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RE: Massive Hive Problem

in GEMS4 years ago

I addressed this earlier in the thread but it is worth reposting. I will address all the other unanswered comments in this thread later today when I get more free time.

“I’m glad you pointed this out as it helps define the message of the article. Another observant reader pointed this out on an attempt I made at a cross post, and this was the answer that I provided him:

https://steem.com/steem-bluepaper.pdf

This brings us behind what is described in the article as “the first layer of distribution” meant to identify the content creators as the primary distributors. Whether or not HIVE has (it obviously does) a rewards distribution pool prior to content creator distribution to the markets is somewhat irrelevant but I’ll explain why. It doesn’t however negate your observation as this pinch point has its own economic implications which I will list here.

How the currencies are received by the markets as described in the article are correct. However, with the setup of the rewards pool the impact this has on the intended users is that the more users come on to the platform the more scarce these rewards become between the users as a finite amount of rewards are distributed across the population of users on the system who are performing the incentivized activities. If those billion users showed up and all actively participated in incentivized activities finite rewards would be few and far between in that large volume of users. This still works against Hive’s greater goal of growing and maintaining a community as less users on the platform will see more rewards provided the incentivized activities are being performed.

Hive would still massively benefit from the strategies suggested in the article or other similar actions performed by the platform for the reasons pointed out in the article. Using strategies to ensure long term upward market trends in the valuation of Hive currencies would serve the greater Hive community rather than the negative up and down that has been seen in the market performance of Hive currencies.

I would also like to point out that whether or not there is a finite pool or infinite stream of HIVE behind the performance of incentivized actions is not the critique of the article. The critique certainly is to bring all the economic incentives in harmony with the goals and ambitions of the platform regardless of what Hive felt was the most preferable way of distribution of its tokens from their origin to the markets.”

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Well, I appreciate your considered response, but must acknowledge that the finite pool of inflation would produce price pressure in response to an influx of users. My own observations of the history of the blockchain over several years has revealed that distribution is problematic due to legacy financial mechanisms supplanting rhetoric supporting decentralization, and this is what prevents price appreciation.

And that’s essentially why it’s not really important whether or not the finite rewards pool or infinite rewards stream is present, although they have their own economic implications, they essentially are subject to the same reaction by the market upon distribution, a downward market force on the given valuation.