Post
Topic
Board Altcoin Discussion
Topic OP
The perfect crypto-currency is one that subsumes them all.
by
kmarinas86
on 24/06/2013, 01:38:53 UTC
http://upload.wikimedia.org/wikipedia/en/8/8f/STKFLW.jpghttp://upload.wikimedia.org/wikipedia/commons/c/ca/StockFlow.gif

The old way is to buy shares of stock.
The new way is to buy shares of flow.

The difference is this:

With shares of stock, you gain money when the price per share increases.
With shares of flow, you gain money when the demand (represented as a flow of money) per share being sold increases.

With shares of stock, the higher the price, the more the people who have the stock for a while want to sell.
With shares of flow, the higher the flux, the more the people who have the stock for a while want to sell.

A share of stock has a value represented by a height.
A share of flow has a value represented by a slope.

Since the peak slope can exist for a longer duration than a peak height, shares of flow are less likely to have sudden sell-offs.
When the slope increases, more people will want to sell their shares of flow.
However, if these were shares of stock, people would wait until the slope decreases, then sell-off.

With shares of stock, sellers profit most when the thing has peaked its success, not before the peak.
With shares of flow, sellers profit most when the thing is still going strong, not when it peaks.

Therefore, shares of flow make more sense for valuation of a currency, as it is inherently anti pump-and-dump in its nature.

It is possible to make a cypto-currency that can be valued in terms of the volume of other cyrpto-currencies as opposed to their reserve quantity.

If one can produce shares the same way that BitCoins are generated, there will be an increasing number of shares, at an exponentially decreasing rate.
Literally thousands of currencies can be fluxed through such shares, some good, some great, some bad, and some ugly.
Such shares can be a kind of money, whose value is protected from the volatility of other currencies.
People will obtain shares of flow based on their contribution to the flux.
People will obtain flux based on their contribution to the sales of shares of flow.
More people will sell their shares of flow when there is a lot of flux available.
If there is many people selling their shares, relative to the demand for them, the people buying them will get them at a discount.
This of course, increases the demand for the shares.
So demand and supply of shares of flow will tend to correlate automatically, regardless of the flux, stabilizing the prices per share of flow.

In contrast, this is situation is unlikely for demand and supply for stock, which tends to decrease as people begin to hoard their stock until prices climb slowly.

Selling shares of stock at a profit reduces the value of existing shares of stock.
Selling shares of flow at a profit does not reduce the value of existing shares of stock, because the flow (slope) of the market backs the share, not the stock (or height) of the market.

Again, with shares of flow:
Demand and supply of shares of flow will tend to correlate automatically, regardless of the flux, stabilizing the prices per share of flow.

Buying crypto-currency for crypto-currency lacks this feature, and is therefore subject to pump-and-dump losses by victims.
Buying cyrpto-currency with crypto-currency flux eliminates this very problem. Pump-and-dump risks can then be completely eliminated for those people preferring to use shares of flow of crypto-currencies as means of deriving value for a stable, balanced crypto-currency that effectively subsumes them all.