Self-destructing crypto - Bomb token

[Sprout]

Interesting experiment in digital currency but more as exploring it as a store of value vs as a currency. After distribution is complete of 1 million free and gifted pre-mined tokens then it will be listed on an exchange for price discovery.

With each transaction 1% of the transaction is destroyed thereby increasing the value of remaining tokens.

It'll be interesting how this effects the crypto space and whether it can retain a first mover status and capitalize on the network effect with it's brand.

In a way it's like fast-forward to bitcoin's milestone of having all possible coins mined and how the market responds to it.


https://bombtoken.com/

 

[gaussian]

With each transaction 1% of the transaction is destroyed thereby increasing the value of remaining tokens.

Deflation is well studied in economics. This will result in coin-induced hyperdeflation that will result in demand for the coin dropping to absolutely zero. I don't understand why people seem to think cryptocurrencies are immune to the basic principles of macroeconomics. My guess is these people think deflation is a good thing. Only someone ignorant of economic factors thinks because deflation makes money worth more it's obviously good.

Eventually all possible theoretical value will be owned by a few people. Those few people will have no way to use their coins because demand won't exist on the other side of the market. Who would make a market on a coin that will instantaneously destroy 1% of it's value?

The term economists use is "deflationary spiral" and it never results in anything anyone would remotely call "interesting". The coin will literally kill itself after some number of iterations as less and less people see value in using it.

 

[Sprout]

Deflation is well studied in economics. This will result in coin-induced hyperdeflation that will result in demand for the coin dropping to absolutely zero. I don't understand why people seem to think cryptocurrencies are immune to the basic principles of macroeconomics. My guess is these people think deflation is a good thing. Only someone ignorant of economic factors thinks because deflation makes money worth more it's obviously good.

Eventually all possible theoretical value will be owned by a few people. Those few people will have no way to use their coins because demand won't exist on the other side of the market. Who would make a market on a coin that will instantaneously destroy 1% of it's value?

The term economists use is "deflationary spiral" and it never results in anything anyone would remotely call "interesting". The coin will literally kill itself after some number of iterations as less and less people see value in using it.

I'm more or less a novice on the subject. Would you post a real-life example of a deflationary spiral?

The mission of this particular crypto is not as a currency but as a social experiment to understand if a self-destructing token can be a store of value.

To use a simplified example, if there are only ever 100 coins minted and distributed to 100 folks and 99 of those folks received something of worth to the 1 person who accumulated them all. The value of those remaining coins has accumulated all the value which was exchanged for it. The token still has utility even to a single owner, the single owner would know it's intrinsic worth.

It becomes a transferrable crypto vault that can be accessed from anywhere at anytime.

Who really knows?

 

[gaussian]

I'm more or less a novice on the subject. Would you post a real-life example of a deflationary spiral?

They don't really exist in fiat markets. Though it sort of depends on what school you come from.

To use a simplified example, if there are only ever 100 coins minted and distributed to 100 folks and 99 of those folks received something of worth to the 1 person who accumulated them all. The value of those remaining coins has accumulated all the value which was exchanged for it. The token still has utility even to a single owner, the single owner would know it's intrinsic worth

A token's value is whatever people are willing to pay for it. Just because you don't use the term "money" doesn't mean a market doesn't exist. If one apple is worth 5 potatoes, you have a market and established value. If 2 hours of labor is worth 1 pound of rice, you have a market and established a value.

The result is similar to hyper inflation (which we have seen), just the other direction. The result is still the same. You will be left holding a bag you paid some large amount of value for and no one is willing to exchange value back to you for it. If you cannot form a market, the coin has no intrinsic value.

 

[sle]

Deflation is well studied in economics. This will result in coin-induced hyperdeflation that will result in demand for the coin dropping to absolutely zero. I don't understand why people seem to think cryptocurrencies are immune to the basic principles of macroeconomics.

IIRC, deflationary spiral is only possible with participation of reserve banking (at least, that's the theory that is being pushed by gold bugs and such). So if you have a "stable currency" and don't create a money multiplier because there is no lenders/borrowers (i.e. you kinda only use this sh*t as payment for fun and games) you can have a steady cycle of deflation without a proper deflationary collapse.

 

[Overnight]

One person's trash is another person's treasure.

*mic drop*

Chew on it.

 

[sle]

One person's trash is another person's treasure.

Sometimes. But in most cases trash is trash.

 

[Sprout]

They don't really exist in fiat markets. Though it sort of depends on what school you come from.



A token's value is whatever people are willing to pay for it. Just because you don't use the term "money" doesn't mean a market doesn't exist. If one apple is worth 5 potatoes, you have a market and established value. If 2 hours of labor is worth 1 pound of rice, you have a market and established a value.

The result is similar to hyper inflation (which we have seen), just the other direction. The result is still the same. You will be left holding a bag you paid some large amount of value for and no one is willing to exchange value back to you for it. If you cannot form a market, the coin has no intrinsic value.

Obviously this sentiment has to be balanced with what someone is willing to sell it for.

The idea of this crypto is not as a currency but as a store of value.

I suspect, it will have an intrinsic value from the buy and hold side where their primary goal is to accumulate all of it as a perceived store of value. The ability to transfer liquid assets across borders would be an asset during this period of global disruption. There are only 1million coins.

I imagine the market would be similar to antiques & collectibles that come to market sporadically and have minority appeal.

 

[wwatson1]

I bought a load of crypto a long while back, just keeps being worth less and less. Maybe I just sell it before there is no daft crypto market anymore??

 

[misterkel]

Deflation is well studied in economics. This will result in coin-induced hyperdeflation that will result in demand for the coin dropping to absolutely zero. I don't understand why people seem to think cryptocurrencies are immune to the basic principles of macroeconomics. My guess is these people think deflation is a good thing. Only someone ignorant of economic factors thinks because deflation makes money worth more it's obviously good.

Eventually all possible theoretical value will be owned by a few people. Those few people will have no way to use their coins because demand won't exist on the other side of the market. Who would make a market on a coin that will instantaneously destroy 1% of it's value?

The term economists use is "deflationary spiral" and it never results in anything anyone would remotely call "interesting". The coin will literally kill itself after some number of iterations as less and less people see value in using it.

The deflationary spiral is an interesting theory. Can you point to a real world example of it?
There is a counter to this theory which basically says that consumer mentality is not completely rational. Someone won't wait for 3 years for a 3% deflation to give them a slightly better price on their washing machine, so, while it works with 'econs', it doesn't prove out with actual people.
But I'd love to see a case where it actually happened.