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BNO
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July 04, 2016, 10:27:37 AM |
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The demand for EC's increases but the price for FCT's stays where it is. And of course, there is a total supply of about 8.7 Mio and that can potentially decrease for some time without that the FCT-price necessarily needs to change. There is still supply to meet the demand. But what would happen over time if the value for Factoids would never increase? The supply would go to zero...
That makes it economically impossible, even without any speculation on exchanges, that the value of Factoids would not increase.
I see it from the other side: If the value of Ec's is fixed how can 1 factom be worth more than the price of the one EC? |
The thinking that has led us to this point will not lead beyond - Albert Einstein
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tempus
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July 04, 2016, 12:41:22 PM |
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The demand for EC's increases but the price for FCT's stays where it is. And of course, there is a total supply of about 8.7 Mio and that can potentially decrease for some time without that the FCT-price necessarily needs to change. There is still supply to meet the demand. But what would happen over time if the value for Factoids would never increase? The supply would go to zero...
That makes it economically impossible, even without any speculation on exchanges, that the value of Factoids would not increase.
I see it from the other side: If the value of Ec's is fixed how can 1 factom be worth more than the price of the one EC? Just calculate it with only two informations: 1. There are about 8.7 Mio Factoids in existence plus 73k FCT's every month as payment for the federated server. 2. Every time somebody buys Entry Credits, Factoids are converted into EC's and out of the system --> "burned". What would happen if there is a demand for 10 Mio Entries each month and the price of 1 FCT would be = 1 EC? The supply of Factoids would be at zero after 8.7 Mio Entries (plus 73k). Now imagine that Factom becomes a huge success with a lot of customers and millions of Entries each day, maybe even billions each month. And again my favorite example, even if it's extreme: "People save 1 billion files every day to Dropbox's online storage service, Chief Executive Drew Houston said today at the Mobile World Congress show here."http://www.cnet.com/news/dropbox-clears-1-billion-file-uploads-per-day/ And yes, a cloud-service is a different use case than Factom but it gives an impression about data-volumes. And dropbox is just one cloud service of many and it's just one use-case, while Factom is open for all kinds of different use cases - also in combination with cloud-services btw. Factom already has promising partnerships and it's very likely that they are in negotiations with many more. And that's the case even while Factom is not a finished system yet, what makes it very likely that the number of partnerships will increase drastically after Milestone 3 and the number of entries will most likely explode exponentially. Of course, that will only be the case if Factom will be a useful and stable system. If there should be flaws or even problems that are impossible to solve, it would turn out as failed and others would overtake Factoms position. But there are no signs that this worst-case-scenario is likely. I believe they will work on it until it's what they want it to be and my impression is that the team is a nearly perfect combination of skilled coders with a lot of experience, business-people, marketing-experts etc. It's really impressive. Kind of funny is that some believe to see a lack of PR because they don't understand that guys like we are not their target. They do a lot of marketing and PR, but they focus on potential customers, not Crypto-Speculators. Long story short: If Factom will be realized as it's planned it will become successful. I have no doubt about that, even if there should be other high-quality competitors. And for now it seems as if Factom is leading. If Factom will become a success there will be a constantly increasing demand for Entry Credits and the price of Factoids will have to rise to meet that demand. That would be true even without any speculation. Because, again: If the price doesn't rise while there is a high demand of Entries, the total supply of Factoids would go down to zero. And that... is the most perfect economical design I've ever seen and it also has a lot of positive implications for the market and speculators. |
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cryptonit
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July 04, 2016, 03:19:09 PM |
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the only limit to the amount of entry credits that can be sold for fixed price vs dollar
is how many entry credits they can produce
and they produce entry credits by buy and BURN FCT
the speed new FCT is generated each month is constant
the $ price for a user to buy entry credits is constant
the conversion rate FCT to EC is not constant
the demand how many EC are used a month is not constant
this all lead to the conclusion that a high demand for EC can increase FCT price a lot
its not true when people say the constant EC to $ conversion result in a constant low FCT price
what is true is that there is a low rate of new FCT generated and a high rate of existing FCT
which if people sell them cheap to convert to EC could create a delayed increase of FCT price
conclusio: the longer u wait the higher ur FCT value will be
a few months with constant shrinking total FCT amount because less produced than burned
will create a run from specualtors on FCT and even if there would be years of FCT left to burn at cheap rate
most people will hoard and dont sell cheap
its like uran
if states know they use so much more than they find
the gona hoard it even if what they have already would maybe be enough for 100 years
and hoarding raise the price (reduce avaiable supply)
suppy and demand
in the end it always returns to the basics
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MyFarm
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July 04, 2016, 03:27:32 PM |
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I would like to restate an assertion I made earlier in the thread.
