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821  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 05:36:26 PM
I have run this through in detail and can show you the 0-sum game, so lets work through the numbers for you:

Assuming 100% MC backing then the price of GoldCoin == 1 Oz of Gold.

If MC goes up in value, then you will have 150% MC backing... this will cause users to value GoldCoin above the value of Gold and bid it up to 1.5 Oz of Gold.

The network will then debase GoldCoin until once again 100% backing is achieved and anyone who invested above 1 Oz price has lost 33% of their investment... a dumb financial move given the rules of the game.

Why do you think investors would act against their own self interest? I thought we were agreed that would never happen. Regardless, the escrow fund still makes a profit in this scenario.

If MC goes down in value, then you will have 50% MC backing and GoldCoin would be worth 0.5 oz of Gold.  

If the network uses 10% of the backing to buy back 5% of the GoldCoin at market price (1 oz) then the Fund will have 45% backing and be worth 0.45 oz of Gold after your manipulation ends.

The only way for the fund to recover is if MC goes back up in value or Gold comes down... either way the value of GoldCoin has all of the Downsides of MC but none of the upsides of gold.

Again, the escrow fund still makes a profit in this scenario unless it is too weak to return the price to target.  If it succeeds, anybody who decided to panic loses money (and the escrow fund takes that money as profit). If it is too weak, then everything falls apart.

Determining how weak is too weak is part of this experiment.
822  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 05:24:44 PM

No, they most certainly don't Wink. You're using your wife as a bargaining chip. You seem to forget that you're not dealing with experienced investors. You've set up a system where there's no accountability for MasterCoin's finances and you've rushed the fundraising along before a proper detailed plan is explained. No investor worth one's salt would touch this.

I still think you're under-qualified. When this falls apart either because you can't put it together in the first place or the house of cards falls your reputation is ruined.

You make a good point that my investors aren't experienced. I could actually get in big trouble if I represented MasterCoins as an equity stake, since it is illegal to sell equity to investors who aren't "accredited" (rich). I was very careful to structure this as a sale of currency for just that reason!

Also, my wife isn't a bargaining chip. I'm just describing my personal situation. It could be that bounties are the way to go as a result.
823  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 05:19:29 PM
An escrow fund will be operating at a loss at all times because the only time it will enter the market is when everyone else disagrees with the valuation and it will be making decisions that profit-seekers would not make!    The only way for the fund to raise capital is to sell above market rates and to convince some other investor to pay above market rates *knowing* that the fund will be working against their interest and that they will take a loss for paying above market rates.   The only way to keep the price from falling due to lack of backing is to purchase the coins at ABOVE MARKET RATES and thus at a loss.   

You have a deep seated assumption based upon circular logic... that assumption is that the price will maintain parity naturally without respect to the backing and that the fund would be able to profit on this natural market correction.   However, if this were a natural market response the fund would be unnecessary.  Every action taken by the fund will be at a loss.

Let's imagine that GoldCoins is launched and a bunch of people buy it, driving the price up above target. The escrow fund then creates GoldCoins to match supply to demand, and sells GoldCoins at a higher price than they will be worth in a few days once supply catches up. This is profit for the escrow fund, and the escrow fund is now over-funded as a result.

Later, a bunch of people decide there is a better way to store gold, and they sell their GoldCoins driving the price below target. The escrow fund then buys those cheap coins until supply again matches demand. Again the escrow fund profits by buying cheap coins which will be worth more in a few days!

There's not circular reasoning here. Sovereign governments do this all the time (although they get in trouble when they try to also control interest rates, as described earlier).

Why would the price go above target isn't that an escrow backed value people wont buy over? Why will coins be worth more in a few days if demand dropped out in the first place?

If the price doesn't go over target, that's great. The escrow fund doesn't have to do anything. But if a bunch of people decide they have to have GoldCoins even if they pay a slight premium for them, the escrow fund takes that premium.

This is supply and demand, folks.
824  Bitcoin / Project Development / Re: [POLL] How should the 1800+ BTC at the Exodus Address be used? on: August 05, 2013, 05:18:05 PM
perhaps walk around town and show her how to use the Gyft app or something. Or walk into a cafe/restaurant that takes bitcoin in your city. Clearly she needs to use it firsthand before she lets her defenses down

Oh, she knows that it works. It's more that she is very suspicious that it will continue to work and hold its value. We've been having these kind of discussions for a long time!
825  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 05:15:48 PM
Let's imagine that GoldCoins is launched and a bunch of people buy it, driving the price up above target. The escrow fund then creates GoldCoins to match supply to demand, and sells GoldCoins at a higher price than they will be worth in a few days once supply catches up. This is profit for the escrow fund, and the escrow fund is now over-funded as a result.

