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> Assuming the network doesn't produce external value to the people transacting on it (for example, lower transaction fees than alternatives, lower cost to enfo
by arcticbull 5y 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 5y agoI'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 5y ago[deleted]
- arcticbull 5y agoThe 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 5y agoTo 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 5y agoI can see that argument, yeah. Curious to see it quantified, but I concede.
- thebean11 5y agoThe 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.