Factom backs data and eventually, identities.
Data and identities in essence back Factom.
Fiat is backed by nothing.
Bitcoin is backed by electricity usage of an ever-decreasing number of mining operations and is becoming centralized.
What will the currency of the future be? In my opinion, a digital currency that is backed by and backs data and identity in a decentralized manner and can anchor into any blockchain as there is nothing more valuable in the information age.
The Factom team doesn't necessarily intend this. But there is a very real chance of exactly that happening.
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tempus
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July 04, 2016, 04:19:35 PM |
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I would like to restate an assertion I made earlier in the thread.
Factom backs data and eventually, identities.
Data and identities in essence back Factom.
Fiat is backed by nothing.
Bitcoin is backed by electricity usage of an ever-decreasing number of mining operations and is becoming centralized.
What will the currency of the future be? In my opinion, a digital currency that is backed by and backs data and identity in a decentralized manner and can anchor into any blockchain as there is nothing more valuable in the information age.
The Factom team doesn't necessarily intend this. But there is a very real chance of exactly that happening.
Yes, that's indeed a very interesting scenario and I agree. In best case, if Factom becomes a huge success, it may be possible to say that Factoids would be a value that is kind of backed by the data that is connected to Factom. There wouldn't be a way to evaluate it. But the more Factom will be used, the more incentive will be there to use it more - for a single customer and for others. And that can stabilize over time and lead into a network effect which would give a lot of trust. Not only into the real use-case of the system but also in Factoids as kind of a currency. It's kind of funny to think about it. The team repeated more than once that it's not about that aspect, but if people would begin to sell goods for Factoids or buying it because they fear an Euro-Crash or whatever... who knows. My new favorite-scenario for Factom is that there will be a day in the future Paul Snow says to Brian Deery: "Damn, Amazon accepts Factoids as payment!"  |
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mig5000
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July 04, 2016, 04:55:52 PM |
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Yes, that's indeed a very interesting scenario and I agree. In best case, if Factom becomes a huge success, it may be possible to say that Factoids would be a value that is kind of backed by the data that is connected to Factom. There wouldn't be a way to evaluate it. But the more Factom will be used, the more incentive will be there to use it more - for a single customer and for others. And that can stabilize over time and lead into a network effect which would give a lot of trust. Not only into the real use-case of the system but also in Factoids as kind of a currency. It's kind of funny to think about it. The team repeated more than once that it's not about that aspect, but if people would begin to sell goods for Factoids or buying it because they fear an Euro-Crash or whatever... who knows. My new favorite-scenario for Factom is that there will be a day in the future Paul Snow says to Brian Deery: "Damn, Amazon accepts Factoids as payment!" I don't think Factoids are going to almost ever be used this way even though they certainly could. Factoids provide a service just like storj and maid are. They are not a store value like BTC is/would be. Their counterparts is the service they provide more than the security they bring like BTC does with his high hash rate. |
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Azael
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July 04, 2016, 05:16:44 PM |
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I would like to restate an assertion I made earlier in the thread.
Factom backs data and eventually, identities.
Data and identities in essence back Factom.
Fiat is backed by nothing.
Bitcoin is backed by electricity usage of an ever-decreasing number of mining operations and is becoming centralized.
What will the currency of the future be? In my opinion, a digital currency that is backed by and backs data and identity in a decentralized manner and can anchor into any blockchain as there is nothing more valuable in the information age.
The Factom team doesn't necessarily intend this. But there is a very real chance of exactly that happening.
Agreed, but they intend on anchoring into Ethereum.. so at least that part is intended. Likely more active blockchains to follow after that  http://themerkle.com/factom-plans-to-anchor-into-ethereum-blockchain/ |
twitter.com/erikledgers
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cryptonit
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bit.diamonds | uNiq.diamonds
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July 04, 2016, 05:42:04 PM |
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I would like to restate an assertion I made earlier in the thread.
Factom backs data and eventually, identities.
Data and identities in essence back Factom.
Fiat is backed by nothing.
Bitcoin is backed by electricity usage of an ever-decreasing number of mining operations and is becoming centralized.
What will the currency of the future be? In my opinion, a digital currency that is backed by and backs data and identity in a decentralized manner and can anchor into any blockchain as there is nothing more valuable in the information age.
