Classic ponzi scheme definition is correct. But anything that promisses gains without having something concrete to back these gains can be called a ponzi scheme.
Well, that might be a casual use of the word ponzi that one might use, but its not the correct use of it. For example, if you were to apply this definition of a ponzi to a cryptocurrency it would be applicable to many blockchains such as Bitcoin, Bitcoin Cash, Dogecoin and really any blockchain that is only used as a means of exchange. In fact, that is precisely the argument that Peter Schiff makes against Bitcoin, calling it a ponzi, as many no-coiners also call it.
"But Bitcoin has USE!!! It can transfer value from one place to the other side of the world!!!"
Yes, but Bitcoin is only valuable if enough people keep agreeing it is. You can't build something with Bitcoin, you can't eat or use bitcoins in any way other than means of exchange. Its nothing if people don't agree it is something. HEX is precisely the same as Bitcoin in this way, nothing more than a digital record of numerical totals that can be moved around the world, the same as most blockchain native coins and ERC20 tokens.
HEX is an idea that you could build a currency on Ethereum, which the founders of Ethereum actually did intend. The idea behind HEX is simple, it aims to be an international currency just as Bitcoin does and a store of value just as Bitcoin does and the reason it is suggested to be useful in this way is that it was designed with game mechanics that reward people for locking up their HEX, which in theory will result in scarcity.
Could it fail to be substantive to work? Sure, maybe, but the idea is interesting. Bitcoin and Ethereum are forced to reward people securing the blockchains, but what if you had the security automatically? Then you could reward other types of behaivor. HEX was designed to reward actors that do things deemed more beneficial for its internal economy. Its a money play.
A ponzi is called what it is because it has a very specific feature of it, which is that return on investment to early participants comes from later participants and not from any real value. But a lot of kinda worthless shit gets appraised for stupid amounts of money.
A sucky Nintendo game that no one enjoyed playing as a kid went for $80K in one auction. A car that was known for having a manufacturing flaw that tended to cause the car to catch on fire and burn the driver alive sold for $3 million dollars... Do things have to have a "concrete" utility to have value? Fuck no...
Here's the problem with applying that to a cryptocurrency. It makes sense to apply that to Bitconnect because it literally couldn't pay you the interest it promised forever, there would be an end and it was destined to be an ugly end.
HEX is a smart contract that rewards you not with USD, BTC or ETH but more HEX when you stake it for a set amount of time and do not unstake too early. So, you cannot fail to get paid what you are promised.
The dump argument would not apply because I already explained how dumping is strongly discouraged in HEX due to how much more you are rewarded to stake when everyone else is staking.
Comparing it to Bank Deposit certificates makes no sense. BDC have a whole financial and regulatory structure behind it that make the system solid enough to provide some guarantees to investors if shit hit the fan. HEX is just a promisse that it will work.
HEX promises you that if you stake HEX you will receive more HEX at the rate of between 3.69%-369% depending on how many people are staking. If 99% of the HEX is being dumped on exchanges for BTC/ETH/USDT then the 1% still staked is getting a 369% interest rate. This design motivates people to not have their HEX sitting on exchanges but staked, increasing scarcity and likely price.
Its not promising you more USD, BTC or ETH, it is promising you more HEX and it can always fulfill this action.
Inflation isn't value increase. It is value decrease. The value of something increase only if there is real demand for that something. Demand based on supposed gains without something solid to back it up is just speculative demand that can bring short-term profits but don't buid value.
It is experimental for sure. But think about this, why is inflation a negative to people? Because they are not the ones getting the inflation. If you were getting the inflation than you would be richer and when you're the one getting hit by the inflation you would be getting poorer.
This is why my post brings up the Steem blockchain a lot. You are on the Steem blockchain, so I imagine you don't see it as a scam. Yet, its whole reward system revolves around inflation. Similarly, HEX does this too. In fact, all blockchains use an inflation system, including Bitcoin, to motivate certain participants to perform some action believed to be beneficial to the network. HEX does that with its inflation, rewarding those that lock up their tokens for longer, and discouraging those keeping their HEX liquid. Steem does precisely this very same thing.
"So why is HEX not a scam? Because its code is available for the whole world to see". Well, Jordan Belfort (the wolf of wall street) operated years on daylight before it could be proven that he had a really elaborated scam. Having a open-source code isn't an argument that it isn't a scam. It's just a scam that want to appear as a legit and trustfull project.
