One thing that always comes to mind and troubles me about many cryptocurrencies is the fact that in effect they have little utility other than as wealth storage and as a trade medium. Therefore demand for the coins will always be limited.
In my simplified understanding of economics:
In the case of limited issue coins such as Bitcoin, they attempt to generate value by limiting supply, as there is a small latent demand for cryptocurrency in its base usage as a wealth store this means that they will increase in value until an equilibrium is found and the demand is satisfied. At this point any gains are likely to only come with any demand generated by the growth of the global economy.
The issue we have with coins such as Gridcoin is that the supply of coins is not limited, well, this is not entirely true, the rate of generation is limited through network difficulty. The point I wish to make however is that more coins will always be being created.
This means we have a constant supply of Gridcoin but we share the limited demand as a wealth store with coins like Bitcoin.
As described previously Bitcoin will generate value through lack of supply which means that in the long term you are more likely to generate better returns on investment wither Bitcoin rather than with Gridcoin.
There are two ways to generate value, we can increase demand or reduce supply. Now Gridcoin is designed in such a way that reducing supply is not something we would want to do as we still want to reward people contributing to science. This leaves increasing demand.
To create a demand for Gridcoins we need to give people a reason to buy them other than to store wealth. This is because as pointed out earlier, we will always lose out to limited issue coins.
One way of doing this is to create a way for organisations to be able to pay for distributed computing power using Gridcoins. This would be a great way to use coins therefore creating demand and the circulation of Gridcoin as a currency.
Projects would be split thus:
These projects would be non-profit and would work just like BOINC projects do today. They can be managed using the existing whitelist and Gridcoin rewards would be issued the same as today.
These projects would generally be for profit and could work through the BOINC platform. Normally they would not get many volunteers to process there data on BOINC as people would rather donate to good causes than profit making businesses. However more “crunchers” could be encouraged to do work on these projects if they were rewarded. To do this the project would purchase Gridcoin and set a reward rate for work done (Measured as BOINC credit received). These rewards would then be transferred to the crunchers based on the users project credit in the Superblock.
E.g:
As said new coins can still be minted through work on the whitelisted projects which are mainly non-profit. But this enables a (profit making) organisation to buy computing power as well, they do this by buying Gridcoins.
Please also see this post which prompted me to write this:
https://steemit.com/gridcoin/@dangermouse77/deep-space-computing-a-garage-mining-company
Thanks for taking the time to read my ramblings. If you have found this post useful please consider upvoting, resteeming and/or following me.
