4 ms·

Ok, 90% of these "useful mining" projects get the economics backwards. Paying coins to miners does not generate demand for the coin! The miners (in this case, t

Ok, 90% of these "useful mining" projects get the economics backwards. Paying coins to miners does not generate demand for the coin! The miners (in this case, tor nodes) will sell and push the price to the ground. Who will buy the coins? Other altcoin enthusiasts who also don't get the economics? (And yes, this argument theoretically applies to Bitcoin, but you have to use bitcoins to pay the transaction fee to use the bitcoin network, which has value because of its network effect for use in value transfer).

oleganza 12y ago
Your last statement is circular. "Network effect in value transfer" exists only when there is "network effect in seeing value in BTC units". You can't transfer value before something has value. Also, act of transferring or fees does not generate value either. Bitcoin units are rare collectibles. Like gold coins or USD paper bills. They are scarce, hard to counterfeit and they are portable and fungible. They are easy to collect. Once you have a club of people who collect them and speculatively value them, this club can grow (or shrink). If such token is superior than others, then some people will likely sell their inferior tokens in order to acquire superior ones. This way the club grows. Plus, there is value in liquidity. People generally want to store wealth in something "secure" which means not only secure in terms of storage (personal vault, swiss bank account etc.), but also in terms of purchasing power. The more and quicker I can buy myself something I suddenly need, the more secure my wealth is. E.g. if my computer breaks and I need a new one, my cash will help me buy a new one better than a collection of postal stamps. So people will generally prefer to keep savings in money that is more marketable, i.e. valued by more people. This means that once a superior collectible starts to grow, it will drive the value of inferior collectibles down to zero. (However, if there are currency controls and banking regulation in your country, then you might be stuck with a less marketable local currency.) Nick Szabo explains how money evolved: http://szabo.best.vwh.net/shell.html http://szabo.best.vwh.net/shell.html I explained why we all want one universal money: http://blog.oleganza.com/post/54121516413/the-universe-wants-one-money http://blog.oleganza.com/post/54121516413/the-universe-wants...

oleganza 12y ago

Your last statement is circular. "Network effect in value transfer" exists only when there is "network effect in seeing value in BTC units". You can't transfer value before something has value. Also, act of transferring or fees does not generate value either. Bitcoin units are rare collectibles. Like gold coins or USD paper bills. They are scarce, hard to counterfeit and they are portable and fungible. They are easy to collect. Once you have a club of people who collect them and speculatively value them, this club can grow (or shrink). If such token is superior than others, then some people will likely sell their inferior tokens in order to acquire superior ones. This way the club grows. Plus, there is value in liquidity. People generally want to store wealth in something "secure" which means not only secure in terms of storage (personal vault, swiss bank account etc.), but also in terms of purchasing power. The more and quicker I can buy myself something I suddenly need, the more secure my wealth is. E.g. if my computer breaks and I need a new one, my cash will help me buy a new one better than a collection of postal stamps. So people will generally prefer to keep savings in money that is more marketable, i.e. valued by more people. This means that once a superior collectible starts to grow, it will drive the value of inferior collectibles down to zero. (However, if there are currency controls and banking regulation in your country, then you might be stuck with a less marketable local currency.) Nick Szabo explains how money evolved: http://szabo.best.vwh.net/shell.html http://szabo.best.vwh.net/shell.html I explained why we all want one universal money: http://blog.oleganza.com/post/54121516413/the-universe-wants-one-money http://blog.oleganza.com/post/54121516413/the-universe-wants...