Here's the problem with that argument, we know the attack vectors. The founders of HEX can't undo the smart contract, it exists how it does. It also went through 3 auditing companies that verified its economics. You can find those auditing companies by going to Hex.Win the website and checking the "Tech Specs" page.
The code can be checked for malicious techniques. The ways in which the founders get rewarded are obvious, they are getting both large amounts of HEX and ETH right now. But after the first year, the founders only get 50% of the penalty fees when people do an emergency unstake, unstaking early than they agreed to do. To me, that is very fair, most people will not unstake early, and founders should get something for their trouble.
Still about open-source code: How many people do you know have the ability to properly understando the code? I can't. I have to choose to believe in someone that can. Also, how many people attracted by the possible "amazing gains" will care about reading the code?
There were 3 audits by well known thirdparty auditors. They won't like for a dapp. You can check out their reviews and I mentioned in a response above.
And about shitcoins... every coin is a shitcoin until someone believe it isn't.
Very true. However, given the incredible success of HEX so far, especially with all the naysayers out there that call it a scam before looking into it, I'd say HEX already passed that threshold.
But I will say this, I'm way more into Ethereum than HEX. To me HEX is not the be-all-end-all of crypto. Its just an ERC20 with interesting game mechanics that I think will eventually be seen in the top 100, potentially earning me a nice ROI.
What drives me to debate with people on HEX is more that people discount it without really hashing out its details. No, its not the cure to cancer, but like Steem its a fascinating economic experiment.
I hope you enjoyed reading this book. ;)
Not applicable. These projects never promissed any gains for just having the coins. Gains are coming from open market trading.
Yes, as anything in the world. But Bitcoin have a solid technological structure, and have already proven it's protocol security and reliability for around 10 years now. There is a reason people believe bitcoin have value. It's not only "buy and get rich".
No it isn't. HEX is a smart contract built on a valuable blockchain (Ethereum). It doesn't have anything of value except grow within itself.
Again, Bitcoin have a technological infrastructure that solve real problems like centralization, trustless exchanges, and transaction cost (and a few others).
There is no scarcity if there is inflation. Bitcoin scarcity comes from a maximun amount of coins that will enter circulation. HEX will alwasy generate more HEX. Locking it up doesn't make it more scarce.
Really? I read that i have to lock it up for one year before unlocking. Meanwhile, in one year, the creators of the scam have already dumped his whole stack on the market, bringing the price near zero.
What does it matter if you are recieveing more HEX than before if it's price is near zero? You would only be recieving a lot of coins that are worth nothing.
Ponzi Scheme 101:
I convice person A that i will make his money grow, but he need to find 5 more people to invest.
A gets 5 more people, but they also have to find 5 people (people Bs) each to invest.
People Bs money goes to the creator, and pay the "investment" profit to A, who then start to look for more people to invite.
People Bs get 5 more people each (people Cs) to joint the amazing investment. Now there is 25 more people on the system.
People Cs money pay the creator, pay people A profit and people B get a bit from the leftover.
The process continue until there is no more people joining the "amazing investment".
HEX is just more of the same, with a new shell.
Think what will happen when the dump start, and people start to see there is no reason to have a worthless coin that pay more worthless coins?
So, what is paying this interest? On bank deposits you money will be used to finance some one else, and you will get a share of the interest paid by the borrower.
HEX just print more "money". And since there is no use to have HEX, it's just a increase in supply.
At some point, there won't be enough people interested in buying it for the "amazing gains", and whoever got in first will start the sell, and the price will go to zero.
There is emotional value for the person that bought it. I might not be worth for you, but this guy probably had a emotional attachment to this item that made him want to buy it.
I don't think there is anything emotional about HEX.
Yes, but you will eventually get paid in something that is totally worthless.
I don't think you understand. How inflation works.
Nobody receive inflation. Inflation/deflation is a measure of how much value a currency have lost over time.
It's calculated by how much money is needed to buy something now and how much it will cost at some point in the future.
Let's say you buy a burger for 10 USD. One year later, the same burger costs 11 USD. That's 10% inflation.
STEEM doensn't pay inflation. Inflation happens because of there is always reward being paid. an 8% year inflation on STEEM means that, not considering other factors, 1 STEEM will buy 8% less stuff because there is 8% more STEEM circulating, therefore more steem need to be sold to reach the same value than one year before.
Bitcoin have a decreasing inflation (called deflation), because there is a limit of how many BTC will exist, and the rate that they are issued lower with every halving.
