Quote from: accripteau on August 25, 2016, 06:39:40 PM

Quote from: MalReynolds on August 25, 2016, 06:00:03 PM

Why would you assume anything other than one entry per EC, which is the current situation?

I think Factom is a great idea but I am not really sure to be honest how anybody is making money here, or why the Factoid cryptocoins issued at ICO have any real value. Once M3 starts, the price of those Factoids created by inflation (878K per year) can be priced at whatever "price" is necessary to make them generate the required number of ECs at 0.001 cent per EC to support the annual data rate. This "price" would burn all annual Factoid coins produced by inflation, and result in a sustainable steady state.

But....why do Factoids issued at ICO have any value at all in this steady-state scenario? ICO Factoids are not needed for burning to create ECs - that is taken care of by the inflationary Factoids. Thus ICO Factoids are functionally useless. There is no reason other than a psychological one to tie the price of ICO Factoids we hold today to inflationary Factoids that will be created tomorrow and burned to create the necessary number of ECs to run the Factom project.

I don't disagree with the Microsoft 1980 analogy - but holders of ICO Factoids aren't holding shares of Microsoft, they are holding 5 inch DOS floppy disks that will never be sold.

As long as ICO factoids can still be converted to entry credits, they have utility. They also serve as a buffer in the event there's such large demand that all inflation added tokens are gobbled up or are being hodled. You're leading to a good point, which I think is the conclusion of this discussion, that it really comes down to speculation of the number of future entries. The factoid market could never sustain a long period of deflation, so with any addition to the supply, we can estimate how many entries need to be made to prevent overall deflation. So let's speculate 1 billion entries per month...

i = monthly inflation, 73k FCT
r = FCT to EC conversion rate, $0.001
e = new entries needed per month, 1 billion

(e*r)/i = $13.70

After M3, at 1 billion new entries per month, factoids need to be priced at least at $13.70 to prevent deflation. Of course people speculating on future use will hodl and add to deflationary pressure.

I see. So they are priced to PREVENT deflation in your opinion? Interesting, I'll have to ponder that.

Why can the factoid market not sustain a long period of deflation?