So again it seems to me that if a miner spends a certain amount to get a coin, it's not so strange that a buyer on the market would be willing to spend a similar amount. Or if the miner is not a holder and is only in it to make immediate profit then they still rely on a buyer on the market willing to spend this amount to obtain the coin from them.
Agreed. I thought I had made this point explicit. The "price" of the next ("marginal") block is ultra important in a mined coin. You only need to tank the value of that one block to deplete the capital of the whole chain while a coin is still in its mining phase. So why make it valueless by generating it numerically in exchange for no new investment instead of subjecting it to as much competitive mining as possible ?
this also highlights another strange thing about value. Why is the $1000 coin worth 1000 times the $1 coin? Is it because he said so, and he said so because she said so, and so on? Is it herd mentality?
You already explained it to yourself above. Let me remind you: "
it seems to me that if a miner spends a certain amount to get a coin, it's not so strange that a buyer on the market would be willing to spend a similar amount".
The amount the "miner has to spend on a coin" is directly proportional to its scarcity (measured in terms of how much financial effort is required to extract it from the blockchain). The mined portion of Dash's blockchain requires a large amount of financial effort to extract the coin. The masternode reward portion of Dash's blockchain requires zero financial effort to extract the coin, ergo: zero scarcity value. That portion of the blockchain WAS supposed to be supported by service value, but instead it's being drained by pure masternode profit. That profit is being paid for out of the capital value in the chain (since no service revenue is being generated) which is why the chain is being chronically decapitalised.
The way to sort this is to replace most of the masternode numerical ROI with capital gain ROI (i.e. :
1. drastically reduce the Dash denominated masternode reward which will..
2. direct a far higher proportion of new investor's capital into the "scarcity" value of the chain which will..
3. allow new investors (in the primary supply) to receive more coins, at a higher scarcity value than they did with the current protocol which will..
4. attract more investors, since they know their investment is returned to them instantly instead of going to fund masternode holiday cruises
Masternodes will benefit from this as well because under the current regime, all that's happening is they're going to get more slices of a thinner cake who's weight is out of control of the Dash protocol. The market decides it.
If we give the market what it wants (more coins per hash) then it will give us what we want (more capital gain). All we need to do then, having reasonably returned investors their capital in mining terms is compete on useability.
Although it's not a perfect analogy you haven't adequately stated why the masternode owner has to be considered the first buyer. The model you're using is too simplistic and ignores the nuances of value, how people perceive value and why if a miner is willing to spend $X to obtain coin (yes, some are holders) then why that's somehow superior to someone buying from a masternode owner.
I think I did state why the masternode was the "first buyer". I said they shared the same custodial tier as the miner. That is very important because the blockchain protocol is the primary market in the sense that it decides what the cost of a coin is to any human being. From the point that the human possess the coin, the blockchain protocol no longer has any say over its scarcity (how much financial effort is needed to acquire it). So the Dash protocol proposes to apply scarcity as follows:
4 coins out of every 10 at maximum scarcity (you need to deliver hashrate to the blockchain to get them)
6 coin out of every 10 at zero scarcity (they are delivered at no cost, on trust that "some" unspecified value will feed back to the blockchain capital value)
That means that, to be competitive, those 6 coins need to return at least as much capital to the chain as an equivalent amount of hashpower in a 100% mined chain. I think that's impossible because there's no way that any economic entity given unrestricted cost free capital is going to fully invest it back in the chain. So the capital leaves the chain.
Any masternode owner knows this. A bus ticket that was bought with masternode revenue is a capital loss for the chain because it was paid for out of numerical gain by cutting the cake into thinner slices, not capital gain by making us more competitive.
And yet, Dash's hashrate continues to rise...
It sounds nice but the less the protocol is able to absorb the value of that hashrate into the chain, the less it matters. The contribution of hashrate to the value of the coin is being mitigated by design and is currently being priced out by the market. Apparently "
we don't need all this hashrate" and the market has listened. So you can have all the hashrate you like - it ain't gonna make zip difference to the price because it's only applied to a mere 40% of the supply and the rest of the chain is given away for free.
Miners stay alive at any price because they can simply game the protocol by balancing their masternode holdings with their hashrate capacity and difficulty adjustments. Traders stay alive because they can decide whether they go long or short Dash. The only people that get screwed (ironically) are long term holders and faith keepers who neither trade nor mine.
What I think should happen IMO is:
1. Recognise that Dash is not a stable coin, therefore it can only be "invested in" as a store of value and that is its priority
2. Inherit bitcoin's store of value model fully and return as much of the coin as possible to investors who pay for it (that means ramping the mining reward right back up as high as it can go)
3. Pay a small minority of the mining reward to nodes commensurate with costs + a reasonable margin