2 Audits are published, so there is only 2 so far.
Have you read them? Here is a resume:
Audit 1
The contract work as coded, with 3 minor problems. Here is one problem that is really interesting:
"This function is not accessible to users but internally it is called to close a stake from
endStake or goodAccounting. Running out of gas will cause the user to be unable to
close the stake. Fail to close a stake will cause the owner to lose funds on late
penalties."
So, there is a possibility that at some point in the future, users won't be able to close their stakes. Interesting...
Basically with is saying here is that, the longer you stake, you will have to pay more gas to unstake, even reaching the max time of 50 years, where the gas needed to unstake will be even higher than the amount an Ethereum block can hold.
So, you keep on recieving a soon-to-be worthless coin, and you even pay more to withdraw to longer you wait?
Audit 2
Only answer the question: Will people get more HEX if they stake for longer of shorter time?
The answer: Longer.
There is no evaluation about economic sustainability here. This just give a "reasonable" reason for people to hold the coind for a longer time (while the creators dump their stakes on the market).
Also, both audits are from the same company that was paid by HEX creators, so, that is only one opinion funded by it's owners.
Let me know when you find an independet audit.
Really? What have HEX offered so far for people to think this is not a shitcoin? not much really.
The only thing happening here is "buy more to get rich faster".
It's not. It's a clear SCAM with a new look.
Anyway, that's enough for me. It's pretty clear it's another elaborate scam looking to lure people without much knowledge about economics and value, based only on the promisse of easy gains.
And as every scam, it will be higly profitable to those joining early, and a big loss for those who come later.
Don't doubt. It will break sooner or later.
If you get money with it, fine, just don't lure people that have no clue how things work to these kind of things.
It's your money. Burn it as you will.
The HEX founders never made a promise either. HEX was designed to work a certain way, the website says it was "DESIGNED" to do something, not that it WILL do it. The founder has said several times that nobody can know for a fact that it will do it.
HEX is an economic experiment, so is Bitcoin. Satoshi Nakamoto told people that Bitcoin can do this or do that, but so far it cannot. Makes it a scam? No. It was hopeful, and founders of other projects will be hopeful too.
What is a true blue disgusting scam is the people trying to get people to buy $9K bitcoins with hopes and dreams and PREDICTIONS of a $10,000,000 dollar bitcoin. That is scammy and ponzi like if you ask me, because whoever would buy that $10,000,000 BTC would most certainly get fucked over afterward.
People bought $20k BTC, does that make it a scam? No.
People bought $70,000,000 worth of ETH at all time high prices, does that make Ethereum a scam? No.
Some people at some time over paying for an asset that then goes down from that ultra high price does not make the asset a ponzi or scam.
Bitcoin only got popular because people got rich off it. Most people only care about Bitcoin because of its market cap and YOU only care about it because of that.
I can prove it. Let's fork BTC and ETH and the two of us will exchange value between each other. You likely will consider it a waste of time. This is because its technology is not special, it can be replicated. Only its network growth and usage matter to anyone. After all, Bitcoin has had two inflation bugs that could have completely destroyed its value and it might have a third one day and the third might destroy the value of Bitcoin completely.
You know who said that? Willy Woo, a big advocate for Bitcoin, that believed that Bitcoin is high risk because it could have a game changing, totally breaking bug one day.
Diamonds are given a false sense of scarcity, and it works. Diamonds are plentiful, but hoarded in vaults by their owners and those controlling the supply only allow small amounts to be released to the public over time.
HEX is similar in its design, it encourages people to "hoard" their supply by locking it up and only selling small amounts over time. Its a fascinating economic experiment.
Gold is inflationary as well. More gold enters the market every day.
It only has to be locked up for 350 days IF you got your HEX for free via the "free claim" feature available to people that held BTC during the snapshot. Why should bitcoiners not have to wait for a year? It was free to them.
If you buy HEX on Uniswap or send ETH into the Adoption Amplifier to obtain HEX you do not have to stake if you do not want to do it. You are free to resell it any time you want. But if you want interest you have to stake, which is simply how Certificate of Deposit systems work.
There is no deception here. HEX was created to act like a decentralized Certificate of Deposit style asset that can co-exist within Ethereum's robust DeFi ecosystem as a Store of Value asset.
That is highly unlikely to happen in HEX. You're not getting whst I am trying to explain to you about the 3.69%-369% ratio. You should be able to understand after I answer the next quote.
You do not understand the design of HEX, otherwise you would understand how the 3.69%-369% staking reward system prevents ponzi results from happening.
