I am not going to compare NXT with LOVE, but in one aspect they face a similiar challenge:
IPO as a distribution mechanism.
for a RISING price. By patience, slow, very slow selling, I guess.
Do not sell more than the market can absorb per time.
sometimes simply not-knowing hands ... and can be educated )
If the whole group ( IPOs + miners + later investors ) understands this, a coin has a chance to thrive.
I find this price creation challenge quite interesting.
P.S.: LOVE-Difficulty is 6.8 right now (block 612).
mining price give us a barometer what the price range should be
so peeps don't go dump low..Let us all know what the going range is..
qiwoman, here comes your learning.
Only multiplication and division, really easy.Stay with me, slowly reading this. Don't panic.
At the bottom is a really simple three numbers formula.
But let me explain first:
Who can set a the price properly? Miners! Not IPO investors!Miners pay thousands of euros for their hardware, and
then up to 200 euros per month per 1000 Watt electricity
(depending on how environmentally clever the country is).
Miners are the best indicator what is a price for a coin,
because miners RUN AWAY IF THE PRICE IS TOO LOW !!!
And a PoW coin without miners ... is nothing. Not secure.
It's very good that you as an IPO shareholder ask for advise!
If the miners run away from LOVE, that's bad for everyone.
And in a quick dump, not even one IPO holder can earn a lot of money,
so it's better for everyone, if ALL IPO shareholders become conscious,
especially in this IPO. If the miners play out the correct price, everyone can be happy.
(escrow.ms and LOVEcoinproject, why not mail
this to all IPO holders?! Weak hands are sometimes simply not-knowing hands ... )
What do miners do? ... their machines participate in
a "block hashing" lottery (but you'll learn that later)
- interesting for now is only:
What is the miner's reward ? ? ?Now there is an easy mathematical way to predict
the average outcome of the block hashing lottery:
Imagine
difficulty = 11.0 (Wallet ... Help ... Debug ... Console - type: getmininginfo and press enter)
Imagine
hashrate = 1.5 Megahash/s (2 - 5 graphics cards or ASICs).
Imagine a
price = 6,000 Satoshi per LOVELook up the
block reward = 143 LOVE per block (wow, cool - that's 1 LOVE per second on average :-) )
The statistics for scrypt hashing (and for
other algos) is this
BTC_by_LOVE_per_Day
= price * blockreward * hashrate * 24*60*60 * 2^-32 / difficulty= price * blockreward * hashrate / 49710.26963 / difficulty
= price * blockreward * hashrate_in_megahashps * 20.12 / difficulty
= 0.00006000 * 143 * 1.5 * 20.12 / 11.0
= 0.0235 BTC per day, earned by mining LOVEcoins. Minus electricity minus hardware costs minus labor costs.2.35 million Satoshi would be a nice return of one machine actually (it's worth
renting a rig at betarigs then). If the price on the market reaches and sustains these 6000 Satoshi per coin (0.00006000 BTC), lots of miners will be attracted, and help to make the transactions of this currency secure. They will direct their machines to LOVEcoin pools, and help with their expensive hardware to mine more LOVEcoin. But with more miners the block generation will become faster than every 143 seconds - and so the difficulty will have to rise, let's say to 22.0 because there are twice as many miners now. Less coins are earned per MegahashPerSecond hardware, so the miner doubles his hardware, and now points
two of his machines ( 2 * 1.5 = 3.0 ) at the LOVEpool
0.0235 BTC_per_day = 0.00006000 * 143 * 3.0 * 20.12 / 22.0
His coins per day are the same, but he had to double the hardware trouble (and electricity), because the difficulty is twice as high now. A rising coin is a good coin ! With rising difficulty often the price is rising, too - because miners are asking for more money then, or even simple HODL them, for a bright future.
Now disaster ... Imagine the price falls to 2525 Satoshi at difficulty 11.0
0.00991 BTC_per_day = 0.00002525 * 143 * 1.5 * 20.12 / 11.0
the same small miner with his one machine now earns less than one million Satoshis per day with his 1.5 MH/s. That's about what multipools are offering right now, and it pays the electricity only in dirty countries with too low energy prices. Multipools are less work and more reliable than to stay with LOVEcoin -
so miners would leave. RUN FOR THE EXIT! Falling hashrate, falling difficulty. In the end falling price, because miners see that they cannot believe in the future of this coin, and
instead of HODLING, they dump their coins.
A falling coin is no good coin!I know I have to come to an end *g*
Let's take something the middle, 0.015 BTC_per_day with our 1.5 megahashps machine,
that is exactly 1 BTC per day per 100 megahashps factory
(such a factory costs as much as a small family house, and uses ~10 family houses of electricity?)
... or exactly 1 mio Satoshi per day per small 1.0 megahashps not too hot bedroom miner.-->
0.015 = 0.00003823 * 143 * 1.5 * 20.12 / 11.0
or turn the equation around now:
0.015 / 1.5 / 143 / 20.12 * 11.0 = 0.00003823 BTC coinprice
1/100 / 20.12 / 143 * 11.0 = 0.00003823 BTC coinprice
1/2012 / 143 * 11.0 = 0.00003823 BTC coinprice
11.0 / 143 / 2012 = 0.00003823 BTC coinprice
So here is your mining costs rule of thumb calculation:
difficulty / block_reward / 2012 = mining_minimum_price_in_BTC_per_coin
as an example right now (block 224, diff 12.88),
the price should stay well above:
12.88 / 143 / 2012 = 0.00004477 BTC per LOVEcoin
and now we all know how to calculate this for
any coin.
:-)
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