Crypto Musings - Different Thoughts

The Low Supply Fallacy

I'm amazed that people still seem to think that "low supply" is meaningful. You see this constantly but it is 100% meaningless. The most simple reason for this, and the most simple way to explain it, is that splitting a cryptocurrency into one "coin" is simply an arbitrary number. If you know this, skip until #2.

I'll prove it.

Say you have two coins. They function exactly the same, except one has a max supply of 30 million while the other's is 100,000,000 times as many coins: 3 quadrillion coins (3,000,000,000,000,000).

At first glance it seems that of course, the 3 quadrillion coins are so plentiful that they are meaningless! There are so many, while the 30 million is pretty low, so they are more valuable. Right?

Well, change 30 million to 22 million - that's Bitcoin.

And the 3 quadrillion? Those are Satoshis. Satoshis are just fractions of bitcoins.

No one could argue that Satoshis are worth less than Bitcoin. Of course they are not. This is the fundamental misunderstanding that people have when they compare a coin whose single unit value is cheaper or more expensive than another. That comparsion is totally meaningless, for the same reason.

Take Ripple. 1 Ripple is worth $0.92. So someone might think, Oh, it's so cheap, BTC was $1 once and look where it is now!

But that's a total fallacy because there is a max supply of 100 billion Ripple. So the fact that 1 is worth what it's worth is arbitrary; let's just say that 10k Ripple is called a Bipple. That would mean that 1 Bipple is worth $9.2k - similar to Bitcoin. And there are only 10 million Bipples that can ever exist.

So that means each Bitcoin is worth about the same as each Bipple - but there are over twice as many in the max supply!

The $20 Billion Dollar....Something

If you start to think how speculative the entire crypto space is, it could blow your mind.

The one example that really sticks out to me in this regard is Cardano. Don't get me wrong, I have nothing against Cardano and it might very well end up as an amazing platform.

But right now, it's not. In fact, it's a barebones blockchain token. That's ALL. And yet, it is valued at $20 BILLION dollars.

Not only that, but click on the "white paper" link, and you'll see two options "philosophy" and "academic papers". The latter is a series of papers that describe various technical aspects of their project, such as Sidechains and their own version of Proof of Stake. But nothing of what exactly Cardano is supposed to be. And what about the "philosophy" link? Well...

Cardano is a project that began in 2015 as an effort to change the way cryptocurrencies are designed and developed. The overall focus beyond a particular set of innovations is to provide a more balanced and sustainable ecosystem that better accounts for the needs of its users as well as other systems seeking integration.

In the spirit of many open source projects, Cardano did not begin with a comprehensive roadmap or even an authoritative white paper. Rather it embraced a collection of design principles, engineering best practices and avenues for exploration. These include the following...

So Cardano isn't really meant to create anything in particular, or to solve any problem in particular. It's basically supposed to be a blockchain project that "accounts for the needs of its users". Whatever those needs turn out to be.

Can you imagine if a software startup came to get VC funding, and basically said, "We are going to build software with best practices. What is our software going to do? Well, it's going to do what our users need." They would be laughed out of the building.

I don't mean to make fun of Cardano here. They are probably very smart people and may come up with a product that is amazing.

But until they do, what exactly is worth $20 billion? I like to say that it's a $20 billion whitepaper, but they don't even really have a whitepaper; or, that it's a $20 promise, but they are not even promising anything concrete.

This is getting to be too long, but it is related to my horrible anxiety I have over the fact that Crypto culture is so focused on trading, charts, and speculation, and not very interested in use cases and reality. And also this train of thought makes me uber bullish on Steem because it's a real freaking product that real people actually use.

#JustMinerThings

Has anyone ever mined with those little Compute Sticks? I'm so freaking curious. I'm sure they would overheat but it still seems like an interesting experiment.

Since Steemit doesn't really have any organization of posts into groups of any kind, it's hard to feel any sense of community on Steem. I'd love to connect with fellow mining enthusiasts but there doesn't seem to be a tag that is used very much. #Mining is full of off topic stuff. Anyway, I might start posting under the #JustMinerThings tag if any fellow miners want to join me.