A ponzi scheme has a destination, an endpoint where someone MUST lose. This is why people dislike ponzi schemes, because like gambling there must be a loser for there to be a winner. Who are the losers in a ponzi? The people that come late to the game, the last people to join.
Does this happen in HEX? No. It does not happen.
Why do people that come late in HEX not lose? Because they can still be heavily rewarded for staking at any time that they arrive. HEX pays out a 3.69% reward to stakers non-stop.
This is how Steem works as well, only it includes authors, curators and witnesses into its staking system, which has so far caused tremendous downward pressure on STEEM.
HEX and Steem are designed the same. Inflation is a "reward pool" and it is perpetual. The perpetual aspect of the inflation is essential to its functionality. However, Steem and HEX are different in that they have a "reward pool" to incentivize different actions. Steem rewards stakers with a small share of the reward pool and HEX rewards stakers with 100% of inflation because it is an exclusively financial asset and not a hybrid asset that aims to be both a financial asset and a social media utility token.
This is incorrect. Central banks do give inflation away to large corporations with the expectation that they will use it to stimulate the economy.
You clearly do not understand how inflation works, my friend.
You are not referring to inflation but buying power. Yes, inflation has to do with buying power and does erode buying power over time. This is true, but you do not understand inflation it seems.
Buying power is what matters, not inflation. But inflation reduces the overall buying power of each individual unit of USD or whatever currency you would use so long as demand stays the same.
Did you know that the supply of USD could double or even triple and it would be possible for USD to have the same buying power? If enough people demanded USD over their their current derivative contracts it could create enough economic force to keep the value of USD maintained.
Buying power is supply vs. demand, not simply total supply. HEX was designed with a 3.69% total inflation rate, which gets divided among total HEX staked. This is the motivating force that encourages holders of HEX tokens to stake, locking up their tokens and making the total circulating supply of HEX low.
But when most HEX token holders decide to unstake and the circulating supply of HEX grows exponentially, the reward for being a staker also grows exponentially. Again, if 99% of all the HEX tokens are on exchanges building up a huge sell wall, the 1% of the HEX supply still staked is enjoying a handsome 369% interest rate in HEX tokens.
What does this mean? The 99% of HEX tokens on exchanges making the sell wall are being eroded at a rate of 3.69% while the 1% of HEX tokens staked in the smart contract are getting all of that 3.69% inflation/reward pool, which results in a 369% ROI for those stakers.
Sure, the price of HEX might go down temporarily, but during that time the stakers are making 3.69X their total amount of tokens, reducing any potential losses.
Can you guess what will happen next?
You can't sell an asset without a buyer. The people dumping their tokens have to dump them to someone. The buyer is most likely to do what with their tokens?
With a 3.69% inflation rate eroding the value of circulating supply and being awarded to those staking, it is very likely that the buyers of these cheap tokens will stake them. As enough buyers stake their newly purchased HEX the circulating supply suddenly goes back down and the principles of supply and demand go into effect, most likely growing the per unit sell value of HEX tokens.
This is why HEX is not a ponzi or a scam. Its internal economy is designed to be cyclical. Ponzis and scams have an endpoint, a sad and terrible conclusion. HEX only ends if Ethereum ends.
Nothing seems to last forever, so maybe Bitcoin, Ethereum and HEX will all fail eventually. But all three of these systems were designed to perpetually function. HEX is autonomous and cyclical, not destination-oriented.
That is what inflation is dude. You can call it "inflation" or call it a "reward pool" but at the end of the day it is exactly the same thing.
All blockchains have a "reward pool" that they use to reward people for doing things the protocol finds beneficial. I have addressed this in my post, bro.
Steem rewards stakers, curators, authors and witnesses. HEX only rewards stakers. At the end of the day, they both do the same thing, inflate their cryptocurrency supply to reward certain participants that behave in a way deemed beneficial to the network.
Its exactly the same system. In Steem you get fucked if you keep your STEEM as circulating supply, because the stakers, curators, authors and witnesses get all the inflation/reward pool. But in HEX, the holders of HEX don't give a fuck about posting content to grow a network or securing a chain because Ethereum does that for them. They only care about scarcity caused by token lock-up, and so that is what is rewarded.
Its pretty much the same damn system, people might bitch about it but its true. Richard Heart doesn't like it when I have mentioned that Steem already did what HEX is doing.
And people on Steem that want to call HEX a scam don't like having it put in their face the fact that HEX is designed just like Steem. But it is what it is...
