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> Second, proof-of-work currencies are negative sum Assuming the network doesn't produce external value to the people transacting on it (for example, lower tra

> Second, proof-of-work currencies are negative sum Assuming the network doesn't produce external value to the people transacting on it (for example, lower transaction fees than alternatives, lower cost to enforce contracts, lower spread trading equities or currencies etc).

jonny_eh 4y ago
> Assuming the network doesn't produce external value They don't, definitely nowhere near the amount currently invested.
- thebean11 4y ago
  Sure, the point is there's a difference between: "this system is currently costing more than it is producing" vs "this system, by definition, is negative sum" The first is a comment on the current state of the thing, the second is an immutable statement about the thing's nature, which in this case is false.
arcticbull 4y ago
> Assuming the network doesn't produce external value to the people transacting on it (for example, lower transaction fees than alternatives, lower cost to enforce contracts, lower spread trading equities or currencies etc). The hypothetical value generated accrues to those who hold equity in the miners or network operators (stakers in a PoS system) - not the tokens themselves. If Starbucks pre-sold coffee as tokens, the fact that Starbucks is selling more or less coffee means nothing for the value of the token.
- thebean11 4y ago
  I'm talking about value created for users of the network, not token holders miners or stakers. Let's say I use the network to send $5k to a relative in another country and this transaction costs me $1. If I otherwise would have paid $5, then $4 of value is created external to the network itself.
  - deleted 4y ago
    [deleted]
  - arcticbull 4y ago
    The way I'm looking at it: if I save money moving dollars using Wise instead of PayPal, that doesn't change the value of a dollar. So why would saving money moving dollars using ETH instead of Wise change the value of either ETH or USD? The value doesn't accrue to the token holder in any case. Am I missing something?
    - thebean11 4y ago
      To some extent it does. The person moving money is paying transaction fee in ETH creating demand for ETH. Additionally, a part of that transaction fee is burned (permanently deleted) creating a deflationary effect on all other ETH.
      - arcticbull 4y ago
        I can see that argument, yeah. Curious to see it quantified, but I concede.
        thebean11 4y ago
        The ETH burning is easy to quantify: https://watchtheburn.com/ https://watchtheburn.com/ Currently there are inflationary block rewards so the net may still be ETH creation (depends on the day). That will change after the merge when inflationary rewards are removed though.
PaulHoule 4y ago
but isn't it really higher transactions fees, algorithmically enforced 'contracts' that get exploited by hackers, ... ?
- thebean11 4y ago
  Yeah that's true in practice but I think a lot of new tech was in the same boat. The first cars were much worse than horses to use an old example

jonny_eh 4y ago

> Assuming the network doesn't produce external value They don't, definitely nowhere near the amount currently invested.

thebean11 4y ago
Sure, the point is there's a difference between: "this system is currently costing more than it is producing" vs "this system, by definition, is negative sum" The first is a comment on the current state of the thing, the second is an immutable statement about the thing's nature, which in this case is false.

arcticbull 4y ago

> Assuming the network doesn't produce external value to the people transacting on it (for example, lower transaction fees than alternatives, lower cost to enforce contracts, lower spread trading equities or currencies etc). The hypothetical value generated accrues to those who hold equity in the miners or network operators (stakers in a PoS system) - not the tokens themselves. If Starbucks pre-sold coffee as tokens, the fact that Starbucks is selling more or less coffee means nothing for the value of the token.

thebean11 4y ago
I'm talking about value created for users of the network, not token holders miners or stakers. Let's say I use the network to send $5k to a relative in another country and this transaction costs me $1. If I otherwise would have paid $5, then $4 of value is created external to the network itself.
- deleted 4y ago
  [deleted]
- arcticbull 4y ago
  The way I'm looking at it: if I save money moving dollars using Wise instead of PayPal, that doesn't change the value of a dollar. So why would saving money moving dollars using ETH instead of Wise change the value of either ETH or USD? The value doesn't accrue to the token holder in any case. Am I missing something?
  - thebean11 4y ago
    To some extent it does. The person moving money is paying transaction fee in ETH creating demand for ETH. Additionally, a part of that transaction fee is burned (permanently deleted) creating a deflationary effect on all other ETH.
    - arcticbull 4y ago
      I can see that argument, yeah. Curious to see it quantified, but I concede.
      - thebean11 4y ago
        The ETH burning is easy to quantify: https://watchtheburn.com/ https://watchtheburn.com/ Currently there are inflationary block rewards so the net may still be ETH creation (depends on the day). That will change after the merge when inflationary rewards are removed though.

PaulHoule 4y ago

but isn't it really higher transactions fees, algorithmically enforced 'contracts' that get exploited by hackers, ... ?

thebean11 4y ago
Yeah that's true in practice but I think a lot of new tech was in the same boat. The first cars were much worse than horses to use an old example