Gold, Pot, and Fertilizer, oh my!

[jacknimble]

So can anyone explain how it is economically feasible for anyone to "back" coins with these products? I don't get it. You create an altcoin out of thin air, then you agree to hand over your pot, your gold, or whatever, to anyone who mines one? What is in it for the person holding the gold or pot? It looks like they just agreed to hand over their valuable real-world assets for free. It just looks like hot-potato to me.

I mine 1 Pot coin. Jim has 1g of pot. He gives me the gram of pot. He takes the Pot coin, hands it to Bill for 1g of pot. Now Jim got his gram of pot back, and Bill is down 1 gram of pot. etc. etc. etc.

In the end of the story, isn't the only person who benefits the guy who did nothing, got a pot coin, and convinced some sucker to give him a free gram of pot for it? Everyone else gains nothing, and the guy at the end of the line last one holding the coin is the loser. wtf?


PS. what happened to the "Hayek" coin backed by gold anyway?

[canth]

So can anyone explain how it is economically feasible for anyone to "back" coins with these products? I don't get it. You create an altcoin out of thin air, then you agree to hand over your pot, your gold, or whatever, to anyone who mines one? What is in it for the person holding the gold or pot? It looks like they just agreed to hand over their valuable real-world assets for free. It just looks like hot-potato to me.

I mine 1 Pot coin. Jim has 1g of pot. He gives me the gram of pot. He takes the Pot coin, hands it to Bill for 1g of pot. Now Jim got his gram of pot back, and Bill is down 1 gram of pot. etc. etc. etc.

In the end of the story, isn't the only person who benefits the guy who did nothing, got a pot coin, and convinced some sucker to give him a free gram of pot for it? Everyone else gains nothing, and the guy at the end of the line last one holding the coin is the loser. wtf?


PS. what happened to the "Hayek" coin backed by gold anyway?

There is little point in tying a token (digital asset, coin, etc) to a physical good, unless it is backed by a real world contract with a known reputable entity. You're not buying decentralization - you're buying the reputation of the backer. The benefit here is that the tokens are transferable with relative ease, which doesn't mean jack if you can't redeem them for the underlying asset.

[NewLiberty]

The guy with the pot started with a seed and some sun.
The guy with the coin started with a CPU, code and some energy.

If you have extra of either, you might do a trade, but... why not just use a better coin?

[username18333]

The guy with the pot started with a seed and some sun.
The guy with the coin started with a CPU, code and some energy.

If you have extra of either, you might do a trade, but... why not just use a better coin?

Within the hypothetical, "jacknimble" transferred the ownership of a "coin" (jacknimble), not the "CPU, code and some energy" (NewLiberty) that facilitated its genesis.

[bat26]

It is possible to back a coin with something, unfortunately every single time someone has said they would do it, it has been a scam.

[NewLiberty]

The guy with the pot started with a seed and some sun.
The guy with the coin started with a CPU, code and some energy.

If you have extra of either, you might do a trade, but... why not just use a better coin?

Within the hypothetical, "jacknimble" transferred the ownership of a "coin" (jacknimble), not the "CPU, code and some energy" (NewLiberty) that facilitated its genesis.

Right, the sun water earth and seeds were not transferred either.
They're trading the produce, not the means of production.

[username18333]

Right, the sun water earth and seeds were not transferred either.
They're trading the produce, not the means of production.

Additionally, a digital token does not consume "[its] means of production" (NewLiberty) insofar as an organic plant does.

[NewLiberty]

Right, the sun water earth and seeds were not transferred either.
They're trading the produce, not the means of production.

Additionally, a digital token does not consume "[its] means of production" (NewLiberty) insofar as an organic plant does.

Maybe you can help me understand what you are suggesting?  I don't see the difference your distinction makes, (why is this important?).

The electricity is consumed, the sunk cost of the hardware is depreciated over time as it is used, heat is a byproduct.  
The water and sunlight is consumed, land is depreciated, new seeds may be produced, fiber is a byproduct.

No matter and energy is created or destroyed, though a modicum is transformed, in each case.

Both cases the means of production are not consumed, both require some amount of entropy/time to pass.  The process is similar enough that the distinction is not so meaningful.

