Yup, intrinsically worthless tokens engineered to have better than market risk adjusted, liquidity adjusted real returns compared to real productive investment will always be unstable and fluctuate wildly as they get more popular. This is a direct result of physical limits of production. As people hoard worthless tokens, their price increases and people hoard them even more instead of investing in real businesses with real production capacity. Eventually production capacity drops which means there is less things to buy with all the tokens. Stockpiled tokens chasing few goods means prices will rise (tokens will lose value) potentially suddenly as people try to get rid of them all at the same time before they're completely worthless.
The cycle then repeats.
When savings or financial promises are insufficiently tied to future production or to accumulation of real goods, it's always a ponzi scheme.
I really don't follow the rampant hate for the idea and technology of crypto on HN.
Sure it's diluted and abused (eg: Dogecoin, Pepecash), but so is the grand United States of America (where the majority of trolls seem to fester). Like any money, the worship of it breeds all kinds of terrible, but it can support good works as well.
If it's a technology with promise, as it appears to be, why reject it?
To go a little further, you seem to have the whole idea framed incorrectly. There are base techs, and tokens exists on the networks of those base techs. If a base tech is a currency, then tokens are shares in a business that operates on the respective networks. Through the crypto "realm" these are tradable with the currency of principalities and nations via exchanges. There isn't such a great separation in operation or ideology from what most people consider "real" economics.
The remaining problems seem to me to be limited to the technical, and there has rarely been a situation where people cannot overcome the technical.
Well apple also hoard tons of cash somewhere.Is that any more beneficial for society?Value is imo to big degree subjective and always will be.But your comment was insightful.
What is that NPV that thay are talking about? When I look at http://www.investopedia.com... (or https://en.wikipedia.org/wiki/Net_present_value ) I see following formula:
NPV = sum { C/(1+r)^t } - C0 - where C is future cash inflow and r is discount rate. If r goes to 0 NPV = sum (C) - C0 - that is far from infinity.
>To date all major tokens have either a fixed amount of tokens right away or eventually (e.g., BTC) or a rate of inflation that asymptotically goes to zero (e.g., ETH).
These are both incorrect. BTC has inflation that asymptotically goes to zero. ETH has undefined inflation (the current codebase has constant inflation, but has a "difficulty bomb" that is supposed to force a hard fork that will presumably change the inflation).
EDIT: I think I read the OP incorrectly, I think what they meant was that while the rate of coin issuance in ETH is fixed, the inflation as a % goes to zero, and that due to quantization BTC issuance actually hits zero.
ETH's long-term inflation behavior is undefined because the dev team has shown their willingness to alter the consensus rules whenever they deem it necessary.
So the diagnosis is a problem with external risk free rate of return (caused by inflationary monetary policy) and improper risk premium valuations on the token itself, and the cure is an inflationary monetary policy for the token also?
Feels like the exact kind of logic that led to the aversion to the way current central banks operate mentioned by the author early in the piece.
[+] [-] BenoitEssiambre|8 years ago|reply
[+] [-] 52-6F-62|8 years ago|reply
Sure it's diluted and abused (eg: Dogecoin, Pepecash), but so is the grand United States of America (where the majority of trolls seem to fester). Like any money, the worship of it breeds all kinds of terrible, but it can support good works as well.
If it's a technology with promise, as it appears to be, why reject it?
To go a little further, you seem to have the whole idea framed incorrectly. There are base techs, and tokens exists on the networks of those base techs. If a base tech is a currency, then tokens are shares in a business that operates on the respective networks. Through the crypto "realm" these are tradable with the currency of principalities and nations via exchanges. There isn't such a great separation in operation or ideology from what most people consider "real" economics.
The remaining problems seem to me to be limited to the technical, and there has rarely been a situation where people cannot overcome the technical.
Tell the UN, and the thousands of Syrian refugees being fed because of Ethereum that the technology is a ponzi scheme and ultimately worthless: https://www.wired.de/collection/tech/blockchain-fluechtlinge...
edit (another link): https://www.wfp.org/news/news-release/wfp-introduces-innovat...
[+] [-] azm1|8 years ago|reply
[+] [-] just_one_time_|8 years ago|reply
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[+] [-] zby|8 years ago|reply
[+] [-] TD-Linux|8 years ago|reply
These are both incorrect. BTC has inflation that asymptotically goes to zero. ETH has undefined inflation (the current codebase has constant inflation, but has a "difficulty bomb" that is supposed to force a hard fork that will presumably change the inflation).
EDIT: I think I read the OP incorrectly, I think what they meant was that while the rate of coin issuance in ETH is fixed, the inflation as a % goes to zero, and that due to quantization BTC issuance actually hits zero.
[+] [-] nemo1618|8 years ago|reply
[+] [-] Terr_|8 years ago|reply
I think you're confusing "inflation" with "issuing currency".
Inflation and deflation cannot be determined without a measure or prediction of the broader universe of goods and services that are available.
[+] [-] dharma1|8 years ago|reply
https://www.reddit.com/r/ethereum/comments/5izcf5/lets_talk_...
[+] [-] craigkilgo|8 years ago|reply
Feels like the exact kind of logic that led to the aversion to the way current central banks operate mentioned by the author early in the piece.
[+] [-] DennisP|8 years ago|reply
[+] [-] btczeus|8 years ago|reply
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