After August 7 we'll reach more than 50% distributed coins and will start a new phase of our distribution.

Up until now, we were distributing only to holders of BTC and Bytes, i.e. we were rewarding holding.  Now we are adding actual users into the mix, i.e. we are going to reward transactions.

To get you an idea of how we are going to do it, we are going to partner with several categories of companies:
- merchants
- payment processors
- "Bitcoin debit card" companies
and offer 10% cashback, paid in Bytes, for all qualifying purchases (no matter how the purchases are paid).  The cashback will be funded from the undistributed pool.  For example, a customer who bought for $100 receives $10 cashback in Bytes, paid to his Byteball address, at the current exchange rate.  For merchants, this is something that would drive sales and they would put effort into promoting the offer.  In competitive industries, a 10% cashback is a very powerful tool to lure customers.  For customers, this is a 10% discount (which matters a lot in some industries).  For Byteball, it is new users who will have to get involved into the system in order to receive the cashback.

A few companies have already expressed interest (not disclosing the names while it is a work in progress).

A few extensions of this offer:
- 20% cashback if the purchase is paid in bytes or blackbytes.  This would incentivize merchants to start accepting bytes and blackbytes, and the infrastructure will stay after the distribution ends.
- merchants can offer additional cashback to their customers.  Merchants fund it themselves by buying bytes from the market, and for every 1% funded by the merchant we add 1% more from the undistributed pool.

If you see similarity with existing loyalty points schemes, it is similar indeed.

At a minimum, we receive many new users who learn about Byteball from their merchants, plus working payment integrations.  And the users are not just crypto fans, it may be their first crypto coin for many users.  With the most user friendly wallet in the industry, we are in the best position to expand beyond the crypto village.

We can continue adding 10-20% to existing byte balances to incentivize keeping the received bytes before more infrastructure is built, rather than cashing out immediately.  

Two negative sides:
- the scheme is less transparent than plain adding on top of existing balances, and some share of fraud is inevitable.  Merchants might try to deceive us to receive coins for themselves by reporting nonexistent sales or selling to themselves.  This is mitigated by good choice of trustworthy merchants and our ability to disconnect any merchant at any time on suspicion of fraud.  Their customers can also try to find ways to abuse the system, again we'll require the merchants to prevent that by excluding some types of purchases, monitoring customers, enforcing caps, etc.  Additionally, if the merchant funds part of the cashback himself, he has skin in the game to counter the customer fraud.
- these new users are not holders for the most part, they are more likely to sell.  Not a big problem, the point is they already know about Byteball and it's easy for them to get back.  The new users are new to crypto, many of them won't use exchanges, and somebody will have to create new easier-to-use channels to fiat, which is positive for liquidity.  Also, 10%-20% monthly distributions discourage fast selling while the distribution is ongoing.  And lastly, the merchants who fund 50% of the cashback would partially balance the markets by buying coins.

On balance, I'm sure that these negatives are tolerable when we are going to achieve a vast expansion of our user base and acceptance at merchants.

For the current distribution round, nothing changes.

For the next distribution on September 6, we are changing the ratios in favor of Byte holders and slowing down the distribution to have more time to build out the cashback program:

BTC to Bytes: every 160 BTC gives you 1 GB from the distribution (or 0.00625 GB per BTC).
Bytes to Bytes: every 10 GB of existing balance gives you additional 1 GB from the distribution (in other words, +10% to existing balances).

Similar ratios for blackbytes.

For those who receive their first bytes from cashbacks, Sep 6 will be the first distribution when they receive +10%.

I'll make announcements as we add merchants in the cashback program.