And you are counting on everyone who pays above market rate to act against their own self interest?  Why in the world would any sane, profit-seeking, individual buy a GoldCoin for more than the gold price when they know 100% that the algorithm will be debasing them?   You are asking these people to subsidize prior losses with no gains.

Later, a bunch of people decide there is a better way to store gold, and they sell their GoldCoins driving the price below target. The escrow fund then buys those cheap coins until supply again matches demand. Again the escrow fund profits by buying cheap coins which will be worth more in a few days!

There's not circular reasoning here. Sovereign governments do this all the time (although they get in trouble when they try to also control interest rates, as described earlier).

Why will cheap coins be worth more in a few days?  Because you say so?  Because the rest of the players have had a change of heart and realized that GoldCoins don't need 100% backing or simply because MasterCoin has gone up in value and thus the value of the backing has increased?   

GoldCoin has no more value than the escrow fund backing it.  Every market intervention of the escrow fund to prop up the price debases the backing.

Um, have you done this thought experiment in detail? In the first example, if GoldCoin holders don't drive up the price of GoldCoins above the target price, the escrow fund doesn't act at all. If they do, the escrow fund profits. Nobody has to act against their own self-interest for this to work.
826  Bitcoin / Project Development / Re: [POLL] How should the 1800+ BTC at the Exodus Address be used? on: August 05, 2013, 05:12:03 PM
Where is the option for 'pay yourself like a grad student and live on ramen'?

Exactly!

Unfortunately, that one doesn't fly with my wife and kids Smiley

How much have they invested?

+1

My wife doesn't trust bitcoin at all, so if I convince her to sacrifice some of my time, I have to have U.S. Dollars to show for it. They have no interest in investing my time in experimental currencies unless I can express the advantages in those terms.
827  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 05:08:09 PM
You're negotiating against your own wife?? Do you even realize how insanely mixed your role is in this? I honestly find it hard to take you or MasterCoin seriously if you paid yourself any salary at all.

You point out that you'd lose equally as much as other "investors" (purchasers would be a more fitting term). You're essentially controlling expenses and your own salary which you "withdraw" from the exodus address. If you work on this for 6 months and return 50 % of all funds you have not lost  anything because those funds are withdrawn for your own personal use, claimed as "salary".

Just because you say a speculative attack wont happen does not make this an economically sound protocol. You're either knowingly or ignorant to the fact that you're setting up a game of musical chairs for everyone involved, with a twist where you've guaranteed yourself a chair.

I think you're economically under-qualified to lead this project. You've mixed your role on every side of the project which means this is de facto a premined-equivalent altcoin, leeching off the Bitcoin network. You still dodge the hard questions and appeal to greed in half of your posts.

Angel investors and entrepreneurs have exactly the same relationship as this. It really shouldn't be so terribly controversial. Either the idea is great, and lots of money will be made, or it isn't, and investors will lose out.

Please don't hyperventilate Smiley
828  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 05:05:22 PM
An escrow fund will be operating at a loss at all times because the only time it will enter the market is when everyone else disagrees with the valuation and it will be making decisions that profit-seekers would not make!    The only way for the fund to raise capital is to sell above market rates and to convince some other investor to pay above market rates *knowing* that the fund will be working against their interest and that they will take a loss for paying above market rates.   The only way to keep the price from falling due to lack of backing is to purchase the coins at ABOVE MARKET RATES and thus at a loss.   

You have a deep seated assumption based upon circular logic... that assumption is that the price will maintain parity naturally without respect to the backing and that the fund would be able to profit on this natural market correction.   However, if this were a natural market response the fund would be unnecessary.  Every action taken by the fund will be at a loss.

Let's imagine that GoldCoins is launched and a bunch of people buy it, driving the price up above target. The escrow fund then creates GoldCoins to match supply to demand, and sells GoldCoins at a higher price than they will be worth in a few days once supply catches up. This is profit for the escrow fund, and the escrow fund is now over-funded as a result.

Later, a bunch of people decide there is a better way to store gold, and they sell their GoldCoins driving the price below target. The escrow fund then buys those cheap coins until supply again matches demand. Again the escrow fund profits by buying cheap coins which will be worth more in a few days!

