What is SolarCoin and How the Hell can it be worth Anything Anyway?
OK, since I get asked this question on a daily basis, I thought I'd put something down that might help. Here we go:
#SolarCoin is a cryptocurrency that supports people who generate solar electricity. It doesn't matter if that's with a solar farm or just panels on your house, everyone qualifies to receive solarcoins if they have solar panels installed.
SolarCoins are also available to buy - just as with any currency. You get them on places called exchanges.
The question is often asked: how are these goddamn SolarCoins worth anything? Oddly, you can answer this question by thinking about Facebook. The value of each individual within the Facebook network is worth roughly $250 (that's what Facebook earns from each person from advertisers paying to show their ads on people's feeds).
And it turns out that there's a per-person value for many networks. US Dollars, for example, are worth in total around $8.2 trillion. Since 2.1 billion people use them, the per person value of USD is circa $1600. Bitcoin, in early 2017 at least, was worth $2332 per person. And so on: Visa, Gold, Euros, cryptocurrency - if there's a network, it has a value based on the number of people that use it.
So you can see that it's the connecting of people together that creates value.
'Normal' currencies, after all, are simply networks of people who have decided that their particular pieces of paper are worth something.
Back to SolarCoin (but this is all true of any cryptocurrency, by the way). The total network of SolarCoins (today) is worth $59 million. If each person is worth something like they are to Bitcoin, then there are 25,000 people on the SolarCoin network (having earned them or bought them), which doesn't seem unreasonable.
It's important to note that it doesn't matter what each individual does on any given network. They can buy and sell things or speculate and hope to make a quick buck. The point is that they all - on average - bring in a certain value.
I'm not making this up. It's based on what SolarCoin founder Nick Gogherty calls the Theory of Network Value. The strange thing about this is that for all of the networks mentioned above, the per-person value of these network (and any network, it turns out) falls between a 'golden average' of somewhere between $200 and £3000 dollars per person.
So you can see that the bigger the network, the more value the 'representatives' (i.e. the currency) of that network has. Hence growing the network is key to increasing the value of the currency.
How do you do that? Well, SolarCoin has a killer app - it gives them away. Everyone that generates solar gets free SLR. In the UK alone there are around 900,000 with solar panels on their house. If everyone claimed their solar then they'd all join the network, and the size of the network would ... you get the picture.
This scalability is the key factor to any cryptocurrency's value. It's called 'onramping' - bringing new people on board. And the more people, the more value in the network, and the more value of the coin.
Hope that helps.