The Factom team doesn't necessarily intend this. But there is a very real chance of exactly that happening.
Agreed, but they intend on anchoring into Ethereum.. so at least that part is intended. Likely more active blockchains to follow after that http://themerkle.com/factom-plans-to-anchor-into-ethereum-blockchain/please read and quote correct: By anchoring into BOTH blockchains over time, Factom will become more versatile in the future. its not about give up bitcoin chain for ETH chain its about a as broad base as possible there i cant see anything wrong |
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BNO
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July 04, 2016, 07:21:49 PM |
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Just calculate it with only two informations:
1. There are about 8.7 Mio Factoids in existence plus 73k FCT's every month as payment for the federated server.
2. Every time somebody buys Entry Credits, Factoids are converted into EC's and out of the system --> "burned".
What would happen if there is a demand for 10 Mio Entries each month and the price of 1 FCT would be = 1 EC?
The supply of Factoids would be at zero after 8.7 Mio Entries (plus 73k).
Hi guys maybe i am wrong, but i have the feeling the arguments here present only 1/2 of the movie, that goes like this: if FCT is to cheap then FCT's will be burned quickly so price has to go up to prevent this. Wonderful story but let me tell you the second half of the movie with the big BUT and the but goes like this: Imagine FCT price is in an equilibrium to Ec's price and let's say 1FCT=1.5$ and 1 EC= 0.005$ ( https://www.factom.com/entry-credits/). so 1FCT buys 300 EC's today. And the burn rate today is 300.000 Ec's a month which is at current rate 1000 FCT's per month. Lets now say demand skyrockets it grows buy the factor of 1000 from 1000 FCT's /month to 1.000.000 Factoms a month (Astonishing 300 Mio EC's) and lets assume the price would rise by factor 1000 too from 1.5 to 1500$ a piece. So this is the first half of the movie everyone refers to. But in reality the movie doesn't stop here, because of the specifics of the factom construction. And this point now it goes: For the 300.000 Ec's that are needed you only need (300.000.000 Ec's *0.005$/each)/1500$ per Factom = 1.000 Factom per month So the demand for entry credits exploded by factor 1000, but the demand stayed at 1000 Factoms/month as before. With such a low demand for FCT's price can not stay at 1500$ a piece and it falls back quickly. And that is the reason that Factom can not really rise beyond its equilibrium price (besides speculation). One can not tell where that equilibrium price is, but once its reached it doesn't matter if demand for Ec's is a 1000 times higher or Dropboxlevel a 1 billion times higher the demand for Factoms never rises. hope i made clear what i mean... |
The thinking that has led us to this point will not lead beyond - Albert Einstein
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Blazin8888
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July 04, 2016, 07:36:19 PM |
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FACTOM will keep rising as demand increases. FYI any new comers here - do your own research - there is a ton of complicated FUD here. I would research into FCT in the links on the prior posts I have made. You will come to see that this project is severely undervalued and the implications are HUGE. The charts are screaming look at me right now. They are sexy a f charts imo...so fundamentals look good.. FACTOM is actually going to make the world a better place imo as well.. This coin is golden.
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Sorlag
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July 04, 2016, 08:01:47 PM |
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Just calculate it with only two informations:
1. There are about 8.7 Mio Factoids in existence plus 73k FCT's every month as payment for the federated server.
2. Every time somebody buys Entry Credits, Factoids are converted into EC's and out of the system --> "burned".
What would happen if there is a demand for 10 Mio Entries each month and the price of 1 FCT would be = 1 EC?
The supply of Factoids would be at zero after 8.7 Mio Entries (plus 73k).
