Call me an ignorant but I don't understand how the buyback system is better, ICN just like every other crypto currency get its price from the demand and It should get demand so people could use it for a purpose right? In the first case, to receive dividends, now and we switched to buyback, why would people buy ICN If it has no purpose anymore?
I'm an investor and I'm not trying to spread FUD honestly, I just want to get some things cleared to me so I decided If I should invest more or not. I see that the price already started increasing so I might be missing something.
I'm an investor and I'm not trying to spread FUD honestly, I just want to get some things cleared to me so I decided If I should invest more or not. I see that the price already started increasing so I might be missing something.
ICN still represents a share of all the fees from Iconomi platform. They didn't change the fundamentals, only the fee distribution mechanism.
dividend or buy/burn are two different methods of distributing fees
For example, say the market cap is $100m and you own 1/1000 of ICN supply or $100k worth
Iconomi wants to distribute 1000 ETH profits to ICN holders:
A) they send ETH to every address, and now you have 1/1000 of the ICN supply ($100k) + 1 ETH
B) they buy/burn 1000 ETH worth of ICN, shrinking the supply so that you now have 1/999.5 of the ICN supply worth ($100k + 1 ETH)
In case B) you could sell exactly 1 ETH worth of ICN and you would end up with 1/1000 of the ICN supply ($100k) + 1 ETH, just like in case A)
It's not the end of the world if you have to hold less than 0.5% of your ICN on exchange then slowly sell it in order to receive your ETH dividends.
This article does a good job of further explaining the fundamentals of ICN:
https://medium.com/@theDAOKING/the-iconomi-burn-crypto-buybacks-f9edb30530fe
This line of thinking is especially dangerous in non-efficient markets. What you've proved above holds true only if the price of the token represents strictly the underlying economics, which it doesn't, especially in crypto.
The problem with this line of thinking is, you are taking on the exchange rate risk, in addition to the economic risk of the underlying (stock, token, whatever). If you were an investor, do you think you would have preferred dividends from KO during 2008-2009 or would you rather have sold your KO stock, at its lowest point in a generation, to cover the same pseudo-dividend?
Your analysis doesn't take into account price speculation. This is very well known to people who invest in traditional stocks (dividend paying vs. non-dividend paying). I am not saying this is a bad move by the ICONOMI team, but it is incorrect to characterize it as being economically identical to the end investors.
Chronobank also changed their fee distribution mechanism in this 4 March blog post, to a method that is less convenient than ICN's buy/burn. You have to deposit TIME into a smart contract to receive your fees:
https://blog.chronobank.io/time-token-reward-model-1c3508208791
There was no such explosion of opinions and activity when they did this, so I believe this reaction to Iconomi's blog post is very bullish.
