Hacker News Reader

Comment by leot | Hacker News Reader

Assume near-perfect liquidity among x-coins. Assume, also, that software makes starting a new kind of coin as easy as starting a small business. This implies that the crypto-currency market cap will be divided among far more than "21M".

So, given near-perfect liquidity, what makes any particular coin valuable? For shares it's earnings per share. Will we need something akin to "earnings per coin"?

View on HN

Yes, and for ICO-type tokens we can expect to see a lot more starting very soon which offer a simple mechanism of profit sharing (dividends) just like with traditional stock exchanges. It won't be as simple as "earnings per coin" since the coins themselves are so diverse and some carry and modify their own monetary properties.

But ultimately we'll probably see those types of coins separated and the more traditional profit sharing coins dominate the market such that a shared language can be established for it.

The same thing that makes one fiat currency more valuable than another -- the demand/supply/confidence for that currency.

Taxes, central bank, military, and existence of cash all preserve value of fiat.

And, further, fiat currencies aren't perfectly liquid with respect to each other.

Forex markets are basically as liquid as you can get -- of course some exceptions, but I think the idea still holds.

While an existing fiat currency might derive its confidence from different sources than that of a digital currency (taxes, military, etc. vs. blockchain, mining, contracts, etc.), it does not make them that different. People still declare the coins value on that confidence/demand.

Yes, definitely on the forex thing. But with cryptocurrency-level liquidity there is no reason for any normal consumer to hold funds in any particular crypto currency (or any at all), since they can exchange them cheaply and quickly on demand. That is, unless they're speculating it will increase. But this increase presumes scarcity. And so the question is: whence scarcity?

Reply on news.ycombinator.com