Yeah, I know, and a lot of very smart people realize that is a very dumb idea. Ethereum developers firmly explain they will not ever do that because while Austrian economists might like the idea, it risks the security of the network to do that.
Also, all that is possibly temporary. A blockchain is heavily the result of social consensus, if the majority wishes to change any given rule at some point they can. So Bitcoin's economic policy can be completely changed if enough people want it changed in the future.
Okay, first, a quick chat on audits. Audits are usually done before a smart contract is official deployed and it is done to find any bugs that might exist.
So, why is that important to mention in advance? Because this means that any "issues" you find in the audit would be worked on by the team's developers after having been discovered by the auditing company.
Okay, now that that is out of the way lets get to this topic.
Good Accounting is a great feature!!! Why? Because it allows someone ELSE to unstake for YOU, but that person cannot unstake your HEX tokens and take them, if that were possible it would be terrible! But that is not what happens, "Good Accounting" allows you to unstake your own tokens from different account in case you need to in an emergency or empowers you to ask a friend to use their Ethereum account to unstake your stakes for you. Your friend would not have access to your tokens and your tokens would then exist within your Ethereum address waiting for you.
There is a penalty on stakes that do not unstake when they should. This is a very cool feature of HEX!!! Why is that?
It is a cool feature because in Bitcoin a lot of coins are lost FOREVER!!! Nobody can get access to them and as Bitcoin becomes more and more deflationary and people keep losing their coins or dying and leaving them sitting there being useless to everyone, HEX was designed to be an asset owned by the living and the active.
If you die and don't leave a seed phrase with your kids, eventually your tokens become rewards to other stakers. Why is this good? Well, its a lot better than how Bitcoin works. Bitcoins real value is truly difficult to know, because let's say those Plus Token guys are not able to sell their 1% of Bitcoin's total supply because they are in prison for being scammy ponzi folk.
Well, one day they might get out of prison and spend their bitcoins, causing the price to drastically dump. Same with Mt. Gox coins...
On HEX all tokens are active, if someone dies and doesn't leave their keys to someone the coins get inherited to the living and active stakers at that time.
I like that about HEX.
This is why I explained to you that audits show you the mistakes of code that need to be fixed BEFORE deployment and not after. This bug got fixed before HEX launched.
You can only stake for 5555 days or approximately 15 years. This solves the 50 year issue you mentioned.
Gas tends to be pretty damn cheap, so I do not see this becoming a problem.
Are you saying that Richard Heart owns the companies? Because if not I'm not certain you know what a "thirdparty audit" means.
Security auditors don't go around giving applications free audits. You have to pay money to have them audited... This is customary for developers, buddy. And this is deemed an "independent audit" dude...
Are you trying to say that Chainsecurity.com and Coinfrabrik are co-owned? Links or it didn't happen...
Are you trying to tell me that Polkadot went with a scammy auditor too? Because Polkadot is a big project, a lot fucking bigger than Steem, and they used Chain Security for their smart contract audit.
The economic sustainability of HEX is better than the economic sustainability of many other cryptoasset systems. It is also extremely simple.
Remember that 3.69%-369% reward pool to stakers system? The sustainability is there because of this system.
Stakers always win in the long run against dumpers. Buyers are always incentivized to stake. Having your HEX tokens sitting on an exchange in a sell wall causes you to lose 3.69% of your stack while you wait and it goes to the stakers.
Why is this so effective? Swing traders often aim for 5% profit on a trade. Sure, if they can get better than that they will, but its difficult to consistently get more than that on short-term trades.
Well, stakers get no less than 3.69% for staking, so doing nothing gets them almost 5%. Is it worth swing trading when you can get 5% or close to 5% for doing nothing but waiting? No.
So, staking is the most attractive thing to do if you are a buyer of the HEX token.
"But who says there will be any buyers!"
You can't dump if someone isn't willing to be dumped on. You have to have a buyer, and you're just going to have to keep dropping your price until you find a buyer for a price.
But once there is a buy, done, the deal is struck and they get the tokens. Now, what will the buyer do with their tokens? Logically, they will stake it. This reduces the sell wall, this reduces circuluating supply and suddenly supply and demand ratios improve and token price move upwards once again.
HEX is worth 6x its all time low. Currently, it is one of the fasting growing cryptoassets in the market.
You are imagining that for a cryptocurrency to have value it has to do something more than price pumps. But the reality is that Bitcoin, Dogecoin and BCH do nothing more than price pumps and price dumps.
