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Comment by stingraycharles | Hacker News Reader

This is really just the same as saying they raised money to pay creators, but that wouldn't sound so innovative. One way or the other, it's people investing in this startup (or currency if that's what you want to call it) that pay the content creators.

What I wonder what will happen as more content creators join the pool, thus diluting the value of a "prop". Is the idea that this will also draw more consumers, thus balancing out the value of the prop ? How is the total market cap determined ? How will it grow ?

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> This is really just the same as saying they raised money to pay creators, but that wouldn't sound so innovative.

Well the innovation, likely, is in the fact that they raised the money via an almost certainly illegal pyramid-style "investment" medium.

they added an asset to the market that has no intrinsic value other than to help the company that created it and to fuel the market making bots that run rampant on exchanges. There is some social utility to this

Is it a pyramid though? The money doesn't all flow to one place. Content creators 'earn' Props and can convert to traditional currency. The platform loses traditional currency in this case.

The platform generates the currency from scratch though, so they don't lose anything.

They don't generate dollars from scratch. If content creators are converting to dollars they need to pay out, those dollars need to come from somewhere.

Yeah, I was going to say: this sounds like a bond issuance lol. How boring is that!

That said, how cool would it be for companies that make products to issue you a portion of the company with every purchase, so that you could actually support them and be supported by them?

CoopCoin

Except bonds are regulated by the SEC, and are largely understood and able to be traded on open markets. The same cannot be said of this.

I am not sure about the exact structure but REI is set up as a coop.

Coops pay out a patronage dividend to members. Coop accounting is a wierd and special beast, and I won't claim any expertise. Typically a member pays something to belong, that is how ag coops raise some of their capital, for instance.

In the REI case, the dividend amounts to a discount on purchases for members. Others pay the full freight. Same goes for ag coops, but the stakes are much larger and the accounting more complicated.

There is no reason other businesses can't be structured as coops, but trying to find someone who understands the structure probably requires visiting a land grant university in fly-over land and looking up the business school.

yes.. but a bond issuance on the internet!!!

Oh no! They're creating "money" out of thin air to "pay" creators.

Instead of using money that a government created out of thin air?

I can pay taxes, rent, buy groceries, etc with government money.

The source of the currency is not the issue, it's the longevity/stability of it as a medium of exchange. This startup has very little power (compared to the government) to ensure that the currency will continue to hold value to someone you want to trade with. If faith plummets, they can only guarantee as many assets as they hold themselves.

Which one is more likely to be around in 10 years?

General acceptance is inherent to the definition of currency. Unless we're going to move back to a pure barter system, all forms of currency are created out of "thin air" as the very definition of value is wholly dependent on perception. The more universally shared the perception of value is, the stronger the currency.

I think OP was referencing how US currency is fiat

Right, the source isn't important. What matters is whether what you've received is, for practical purposes, actually currency.

If your boss showed up and said "from today we're going to pay you in bananas, and our exchange rate is $1000 per banana. By the way here's a raise too" and drops a bundle of bananas on your desk... Would you consider yourself paid?

Bananas aren't even fiat! You gotta grow them first

This is a silly example, since in the article there's clearly consent on both sides of the equation. But if the coins remain as "e-points" in their system and there's not much incentive on the buy side, they're not super useful as currency.

In practice the crypto currency markets seem to fuel a good amount of liquidity. This is a pretty neat side effect of the block chain boom.

> our exchange rate is $1000 per banana

This implies that your boss is ready to trade both ways. I'd gladly accept the bundle of bananas.

> This implies that your boss is ready to trade both ways.

Again, this is the definition of currency. The root comes from Latin and means to "flow" or "run." It's this condition of "flowing" that defines currency. As I said before, this shared perspective of how well a currency "flows" is what defines it's value. Fiat or otherwise doesn't matter. In the strawman presented here, you (and maybe the rest of the company) accept and will participate in the exchange rate, so bananas have become a slightly stronger currency. For most of the world, it's still pretty terrible, but they are marginally better because at least some people accept it as currency.

Unless we plan to go back to bartering, this same logic applies for all forms of currency. There's nothing special about gold, bitcoins, rectangular plastic cards, or green sheets of paper with dead people's faces printed on them. What gives these things value is simply society's willingness to use these as a means of conducting transactions.

I would _mostly_ agree, but gold is actually a bad example as it has quite a bit on intrinsic value due to it's interesting metallurgical and electrical properties.

Except government money has nuclear aircraft carriers ensuring it's value. But yeah same exact thing!

Ha, ok then. I will happily swap my mega coins for your crappy government currency.

There's always room for Props 2.0!

(I don't think this is that bad of an idea. Is there a lot of packaging and marketing on top? Sure, but the fundamental idea is fine.)

typically there is no dilution, which is what makes this asset class so attractive, but it depends on the individual token's mechanics.

although there are some investors, which primarily help for funding and price discovery, only a small portion of the float is distributed to them. the other portion of the float is doled out to contributors, which would be the video creators in this case.

a way to avoid dilution of the pool would be to price the rewards in USD and give the associated amount of currency

they have to create a demand model to support this, many cryptocurrencies have no demand model whatsoever and just think they can reward people in it

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