Topic: Can a coin that is primarily a store-of-value succeed? (Read 2385 times)

I'm surprised to see that Peercoin hasn't already been mentioned yet. Peercoin was designed to be a store of value coin from the very beginning by Sunny King. His suggestion was that PPC should be used as a savings account or a "backbone currency". It's security model is proof-of-stake although the distribution uses an initial proof-of-work stage.

One of the measures he implemented to make sure that PPC is fit for this role was fixed transaction fees which don't go to miners/stakers but are simply destroyed and lost forever. In order to encourage staking, the coin incorporates a fixed 1% per year inflation rate instead. Hence Peercoin completely dissolves the link between transaction fees and mining/staking incentives. This means that even with very few transactions happening, PPC can still have a healthy network.

Note that this also means that PPC isn't really the type of coin that you'd use to buy your baked beans at the supermarket with.

Store-of-value was programmed into us by the Scientology Overlords so they might easily take our gold when they return. Bitcoin is a secret weapon created on the Planet Satoshi to defeat the Scientologists. 

If you create a coin primarily only for as a storage purpose  how do you expect it to grow without demand. If you can create a coin and slap it with any name you want to call it what prevents others from doing the same and call their coins also as store of value. What makes the difference here is if you can create a coin where there is a natural demand for spending purpose it will likely attain a value. Never mind if it gets sold as long as people will buy it again and spending the coins is the key.

That was the goal with MMXIV. To provide a hedge using high stake rates. It's going alright

There are a few. This is probably the most well-known: https://coinapult.com/locks/info

Hedged accounts are here now. 
https://support.coinjar.com/hc/en-us/articles/204157605

i can't recall any service like that, and it could potentially go against the bitcoin decentralization, because a service like that will probably be centralized...

Gold is not something I m interest in cause I have my investments into crypto. If I wanted traditional sources, I would not be here. Besides, a store of value comparison between gold and crypto s probably one of the most common ones. I m simply saying, DMD is, IMHO, the closest thing I currently consider to to store of value coin. If you have any other option which s better, pls do suggest it and explain why.

why don't you use a bitcoin service that locks your bitcoins value? that way you get a store of value with bitcoin

Yes why not, but you can't say :


If you want to store value, the best choice at the moment is the gold. If you talk in the cryptocurrency world, there is not exist a coin that can considered primarily store of value". Just my opinion and maye I'm wrong.

People like choice and people want to have choices. The same goes for drinks and crypto.
I personally hold 3 additional cryptocurrencies besides BTC and each of them s got some kind of unique trait which I like. Not to mention the fact it s much easier to make money on alts then on BTC.

still the most succeful is coke, the other are just niche market, the same with alt and bitcoin, bitcoin is the primary and most accepted while alt are just for the minority who got bored to play with bitcoin only

also this isn't exactly a good comparison, because bitcoin has utility, those are only "food" instead

Store of value is not its only feature, its also global payments without borders. You can buy drink on every airport in the world without need of using money exchanges and paying many fees.

I think my questions in the OP were very clear; I don't know why people keep trying to misinterpret it.

Op, so are you worried about that Bitcoin could in the future become deflationary spiral, because we have finite coins plus lost coins means deflationary spiral - some people seem to think that way.
Is that your problem? First and foremost I am not sure what is the deal with lost bitcoins, it is normal, it was happening and it always will. There is no problem with it. Satoshi predicted this and said it is perfectly fine as lost coins only make everyone else's coins worth slightly more...

DMD Diamond price went up 10% in less then 24 hours and it will continue to rise IMHO.

So this coin s going to be the best example how store of value coin can be successful. True, it takes a very active team behind it to do so as well.

If bitcoin has mass circulation and price remains stable, bitcoin can fulfill a store-of-value function. The key question is for how long.

Gold is a store-of-value commodity and its price can also fluctuate tremendously too over the years. We cannot discard bitcoin has a store-of-value purely by its volatility. I believe future demand is a crucial factor. No one can be sure about the demand for bitcoin in a few years.

The biggest enemy for bitcoin (as all the other things) is the "ignorance". If you don't know something you will know how to do it so at the end you will fail and not succed to do that thing. The scam and ponzi schemes are only a little part in the bitcoin ecosystem, and it is not that the problem.

Yes, scam and ponzies are the biggest enemy of Bitcoin. So many good people have left this industry due to human scum ripping them off.

In short, no. Something that has no utility ultimately has no value, and something with no value cannot be a "store of value".

Bitcoin's utility as a medium of exchange gives it value, so it can be a "store of value".