People don't use Bitcoin for shit. Cryptocurrency ATMs are far and few between. You know how many restaurants, movie theaters, grocery stores, liquor shops accept Bitcoin in my area? Fuck all. You can't buy coffee with gold bars and you can't buy coffee with Bitcoin.
Cryptoassets are currently nothing more than commodities. I hope that changes, but for the time being that's the situation. HEX was designed to be a very interesting commodity that motivates people to stake for interest and sell HEX tokens in small amounts over time. I dig that.
See, I answered your questions, defended against your objections. Now, its my turn. You should have to answer my questions.
Question #1:
How is the 3.69% reward pool divided among stakers not going to work to create a cyclical investment system that preserves the value of HEX?
For your information:
100% of tokens staked = 3.69% ROI
1% of tokens staked = 369% ROI
Question #2:
Are you aware that the founder account that received a large sum of HEX staked it for 10 years?
Question #3:
Now, knowing that they staked their HEX for 10 years and can't dump it in a year, does that change your viewpoint on HEX?
Question #4:
If people dump all their HEX in a year from now, what do you think the buyers of that HEX will do with the HEX they bought?
Question #5:
What's your favorite color?
I'll buy a lambo in that color after HEX becomes $0.10 per token.
Bitcoin only got popular because people got rich off it. Most people only care about Bitcoin because of its market cap and YOU only care about it because of that.
I can prove it. Let's fork BTC and ETH and the two of us will exchange value between each other. You likely will consider it a waste of time. This is because its technology is not special, it can be replicated. Only its network growth and usage matter to anyone. After all, Bitcoin has had two inflation bugs that could have completely destroyed its value and it might have a third one day and the third might destroy the value of Bitcoin completely.
You know who said that? Willy Woo, a big advocate for Bitcoin, that believed that Bitcoin is high risk because it could have a game changing, totally breaking bug one day.
Diamonds are given a false sense of scarcity, and it works. Diamonds are plentiful, but hoarded in vaults by their owners and those controlling the supply only allow small amounts to be released to the public over time.
HEX is similar in its design, it encourages people to "hoard" their supply by locking it up and only selling small amounts over time. Its a fascinating economic experiment.
Gold is inflationary as well. More gold enters the market every day.
It only has to be locked up for 350 days IF you got your HEX for free via the "free claim" feature available to people that held BTC during the snapshot. Why should bitcoiners not have to wait for a year? It was free to them.
If you buy HEX on Uniswap or send ETH into the Adoption Amplifier to obtain HEX you do not have to stake if you do not want to do it. You are free to resell it any time you want. But if you want interest you have to stake, which is simply how Certificate of Deposit systems work.
There is no deception here. HEX was created to act like a decentralized Certificate of Deposit style asset that can co-exist within Ethereum's robust DeFi ecosystem as a Store of Value asset.
That is highly unlikely to happen in HEX. You're not getting whst I am trying to explain to you about the 3.69%-369% ratio. You should be able to understand after I answer the next quote.
You do not understand the design of HEX, otherwise you would understand how the 3.69%-369% staking reward system prevents ponzi results from happening.
A ponzi scheme has a destination, an endpoint where someone MUST lose. This is why people dislike ponzi schemes, because like gambling there must be a loser for there to be a winner. Who are the losers in a ponzi? The people that come late to the game, the last people to join.
Does this happen in HEX? No. It does not happen.
Why do people that come late in HEX not lose? Because they can still be heavily rewarded for staking at any time that they arrive. HEX pays out a 3.69% reward to stakers non-stop.
This is how Steem works as well, only it includes authors, curators and witnesses into its staking system, which has so far caused tremendous downward pressure on STEEM.
HEX and Steem are designed the same. Inflation is a "reward pool" and it is perpetual. The perpetual aspect of the inflation is essential to its functionality. However, Steem and HEX are different in that they have a "reward pool" to incentivize different actions. Steem rewards stakers with a small share of the reward pool and HEX rewards stakers with 100% of inflation because it is an exclusively financial asset and not a hybrid asset that aims to be both a financial asset and a social media utility token.
This is incorrect. Central banks do give inflation away to large corporations with the expectation that they will use it to stimulate the economy.
You clearly do not understand how inflation works, my friend.
You are not referring to inflation but buying power. Yes, inflation has to do with buying power and does erode buying power over time. This is true, but you do not understand inflation it seems.
Buying power is what matters, not inflation. But inflation reduces the overall buying power of each individual unit of USD or whatever currency you would use so long as demand stays the same.
