Wow, thanks for the very long and detailed email! I'm glad you are concerned about the health of the project.
I'm happy with my stake in MSC, and have no plans to significantly reduce that stake in the near future. It is only with great pain and out of necessity that I contemplate selling a tiny amount at 0.7.
As you say, I could potentially dump a huge chunk of MSC on the market and crash the price to zero, but that would not be in my self-interest, and I don't think anybody need worry about my behaving irrationally in that way. 30% is actually not a very large stake for the founder of a startup, and I consider my stake a very, very long term investment.
If my stake was over 50%, I would agree that it wasn't healthy, especially considering that we are moving towards proof-of-stake voting for important decisions.
I eventually will be forced to sell more and more MSC for diversification and physical security and living expenses, but I plan to do so only out of necessity for those purposes. The success of Mastercoin has been a dream come true for me, and I intend ride it out. Frankly, even if MSC became a failing project somehow, I'd have a hard time abandoning it. I'd probably just go down with the ship
-J.R.
On Thu, Nov 21, 2013 at 11:13 PM, ----<
----------@gmail.com> wrote:
Hi J.R.,
I am an investor in Mastercoin, and have been following the Mastercoin
threads and developments on Bitcointalk closely. The following post,
by user zbx, on the Buyer/Seller thread expressed a concern that I too
have:
"If and only if you think that the price is too high right now, you
should sell some of your Mastercoins (and undercut our asks). And
though it would be bad for the price in the short term, it's very bad
for the MSC economy, in the long term, for one person to hold so many.
Kill two birds with one stone."
You never responded to zbx's post, and as a result, I am writing to
encourage you to start selling your Mastercoins.
Your current Mastercoin holdings, amounting to 30% of all Mastercoins,
will harm the Mastercoin project for both pyschological and strictly
economic reasons. Regarding the latter, the most obvious problem is
that you control the price of Mastercoin. As long as you hold
approximately one-third of all Mastercoins, you are distorting the
supply-and-demand of the latter. Your plan to sell 1% of your total
holdings when the exchange rate is .7BTC/MSC will not necessarily help
matters. First of all, 1% is not enough. Second, the price of
Mastercoin and its value as a financial platform are not necessarily
correlated. It is possible, for example, that the price will rise to
.7 during a speculative bubble, and that you will either feed the
bubble or pop it by adding your Mastercoins to the economy at such a
point. Even if you perceived the bubble, you couldn't tell the
community, as you could easily induce a panic and make the crash more
severe than it would have been otherwise, and you would be forced to
sell, as you have already made a public statement saying you would do
so. It is irresponsible to let the *price* of Mastercoin determine
when and how much you start selling; rather, you must carefully
consider the total state of the project, and must do so dynamically,
not once and for all.
Within Mastercoin, then, you are almost a benevolent dictator, which
is a precarious position, especially within the Bitcoin community. I
am worried that you may have lost sight of the precariousness of your
position because the current tenor on the Mastercoin threads is much
less skeptical than it was in August. From what I've read on the forum
threads, it seems that at this stage of Mastercoin's adoption, the
initial nay-sayers have already decided not to invest, while those who
are now showing interest in Mastercoin are manifestly less skeptical
both of your position within the project and the project itself. It is
important to recgonize that this constituency is unrepresentative of
the future Mastercoin adopters; we are at a unique point in
Mastercoin's history. People will continue to take issue with the
amount of power you have within the Mastercoin community, and that
just because you and I believe in your trustworthiness, that doesn't
mean everyone will - nor should they! They are investors, not friends.
You will have to prove your trustworthiness over and over again. Such
a state of affairs is unacceptable and moreover unsustainable; your
power within the Mastercoin cannot constantly hover as a specter
around the Mastercoin community.
It will only be a matter of time before investors realize there is no
reason for you to have so much power over Mastercoin, and I believe
you will continually be asked, for the good of the project, to lessen
your stake. This will not only be a request, but a challenge; the
community will be testing you to see whether you are willing to put
Mastercoin's needs ahead of your own. The more successful Mastercoin
is, the more you will be asked to sell many of your Mastercoins. If
you start selling your Mastercoins before there is general pressure
from the community to do so, it will be clear that you are willing to
sacrifice significant personal gains to the success of the project,
without being pressured to do so. And if you lay out your reasons for
selling your shares, emphasizing and explaining the positive effect it
will have on the economy, investors will be reassured of your
understanding of financial systems.
You repeatedly say in your forum posts that the biggest threat to
Mastercoin's success is that someone else will create something
better. Aside from any technical improvements that can be made upon
the Mastercoin protocol, the creator of another protocol may own a
much smaller percentage of the currency than you do, which while
perhaps in itself is not enough to have people switch from Mastercoin
to another protocol, will not help. In any case, it seems
irresponsible not to address such a gratuitous problem.
It seems to me that you are not only overly concerned about the
symbolic value of selling or continuing to hold your Mastercoins, but
fundamentally misinterpret how your holdings look to others. Firstly,
if you refuse to start selling you Mastercoins, and hurt the project
thereby, other Mastercoin investors will not thank you for your
symbolic act of commitment. Secondly, your unwillingness to start
selling your Mastercoins does not, in my view, betray your commitment
to the project, but rather makes you seem greedy. At the time that I
am writing this, the total valuation of Mastercoin is over $70
million, which makes your holdings worth over $20 million. You have
recently written that you will sell 1% of your Mastercoin at
.7BTC/MSC, at which point your holdings will be worth over $90
million. It may well be asked, who needs so much money for reasons
other than greed? It is true that what you do with your money is not
other people's business, but since you have consistently published
details of your personal life and wealth, the question will arise, and
will become more and more pressing as the value of Mastercoin
increases.
It was a mistake to have bought so many Mastercoins initially, and it
will be quite difficult for you to backtrack effectively.
As an investor, I am very anxious to hear your response.
Thanks,
----
