Ok, so this is just a few thoughts I’ve been mulling over with some questions to see if I’ve gone way off course.
We know that mining increases the value of crypto networks indirectly. Mining provides security and that creates some of the value in the mined coins. However, miners respond to market prices. They switch coins depending on what the market wants, so it can’t be said that they have a direct causal effect on the price. Instead, it seems that miners respond to demand (speculation and utility) rather than creating it.
Monetising spare resources seems to create a different paradigm to mining (possibly unique?). New farmers add real and direct value to the network. If more come on board to compete for the SAFEcoins then the utility demand ought to go up as the cost of using the network falls - if users are aware of it, trust it and the market is rational.
Is this just a standard economy-of-scale paradigm, or does the utility demand for SAFEcoin turn it into more of a positive feedback spiral, creating and sustaining its own inertia with a direct causal relationship between farming levels and price?
I’ve heard it said that the killer App for bitcoin has ended up being speculation and Alt coins. I think that’s largely true. We see very little utility in crypto, but we see huge amounts of speculation and hopeful ‘hodling’. Subsequently we see crazy volatility. Speculators see a chance for profit, then they take that profit and so it yo-yo’s around with people’s optimism and pessimism about the short-term direction. With very little utility demand there is a very low volume base level for the swings to drop back down to when the traders lose enthusiasm and exit their positions. The only thing more important than volume and market cap for price stability is utility, if you crack that nut price can maintain an upward trajectory.
Bitcoin has taken a very long time to build up a utility base and it is still very volatile because most are not holding their coins for utility. I don’t believe BTC will be nearly as useful as a functioning SAFEcoin. There are a lot more reasons to need your SAFEcoins than BTC, and for things you want to do on SAFE network you will HAVE to use your SAFEcoins. I don’t know about you, but I don’t really shop with BTC because I’d rather hold it and it costs me bank charges to buy it. I hold it because it goes up in value and I shop with my fiat because I want to spend the shit that’s going down in value. SAFEcoin is a totally different proposition isn’t it? If you HAVE to use it to do the things you want to do online (if you want to be ‘free’ and not monitored, censored or restricted and regulated, or just store data more securely or cheaply), then surely the majority of the demand will be utility? Most average home-user farmers should end up using their coins rather than selling them shouldn’t they? It is a hassle to go through the wheels of crypto to sell a few quids worth of coins. Most likely a lot of the exchange demand will come from small buyers in places like the US where they don’t get unlimited broadband in many places and therefore might be less inclined to farm.
So yeah, basically, how closely do you think price and farming rates will correlate and why? How do you see the utility/speculation ‘pie chart’ developing? Could there be so much speculation that even a big utility base is dwarfed by millions of hopeful holders and we’ll might still have huge volatility for a long time post-launch?