[username18333]

I don't see the difference your distinction makes, (why is this important?).

The electricity is consumed, the sunk cost of the hardware is depreciated over time as it is used, heat is a byproduct.  
The water and sunlight is consumed, land is depreciated, new seeds may be produced, fiber is a byproduct.

No matter and energy is created or destroyed, though a modicum is transformed, in each case.

Both cases the means of production are not consumed, both require some amount of entropy/time to pass.  The process is similar enough that the distinction is not so meaningful.

The guy with the pot started with a seed and some sun.
The guy with the coin started with a CPU, code and some energy.

If you have extra of either, you might do a trade, but... why not just use a better coin?

The "seed and some sun[light]" (NewLiberty) is "consumed" (NewLiberty); however, the "code" (NewLiberty) never is, and the "CPU" (NewLiberty) but marginally so.

[NewLiberty]

I don't see the difference your distinction makes, (why is this important?).

The electricity is consumed, the sunk cost of the hardware is depreciated over time as it is used, heat is a byproduct.  
The water and sunlight is consumed, land is depreciated, new seeds may be produced, fiber is a byproduct.

No matter and energy is created or destroyed, though a modicum is transformed, in each case.

Both cases the means of production are not consumed, both require some amount of entropy/time to pass.  The process is similar enough that the distinction is not so meaningful.

The guy with the pot started with a seed and some sun.
The guy with the coin started with a CPU, code and some energy.

If you have extra of either, you might do a trade, but... why not just use a better coin?

The "seed and some sun[light]" (NewLiberty) is "consumed" (NewLiberty); however, the "code" (NewLiberty) never is, and the "CPU" (NewLiberty) but marginally so.

Right, we already agreed on this.  The electricity for generating the coin is also "consumed".
Both are exchanging product and not the means of production (they aren't trading hashing farms for... well... hash farms).

We agree that they are distinct things being exchanged with distinct processes to create them, what I am looking for is why this distinction matters to you or anyone?
My guess is that you were trying to establish that in a cost-basis theory of market exchange that any amount of one for the other would not be "fair"... or something else? 

[NewLiberty]

To get to an answer to OP's question about why any of these "backed" alt coins could work, most don't work simply because it is already easier to do this within Bitcoin.  For example if someone had some goods coming up for sale or working on a crop or had a vault of gold and needed a sort of futures market for this, or a way to manage warehouse receipts, or in order to smooth our the income stream rather than having it all come at once at harvest time, or to make the gold tradable, that someone could create a counterparty asset which would be redeemable for the goods when they are produced.

There are other ways to do it also.
If sidechains materialize, that may become even more easy.

[username18333]

My guess is that you were trying to establish that in a cost-basis theory of market exchange that any amount of one for the other would not be "fair"... or something else?  

The net losses of the foremost fellow (of the OP's hypothetical) were less than those of all others (as iterated above); therefore, the jist of the OP's conjecture (see the citation below) is, to a degree, accurate. (Note: to clarify this position, in departing with the capital that "foremost fellow" valued in excess of what he forsook to acquire the capital, his successor [in the hypothetical series of exchanges] suffered more in the way of economic loss than did the "foremost fellow," for his gains matched his losses.)

In the end of the story, isn't the only person who benefits the guy who did nothing, got a pot coin, and convinced some sucker to give him a free gram of pot for it?

[username18333]

For example...

(Your [assorted] hypotheticals are not that singular hypothetical posed in the OP, and is, both therefore and because the matter is, theretofore, unresolved, off-topic.)

[BitcoinNational]

There is little point in tying a token (digital asset, coin, etc) to a physical good, unless it is backed by a real world contract with a known reputable entity. You're not buying decentralization - you're buying the reputation of the backer.

nailed it.

debate-able terms

"decentralization"  sort of but you can create a "distributed" network of contracted backers ... think trade union or association.

[jacknimble]

So...nobody has any clue then? lolz.

Ok, let me try again. I mean look, it takes a lot of money to grow pot, in fact. Theoretically, yes, you get a seed free in your bag, you stick it in the ground and up it grows. But in reality, all the pot farms supplying dispensaries with high quality herb spend a lot of money on electricity, fertilizer, and clones (it's very uneconomical to grow from seeds).