Gold has some utility as a component of jewelry and some industrial uses. In the past, it had utility as a medium of exchange, but not as much now. Its utility is what gives it its value and the ability to be a "store of value". In my opinion, its current value is overblown because its utility as a medium of exchange is so much less now. Without that utility, its current value cannot be supported in the long run.

Gold have little intrinsic value indeed. It's is just psychology, social consensus and most importantly tradition. Gold have been currency for nearly three thousand years so ppl traditionally think it has a great value on it's own (rarity, looks nice, etc). BTC have no such tradition, the social consensus isn't widespread enough yet, and because of volatility and the lot's of scams psychology even working against it.

yes, look at the gold coin been going strong for thousands of years

It's difficult to tell if a coin like this could succeed. Many store of value coins have been made in the past and they always failed, maybe in the future a sidechain an be built with a store of value.

Its the same as saying it pointless to have Pepso, Fanta and Sprite since we have Coke. Well, I like my choices. I m sure other 2 million supporters of other alts also like their choices. Can BTC stake?

I don't see a point for a coin to have any value over Bitcoin, unless it does something that Bitcoin can't do. I do not think DMD is the case.

Because (again) I want to move real bitcoin on the blockchain and not off chain. For the question about the private keys, no one more than me can store and protect my private keys. Why should I trust another person to save my funds if I can save it/them myself?




  It is normal, a lot of person here hate the banks and it is not necessary a bitcoin bank (look at the exchange system).



I think bitcoin will survive until a few person will support it, but I think one day will 'born' a new concept better than Bitcoin itself.

Why? because within the system, you can save on transaction fees. They might also offer some sort of a bonus, or claim they can store your keys with more safety than you can. May sound outrageous to some of the extreme techies here, or those who cannot trust anyone. But I'm sure for a fair number of people, this would be totally true.

Also, I'm not looking for a store of value. I'm wondering how bitcoin will survive in various scenarios, and how the altscene will develop in the future.

@Snail: what's the intrinsic value of gold? And yet it keeps keeping up with inflation.

"...coin that is primarily a store-of-value ..."

Is there any such thing? IMO Cryptos are for transaction processing not for storing value. BTW what value? A value suggested by a bunch of pumpers and/or fuders ? What will happen if you want to buy something from an "unbeliever"? In that case the value of your coins are exactly zero (unless you can find a "believer" around and sell your coins for fiat).
A crypto what is acting as a store of value is basically an electronic form of fiat as it has no intrinsic value on it's own. Only the consensus of a community grants any value for our coins.

Watch out Amph, talk bad about Diamond and crazyivan will begin to flip shit-soaked pancakes.

BTC is basically fulfilling the role from the OP.  Any alt-coins claiming this are almost certainly dependent on the mercy and market elasticity of BTC.  Defeating the purpose.

Gold or go home.  Seriously, and physically own it.

@futureofbitcoin,

if you want to store value (like 10k dollars) or something I can suggest you to chose the 'gold', because BTC compared with gold it's very, very volatile. bitcoin as money (at the moment) for a lot of us is considered a thing for make money (pure speculation) but when one day this speculation will terminate we can start to think to another concept of bitcoin and usage.


(This was just my personal opinion).

then what about other pos coins that have less coin supply(like 1 coin and many others crap with 100k total supply(firecoin, lemurcoin ecc... )? they should be better than diamond or bitcoin right? well i don't think so

There s no doubt this is useful trait but the question was whether a coin which is primarily store of value can succeed?

Then in this case we will not "move" bitcoin, but something like that "the promises" as in the FIAT value. The limit of 7tx/s is due the block size, and I think one day it can be "adjusted" to 5 Mb per block. We should move real bitcoin on the chain, not 'off the chain'.

For the question of bitcoin banks, I think it will never exist a bitcoin bank.... because bitcoin was created also for 'go away' from those banks. Why someone should keep his bitcoin on a hypothetical 'bank'? We own ours wallet/client to keep and store bitcoins and (in my honest opinion) we don't need bitcoin banks.

Really? How many diamonds do you have? As opposed to some other carbon stone? I can find coal in my back yard, diamonds, a bit harder.

....... read the thread title? The question is what will happen if people choose NOT TO transact, and give miners rewards...

Or even if people transact, but within a system say xapo or coinbase or something, such that the transactions don't actually happen on the blockchain, but within xapo/coinbase or some future bitcoin bank, and miners will not get rewards.

The things we should keep in mind that when time goes by, the adoption rate of bitcoin will increase, and the number of transaction per day will increase as well. So does the transaction fees.  If the number of transaction can reach to the theoretical maximum of 10tx/s, then every block can collect 9 BTC (we assume every transaction includes the minimum fee 0.0001 BTC) to reward the miners. And the supply of it is diminishing, more merchants and individual are requiring it and the price will definitely shoot up.  Until the bitcoin ecosystem reaches to the balance.

