I am seriously enjoying these in depth conversations that the Gridcoin community is spawning. So let's continue! = ). If anyone thinks it would be better to have these conversations in the comments of a single thread, please speak up. I personally think the length of these dialogues doesn't really work in comments, but I'll do whatever.

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This is in response to:

My Thoughts on the Value of Gridcoin by @decayingzombie

which is the third post in a continuing conversation so far consisting of:

1. Long Term Goal of Gridcoin by @applepiee
2. Response to Appliepiee's Post "Long term goal of gridcoin" by me, @jringo

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I agree with the day to day utility of what you call value, @decayingzombie, and I very much agree with the connection you draw between time, energy (or work), and your definition of value, however I think there is confusion of terms when you talk about value. I am by no means an economist, just someone who studies economies. What I’m describing here is only my understanding as such.

Currency

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.

What you’re describing here is a standardized currency. A standardized currency is not required for an economy to function. And the backing of debt or gold, beaver pelts or tulips, is not required for an economy or currency to exist. The value of a currency is based on its ability to be traded easily. Consider, standardized currency wasn’t common place until we learned how to make little metal coins.

Currency needs to move around for a true economy to develop around it (again, sorry economists for gross oversimplifications).”

Since currency isn’t needed for an economy, this can’t be true. It’s an oversimplification for a reason = ). And I’m not an economist!

Commodity

A commodity is a thing that can be sold and used. This thing has to fulfill a few more requirements to be called a commodity, but I won’t get into that. It's things like gold, oats, coal. Gold, as I mention in my post you link to, has held value as a commodity throughout history because it is useful, rare, and beautiful. We had a commodity based economy until 1971.

Fiat

Fiat is defined as “a formal authorization or proposition; a decree.” It does not stand for anything. Fiat’s second definition is “an arbitrary order.” If we take the enjoyably pessimistic point view, all formal authorizations or decrees are arbitrary, so fiat economies are economies of arbitrary law. It sounds harsh, but it’s what it is. Fiat, as with most economic systems, dates back thousands of years. We live today in a debt based fiat economy meaning that arbitrary laws create an economy which prioritizes debt as a determiner of value.

Economy

An economy is nothing more than the resources of an entity, called “wealth” in capitalism. Capitalism also makes economies particularly focused on production and consumption, but at its roots, economy is just the resources of an entity. Its second definition ties it into management of these resources. There is nothing about exchange, though management often creates exchange.

Asset

An asset is a useful thing. That’s it. Literally. Anything can be an asset if it's useful. A house, a stock (which is useful in our system), a skill, a book, these are all examples of assets. Remember this: Commodities and assets are both things that meet wants and needs, but not all assets are commodities while a commodity is always an asset.

How does Gridcoin fit into all of this?

Gridcoin represents a unit of volunteer processing power on the platform BOINC. Gridcoin is not a commodity and I would argue is not quite an asset, though it is closer to an asset than a commodity. We simply don't yet have the language to describe block-chain assets. Governments are hard at work to solve the problem.... xD

One thing that is certain: Gridcoin is not just a currency. "Cryptocurrency", as Gridcoin might be called in day to day conversation, is a mislabel the same way that global warming is a mislabel for climate change. -- If I have to explain to 1 more person that it reaching record cold temperatures last year is a result of climate change and not evidence that climate change is a hoax.... -- this is not just semantics.

So that’s a bit of my view on the value of Gridcoin from a more practical lens. It is a block-chain based digital asset(ish) which represents a unit of volunteer processing power on the platform BOINC. In the same way that Bitcoin seeks to replace centralized 3rd party financial institutions, entities with real market value which is now getting transferred over to bitcoin, Gridcoin seeks to replace centralized 3rd party super computers, things that are only going to become more valuable as society gathers and processes more and more data. That is the value I see in Gridcoin, and it is very possible that we are shifting into an asset (multi-currency) economy faster than we realize.

In general, I do not think we should be using the definition of currency to describe the value of Gridcoin, something that is not a currency.

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Regarding @decayingzombie's Proposed Project Rain (there are 3 so far)

Instead of talking about the dangers of setting up a profit based BOINC project economy, I am going to suggest another way we could help fund projects looking to get some compute done on BOINC while keeping volunteer processing an absolute priority of Gridcoin. If we begin to look more like Golem, iEx, or SONM, what’s the point? If we get into it, I can describe the danger I see in your proposal later. Not saying I don't support the idea, just that I think it needs to be seriously explored before any action is taken.

This is a copy and paste of my response to @nightshift1134’s post. It’s just a rephrasing of his idea describe in that post. I have added one line from that comment to this one.

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This might look like:

We make a project, let's say GRCStarter@home. The data processed by this project changes based on the decision of whoever runs it -- community, an individual, whatever. The Mag awarded to every CPID on GRCStarter@home is based on the average GRCStarter@home RAC of all CPIDs working on the project.

To find out which projects award you how much of your magnitude, type

list explainmagnitude

in the debug console.

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Cause:
The project can change data.

Effects:

1. Topical data processing = good for media.

2. Can not run out of data, with proper maintenance.

3. Researchers can submit compute requests to be hosted on GRCStarter@home and they will get the attention of many new users and philanthropic heavy magsters.

Cause:
Low mag users can work on this project to increase their mag. High mag users can work on this project to help new or low mag users.

Effects:

1. Heavily invested entities can help Gridcoin and BOINC without requiring direct involvement.

2. Publicly traceable philanthropic competition.

Cause:
The process of getting a new user onto Gridcoin and BOINC is condensed into the clients required to operate Gridcoin and BOINC -- a massive simplification.

Effects:

1. An additional measure of network health and statistics.

2. The project website could be a hub of information for new users -- tutorials, FAQ, tech documents, BOINC info, project info, etc.. Education!

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What do ya'll think?

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I know this is a long post. Thank you for taking the time to read it! It gives me a lot of confidence in Gridcoin to see people proposing endeavors with so much thought and discussion behind them.

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Banner credit goes to @joshoeah
Credit for the animation goes to @dutch