Hi guys maybe i am wrong, but i have the feeling the arguments here present only 1/2 of the movie, that goes like this: if FCT is to cheap then FCT's will be burned quickly so price has to go up to prevent this. Wonderful story but let me tell you the second half of the movie with the big BUT and the but goes like this: Imagine FCT price is in an equilibrium to Ec's price and let's say 1FCT=1.5$ and 1 EC= 0.005$ ( https://www.factom.com/entry-credits/). so 1FCT buys 300 EC's today. And the burn rate today is 300.000 Ec's a month which is at current rate 1000 FCT's per month. Lets now say demand skyrockets it grows buy the factor of 1000 from 1000 FCT's /month to 1.000.000 Factoms a month (Astonishing 300 Mio EC's) and lets assume the price would rise by factor 1000 too from 1.5 to 1500$ a piece. So this is the first half of the movie everyone refers to. But in reality the movie doesn't stop here, because of the specifics of the factom construction. And this point now it goes: For the 300.000 Ec's that are needed you only need (300.000.000 Ec's *0.005$/each)/1500$ per Factom = 1.000 Factom per month So the demand for entry credits exploded by factor 1000, but the demand stayed at 1000 Factoms/month as before. With such a low demand for FCT's price can not stay at 1500$ a piece and it falls back quickly. And that is the reason that Factom can not really rise beyond its equilibrium price (besides speculation). One can not tell where that equilibrium price is, but once its reached it doesn't matter if demand for Ec's is a 1000 times higher or Dropboxlevel a 1 billion times higher the demand for Factoms never rises. hope i made clear what i mean... That's the point. Someone correct me if I'm wrong, but there's no such equilibrium, there will never be, the price of an EC is fixed. |
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crazyivan
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DMD Diamond Making Money 4+ years! Join us!
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July 04, 2016, 08:08:56 PM |
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FACTOM will keep rising as demand increases. FYI any new comers here - do your own research - there is a ton of complicated FUD here. I would research into FCT in the links on the prior posts I have made. You will come to see that this project is severely undervalued and the implications are HUGE. The charts are screaming look at me right now. They are sexy a f charts imo...so fundamentals look good.. FACTOM is actually going to make the world a better place imo as well.. This coin is golden.
Ah, cut the positive trolling, if u re going to comment on something, make is something specific. Saying how FCT s nice and dandy s not gonna make me buy more or in my case, buy any again. M2? M2? Maybe M2? Any kind of progress report? |
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mig5000
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July 04, 2016, 08:17:48 PM |
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That's the point. Someone correct me if I'm wrong, but there's no such equilibrium, there will never be, the price of an EC is fixed.
If the price of EC is fixed how can factoids be non fixed ? Isn't there a constant number of EC allowed per factoid ? I'm newb with this tech, so I'd like to know. Thanks |
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tempus
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July 04, 2016, 08:35:29 PM |
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Just calculate it with only two informations:
1. There are about 8.7 Mio Factoids in existence plus 73k FCT's every month as payment for the federated server.
2. Every time somebody buys Entry Credits, Factoids are converted into EC's and out of the system --> "burned".
What would happen if there is a demand for 10 Mio Entries each month and the price of 1 FCT would be = 1 EC?
The supply of Factoids would be at zero after 8.7 Mio Entries (plus 73k).
Hi guys maybe i am wrong, but i have the feeling the arguments here present only 1/2 of the movie, that goes like this: if FCT is to cheap then FCT's will be burned quickly so price has to go up to prevent this. Wonderful story but let me tell you the second half of the movie with the big BUT and the but goes like this: Imagine FCT price is in an equilibrium to Ec's price and let's say 1FCT=1.5$ and 1 EC= 0.005$ ( https://www.factom.com/entry-credits/). so 1FCT buys 300 EC's today. And the burn rate today is 300.000 Ec's a month which is at current rate 1000 FCT's per month. The $ 0.005 is to make profit. It's not the conversion rate which is still $ 0.001 if I'm right. Lets now say demand skyrockets it grows buy the factor of 1000 from 1000 FCT's /month to 1.000.000 Factoms a month (Astonishing 300 Mio EC's) and lets assume the price would rise by factor 1000 too from 1.5 to 1500$ a piece. So this is the first half of the movie everyone refers to.
300 Mio EC's would be $ 300,000 and a price where burned and new created Factoids per month would be equal would be at: $ 4.1 So, I agree: Wouldn't make sense that the price would skyrocket to $ 1500. But in reality the movie doesn't stop here, because of the specifics of the factom construction. And this point now it goes: For the 300.000 Ec's that are needed you only need (300.000.000 Ec's *0.005$/each)/1500$ per Factom = 1.000 Factom per month
So the demand for entry credits exploded by factor 1000, but the demand stayed at 1000 Factoms/month as before. With such a low demand for FCT's price can not stay at 1500$ a piece and it falls back quickly. It wouldn't even rise that irrational high with such a demand. Wouldn't make any sense.
And that is the reason that Factom can not really rise beyond its equilibrium price (besides speculation). One can not tell where that equilibrium price is, but once its reached it doesn't matter if demand for Ec's is a 1000 times higher or Dropboxlevel a 1 billion times higher the demand for Factoms never rises.
hope i made clear what i mean...
