I've been planning on writing this post for a while now and I figured since a number of other community members have posted similar things I should get off my butt and actually write it. Some bits here may be re-hashes of the other posts but hopefully I'm able to provide a bit of my own unique perspective and provoke even more thoughtful discussions. For reference the other posts I'm referring to are:
Response to Long Term Goal of Gridcoin
Also, please note that some of these points are presented as points of discussion and are in no way meant to hate on Gridcoin. As I've stated previously I love the idea of the coin and only want to see it grow but sometimes growth means taking a critical look at your faults. Anyway, with the foreword out of the way let's get onto the topic at hand.
What is the value of Gridcoin? That's the question I'd like to get you all thinking about. To start off let's examine what gives FIAT currencies value. The aforementioned posts touch a bit on the higher-level concepts behind what gives the money we use on a day to day basis value and what they're backed by. For this post I'd like to take a viewpoint closer to the everyday person. Why does the (in my case) Canadian dollar have value for Joe and Sally down the street? To answer that we can look at how Canadian dollars pass around the system. Inherent in every exchange is a perception of value. Say Joe owns a shop and his floor needs to be moped daily. Joe can either mop his own floor or give me $20 to do it for him. In the case where I mop Joe's floor for $20 the value for Joe is that he does not need to do it himself, thus freeing up that time and energy for him to do something else. Joe attributes the value of his time and energy to be roughly equal to (probably greater than) $20.
But why do I accept a $20 bill in exchange for moping Joe's floor? I accept it because I know that I can go down the street to Sally's coffee shop and use it to get a sandwich and a coffee. Sally accepts my dollars because she can then use the dollars I've given her to pay someone to mop her floor or buy herself goods. The cycle continues and we have a very rudimentary and simplistic view of an economy, at least from the perspective of trading time for money. My apologies to the economists in the crowd. Of course, rooted in all this is the high-level backing of the currency by debt or gold or beaver pelts or whatever else society deems as THE determiner of value.
This isn't even close to the most obscure form of currency to have been used.
Going back to our original question on the value of Gridcoin let's look at how Gridcoins are earned and generated. Gridcoins are issued in two ways:
1. As 1.5% interest on Gridcoins already held.
2. In exchange for completing scientific computations on the BOINC network.
Neglecting the interest part for now fundamentally Gridcoin is proof that you used your computational power to do science. Does the science you did have value like Joe's time did in our example? Of course it does! It has incredible value! Does Sally down the street recognize that value and is she wiling to give you a coffee in exchange for that proof of science completed? Unless Sally works for one specific coffee shop in Germany, probably not. This is the sticking point with Gridcoin. The science done arguably benefits all of mankind to various extents. Sally might love wine and the work done on TN-Grid may very well one day influence the price or quality of her wine in one way or another but she doesn't know that. The value associated with Gridcoin right now is fuzzy, hard to pin down and extremely niche.
Maybe one day we will live in a society where scientific advancement is valued as a valid backing for a currency, like our precious time, gold or debt we can trade it for goods and services. As of right now we unfortunately do not live in that society. Society today needs to see tangible near-direct benefits to perceive value; so, with that in mind, let's look at the value of Gridcoin through that lens.
What are the tangible near-direct reasons to want to buy Gridcoins? The most obvious one is the 1.5% interest. This is a minor reason to buy and hold the coin but it is also linked to the value of the coin. If I'm getting 1.5% more of something that has no value what's the point? Not to say that Gridcoin has no value, just an example.
Another reason to buy it might be because, like me, you want to live in a society that values scientific progress over gold or beaver pelts so you buy some to hold onto it. You see the potential in a currency that is backed by science. I think most of us are probably in this camp. This is a very amicable long-term goal and a lot of things are going to have to happen before we get there. There would have to be a monumental shift in the world's value judgements as a whole. I hope that one day we do get there, but again that day is not today.
You'll notice both of the reasons to buy Gridcoin also involve holding it. This doesn't make for much of an economy. Currency needs to move around for a true economy to develop around it (again, sorry economists for gross oversimplifications). From that observation we have to ask, what are the other reasons to buy (and spend) Gridcoin? Some people have touched on perhaps making it so that people can use Gridcoins to utilize the computing power of the Gridcoin network for their own projects and as @Dutch has pointed out we have a basic level of that functionality now with the rain feature. I think this is worth exploring further.
The rain feature is a great start but I think progress can be made from there. How can we make it so that someone can come along with a massive set of data they need crunched and motivate the Gridcoin network to compute it for them? On the basic level we have them buying up a bunch of Gridcoin and promising to rain it at certain intervals. This seems to be the next logical step in the development of Gridcoin. Some way for people to get their projects on the platform and get them extra attention and computational power by promising higher rewards of Gridcoin. I think the rain functionality can be improved on to support this concept better and I have some thoughts on the topic but this post is already getting lengthy so I'll save that for a follow-up post.
I'd like to stress that I'm not suggesting we remove the volunteer aspect of Gridcoin, I think that the volunteer part is the soul of Gridcoin and fundamental to the overarching goal of valuing science over gold etc. I also think we can have that part co-exist with a more for-profit style of number crunching. Some people have suggested that if we had a profit motivated part of Gridcoin that would take over and we'd lose the soul of Gridcoin. I do not think this is the case. After all, there's a large amount of people in this community who were doing BOINC for free long before Gridcoin was around. I don't think there's any risk of that aspect ever going away no matter how much money a corporation, individual, dog, etc. may want to throw at their specific problem. There will always be people who just want to crunch SETI and get a few Gridcoins along the way.
As I said, this post is getting a bit long so I'm going to end it here. Hopefully I gave you all something to think about and we can get plenty of meaningful discussion going around the value of Gridcoin and how to enhance it. I think that successfully coming up with reasons to want to buy and spend Gridcoins is important for the future of the coin and bettering society as a whole through science.