There's not circular reasoning here. Sovereign governments do this all the time (although they get in trouble when they try to also control interest rates, as described earlier).
829  Bitcoin / Project Development / Re: [POLL] How should the 1800+ BTC at the Exodus Address be used? on: August 05, 2013, 04:56:07 PM
Where is the option for 'pay yourself like a grad student and live on ramen'?

Exactly!

Unfortunately, that one doesn't fly with my wife and kids Smiley
830  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 04:52:05 PM
That said, he has still failed to address my post regarding the insufficient backing, all downside/0 upside, guaranteed bank run problems with GoldCoin under his design.

Yes, walk us through like we are your wife.

I can't pretend that 100% of user-created currencies will maintain their values forever. That is patently impossible. I can't claim that any legitimate currencies which aren't Ponzi schemes will never fail - clearly some of them will.

I believe an escrow fund, even a modestly unhealthy one, can maintain a target value of a currency such as GoldCoins or USDCoins for many years. The tipping point where an escrow fund is too unhealthy, triggering a bank run of a large percentage of the users of that currency remains to be determined. However, as I have repeatedly said, the typical escrow fund should become more healthy over time, not less.

I'm pretty sure the tipping point is when the percentage of people who panic is higher than the percentage of outstanding coins backed. An over-funded currency is guaranteed to work correctly. A 50% funded currency should work as long as 50% of the coin-holders don't panic at the same time.

Keep in mind, like with bitcoins, many people will buy these currencies, and then lose them. Those people won't even have the option of participating in a bank-run.

It seems clear to me that once MasterCoins fall out of favor, ALL currencies built on MasterCoin will subsequently collapse as MasterCoin values approach zero and escrow funds become worthless. Hopefully that will be a few centuries from now Smiley
831  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 04:41:56 PM
I went ahead and created a poll here: https://bitcointalk.org/index.php?topic=268464.0
832  Bitcoin / Project Development / [POLL] How should the 1800+ BTC at the Exodus Address be used? on: August 05, 2013, 04:41:05 PM
So I need to have negotiations with my wife to secure some of our precious weekend and/or vacation time to work on my crazy MasterCoin project (new protocol layer built on bitcoin). You can read more about the project here: https://bitcointalk.org/index.php?topic=265488.0

So far, I have raised over 1800 BTC, 1222 of which is my own money. There is a lot of spirited discussion as to how much I should pay myself to work on this project on that thread, so I'm creating this poll to tabulate opinions.

As I said in the thread, no matter what the outcome of this poll, I will do what I think is best for MasterCoin holders, but your opinion definitely matters to me.

Also, note that there is an option on this poll for those of you who think I am a scammer Smiley
833  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 04:28:30 PM
Let's take a poll! Everybody following this thread: please post your opinion on whether you want to see me use bounties for other developers, or pay myself, and what multiplier on my current salary would be scammy if I paid myself.

Although again, I will do what I think is best for MasterCoin holders (this is a non-binding poll) but I do want to know your opinion!
834  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 04:21:14 PM
Now I'm even more confused.

The problem is that until demonstrated otherwise, remaining funds = original funds - funds paid to yourself. So in this case you still keep all of your funds and some of other people's funds.

Specifying in advance what is the salary you intend to receive for full-time employment in this (which AFAIK you have not yet done) will be helpful.
I don't plan to take a salary at all
I was under the impression that you intend to quit your day job and instead receive a salary from the Mastercoin project. Is that correct?

How much money I withdraw for work on this project
What does withdrawing have to do with anything? The money in the Exodus address isn't yours, you can't withdraw it. It belongs to the Mastercoin project and a salary can be paid to you.

will be a negotiation I have with my wife
That was my point, what assurances do we have that the "negotiations" will not result in you taking a salary of $100K / month?

Sounds like your wife is a net drag on investors profits.   I would hire everything out if I were you because you cannot use your wife as an excuse for charging insane rates.  

That is a great idea - I've thought about doing some bounties, and it is likely that there will be some. Bounties have their own set of problems though, since somebody might work many hours and not get paid because somebody else collected first. Or, you have to offer the bounty to just once person who might not do a good job.

Still, I would LOVE to use the Exodus Address funds to pay somebody else to work on this!
That also was my point. With an upper bound on your own salary, it becomes practical/necessary to hire other people as well.

I don't think my wife would demand something totally absurd, but if she did, the Exodus Address funds would be used for bounties to other developers only.