But if this is in doubt, let's use gold. That costs a ton of money to produce or invest in.

The coin miner spends only a few dollars in electricity.

This doesn't matter, because the guy trading gold for the coin can't get that electricity. The coin has no real value. The guy with the gold GAVE it value, by agreeing to hand over X amount of gold for a coin.

My question is, WHY would anyone do this? What is the perceived advantage? What are they trying to accomplish, that could possibly make it worth giving away a bunch of their hard earned gold in return for an easily earned string of code, whose value is, after all, defined only by how much of my gold I decided to hand out for it in the first place?

[username18333]

My question is, WHY would anyone do this?

For (ir-)reason of "the unacknowledged fear of death and punishment" (Konstan).

[...]

Hitler was the archetypal "charismatic leader". He was not a "normal" politician - someone who promises policies like lower taxes and better health care - but a quasi-religious leader who offered almost spiritual goals of redemption and salvation. He was driven forward by a sense of personal destiny he called "providence".

(Colorization mine.)

[Epicurus] regarded the unacknowledged fear of death and punishment as the primary cause of anxiety among human beings, and anxiety in turn as the source of extreme and irrational desires.

(Colorization mine.)

[Purple Wayne]

So can anyone explain how it is economically feasible for anyone to "back" coins with these products? I don't get it. You create an altcoin out of thin air, then you agree to hand over your pot, your gold, or whatever, to anyone who mines one? What is in it for the person holding the gold or pot? It looks like they just agreed to hand over their valuable real-world assets for free. It just looks like hot-potato to me.

It isn't really feasible. People are just trying to capture a niche and do something similar to the old gold standard in order to give their coin some real world wealth. Most of these coins will just be scams or at best wont work very well.

[NewLiberty]

My guess is that you were trying to establish that in a cost-basis theory of market exchange that any amount of one for the other would not be "fair"... or something else?  

The net losses of the foremost fellow (of the OP's hypothetical) were less than those of all others (as iterated above); therefore, the jist of the OP's conjecture (see the citation below) is, to a degree, accurate. (Note: to clarify this position, in departing with the capital that "foremost fellow" valued in excess of what he forsook to acquire the capital, his successor [in the hypothetical series of exchanges] suffered more in the way of economic loss than did the "foremost fellow," for his gains matched his losses.)

In the end of the story, isn't the only person who benefits the guy who did nothing, got a pot coin, and convinced some sucker to give him a free gram of pot for it?

You could have simply said that I had guessed correctly.


For anyone else that might be reading this thread, if you always value things based upon what they cost you, rather than what you may gain by parting with them, you will restrict your opportunities.

[shanem]

Backing coin is a way for the dev to dump the coins or sell their coins at a higher price.
It did attract many buyers when the coin was 'backed' but nowadays people have seen through the scam and stopped buying them.

[solid12345]

I'll speak to this as someone who spent a year in IRC with the developer of Urocoin and one could say "duped" by him, but i'll give it my best to explain the method to the madness.

What Urocoin was meant to do was speed up the process of business transactions. When commodity importers buy Urea or any other commodity, they don't usually just send someone a check for 2 million dollars for a million tons of Urea. Letters of Credit are used and typical a bank in India that represents the Indian government will talk to a bank in China that represents the Urea manufacturers. This letter of credit proves the two parties credit is in good standing and will satisfy the wiring of money between the two entities. This is a long process that can sometimes take months and the industry is rampant with fake letters of credit and fly-by-night commodity dealers who offer to sell you the goods but never deliver.

The idea behind Urocoin was that by "backing" the coins on Urea, you can bypass all this bureaucratic BS and ensure that each coin is redeemable for fertilizer from all the companies that sign to the charter. This would greatly speed up commerce by allowing entities to go on an exchange, purchase Uro like one would do purchasing paper gold on Forex and be able to hold onto it, sell it or swap it for real fertilizer quickly.