You draw a picture of a total weird scenario. As if the price would explode without good reason to $ 1500. And sure, it couldn't stay there. But if there would be really a demand for Entries like Dropbox has uploads, it would definitely shoot up at least to above $400. This is the calculation: 1 bn per day, 30 bn each month: $ 30 Mio into Factom. The equilibrium would be at $410 I don't know if that is a realistic scenario and even if that should be potentially possible, it won't happen any time soon. Maybe in years, not sure. But in general your theory, that the price of Factoids doesn't need to rise, even if the demand for Entry Credits explodes, is simply wrong. I mean, you even had the theory it could be and stay at a level where 1 FCT is equal to 1 EC. The current situation is: 1 FCT = $ 1.45 That's enough for about 100 Mio Entries each month. So, it's true that there is a lot of room for an increasing demand without that the price needs to rise. But, what I believe about Factom is that it won't be about a way in the middle. I believe that it will be a huge success or not, without much scenarios between those both extremes. And if I should be right with that and if the success-scenario should realize, I'm pretty sure that a billion-demand each month is possible and likely. The reason why I believe that is: Factom is open for so many use-cases we can think of and maybe even more that we are unaware about, in all kinds of different areas, from private persons like you and me to big companies. Factom can help to reduce costs for potential customers, it can help to connect data of different companies etc. And we speak about "Big Data". If you look at the number of transactions of just one single bank has each day, or trades of exchanges or how much data is produced in laboratories for example (...) - it's unbelievable. And I like the cloud-service-example, even if it's a different use case, because cloud services also have all kinds of customers. From private persons to big companies. And that is Factoms potential as well. Kim Kardashian can factomize her millions of selfies to prove it's really her, Hillary Clinton could promise to factomize her mails to avoid problems with the FBI, people can use it to hash testaments and other important documents, or the process of creating all kinds of arts. A country can use Factom for land title registry, all kinds of institutions could use it to secure important documents, a bank could use it to record transactions and all kind of data. It can be used to track and record the way of all kinds of products. It can be used for smart cities and so on. The potential is most likely bigger than we can even think about. I don't say that I'm totally sure about Factoms future success. They could fail at one point. There could be a huge set-back like a hack or whatever, in worst-case with the result of a lack of trust in Factom. Or there could be a really big competitor who overtakes nearly the whole market, like Google or Facebook did it in their areas. But for now all signs I know of are very positive. And even if I can't know Factoms future I know how markets work. And markets always trade the future and very often they just trade a collective short-term-dynamic. I mean, Ethereum is still near to a 1 billion marketcap. Impossible to explain that with objectivity and a rational market. It's the result of hype and manipulation and my prediction is still that it will come down much more while a lot of ppl already say it's "cheap". The same is true for some others. In comparison to those projects, Factom is the best Investment I can think of in Crypto right now and for all aspects. |
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Azael
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July 05, 2016, 12:30:19 AM |
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I would like to restate an assertion I made earlier in the thread.
Factom backs data and eventually, identities.
Data and identities in essence back Factom.
Fiat is backed by nothing.
Bitcoin is backed by electricity usage of an ever-decreasing number of mining operations and is becoming centralized.
What will the currency of the future be? In my opinion, a digital currency that is backed by and backs data and identity in a decentralized manner and can anchor into any blockchain as there is nothing more valuable in the information age.
The Factom team doesn't necessarily intend this. But there is a very real chance of exactly that happening.
Agreed, but they intend on anchoring into Ethereum.. so at least that part is intended. Likely more active blockchains to follow after that http://themerkle.com/factom-plans-to-anchor-into-ethereum-blockchain/please read and quote correct: By anchoring into BOTH blockchains over time, Factom will become more versatile in the future. its not about give up bitcoin chain for ETH chain its about a as broad base as possible there i cant see anything wrong I know |
twitter.com/erikledgers
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BrianDeery
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July 05, 2016, 03:11:55 AM
Last edit: July 05, 2016, 03:26:00 AM by BrianDeery |
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I would like to restate an assertion I made earlier in the thread.
Factom backs data and eventually, identities.
Data and identities in essence back Factom.
Fiat is backed by nothing.
Bitcoin is backed by electricity usage of an ever-decreasing number of mining operations and is becoming centralized.
What will the currency of the future be? In my opinion, a digital currency that is backed by and backs data and identity in a decentralized manner and can anchor into any blockchain as there is nothing more valuable in the information age.
The Factom team doesn't necessarily intend this. But there is a very real chance of exactly that happening.
