It's become clear in this long thread that a year of "Fibs and Fud" from people who have little personal honor have left many fair minded folks with deep misunderstandings about BitShares. Rather than continuing to answer them piecemeal, I've decided to author a series of posts that explain everything from the beginning. I hope some of you find this useful.The Origin of BitShares
Part 8
Experimenting and Pivoting
I was skimming through one of the
other threads on bitcointalk where I read with interest that Crypti was about to adopt DPOS.
That's when I ran across this wonderful graphic:
"That's it!", I enthused,
"That's exactly what it's been like on every project I've worked on in the past 40 years!"
And it's certainly what we've experienced in the BitShares community since Invictus Innovations was founded on the Fourth of July, 2013. It's a good thing we put "Innovations" in our name, because we've certainly needed to innovate.
I especially liked the chart's
Trough of Sorrow where "experimenting and pivoting" is said to go on. Been there. Done that!
In general, the market doesn't like it when you pivot. Makes you look like you don't know what you're doing. However, once you admit that to everybody, the pivot can be a devastating competitive move. You'd be crazy not to use it in combat, if you can pull it off.
Of course, most investors would prefer it if you would simply run a fast break straight down the middle of the court for a lay-up. We would too. Why can't all those moving obstacles stay seated on the opposing bench?
So, that's what we're about. We regret that we have lost some supporters along the way who expected us to dribble straight down the court. But our intention was to maneuver quickly around the obstacles and get on with the Grand Vision with all of our supporters against the challenges that ahead of us. Without the change, we would've lost eventually.
We do smile when our detractors point out each of our pivot moves.
I don't know why they want to keep playing our highlight reel, but ok...
For their convenience, I'll summarize them here:
Obstacle: Big Mining ProtoShares (PTS) built a fantastic community, but Big Mining sucked up all the shares before we could mine enough to fund development. We played by the rules offering a "fair" mining lottery - and got our head handed to us. We had to find another way to fund development.
Pivot: We invented AngelShares (AGS) - a simulated mining lottery where people donated what they would otherwise have burned up in a traditional mining lottery.
Result: We raised over $6 million dollars in donations. Enough to fund our team for two years, produce a general purpose software toolkit, and spin off six new DACs (BitShares X, BitShares Music, BitShares Play, BitShares ME, BitShares DNS, and BitShares VOTE). Share growth in all of these DACs promised to fund continued development indefinitely. Life was good.
Obstacle: Unprofitable Mining Mining wasn't going to work for implementing a decentralized exchange. It was too wasteful and too slow. No market would wait for confirmations that could take up to an hour to lock down a transaction. We needed trades to confirm as fast as users could specify them. And we were trying to build a profitable company. Burning the value of each issued share made no sense at all.
Pivot: Read all about it in Part 5:
POW to POS to TaPOS to DPOS!Result: It delayed our release by over 4 months (a real Trough of Sorrow!). But it gave us blazing fast 10 second
confirmation times. Bring on the traders! As a byproduct, we had a system we could upgrade weekly under control of elected delegates - great for tuning market rules and parameters as we observed trading in live action. These delegates also became an amazing resource of reputation based
distilled trust - highly useful in overcoming obstacles we didn't even know about yet!
Obstacle: The Great Bitcoin Recession For the sake of transparency, we left all the donated funds in BTC and PTS on the block chains where everyone could keep track of how we were spending them. (Volatility-free BitAssets weren't available yet.) PTS was supposed to drop as its value was transferred to new products. But Bitcoin was supposed to hit $1200 by years end! Instead it dropped like a rock all year long. By the fall it was clear that our two year runway had been whittled down to one year - and that was about to end!
Pivot: We rediscovered something every Silicon Valley startup knows well: working for equity! Why couldn't that work for block chain based companies? Why not do the same thing as bitcoin - issue new shares at a slowly decreasing rate. Except, unlike Bitcoin, we didn't have to burn them. We could use them to pay employees! What's a few percent annual dilution when we were expecting value to grow by hundreds of percent in the coming year? All we had to do is bleed off a few percent of that growth and we could fund much faster growth!
Result: If Bitcoin could do what we could now do, it could pay 101 small businesses several million dollars a year - each! Instead Bitcoin gives all that new money to the electric companies to produce global warming. Even at BitShares current scale, that same rate of token issuance could sustain our 2014 development budget into the future indefinitely. With just a couple doublings of our market cap we would be looking at 101 full time developer and marketer positions working to grow the whole ecosystem.
Obstacle: Promises, Promises We had the solution to all our funding problems and a path to ever-accelerating growth right there within our grasp - and couldn't implement it for BitShares X! Its Social Consensus and ownership distribution had already been defined. No Dilution!
You Promised! Remember a few posts back when I said that allocating zero shares for development and giving it all to PTS and AGS holders (50/50/0) had been a mistake? Well that mistake had come home to roost. BitShares X was boxed into a corner. Bound by the same suicide pact as Bitcoin and most other chains - no way to fund developers and marketers! Rats.
Pivot: That's ok. We'll just apply that lesson learned to all future DACs we develop. MUSIC and PLAY had already spun off to their own independent developers, and ME had been merged into BitShares X, but we still had VOTE and DNS on the launch pads. We would build them to be self-funding DACs - and they could pick up the development and marketing torch for the whole ecosystem.
Result: Bytemaster turned his attention to VOTE and DNS. These had to get up and operational and generating funds to pay salaries by the end of the year. We were about out of railroad track and had to get them up to 88 miles per hour in a hurry!
Obstacle: Fratricide! There's just one problem. Every new DAC we build has to be the best we can build - using all the past lessons learned - or some competitor will seize the opportunity to do it for us! VOTE would need its own stable BitAsset currency. To produce that it would need a full-scale decentralized exchange. It would need its own name registration system. It would need its own network effect and would be leveraging every poll, petition, and election registration to build it's own huge base of
provably unique users. It would need to become a SuperDAC, able to compete on all possible fronts for all important market depth and network effect. And BitShares X would inevitably be in its cross-hairs! Most importantly, BitShares VOTE would be self-funding - able to recycle a few percent of its growth every year into paying developers and marketeers. We were creating our own BitShares X killer.
Does anyone know where the love of God goes
When the waves turn the minutes to hours?
-- Gordon Lightfoot, The Wreck of the Edmund Fitzgerald.
We had to go back and explain this to the BitShares community. It wasn't pretty. We explained that as long as we were building new DACs we would keep learning and applying those lessons to each new DAC. And each new DAC would want to have its own BitAssets, domain names, and network effect. Each would be forced to clone all its predecessors and fight for dominance over all our previous efforts. If we tried to play nice and keep features separate, some outside competitor would come along and combine everything into a SuperDAC. We couldn't leave that option on the table for them. BitShares X would have to be upgraded, or face eventual extinction. There was wailing and gnashing of teeth.
Result: We merged all our DACs into one SuperDAC called simply
BitShares. For some, this was the last straw and they jumped ship. But for those who patiently understood the reasons and the vision, the future is incredibly bright.
They now own shares in a self-funding, hyper-competitive SuperDAC.
...and it will exclusively get the benefit of all our future innovations!
What good is a SuperDAC? Why, that's the subject of Part 9!
(To be continued...)
