflation rate?
good point. A company also can always issue more shares to dilute existing holders. But no company (to my knowledge) has ever promised to do so at a fixed annual rate.
good point. A company also can always issue more shares to dilute existing holders. But no company (to my knowledge) has ever promised to do so at a fixed annual rate.
> Accordingly, I'd argue that this is a more accurate representation of market cap (view by total supply): http://coinmarketcap.com/currencies/views/market-cap-by-tota...
That one is going to be fun if we (Ethereum) decide to premine 2^200 ether into a few standard-library contracts (eg. ecrecover, bloom filters, data structures) to compensate people a few microcents per call for the mismatch between their gas cost in a naive EVM implementation and their actual execution cost...
Edit: although I suppose you could argue that currency units which are existent, but which cannot be accessed for 1000000000000000000000000000000 years because they are locked up in a contract that no one can open up at anything more than a trickle rate, actually inexistent. Will get complicated in any case.
That one is going to be fun if we (Ethereum) decide to premine 2^200 ether into a few standard-library contracts (eg. ecrecover, bloom filters, data structures) to compensate people a few microcents per call for the mismatch between their gas cost in a naive EVM implementation and their actual execution cost...
Edit: although I suppose you could argue that currency units which are existent, but which cannot be accessed for 1000000000000000000000000000000 years because they are locked up in a contract that no one can open up at anything more than a trickle rate, actually inexistent. Will get complicated in any case.
Have you seen https://www.coingecko.com/en? Bitshares-X is ranking #12 there now. Imperfect at first sight, but a broad overview of the coins.
Here's a good analysis of the (highly-questionable) economics of BitShares: http://prestonbyrne.com/2014/08/17/dont-walk-away-run/
Check out the discussion in the comments here. The article you linked has effectively only one argument: that BitUSD will not maintain the peg in the event of a flash crash in BTSX value. The author and the lead developer of BTSX have a back-and-forth which clarifies the whole situation.
http://prestonbyrne.com/2014/08/24/what-goes-up/
http://prestonbyrne.com/2014/08/24/what-goes-up/
Do you really need any more an argument than that?
If you did, Bitshare founder's Daniel Larimer's comments at the bottom provide a couple more
Namely (i) As he points out governments tend to like to be involved in investment and money transmission schemes... and the likelihood of the SEC taking a dim view of the trade and marketing of unregulated "shares" is probably a tad higher than the likelihood of your USD deposit account being frozen or haircut. (ii) he appears to imply the only thing that went wrong with MtGox and "other otherwise trustworthy institutions" is government intervention. Whether that selective blindness to MtGox's problems was purely rhetorical or not, it's a remarkable attitude coming from the founder of a crypto exchange...
Namely (i) As he points out governments tend to like to be involved in investment and money transmission schemes... and the likelihood of the SEC taking a dim view of the trade and marketing of unregulated "shares" is probably a tad higher than the likelihood of your USD deposit account being frozen or haircut. (ii) he appears to imply the only thing that went wrong with MtGox and "other otherwise trustworthy institutions" is government intervention. Whether that selective blindness to MtGox's problems was purely rhetorical or not, it's a remarkable attitude coming from the founder of a crypto exchange...
Of course not, if you think it's likely don't put your money in. Even Bitcoin's rapid price drops in the past have not been fast enough to have triggered a peg break. And you're trading the risk off against the risk of a bank haircut or account freezes or what have you.
Again, to be clear: I am not encouraging anyone to put their money into this.
Again, to be clear: I am not encouraging anyone to put their money into this.
Not sure if someone wrote a rebuttal. The author does get quite a few things wrong. I guess we'll find out soon enough. The markets for BitAssets are going to open this week, and a pure-prediction market will take over soon thereafter. There's a 'backup' strategy of centralized price-feeds instead of prediction markets that's published by a majority of the delegates if the market isn't able to maintain the peg or is easily manipulated.
The 10 second confirmation time seems to solve a major problem with Bitcoins for casual transactions - the need to wait 30 minutes before you are certain that you've actually been paid.
Another win is the emphasis on Transaction fees as the mechanism to incentivize people to ensure the integrity of the block chain, and note transactions.