Did you know that the supply of USD could double or even triple and it would be possible for USD to have the same buying power? If enough people demanded USD over their their current derivative contracts it could create enough economic force to keep the value of USD maintained.
Buying power is supply vs. demand, not simply total supply. HEX was designed with a 3.69% total inflation rate, which gets divided among total HEX staked. This is the motivating force that encourages holders of HEX tokens to stake, locking up their tokens and making the total circulating supply of HEX low.
But when most HEX token holders decide to unstake and the circulating supply of HEX grows exponentially, the reward for being a staker also grows exponentially. Again, if 99% of all the HEX tokens are on exchanges building up a huge sell wall, the 1% of the HEX supply still staked is enjoying a handsome 369% interest rate in HEX tokens.
What does this mean? The 99% of HEX tokens on exchanges making the sell wall are being eroded at a rate of 3.69% while the 1% of HEX tokens staked in the smart contract are getting all of that 3.69% inflation/reward pool, which results in a 369% ROI for those stakers.
Sure, the price of HEX might go down temporarily, but during that time the stakers are making 3.69X their total amount of tokens, reducing any potential losses.
Can you guess what will happen next?
You can't sell an asset without a buyer. The people dumping their tokens have to dump them to someone. The buyer is most likely to do what with their tokens?
With a 3.69% inflation rate eroding the value of circulating supply and being awarded to those staking, it is very likely that the buyers of these cheap tokens will stake them. As enough buyers stake their newly purchased HEX the circulating supply suddenly goes back down and the principles of supply and demand go into effect, most likely growing the per unit sell value of HEX tokens.
This is why HEX is not a ponzi or a scam. Its internal economy is designed to be cyclical. Ponzis and scams have an endpoint, a sad and terrible conclusion. HEX only ends if Ethereum ends.
Nothing seems to last forever, so maybe Bitcoin, Ethereum and HEX will all fail eventually. But all three of these systems were designed to perpetually function. HEX is autonomous and cyclical, not destination-oriented.
That is what inflation is dude. You can call it "inflation" or call it a "reward pool" but at the end of the day it is exactly the same thing.
All blockchains have a "reward pool" that they use to reward people for doing things the protocol finds beneficial. I have addressed this in my post, bro.
Steem rewards stakers, curators, authors and witnesses. HEX only rewards stakers. At the end of the day, they both do the same thing, inflate their cryptocurrency supply to reward certain participants that behave in a way deemed beneficial to the network.
Its exactly the same system. In Steem you get fucked if you keep your STEEM as circulating supply, because the stakers, curators, authors and witnesses get all the inflation/reward pool. But in HEX, the holders of HEX don't give a fuck about posting content to grow a network or securing a chain because Ethereum does that for them. They only care about scarcity caused by token lock-up, and so that is what is rewarded.
Its pretty much the same damn system, people might bitch about it but its true. Richard Heart doesn't like it when I have mentioned that Steem already did what HEX is doing.
And people on Steem that want to call HEX a scam don't like having it put in their face the fact that HEX is designed just like Steem. But it is what it is...
Yeah, I know, and a lot of very smart people realize that is a very dumb idea. Ethereum developers firmly explain they will not ever do that because while Austrian economists might like the idea, it risks the security of the network to do that.
Also, all that is possibly temporary. A blockchain is heavily the result of social consensus, if the majority wishes to change any given rule at some point they can. So Bitcoin's economic policy can be completely changed if enough people want it changed in the future.
Okay, first, a quick chat on audits. Audits are usually done before a smart contract is official deployed and it is done to find any bugs that might exist.
So, why is that important to mention in advance? Because this means that any "issues" you find in the audit would be worked on by the team's developers after having been discovered by the auditing company.
Okay, now that that is out of the way lets get to this topic.
Good Accounting is a great feature!!! Why? Because it allows someone ELSE to unstake for YOU, but that person cannot unstake your HEX tokens and take them, if that were possible it would be terrible! But that is not what happens, "Good Accounting" allows you to unstake your own tokens from different account in case you need to in an emergency or empowers you to ask a friend to use their Ethereum account to unstake your stakes for you. Your friend would not have access to your tokens and your tokens would then exist within your Ethereum address waiting for you.
There is a penalty on stakes that do not unstake when they should. This is a very cool feature of HEX!!! Why is that?
It is a cool feature because in Bitcoin a lot of coins are lost FOREVER!!! Nobody can get access to them and as Bitcoin becomes more and more deflationary and people keep losing their coins or dying and leaving them sitting there being useless to everyone, HEX was designed to be an asset owned by the living and the active.
