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January 27, 2014, 05:32:04 AM |
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This is a very important discussion and I hope a lot of you will chime in on this. While it's great that there are all these new cryptocurrencies coming out, the bottom line is the market is getting saturated with them and many are doomed to die out before they ever reach even the success that bitcoin has (and believe it or not, even bitcoin's place in the world economy is far from guaranteed at this point in time.)
It seems to me that for any of these cryptocurrencies to last, they need to meet a few basic requirements:
1.) There must be sufficient active miners in order for the currency to be generated, for transactions to be processed in a timely fashion, and for security.
2.) People other than miners need to begin to take an interest in the currency, and want to acquire and use it.
3.) People must eventually develop enough faith in the currency to be willing to hold it in their wallets for extended periods of time, without being afraid that it will either collapse or drop dramatically in value with little or no warning.
4.) People must begin to use the currency like an actual currency, and not merely as an investment vehicle or hobby.
The problem, as I see it, is that with most of these currencies, the vast majority of interaction that is taking place is simply between miners who generate the coins, then sell or trade them, and speculative investors who are much like the people who buy penny stocks. Without real use, these speculative investors will control and ultimately destroy the currency before it gets off the ground.
What we as a community need to do, is to fuel adoption of these currencies to the point where they are able to fulfill all or most of the roles that our current real-world government-backed currencies currently do.
Here are some ways that we could do just that:
-Create websites and online communities where real transactions occur that make use (ideally exclusive use) of cryptocurrency. I'm not talking about a website where miners can sell their mooncoins to investors or hobbyists. I'm talking about sites where, for example, freelance workers advertise their services and will accept payment in cryptocurrency. There are a lot of websites where freelance writers, IT people, project managers, etc can connect with employers and "bid" on freelance projects. There are sites like Fiverr where people post small jobs they will complete for $5. Or what about an auction site where items are listed and sold in terms of cryptocurrency? What about a site like Craigslist but again, the terms of the site call for all transactions to be negotiated in terms of cryptocurrency?
-Create ways for people to easily trade real world currencies for cryptocurrencies, and vice versa. Currently, the few services that facilitate this are not very developed in my opinion, and involve a lot of risk, and only serve one or a small handful of the most well-established cryptocurrencies. What if someone created a website, or even a local business, that functioned much like those places at airports and in major cities where you can trade currencies (like USD for Yen if you are about to travel for Japan)? Particularly for non-IT savvy people who are vaguely interested in all this buzz about cryptocurrencies, the whole system can be very complex and seem scary and risky. We are missing out on a big user base by not making it easier for them to get involved.
-Which brings me to the next point - we need a really good, approachable, easy-to-understand guide that explains cryptocurrencies to help new people get started. I am in IT and even I had trouble understanding how these things worked when I first started hearing about them and trying to look into it.
Everyone mining or investing in these currencies has a vested interest in helping adoption efforts to ensure that they survive and raise in value. What other ideas do you have? Let's get on this!
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