Another win is the emphasis on Transaction fees as the mechanism to incentivize people to ensure the integrity of the block chain, and note transactions.
True. That's a big part towards the move to proof of stake systems. Some people argue that the 'delegates' can collude to destroy the system, but this is more of a problem in Bitcoin, where just two major mining pools can collude to double-spend. In addition, since delegates are 'voted' by the people holding the currency, if anything funny is noticed people will immediately withdraw their votes (they have an economic incentive to do so), and thus the delegate ceases to be a delegate anymore and cannot extend the blockchain.
Of the many problems with Proof of Stake, "Centralization" and the trivial-ness of a rollback are probably the two largest. (Though the "nothing is at stake" argument is very compelling) It's likely that Stake-chains are a wonderful way to run a company. It's probable that Stake-chains won't secure enough trust to maintain 'platforms' amongst anonymous and antagonistic holders. IMO
In PoW chains 10 second confirmations are a bug, not a feature. If Bitcoin's confirmation times were 10 seconds, you would have 1/60th the amount of hashing power/energy securing a block to the chain, which would be trivial to compromise. The solution to instant confirmations are in the form of 'latency insurance', underwritten by a trusted provider. This is implemented in Bitcoin via BIP70. It will provide 'instant' transactions.
So are those trusted providers going to be cheaper than Visa?
Not just cheaper than what Visa charges merchants today, cheaper than what Visa can charge and still make money.
Not just cheaper than what Visa charges merchants today, cheaper than what Visa can charge and still make money.
Yes. Probably they will be free. Bitpay offers BIP70 for free to its merchants.
So that means they build the cost into their pricing, right?
Yes. If you want a more exact number, it's probable that the charges will be significantly less than typical miner tips. It may even be absorbed by miners in order to give the miner a better lead-time on entries in the mempool.
I never took Bitshares seriously. I thought their licensing strategy was insane so I dismissed them. Then I read their delegated proof of stake paper. It's one or the more rational, practicable alternatives to POW I've seen proposed.
What's their licensing strategy? Are you talking about the fundraising (Angelshares/Protoshares)? If you are, it sounds fair to me that the people who funded the development and project early on, before a final product was ever released, should be rewarded. Besides, the "licensing" is just a social consensus, not a legal one. The project is all open source.
Agree with the Delegated Proof of Stake paper. It's well written and well implemented as well. Going forward, I am sure quite a few other projects in this space will adopt the idea.
Agree with the Delegated Proof of Stake paper. It's well written and well implemented as well. Going forward, I am sure quite a few other projects in this space will adopt the idea.
http://bitshares.org/delegated-proof-of-stake/
...a link for anyone wanting more information about DPOS.
...a link for anyone wanting more information about DPOS.
remember when aurora coin skyrocketed to the top of the list?
It is true but BitshareX it is not a coin it is a virtual vault it is so much more then any coin out there it is a DAC. You have a business model you have dividends, delegates etc. The mechanism behind it brilliant it the peg it is working this will be huge.
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When a public company does a secondary offering and releases more shares, that clearly doesn't result in an increased market cap. The market already knew that those shares existed, even if they weren't publicly traded yet, and things are priced accordingly.
The convention for BTC and cryptocurrency in general seems to be to calculate market cap based on the total number of BTC that have been mined so far (~13mm). That's like the float. I'd argue that we should be using 21mm to calculate BTC market cap, since that's effectively what the "bitcoin treasury" has authorized. (To follow the anology, I think of BTC as doing a small secondary offering every 10 minutes.... but the market already knows this information and prices things accordingly. It should not result in an increasing market cap every time a new block is mined).
Accordingly, I'd argue that this is a more accurate representation of market cap (view by total supply): http://coinmarketcap.com/currencies/views/market-cap-by-tota...
You can find a lot of stocks in the market with a very low float. For example, Pandora and LinkedIn only IPO'ed ~9% of the total shares.[1] i.e. The float is ~9% but the market cap is calculated based on the full 100% shares that are authorized by the treasury, even if they are held by the company and not publicly traded. The market still knows that those shares exist and can be released to the market at a future date.
[1] http://online.wsj.com/news/articles/SB1000142405270230393670...
disclaimer: i work on the ripple project