Quote from: mercSuey on June 24, 2013, 06:51:22 AM

I didn't read your whole post, but here's how to game the idea of flow as valuation metric:

Say there's a company, Hack Money Inc.

Hack Money Inc. has two subsidiaries, Hacker Company A and Hacker Company B, each supposedly selling some service.

HCA and HCB buy and sell each other's 'service'....infinitely, under the corporate umbrella of Hack Money Inc., so that Hack Money Inc. never realizes a loss in its capital. But all the while driving the value of its currency upward.

In other words, if currency was valued by 'flow,' you'd see millions of these ghost companies doing 'business' with themselves and able to make a killing by doing/offering nothing of value.

The share of flow does not contain the money itself, as the money flow that backed it up continues to circulate outside the shares of flow. If you are going to obtain shares, someone must sell the shares, as any new shares are generated automatically by an inverse proof-of-stake mechanism (remember, the context here is that of applying this principle to a cyrpto-currency). Now you have a question of who sells the shares. If that is you yourself, then the only way you can increase the value of each share of flow is to circulate arbitrary flux, but this flux only gives value to shares of flow being sold, not total shares of flow! The shares of flow have no value themselves until they are sold, except in terms of the context of using shares of flow as their own medium of exchange (i.e. for their own merits). 1 million times 1 millionth is still 1. You are not arbitrarily reporting wealth simply by circulating it - if the accounting is done correctly anyway.

Let C be total capital.
Let F be total flux.
Let f be a sample of flux.
Let S be total shares of flow.
Let s be a sample of shares flow.

0 < s < S
0 < f < F

Let S also be the quantity of the proposed crypto-currency.
Let F be the nominal value of money to be fluxed (U.S. Dollars, Euros, Chinese RMB, crypto-currencies, etc.).
Let C be the wealth that exists.
Let the change of C be the generation of wealth.
Let S_selling be the number of shares of flow presently being sold.
Let S_period be the weighted period of time that shares S_Selling are being depleted.
Let F_period be the weighted period of time that flux F is being extended over.

F / F_period is the rate of currency being fluxed through (the money paid to obtain shares in a period = the money received to sell shares in a period)
S_selling / S_period is the rate of shares being sold (the shares being obtained = the shares being sold)

The amount of flux obtained by an individual is:
((s_selling/s_period) / (S_selling/S_period)) * F / F_period
= % contribution to S_selling * available flux

The amount of shares obtained by an individual is:
((f/f_period) / (F/F_period)) * S / S_period
= % contribution to F * available shares

As you can see, the calculation of the amount of flux and the calculation of the amount of shares obtained by an institution has nothing to do with determining the value of C.

Increasing F / C decreases C / F, which has more to do with reducing capital relative to flux, than it has to do with any income generated by capital. F, taken by itself, is not income by any stretch of the imagination.

The number of shares of flow that have value is:
S_selling
The number of shares that lack value is:
S - S_selling

Let me repeat what I said earlier for more nuance:
"The shares of flow have no value themselves until they are sold, except in terms of the context of using shares of flow as their own medium of exchange (i.e. for their own merits)." The merits are obtained because when these shares are traded for currency, they have value. However, when shares of flow are not being traded for other currencies, they do not have any value in terms of other currencies except through indirect actions via the buyer and seller market. Only during the action of direct trade between currencies is the value of each stock of flow well-defined with respect to other currencies.

The value of each share of S_selling is:
F / S_selling
Assuming that F is constant.
If F is not constant, then we can still calculate the value obtained by S_selling during the present block.
(F / F_period) / (S_selling / S_period)