MasterCoin: New Protocol Layer Starting From “The Exodus Address”

[vokain]

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!

I want you to do both. do as much as you can yourself, pay others if time is not of the essence (i think it sort of is) and it is worth the cost

I suggest something else - start another (moderated?) thread asking for developers to sign up.
We can evaluate the different options and vote on the correct course of action.

I think a vote on your salary is, at this phase, meaningless.

we really should have a dedicated developer's thread regardless

[1714247136]

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[1714247136]

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[bytemaster]

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!

Group bounties? Appoint a bounty leader, have them distribute accordingly to whoever they work with? This would have to be reputation based I imagine.

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.

the guy still has kids!

I think the more telling thing is that he is unable to convince his wife and his wife lacks confidence in his abilities / ideas.    My wife doesn't understand everything I do, but she trusts my judgment and overall competence enough to go out on a limb.   All of this while having to pay child support to my ex-wife, who sounds more like dacoinminister's wife, to the tune of 50% of my market-rate salary.   So for a matter of perspective, I am bootstrapping a company while paying 70% of my income as child support/spousal support because I am working for a below-market-rate salary and the corrupt courts impute market-rate.    

While I think it is great that he is using private schools and keeping his kids out of public schools, without the support of his wife this project could be abandoned at any time and he will be unable/unwilling to make the sacrifices necessary to see it succeed.   Hiring out this kind of thing is not really viable because good developers are hard to come by and the ideas are all in his head.   So, I would suggest that he step back from the project until he can find someone else to pick up the cause and run it entirely.   I wouldn't invest money in this project so long as dracoinminster is a critical player and his wife isn't 100% on board and willing to make sacrifices to their lifestyle.    

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.

[vokain]

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.

[dacoinminster]

I went ahead and created a poll here: https://bitcointalk.org/index.php?topic=268464.0

[dacoinminster]

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

[bytemaster]

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.

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.

[bvt]

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.

[dacoinminster]

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).

[dacoinminster]

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

[bytemaster]

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.

[dacoinminster]

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.

[Chang Hum]

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?

Edit: sorry someone posted similar at the same time

[bvt]

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

No, they most certainly don't . 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.

[dacoinminster]

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.

[bytemaster]

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.

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.

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.

[dacoinminster]

No, they most certainly don't . 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.

[bvt]

No, they most certainly don't . 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.

You could also get in trouble selling currency...... Either way your personal 'situation' is irrelevant and unprofessional to use as a bargaining chip.

Anyway, I've voiced my criticism and you've made it clear that you see no problem proceeding as is and have no intention of addressing the serious issues raised in a reasonable way.

[bytemaster]

I suggest your first bounty should be the following:

10 BTC to anyone who can convince 50% of your investors that your system is economically unsound and not viable.  

I will no longer respond until such a bounty is posted.

[dacoinminster]

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.

[dacoinminster]

I suggest your first bounty should be the following:

10 BTC to anyone who can convince 50% of your investors that your system is economically unsound and not viable.  

I will no longer respond until such a bounty is posted.

I remember when you posted a similar bounty

Bless you sir. I have other work I need to do today!