The Origin of BitShares - Part 11 -
and rely on space suits to catch their next ride (when it arrives).
Yeah, it was like that. We would simply hold our breath until Starship BitShares entered orbit to pick us up!
Part of BitShares history is the lessons learned and growing pains of startups. Picking up where The Origin of BitShares left off, here is one of the most unusual startup predicaments you'll ever hear about. Our intrepid development team had all quit their jobs with Invictus Innovations and gone to work directly for the BitShares Decentralized Autonomous Company (DAC) - a piece of open source software that they had just released into the wild.
Invictus had been funded by donations of PTS and BTC. Enough to last us two years! That is, until the 2014 cryptorecession dropped the value of those donations cutting our two-year runway in half. On top of that, we were taxed on the value when we received the donations, not the value when we spent them. On top of that, our accountants explained that anything we didn't spend the year we got it would count as, eew, profit and about 1/3 of that would have to be given to the government. We were forced into "use it or lose it" mode by the end of 2014. We optimized our burn rate to run out of fuel on New Year's Eve...
Simply put: American tax law requires that all fuel in the first stage be burned by the end of the year or 35% of any remaining fuel will be seized and unavailable to achieve orbit.
So we tuned our burn rate to meet those entirely artificial, but very real, fiscal engineering constraints.
No worries. We had designed BitShares to pay for its own developers after our donations ran out. Instead of printing bitcoins to pay miners, a limited number BitShares (if authorized by the BitShareholders) were automagically printed by the blockchain to pay developers. People readily accepted this small dilution when Bitcoin did it, so they would love substituting a much smaller dilution where new coins spent on real work instead of just wasted electricity! ...or not.
Before long, inevitable appreciation of those new coins would mean a growing budget to build out and promote the rest of the system and all the never ending side chains our supporters were expecting. We were really proud of that idea!
Egad, Brain, Brilliant!
So, all we had to do is get a big running start by the end of the year, leap out into very cold deep space, and then hold our breath until BitShares could start generating forward thrust on its own! Nothing could go wrong!
At BitShares market prices in early 2015, a BitShares salary was about a quarter of a former Invictus paycheck. We would be relying on employee savings from that year-end burst of spending to carry us to a point where the BitShares worker pay would reach the value of a full salary. This was a significant risk for our engineers who would have to make rent payments and buy pizzas from their personal savings for an unknown number of months during a flight phase I'll call "token thrust". Once we grew the market cap by 4x to a full paycheck the crisis would be over and we could then grow the ecosystem at an ever accelerating rate forever.
No problem. After all, how long a wait could that possibly be? ...
Coming up Next: Part 12 - Never Let Them See You Sweat