Just FYI, diamonds are common.

The tendacy would be that some people would want to hodl/hoard it, because of the deflationary nature, but there would also be a huge number of people, who would use it, for the other features it offers them.

1. Low Fees
2. No charge backs
3. Speed of transactions { 1 or 2 confirmations}
4. Better security for online transactions, compared to credit cards etc. 
5. Some degree of anonymity.
6. Cutting out the middle man {Banks}

We hope these features of Bitcoin would promote it's use and not the deflationary nature of the coin. Nothing is set in stone, so features can be added to make it more flexable. 

I think we will see something before/after the next halving (25 --> 12.5 bitcoin). Maybe from 200 dollars the price will jump to 300 bucks, but as you said the real interesting thing may happen after ~2032 (when the block reward will be less than 1 bitcoin).

Ok, sure.


You know how they often compare crypto to a gold?

One of the major function of gold is to be a store of value, in other words a precious metal you can turn your assets into and know that you ll be able to retain that value over decades.
The same idea s behind several cryptocurrencies, I would say most of them besides those with high inflation rate e.g 700%+

People often think that the primary reason for crypto to succeed is to get accepted by thousands of small retailers and get spent EVERY DAY. This might not be true.
I personally chose my currencies to act as store of value, I do use some of them to purchase things I need but most of them I hoard like a hamster. Let us be honest, most of us do the same.
The only difference is that some people do it solely because they expect the price of their portfolio to apprecaiate while other, like me, do this due to this additional reason of PRESERVING current assets over time.

I like gold but I m into tech and I need something with characteristics of a precious metal which can be turned into FIAT fast, which is easy to transfer, which is safe and secure.

Why DMD Diamond? Well, its a 50% annual PoS coin. In other words, it s a gold bar which generated small gold bars over time. 
Also, it s a coin with a very limited and scarce supply as a real diamond should be. PoW phase reward just got reduced from 1 DMD per block to 0.2 DMD per block.

So, yes, I believe crypto can be used as a store of value. Whether this is its primarily function, it depends on the person who holds it.

2140 is pretty far, but if you think about it, a block reward of < 1 BTC wouldn't be all that much, unless bitcoin's value skyrockets. So we may face this problem a lot earlier.

LOL

Okay, you're free to promote a coin you like, but in keeping with this being the bitcoin discussion section, would you mind elaborating why you think such coins can/will succeed? You're free to bring examples from your coin, but I hope that there is also something in general to all cryptocurrencies. I don't mind the mods moving this thread, but I'd prefer if it stayed here.

Thanks.

Yes it can. DMD Diamond s primairly store of value and it s going to be big. Yes, I have invested in it and yes you can consider this as a promotion. However, if I think it s smart to invest my own money in it, I see no reason why I would not recommend it to other people.

Sorry if this should go into the alt section. But it's not just about alts, and I figured there are more people here. If it should be moved, sorry for giving you more work, mods.

Can a coin that is primarily a store-of-value succeed? What I mean is, a lot of people have been comparing bitcoin to gold. Some, like me, believe that it will be very hard for bitcoin to overtake current national currencies (I avoid fiat, because it doesn't matter whether they're fiat or not, the point is the governments of the world recognize these currencies, thus they're "legitimized" in a way) in terms of being a spending currency. But bitcoin could also carve out a niche in other areas, particularly as a store-of-value, since it was even modeled after gold. If bitcoin goes mainstream, because of the deflationary nature, many people will want to save and hold instead of use.

So if bitcoin becomes a primarily store-of-value coin, or if an altcoin that pops up in the future decides to make itself primarily for the use of storing value, will the amount of transactions be able to support miners, when the block reward drops off, and only transaction fees are left? If not enough transactions happen, what will happen to the network security? Will the big players spend their own money to secure the network to make sure the value they have in the coin is safe? Or will transaction fees be very high? Or will the network be vulnerable?


-Just two points to end; yes, I understand, for the libertarians among us, the hope is that bitcoin will work as a currency. I'm just talking about a hypothetical question here. Or perhaps, if bitcoin goes mainstream, there will surely be more people making altcoins for various niches. So no need to tell me that bitcoin will kill fiat for sure, blah blah blah.

Also, if an altcoin is too inflationary, obviously it won't work well as a store of value. But perhaps a small amount of inflation could work; if we could estimate the amount of coins lost (through mistakes, death, or whatever else) per year, and have the emissions match that amount, we are essentially keeping the amount of coins constant (or close to it). Miners will still get rewards, and we won't end up with a grand total of 1 satoshi that isn't lost, from 21mil coins in the future.