Topic: [ANNOUNCE] EnCoin - An alternative with a completely different paradigm - page 6. (Read 12139 times)

OP, let me be frank

I've only been here ~ 1 month and I've seen 4 alt-chains stagger and fall. 

All your strategy goes around:

1) Fork bitcoin (you're not doing nothing new)
 

Production price does not include ROI. The ROI is theoretically what every coin should be able to make, were they able to be sold for today's prices.
Scarcity or abundancy is controlled by people with coins.
2-4 CPUs worth mined 1.6 million coins.

Whether or not you believe Satoshi is a "rational actor," (I will ignore bringing up the fact that he disappeared -- oh wait) why would you want to place that much trust in him?


http://en.wikipedia.org/wiki/Straw_man

Production price measures nothing but the investment itself and ROI part. It DOES NOT settle any final price, final price is settled by how scarce or abundant a good is compared to its demand and use.

This starts to look like "the desperate miners section"! Too bad many didn't took to account that their hardware wouldn't be keeping up with the constantly growing btc network hashrate demand.

Businesses commonly make use of a simple calculation called Return On Investment (ROI). If we assume that there was a linear increase of the price to produce 1 BTC (highly unlikely, but simplifies calculations greatly), we come to a figure of $1.80 worth of electricity to produce an average coin. For the sake of including all factors, I will make a gross guestimate that with all of the computer hardware purchased for BitCoins, the average coin has cost $2.50 to produce. This is heavily, heavily weighted on later coins as initial coins were CPU mined, not expensively GPU mined.

ROI is calculated as (Gain - Cost) / Cost. ($4.80 - $2.50) / $2.50. We get a figure of 92%. The average BitCoin sees a 92% ROI at a trade price of $4.80 (as of 2011/09/20, the current trading price is closer to $6). 92% ROI, almost a guaranteed double-your-investment, by turning on a computer and making it do stuff.

Common sense would argue that this is not a sustainable economy. In fact, if we use that $0.70 figure for cost of hardware and add it to the current $3.60 price to produce, we are dangerously close to the $4.80 sell mark.

Couple this with the fact that BitCoins are about to become more scarce when the block award drops to 25 BTC at the 210,000th block, the security of BitCoin may even be at risk. BitCoins will either immediately cost $7.20 to produce, or half of the mining network must stop (and that half of the network might just decide to turn against BitCoin), or some point inbetween. BitCoin proponents are hoping the renewed scarcity will cause the price to increase and that they will continue to see exorbitant ROIs.

None of this has even taken into account that the market exchanges offer a very small percentage of the total BitCoins in existence for sale. The total value of the BitCoin network is commonly quoted as being the sell price multiplied by the total number of coins. If that is the case, then the BitCoin network was once worth $30x6.3 million but is now worth $5x7.3 million. Where did that $150,000,000 go? Where is the evidence that it can’t or won’t happen again? 1.6 million coins alone were mined for a total cost of $584. Will a market price of $5 really bear any small percentage of those coins being suddenly added to circulation?

That's not enough.  You need to have every feature proposed and put it into one really good cryptocurrency for it to be a real replacement.

 A single tweak alone, especially some money thing is lacking.

It's not based around price, it's based around a consistent value to produce. Supply and demand will still affect the price like BitCoin.

Another coin system based around price.  This is the wrong way to do it because it won't work and won't affect the price.

Proposal for possible successor to BitCoin -- EnCoin

You just started with both wrong feet on the title, no need to read more. Move along, one solidcoin was enough.

It seems you're basing the 'value' off of the cost to produce.  This is where I disagree. There are other things which give Bitcoin value apart from the electricity invested.

Edit: I'll add, that the 'worst case scenarios' described are at a value of 1:1.  This will only happen if the other aspects of BTC cease to appeal to anyone.

In those scenario's described above (where BTC is 320 each), there's a huge value to being able to send value instantly, pseudo-anonymously, globally, without oversight, cheaply.  Add that value on top of the 1:1 energy/BTC ratio, and the figures change a bit.

I skimmed this thread... to me, the cost of mining is going to be irrelevant as I believe that more and more, mining will be performed covertly on the computers of the unsuspecting, who don't know they're paying the bill for it.