BitDAO.txt

've finally got a good idea how to do a "community currency" kind of
thing we were discussion a year ago :)

As you probably know, nowadays people talk about so-called
"decentralized autonomous corporations" (and "decentralized
applications").

So decentralized corporation is how it might work, i.e. owners can
vote on various issues and plan actions together.

The second question is what this corporation will do. That's what we
had hard time defining before.

I think the problem was that we wanted to tie it to colored coins in
general, which is not quite possible. Instead we can think of it as of
one of colored coins applications, i.e. one of things we can do using
colored coins.

The most straightforward thing a decentralized corporation built
around a currency can do is investing.

Let's go through workflow:

1. Issuance: To get this new currency, let's call it CDAC, people will
color their bitcoins.
They don't need to send them anywhere, just create a new genesis
transaction using specialized software. As a result, they have same
amount of bitcoins as before, but colored.

This is a major difference from mastercoin, counterparty, etc.: it is
tightly coupled with Bitcoin, and in the worst case people will just
convert it back to Bitcoin.
We want CDAC to be valued above Bitcoin, and for this reason we need
scarcity. Issuance interval should be limited to a month or so.

2. The goal of corporation is to make CDAC as valuable as possible.

3. To do this, people need to invest CDAC into projects which either
do something with CDAC, or pay dividends with CDAC.

4. We need some voting layer for decision-making.

5. Fundraising can be done via Assurance contracts:
   http://en.wikipedia.org/wiki/Assurance_contract
   https://en.bitcoin.it/wiki/Contracts#Example_3:_Assurance_contracts
which will, basically, let people to pledge CDAC for specific investments.

6. Projects which are financed this way will either do something with
CDAC to increase its value, or pay dividends for those who invested,
or something like that.

We need to do something to people who do not invest their CDAC coins
and just wait until they appreciate, perhaps something like demurrage
will help?

Otherwise, implementation is fairly straightforward, we do not need
particularly complex features.

At this stage it is just an idea, of course I want to do normal
colored coins first.
Implementation of 'corporation' features will take a while.