Ultimately, the usage of the Exodus Address funds are in my hands, and you guys will have to decide if you trust my judgement on using them in the most cost-effective way.

I think a $100k/month salary would definitely fall on the "scam" side of the equation! (Although I might be able to justify that if MasterCoins were worth billions of dollars someday)
835  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 04:19:42 PM
Sounds like your wife is a net drag on investors profits.   I would hire everything out if I were you because you cannot use your wife as an excuse for charging insane rates.  

Yeah, the optimal thing for the project's success would be for Willet to divorce his wife, because he would have much more free time and less liabilities.

Luckily (or unluckily, depending on your perspective), he has other priorities except MasterCoin, including (gasp), his wife's happiness.

LOL!
836  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 04:17:47 PM
Sounds like your wife is a net drag on investors profits.   I would hire everything out if I were you because you cannot use your wife as an excuse for charging insane rates.  

That is a great idea - I've thought about doing some bounties, and it is likely that there will be some. Bounties have their own set of problems though, since somebody might work many hours and not get paid because somebody else collected first. Or, you have to offer the bounty to just one person who might not do a good job.

Still, I would LOVE to use the Exodus Address funds to pay somebody else to work on this!
837  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 04:11:30 PM
How do you see MSC playing out upon release? As in, what are scenarios for distribution and success?

Also, does it matter how many initial buyers/MSC holders that you have in terms of distribution? Would more hands at the beginning help its success?

Take a look at the project milestones in post #2 - I'm hoping to give away a small number of MasterCoins in order to widen our user base and increase demand for them.

The economics of how this will play out are anybody's guess, but here is my guess:

  • MasterCoin sales will continue throughout this month, raising an unknown amount of money
  • Assuming that I don't raise an absurd amount of money, MasterCoin features will start trickling in slowly over the following months
  • At some point, probably once distributed betting is implemented, MasterCoins will catch fire, and early investors will hopefully have a large profit
  • Once user-created escrow-backed currencies are implemented, there will be another big jump in MasterCoin prices, and early escrow funds will have way more than they need to maintain stability as a result
  • Later currencies will be less over-funded, and any currency failures we see will probably happen to them
  • Ponzi schemes (as in, this currency doubles in value every week!) will be rampant
  • Ponzi schemes will eventually die, giving us a lot of information which will be used to tune the parameters of real currencies to hopefully allow them to keep their stability for many years
  • MasterCoins will eventually become quite valuable, as commerce starts using stabilized currencies, such as USDCoins, and a whole economy gets built on this protocol

I really hope to make you guys very rich. We'll see how it goes!
838  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 04:02:55 PM
The problem is that until demonstrated otherwise, remaining funds = original funds - funds paid to yourself. So in this case you still keep all of your funds and some of other people's funds.

Specifying in advance what is the salary you intend to receive for full-time employment in this (which AFAIK you have not yet done) will be helpful.

I don't plan to take a salary at all, given the funds currently raised. How much money I withdraw for work on this project will be a negotiation I have with my wife in order to secure time that would normally be devoted to giving her a break from the kids and household chores or taking her on vacation!

I think it likely that the price per hour will have to be on the order of "overtime pay" in comparison to my current day job in order to secure her approval. I don't want to make any promises, but I doubt I will burn through even half of funds contributed to date in order to get to feature complete.

Again, I haven't actually done this negotiation with her yet, and forecasting how long software projects will take is notoriously tricky!
839  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 03:47:55 PM
Perhaps when the time comes you could have a messaging thread between those that have risked their money in 1exodus so that discussion of your usage of the funds can be facilitated. Transparency and all that.

When withdrawing funds from the Exodus address, I'll be sure to say what it was for, probably on this thread.
840  Alternate cryptocurrencies / Altcoin Discussion / Re: OFFICIAL LAUNCH: New Protocol Layer Starting From “The Exodus Address” on: August 05, 2013, 03:44:42 PM
I imagine Mastercoin will be worth as much as to how useful it is in the marketplace. IF, and only IF, the protocol does what  the author claims it will do, then I believe it will be useful to the marketplace. Impeccably useful, actually. As in, society could never go back.

I would like to see these questions addressed:
https://bitcointalk.org/index.php?topic=265488.msg2857527#msg2857527
https://bitcointalk.org/index.php?topic=265488.msg2858535#msg2858535
https://bitcointalk.org/index.php?topic=265488.msg2863003#msg2863003

I think we both posted at the same time, because the post right before yours attempts to address these questions Smiley
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