I really like this understanding of money creation: https://www.reddit.com/r/Bitcoin/comments/3np2ul/is_bitcoin_mining_an_energy_waste_bitcoin_network/cvqzz1vBitcoin is backed by electricity.
People are under the mistaken impression that money creation is a simple matter of running the printing press. If you simply run the printing press the money will very soon become worthless.
Money creation actually involves the act of destroying value from the existing economy and then, in turn, creating new money of corresponding equal value. This transfers the value from the economy to the new money and is the magical moment that represents money creation.
Take a central bank like the Bank of England, for instance. To create new money it doesn't just run the printing press and/or type in a bunch of numbers into one of its member banks' account. In itself that wouldn't represent money creation. The money creation moment is achieved when the BoE buys existing financial assets with the newly "printed" money. Put simply, they remove some existing value from the economy and exchange it for new monetary tokens, thereby magically engendering these tokens with value equivalent to the financial assets that have been removed from circulation.
Take the more ancient process of coin minting if you prefer. Metal ore is removed from the economic system and is no longer available for use in the production of jewelry and such -- it ceases to be useful as metal per se and instead becomes valuable now as money. That economic value that once was present in its use as ore is in an instant converted into a corresponding value as money.
When we say that money is backed by something, the true meaning of that is not that the money is convertible into its underlying asset upon demand. The true meaning is simply that upon creation its value came from the disappearance of value of whatever backed it. The pound is created by removing bonds from circulation, it is backed by those bonds. But you can't exchange your money for those bonds on demand, nor do those bonds safeguard the value of the currency against complete collapse since those bonds are denominated in the very same currency that would be under collapse.
The critical thing is not the convertibility of a money into some other valuable, the critical thing is that when that money was created it attained its value not just from people spontaneously declaring it to have value, but by deriving that value from some other valuable which was "destroyed" in the process, or more accurately had its value "transferred" to the newly created money.
This is precisely what mining does for bitcoin. New bitcoins are created with value because value is destroyed in the form of electricity in the act of their creation, that value is transferred to the value of the newly created coins. Money creation must always have some underlying exchange of value, the fact that this particular form of exchange has negative consequences for the environment is a problem with our current methods for generating electricity, not a problem with bitcoin per se.
Many people have this false notion of money creation as simply a matter of creating new tokens. This is where the whole notion of bitcoin as "monopoly money" comes from. I fear some alt-coins that issue currencies without backing that currency (i.e., destroy some existing value in the process) are going to be in for a rude awakening.
So, if there is one thing that is true about bitcoin, it is most definitely NOT that mining is a liability upon the system. Just the opposite, it is a glowing asset and one of the miracles of the system.
Factoids are not money, but if we wanted to apply this definition, then it is not the data itself the system is securing would back the Factoids. I'm not sure that these mappings work, but what value is destroyed in the system when creating Factoids? In the time up through the token sale, the labor to build the system was value which was destroyed, in the same way that electricity is burned to make Bitcoins. After milestone 3 goes live, the computing and organizational resources (labor) of the Federated Servers will be destroyed to sustain the network. Presumably the marginal revenue above an beyond the marginal cost of running a federated server will be expended to promote the network or promote support for individual Federated servers. Factoids are, however burned when using the system. This is also where the mapping is a bit off. When using the system, the Factoid value is destroyed after it is created, rather than before, like with Bitcoin. Factoids have an economic model that is not based on them being money, thus, talking about them being backed as if they were money seems a little weird. |
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MyFarm
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July 05, 2016, 03:38:24 AM |
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I would like to restate an assertion I made earlier in the thread.
Factom backs data and eventually, identities.
Data and identities in essence back Factom.
Fiat is backed by nothing.
Bitcoin is backed by electricity usage of an ever-decreasing number of mining operations and is becoming centralized.
What will the currency of the future be? In my opinion, a digital currency that is backed by and backs data and identity in a decentralized manner and can anchor into any blockchain as there is nothing more valuable in the information age.
The Factom team doesn't necessarily intend this. But there is a very real chance of exactly that happening.
I really like this understanding of money creation: https://www.reddit.com/r/Bitcoin/comments/3np2ul/is_bitcoin_mining_an_energy_waste_bitcoin_network/cvqzz1vBitcoin is backed by electricity.
People are under the mistaken impression that money creation is a simple matter of running the printing press. If you simply run the printing press the money will very soon become worthless.