This would also allow many farmers and fertilizer companies to bypass middle-men commodity dealers directly. Instead of having to go hunting on Linkedin, Alibaba or wherever for a good rate (yes seriously, million dollar commodity deals are done on Linkedin thru email! Bizarre world), they could go on an exchange, buy Uro and then exchange it for fertilizer from a respectable NIER. Boom, 3-6 months of negotiations and banking red tape avoided.

Another use case for this is by "backing" the coin on Urea, it would act almost as a sort of futures contract so that speculators or farmers who are concerned fertilizer might go up in price next year for example could buy it now at the cheap rate, hold onto it for a year, and when the price of fertilizer goes up, you can exchange it at 1:1 rate hence making a significant profit or acting as insurance for a farmer who was concerned he might not be able to afford it the next growing season.

Finally by backing the coin on Urea, you avoid alot of the extreme volatility of Bitcoin. Yes Urea is volatile too but not as much as Bitcoin and wild price movements generally aren't see day to day like Bitcoin. So it would be a crypto currency that would be very valuable for day to day commerce as well.

Now as to Urocoin being a scam, after a year of knowing Bohan and his quirks and having investigated Green Earth Systems as much as I could, my conclusion about whether it was a scam or not, I do believe the INTENT was there to actually make Uro work. The fact is GES DOES engage in commodity transactions and DOES have access to high net individuals. The CEO did do business in Fiji and met with the President there, they do have offices in Egypt, Hong Kong, Australia, etc., their business partner Vinny Pillay does work at Capricorn investments which is a legit commodities dealer and is verifiable on bloomberg and other websites. Also I can tell you, they DID go to Iran and I can verify the infamous video of the Iranian meeting which everyone was clamoring actually DID exist but for some bizarre reason Bohan would never release it, which I never understood why as it would've increased the credibility of the project. I can also testify Bohan didn't really make any money from the whole thing and actually got into debt with the whole project and he personally paid for supporters plane tickets to go to Hong Kong at Urose. How many scam developers in Bitcoin would do such a thing?

However the "scam" was that while they have connections to make it happen, they didn't have the raw capital I believe to risk giving away a ship filled with 12,500 tons of Urea with a market value of several million dollars to bring the price of Uro up to $300 USD+/-. Hence all the endless arguments for "proof" everyone demanded could never be given as they couldn't afford to get the initial "backing" off the ground. I believe the hope was thru Urose and the opening of the Uroex exchange they could find other ways to bring the price up, the vibe I got from Bohan is they were hoping to find some high roller investors willing to pump the price and once the price is settled then they could start actually trading fertilizer for real. However while some rich individuals DID go to Urose, for whatever reason the deals fell through. It's the classic "need money to make money" problem.

The tragedy of Uro is that it was actually a pretty good idea and if put into practice could've revolutionized the business world. The sad part is it was killed by a combination of GES's greed and shady tactics, but also a mix of venomous vile from the crypto community which is made up of kids and idiots who usually have never interacted in the real world of 2nd and 3rd world business practices which may seem foreign or outright scammy to them but is actually done everyday with billions of dollars changing hands. Yes people there ARE multi-million dollar companies out there that don't even have a website, get over it. The FUD last summer that killed the pump was some of the most bizarre shit i've ever read, accusations of photoshopped people, companies and people that didn't exist, this was all nonsense. So while I still hold Bohan responsible for his behavior I also think the community could have been more fair about analyzing the whole thing as well. Afterall, if URO had made some people millionaires overnight, would you bitch whether some questionable tactics were used to get it off the ground? Afterall no one gives a damn 30 years later that Microsoft practically lied to IBM before acquiring DOS or that Steve Jobs stole money from Woz behind his back at Atari. Unfortunately this is the real world and to get ahead sometimes people do dirty things.  Hell look at Dashcoin and the instamine controversy, frankly alot of people just don't give a shit.

And call me crazy, while I sold most of the coins off, I still hold some Urocoin "just in case" as it is a rather cheap lottery ticket right now with the price so much in the dumps. I wouldn't be shocked if GES is quietly accumulating the bulk of their coins back to one day pump it themselves if they can secure that one big investor. Is that shady? Probably, but again if they do make it happen i'm not going to complain.