Exchanges: Price Karma as price per 1,000 Karma in Bitcoin
For this to be implemented it requires just 2 things:
1. The community to agree that it is a good idea; and
2. The exchange to do the implementation.
Follow up work would simply be ensuring future exchanges know about the preference and noting the activity of the exchanges that have implemented it compared to those that haven't.
Therefore I will outline the benefits to each below. Please feel free to add to the list.
1. Why it is a good idea for Karma holders1. It will increase the volume traded due to increased granularity. This is important because it makes the cryptocurrency look more active and as if it is actually being used, even if it is for trading on exchanges.
2. If KARM is more traded a day trader that was just looking at the charts and doing a quick trade might actually look into KARM more. "Ohh it's actually called Karma, that's a good name" "Ohh it actually has all this other stuff going on behind it".
3. Increased trading volume means exchanges are more likely to list Karma, which in turn means more people know about and may become active in the Karma community.
4. It makes Karma prices more flexible to changes in value of Karmashares LLC and improvements to Karma itself, which I'd like to think are generally good and will therefore increase prices. As many of you are aware the price wasn't impacted by an announcement that holders of the Karma could potentially receive a pay out of greater than what Karma was actually trading for on the market. This announcement should have had a notable impact on prices.
5. It allows people to buy/sell large quantities of Karma easier at a fair rate in Bitcoin instead of Litecoin. Due to ignorance or laziness people have sold Bitcoins worth of Karma at 2 Satoshi, instead of 2.5 Satoshi worth in Litecoins. At the moment if you want to sell Karma in Bitcoin you are selling to people at 2 Satoshi, those people can then resell the Karma at 3 Satoshi for a 50% mark up. At the moment it is very likely the price will go up again so buying at 2 Satoshi is a reasonably safe investment as far as crpytocurrencies are concerned.
6. It allows people to buy or sell and then change their mind without it costing them 5% of their value just on the spread, that's the difference between 19 and 20 Satoshi. It would currently cost somebody 1/3rd (33%) of their holdings.
7. At the moment it is likely there is queing, people think "yeah I'd probably sell at 7 Satoshi so I'll put my order in now so I'll be the first person to sell instead of the last. If I change my mind I can probably rebuy at 6 or 7 myself to other people that will put orders behind me." This type of thinking can make it look like there are far more people interested in selling Karma than may actually want to, again it also locks in prices and means people are less interested in buying Karma.
8. It decreases the attractiveness of trying to lock Karma between 2 price points or manipulating the market in other ways. For example, locking Karma between 2 and 3 Satoshi results in a 50% gain on every trade. As discussed above people are making these transactions. If the market recovers to a decent buy order at 3 and you were willing to sell all your 1 billion or more Karma at 3 Satoshi you could put your sell order at 3 Satoshi and a buy order at 2 Satoshi with the Bitcoin you just got from your sale. If nobody buys you out fully you could end up selling those coins at 4,5,6 Satoshi (1,2,3 iterations). I don't think this would happen at 3 Satoshi, but 4-5? 19-20? This opportunity shouldn't be there. Stagnation can kill any cryptocurrency.
9. It improves how people perceive Karma. Coins at less than 10 units of measurement (either Satoshi or Litoshi) are more risky because generally (with the exception of Karma's revival) it means the eventual delisting from exchanges and ultimate death of the cryptocurrency. A cryptocurrency trading at 2,000 Satoshi (even in lots of 1,000) doesn't look like it is on the ropes to people that are looking at just the prices of 100 cryptocurrencies however at 3, even 6 Satoshi it doesn't look good. Traders will convert to active community members which will convert to long term value.
10. Due to the granularity issue Karma is only partly listed on the Bitcoin market. Prices have reverted back to when it wasn't listed on the Bitcoin market, this is because effectively it might as well not be listed right now due to a low volume.
The above can be summarised as:
1. Higher Karma prices (in the medium to long term, limited impact in the short term as lots of Bitcoin will need to be spent to soak up Karma currently on the market); and
2. More activity in the Karma community due to increased interest in Karma.
By way of counter argument the downsides and the counter agruments to those downsides are as follows:
1. People may think it is a second attempt at reverse splitting Karma (rehashing a cancelled idea) because it has the same benefits. It is better for topics to be handled once then left alone. I note however the majority of people were in favour of the reverse split but it wasn't done due to technical considerations. This suggestion alleviates many concerns of those that do not want the reverse split. It is actually a very different suggestion, we aren't reviving a cancelled idea.
2. People may get confused when they see "KARM" trading at 1,000 times its last price and in their joy may not read the amount of BTC a sale will give them. It will be up to exchanges to make this clear in their announcements of the change or a new listing. A mistaken transaction however should be reversible (ie rebuy straight away, hopefully only at a small lose). People with large amounts of Karma will be more careful. Given how large the change is (a factor of 1,000) I don't think many people would make this mistake. To decrease the chance of this I suggest actually making the new listing called KARMA instead of KARM.
3. If people don't understand the benefits they will consider it to be a gimmick. You will have this with practically every change made.
2. Why it is a good idea for exchangesI will flesh this out more depending on interest by Karma holders but basically:
1. Increased volumes, which could also lead to them being or helping secure their position as the primary market for Karma.
2. People may be willing to pay a bounty for the first major exchange to introduce it to help cover the costs of implementation. I'll start the bounty off at 0.2 BTC if implemented by either Mintpal, Crytpsy or a similar volume exchange. If this idea is to be implemented the charities and causes team can take over this fund raising effort and manage the funds.
I will draft a sample message to send to current/new exchanges if the community votes in favour of the change.
Chargin.
