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Because a protocol with a finite number of coins has an inherent value to it. But not value that can be captured by the creator of the protocol. Let's go back
by harryh 9y ago
Because a protocol with a finite number of coins has an inherent value to it.
But not value that can be captured by the creator of the protocol. Let's go back to cloud storage. Sellers of storage sell 1GB-Month for 1 token (or whatever). Buyers of storage eventually run out of tokens because they've given them all to sellers. So they have to purchase the tokens back from sellers for dollars. How much will sellers charge? The cost of storage (plus whatever profit they can get away with).
At that point buyers of storage are paying exactly what they'd pay for storage if the token system didn't exist. It's just this goofy middle layer of scrip. There's no magical extra money that the protocol creator can siphon off.
Step back and look at the big picture. The only way for a protocol creator to make money is for either sellers of storage to charge less than they otherwise would or for buyers of storage to pay more. Why would either of those two groups ever want to do that?
- DiNovi 9y ago...uhh, or people could rent storage and get paid a token fee, thus generating revenue
- harryh 9y agoYes, sellers (or renters) of storage can make money. Sure. I'm saying that the creator of the protocol won't.
- cstejerean 9y agoThe creator of the protocol makes money because they issue 20% of all tokens to themselves, and then wait until later to sell it (once the token is in high demand).
- harryh 9y agoI don't see how that works either. People know that 20% is out there just waiting to move the market so that has to have an impact on spot prices which either means that buyers or sellers of storage (or both) are getting a bad deal. Again, why would they do this?
- mcbits 9y agoIf a distributed cloud storage protocol became as ubiquitous as e-mail, the difference would be that buyers could buy tokens from anyone and not concern themselves with who actually stores their data. Also, anyone with spare storage capacity could join the network to squeeze a small amount of value from it until they have something more productive to do with it. That's also how proof-of-work systems should have worked with surplus compute cycles, except ... ASICs. I basically consider Bitcoin broken because of this. As to how the protocol creator makes money, they can sell storage like everyone else, but creating a protocol doesn't require the same initial capital as starting a whole cloud storage company.
- Aweorih 9y agoI think its rather like the owner gives the storage to people for some money and from thereon it's your storage. You can keep and use it or sell it to whatever value you (and probably the market) thinks it is worth for.