If you die and don't leave a seed phrase with your kids, eventually your tokens become rewards to other stakers. Why is this good? Well, its a lot better than how Bitcoin works. Bitcoins real value is truly difficult to know, because let's say those Plus Token guys are not able to sell their 1% of Bitcoin's total supply because they are in prison for being scammy ponzi folk.
Well, one day they might get out of prison and spend their bitcoins, causing the price to drastically dump. Same with Mt. Gox coins...
On HEX all tokens are active, if someone dies and doesn't leave their keys to someone the coins get inherited to the living and active stakers at that time.
I like that about HEX.
This is why I explained to you that audits show you the mistakes of code that need to be fixed BEFORE deployment and not after. This bug got fixed before HEX launched.
You can only stake for 5555 days or approximately 15 years. This solves the 50 year issue you mentioned.
Gas tends to be pretty damn cheap, so I do not see this becoming a problem.
Are you saying that Richard Heart owns the companies? Because if not I'm not certain you know what a "thirdparty audit" means.
Security auditors don't go around giving applications free audits. You have to pay money to have them audited... This is customary for developers, buddy. And this is deemed an "independent audit" dude...
Are you trying to say that Chainsecurity.com and Coinfrabrik are co-owned? Links or it didn't happen...
Are you trying to tell me that Polkadot went with a scammy auditor too? Because Polkadot is a big project, a lot fucking bigger than Steem, and they used Chain Security for their smart contract audit.
The economic sustainability of HEX is better than the economic sustainability of many other cryptoasset systems. It is also extremely simple.
Remember that 3.69%-369% reward pool to stakers system? The sustainability is there because of this system.
Stakers always win in the long run against dumpers. Buyers are always incentivized to stake. Having your HEX tokens sitting on an exchange in a sell wall causes you to lose 3.69% of your stack while you wait and it goes to the stakers.
Why is this so effective? Swing traders often aim for 5% profit on a trade. Sure, if they can get better than that they will, but its difficult to consistently get more than that on short-term trades.
Well, stakers get no less than 3.69% for staking, so doing nothing gets them almost 5%. Is it worth swing trading when you can get 5% or close to 5% for doing nothing but waiting? No.
So, staking is the most attractive thing to do if you are a buyer of the HEX token.
"But who says there will be any buyers!"
You can't dump if someone isn't willing to be dumped on. You have to have a buyer, and you're just going to have to keep dropping your price until you find a buyer for a price.
But once there is a buy, done, the deal is struck and they get the tokens. Now, what will the buyer do with their tokens? Logically, they will stake it. This reduces the sell wall, this reduces circuluating supply and suddenly supply and demand ratios improve and token price move upwards once again.
HEX is worth 6x its all time low. Currently, it is one of the fasting growing cryptoassets in the market.
You are imagining that for a cryptocurrency to have value it has to do something more than price pumps. But the reality is that Bitcoin, Dogecoin and BCH do nothing more than price pumps and price dumps.
People don't use Bitcoin for shit. Cryptocurrency ATMs are far and few between. You know how many restaurants, movie theaters, grocery stores, liquor shops accept Bitcoin in my area? Fuck all. You can't buy coffee with gold bars and you can't buy coffee with Bitcoin.
Cryptoassets are currently nothing more than commodities. I hope that changes, but for the time being that's the situation. HEX was designed to be a very interesting commodity that motivates people to stake for interest and sell HEX tokens in small amounts over time. I dig that.
See, I answered your questions, defended against your objections. Now, its my turn. You should have to answer my questions.
Question #1:
How is the 3.69% reward pool divided among stakers not going to work to create a cyclical investment system that preserves the value of HEX?
For your information:
100% of tokens staked = 3.69% ROI
1% of tokens staked = 369% ROI
Question #2:
Are you aware that the founder account that received a large sum of HEX staked it for 10 years?
Question #3:
Now, knowing that they staked their HEX for 10 years and can't dump it in a year, does that change your viewpoint on HEX?
Question #4:
If people dump all their HEX in a year from now, what do you think the buyers of that HEX will do with the HEX they bought?
Question #5:
What's your favorite color?
I'll buy a lambo in that color after HEX becomes $0.10 per token.
My reply was so damn HUUUGE that my comment got pruned...
Here is my comment as a post:
https://steempeak.com/@ethereumalist/the-comment-that-became-a-post