Money creation actually involves the act of destroying value from the existing economy and then, in turn, creating new money of corresponding equal value. This transfers the value from the economy to the new money and is the magical moment that represents money creation.
Take a central bank like the Bank of England, for instance. To create new money it doesn't just run the printing press and/or type in a bunch of numbers into one of its member banks' account. In itself that wouldn't represent money creation. The money creation moment is achieved when the BoE buys existing financial assets with the newly "printed" money. Put simply, they remove some existing value from the economy and exchange it for new monetary tokens, thereby magically engendering these tokens with value equivalent to the financial assets that have been removed from circulation.
Take the more ancient process of coin minting if you prefer. Metal ore is removed from the economic system and is no longer available for use in the production of jewelry and such -- it ceases to be useful as metal per se and instead becomes valuable now as money. That economic value that once was present in its use as ore is in an instant converted into a corresponding value as money.
When we say that money is backed by something, the true meaning of that is not that the money is convertible into its underlying asset upon demand. The true meaning is simply that upon creation its value came from the disappearance of value of whatever backed it. The pound is created by removing bonds from circulation, it is backed by those bonds. But you can't exchange your money for those bonds on demand, nor do those bonds safeguard the value of the currency against complete collapse since those bonds are denominated in the very same currency that would be under collapse.
The critical thing is not the convertibility of a money into some other valuable, the critical thing is that when that money was created it attained its value not just from people spontaneously declaring it to have value, but by deriving that value from some other valuable which was "destroyed" in the process, or more accurately had its value "transferred" to the newly created money.
This is precisely what mining does for bitcoin. New bitcoins are created with value because value is destroyed in the form of electricity in the act of their creation, that value is transferred to the value of the newly created coins. Money creation must always have some underlying exchange of value, the fact that this particular form of exchange has negative consequences for the environment is a problem with our current methods for generating electricity, not a problem with bitcoin per se.
Many people have this false notion of money creation as simply a matter of creating new tokens. This is where the whole notion of bitcoin as "monopoly money" comes from. I fear some alt-coins that issue currencies without backing that currency (i.e., destroy some existing value in the process) are going to be in for a rude awakening.
So, if there is one thing that is true about bitcoin, it is most definitely NOT that mining is a liability upon the system. Just the opposite, it is a glowing asset and one of the miracles of the system.
Factoids are not money, but if we wanted to apply this definition, then it is not the data itself the system is securing would back the Factoids. I'm not sure that these mappings work, but what value is destroyed in the system when creating Factoids? In the time up through the token sale, the labor to build the system was value which was destroyed, in the same way that electricity is burned to make Bitcoins. After milestone 3 goes live, the computing and organizational resources (labor) of the Federated Servers will be destroyed to sustain the network. Presumably the marginal revenue above an beyond the marginal cost of running a federated server will be expended to promote the network or promote support for individual Federated servers. Factoids are, however burned when using the system. This is also where the mapping is a bit off. When using the system, the Factoid value is destroyed after it is created, rather than before, like with Bitcoin. Factoids have an economic model that is not based on them being money, thus, talking about them being backed as if they were money seems a little weird. Central banks have three primary means they utilize to affect money supply. The post you quoted above refers to, "Open Market Operations". This is where the central bank buys or sells government securities on the open market as alluded to. However, there are two other means: 1. Altering the reserve requirements banks must keep on hand. This either increases or decreases the amount of money in circulation. 2. The central bank can also change the discount rate which is the interest rate banks pay on loans from the central bank. Like it or not, Factoids are money. They fit all the requirements and nothing has to be destroyed for that to be so. Here is the definition of a gold standard: "A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold." Let's alter that a little, shall we? "A Factom standard is a monetary system in which the standard economic unit of account (Factoid) is based on a fixed quantity of Entry Credits." Entry Credits = secured data. Therefore, we can edit our statement as such: ""A Factom standard is a monetary system in which the standard economic unit of account (Factoid) is based on Secured Data." |
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Blazin8888
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July 05, 2016, 04:31:49 AM
Last edit: July 05, 2016, 03:44:33 PM by Blazin8888 |
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I would like to restate an assertion I made earlier in the thread.
Factom backs data and eventually, identities.
Data and identities in essence back Factom.
Fiat is backed by nothing.
Bitcoin is backed by electricity usage of an ever-decreasing number of mining operations and is becoming centralized.
What will the currency of the future be? In my opinion, a digital currency that is backed by and backs data and identity in a decentralized manner and can anchor into any blockchain as there is nothing more valuable in the information age.
