I have spent quite a bit of time thinking about this issue the past couple weeks, and have reached a point where I have cast my vote in favor of becoming open-source. It is somewhat earlier than I expected to vote for this motion.
We are in the beginning stages of seeing a widespread movement towards stable-value digital currencies. 2015 will introduce many new projects aiming to replicate what Nu has accomplished. As this global discussion begins to form, discussion will expand beyond simple project comparisons (such as NuBits vs. BitUSD) to structural comparisons based on the pioneers of specific approaches (The âNu modelâ vs. âThe Ethereum modelâ vs. âThe BitShares modelâ).
I believe our competitive advantage will actually be reinforced by new projects imitating/forking our Nu model. As many of you may have noticed, there has been a recent increase in the amount of criticism of our project. This is the natural precursor to intense competition in a growing, lucrative niche.
By open-sourcing, we can build legitimacy for our model if other groups create Nu forks. If the âNu modelâ had ten forks a year from now, and the âBitShares modelâ had three forks, there is a strong chance that public consensus will be more positive to our approach. Previous concerns I had â namely, that these forks might not succeed in maintaining a peg â may not be as serious as I thought either. There are two possible outcomes that will occur:
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The âNu Modelâ succeeds in that the majority of forks maintain price stability. The outcome is that our design is validated and Nu is seen as a brilliant design.
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The âNu Modelâ fails in that the majority of forks fail to maintain price stability. As long as NuBits are still $1.00 US, the outcome is that the NuBits project is validated, as it is clear that it requires a very talented team to manage peg stability operations successfully. If this happened, NuBits has a sustainable competitive advantage that is inimitable.
Also, every fork of Nu will either be open-source (meaning Nu can simply incorporate any additional features developed for other projects), or the project will be closed-source (and will suffer from the same criticisms we have heard so far). In both scenarios Nu has an advantage.
There are still downsides of course. It is almost certain that some groups will fork the Nu code, hold 99.999% of the shares for themselves (even if they publicly claim to have sold them to many users, there is no way to verify numbers), and achieve a massive market capitalization that might surpass NuShares in the short-term before the price collapses. This problem really isnât different from what Bitcoin faced in April 2013 with identical-clones being released and dumped.
I think Iâve come up with a solution to this problem. This risk can be mitigated by adopting a set of standards and best practices around using the Nu model, such as committing to selling shares to a minimum number of users to ensure sufficient decentralization. A list of best practices would protect the Nu brand from reputational risk when three budding entrepreneurs create a Nu clone, distribute only 0.01% of shares, achieve a very high market cap, and then have their peg fail. This list of best practices will also reinforce our projectâs position as a source of expertise and knowledge in the field of stable-value digital currencies. We want people to say âProject Xâs stable-coin is far riskier because they have not demonstrated compliance with four of the ten best practices that are being used by the successful pioneering Nu project.â
In short, I think that open-sourcing will not only help quicken development of Nu, but it will also provide us with a significant advantage in structuring the debate in 2015 to not be âproject vs. projectâ, but instead âdesign vs. designâ. We want people talking about the âNu modelâ of splitting currency and equity into fungible units, just as people currently associate âBitcoinâ with blockchain technology. The solution isnât to hold every other car on the race track at the start line until we get far enough ahead; the solution is to open up the technology so that our car can go even faster. Open-sourcing will speed development of not only our project, but the public acceptance and validity of the Nu design versus other designs.