The Factom team doesn't necessarily intend this. But there is a very real chance of exactly that happening.
I really like this understanding of money creation: https://www.reddit.com/r/Bitcoin/comments/3np2ul/is_bitcoin_mining_an_energy_waste_bitcoin_network/cvqzz1vBitcoin is backed by electricity.
People are under the mistaken impression that money creation is a simple matter of running the printing press. If you simply run the printing press the money will very soon become worthless.
Money creation actually involves the act of destroying value from the existing economy and then, in turn, creating new money of corresponding equal value. This transfers the value from the economy to the new money and is the magical moment that represents money creation.
Take a central bank like the Bank of England, for instance. To create new money it doesn't just run the printing press and/or type in a bunch of numbers into one of its member banks' account. In itself that wouldn't represent money creation. The money creation moment is achieved when the BoE buys existing financial assets with the newly "printed" money. Put simply, they remove some existing value from the economy and exchange it for new monetary tokens, thereby magically engendering these tokens with value equivalent to the financial assets that have been removed from circulation.
Take the more ancient process of coin minting if you prefer. Metal ore is removed from the economic system and is no longer available for use in the production of jewelry and such -- it ceases to be useful as metal per se and instead becomes valuable now as money. That economic value that once was present in its use as ore is in an instant converted into a corresponding value as money.
When we say that money is backed by something, the true meaning of that is not that the money is convertible into its underlying asset upon demand. The true meaning is simply that upon creation its value came from the disappearance of value of whatever backed it. The pound is created by removing bonds from circulation, it is backed by those bonds. But you can't exchange your money for those bonds on demand, nor do those bonds safeguard the value of the currency against complete collapse since those bonds are denominated in the very same currency that would be under collapse.
The critical thing is not the convertibility of a money into some other valuable, the critical thing is that when that money was created it attained its value not just from people spontaneously declaring it to have value, but by deriving that value from some other valuable which was "destroyed" in the process, or more accurately had its value "transferred" to the newly created money.
This is precisely what mining does for bitcoin. New bitcoins are created with value because value is destroyed in the form of electricity in the act of their creation, that value is transferred to the value of the newly created coins. Money creation must always have some underlying exchange of value, the fact that this particular form of exchange has negative consequences for the environment is a problem with our current methods for generating electricity, not a problem with bitcoin per se.
Many people have this false notion of money creation as simply a matter of creating new tokens. This is where the whole notion of bitcoin as "monopoly money" comes from. I fear some alt-coins that issue currencies without backing that currency (i.e., destroy some existing value in the process) are going to be in for a rude awakening.
So, if there is one thing that is true about bitcoin, it is most definitely NOT that mining is a liability upon the system. Just the opposite, it is a glowing asset and one of the miracles of the system.
Factoids are not money, but if we wanted to apply this definition, then it is not the data itself the system is securing would back the Factoids. I'm not sure that these mappings work, but what value is destroyed in the system when creating Factoids? In the time up through the token sale, the labor to build the system was value which was destroyed, in the same way that electricity is burned to make Bitcoins. After milestone 3 goes live, the computing and organizational resources (labor) of the Federated Servers will be destroyed to sustain the network. Presumably the marginal revenue above an beyond the marginal cost of running a federated server will be expended to promote the network or promote support for individual Federated servers. Factoids are, however burned when using the system. This is also where the mapping is a bit off. When using the system, the Factoid value is destroyed after it is created, rather than before, like with Bitcoin. Factoids have an economic model that is not based on them being money, thus, talking about them being backed as if they were money seems a little weird. Central banks have three primary means they utilize to affect money supply. The post you quoted above refers to, "Open Market Operations". This is where the central bank buys or sells government securities on the open market as alluded to. However, there are two other means: 1. Altering the reserve requirements banks must keep on hand. This either increases or decreases the amount of money in circulation. 2. The central bank can also change the discount rate which is the interest rate banks pay on loans from the central bank. Like it or not, Factoids are money. They fit all the requirements and nothing has to be destroyed for that to be so. Here is the definition of a gold standard: "A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold." Let's alter that a little, shall we? "A Factom standard is a monetary system in which the standard economic unit of account (Factoid) is based on a fixed quantity of Entry Credits." Entry Credits = secured data. Therefore, we can edit our statement as such: ""A Factom standard is a monetary system in which the standard economic unit of account (Factoid) is based on Secured Data." Very interesting indeed. http://mt.sohu.com/20160704/n457691797.shtml |
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