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The crypto economy is a deflation economics, which has never been done before. How do you see a business succeeding in this economy?

Discuss and debate.

For reference, you can read about this topic from our crypto economist and CCO (Chief Crypto Officer) Milan Tymel. Most upvoted comments earn the most Yupies!

Read the 3min article here.





24 COMMENTS 60 VOTES

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4 months ago

A deflationary currency is the only way for a fair distribution of wealth to occur. Inflationary markets causes crashes like we Americans have seen twice now! The only fear is deflation and the technology is growing in a way that will likely hedge all those threats before they come to pass.

1 year ago

I think the blockchain will revolutionaries every industry we know today. It's one of the new things which initially is considered dangerous by the big players but it eventually is adopted by the common people. It's one of the inevitable events which if we want can only accelerate. Same thing happened to the printing press, to the automotive industry and now will happen in the field of economics.

https://medium.com/@harsh_kedia/imagine-a-world-on-blockchain-f81...

1 year ago

Deflation would be a problem if everyone was hoarding. Of course we see this now, but the amount of money circulating in crypto right now is just a small chunk compared to the fiat. We have tons of project slowing being developed right now that will counter this problem. As more people get in the crypto world and technologies are present that allows us to freely use crypto as everyday cash we will dodge this issue

1 year ago

Just one word "Awesome"
Everyone ,Don't miss this chance !!!

1 year ago

Есть теория, а есть практика! Вот когда бизнес перейдет от теории к практике, будут сразу видны положительные и отрицательные стороны любого начинания!

1 year ago

I think that for blockchain businesses the path to the success is looks ease for now, with a limited supply, the more a services through blockchain that will be in use then the more people will have to by tokens so as to pay up for the services.

1 year ago

Will be waiting for the world to change, already preapare mine..

1 year ago

I don't have much to add here... I think you all said it very articulately. Deflationary currencies (or even ones with a fixed total supply like Bitcoin) are a huge hedge again government currency manipulation.

1 year ago

Seeing a business succeed in the type of economy where currency is dependent on deflation , rather than inflation will be interesting. Measuring the value of success will be to a different degree now that these thriving businesses will have to reverse engineer, and take a whole new approach. Treating the value of their assets (Curreny being the most important) more confined, rather than do accessible to the public.

1 year ago

По прошествии времени люди, которые присоединились к сообществу и купили токены YUP ранее, смогут продавать предприятиям по более высокой цене. Таким образом, владельцы токенов, которые купили YUP в течение до ICO или Crowdsale, смогут перепродавать растущую сеть предприятий на платформе Crowdholding, которая будет использовать YUPIE в качестве оплаты для Crowdholders. Это, в свою очередь, означает, что экосистема Crowdholding включает в себя неотъемлемый спрос, который будет стимулировать цену YUP.

1 year ago

I think one of the big challenge will be for those businesses to find a way to keep the currency "flowing" and "changing hands" in the face of increased (perceived and real) value. Humans being humans are likely to adopt behaviours that might be harmful for this specific economy in the long term. People have been betrayed multiple time by the traditionnal economic system and collectively, lost a lot. Yet big industries were rarely imputable for their reckless behavior. The success of a business in a deflation economic in the world of cryptocurrency will thus depend a lot on the trust people have in it, which means people will expect total transparency. I believe that trust will come progressively after a few success stories inspire other businesses to do the same.

1 year ago

Model token:
1. The token is a payment method within the service, or access system or discount system discount system and after a certain time can be observed (and it's the core mechanics of the project) that the token is improving. Due to this growing project, increasing its audience and there is a deficiency.
2. Burning token in the process of the system, this leads to a reduction of its quantity, and thus to the deficit. It is also possible to model the increase in the payment of the cost of the token, which leads to better payment performance and also leads to a shortage.
Distribution is a very important point, which must be spelled out in the White Paper, on the landing and in all other promotional materials, to give a picture of whom and what number tokens you will get. If some of the audience, whether the project team, project partners or advertising agencies, they receive significant amounts of tokens on hand, there is a risk of what will happen rather sharp resetting the tokens, which will lead to noticeable price fluctuations.
The decline in prices during the ICO is because the audience and potential holders of tokens waiting for it to be placed on the stock exchange and when they can buy it cheaper than it is on presale.
A clear rationale for listing. Justification for the listing in any case can not be speculation, but only, for example, if the project requires expansion of the user base. Or, say, the project did not manage to reach your entire user base during the ICO, and its service works best with a large mass of users, or there should be certain proportions. Accordingly, in these cases, there is justification for going public. The listing should be a tool to develop the project, put it in the right direction and benefit.

1 year ago

At its core, ICO is a tool of raising capital through the involvement of investors in the startup related to the development/promotion of any technology/platform/service with bitcoin. The direct capital raising is carried out through pre-sale of tokens established by the organizer price.
Thus, the company produces some number of crypto-tokens, and then sells to their target audience, often with bitcoins or Fiat money. In the end, the user is transferred bitcoins, and in return receive a new cryptocurrency, which in future will help them to get from start-up some profit.
Raising funds for the ICO is carried out via "smart contracts". The vast majority of cases, smart - contracts generate tokens standards ERC20 on the Ethereum blockchain.
The characteristics of the ideal and the most correct ICO:
1. The intersection of the audience of the holders of token and user audience of the project. The more intersections, the higher the level of the deficit. This is the most important component, and it always affects the first volume of the user base and the potential for its expansion, then the deficit, and then indirectly to the price.
2. What contribution the project makes to the blockchain technology in General, in the development of the market, what value it may have for infrastructure. If the project is quite important and really helps the market to develop, resulting in a blockchain to a new audience and shows new ways to use it, it has all the chances to win.
3. Economic feasibility as the combination of benefits from the use of the token and gain from the sale of the token. It is obvious that besides creating shortages, a project must have a significant impact on the entire industry, and a token needs to be economically useful.
An important component of the project is its team, which is responsible for the quality advisors for its promotion, and the backers who bought the tokens on the presale and placed on the website information about it, ensure its attractiveness to new buyers. When everyone on the team cope with their role, the likelihood that tokens of a project quickly snap, very high.

1 year ago

Rosario Colletti

Power is nothing without control

Well blockchain is a good and future-looking technology, allows transparency and scalability. And you get the advantage of your own currency appreciation. This is definitely a technology and business strategy that all small (and bigger) startup should consider!

1 year ago

Looks all this of course beautiful! But our problem is that we are accustomed to gluing labels and terms from the classical economic model to something new !! It happens in everything ... when a person sees something new. Remember the example .... When the Indians could not see the approaching ships of Columbus because they had no idea of ​​them!))) A vivid example of BTC inflation is its HardForks. We just do not want to notice this .... or can not !!) The main focus of the masses on the new fork .... here's an increase in the total volume. BTC + BTC 2.0)))) 21 mln + 21mln = 42)))) Is this not possible ?? !!

1 year ago

Burning unspent tokens after an ICO helps in many ways. Not only do you keep the token from losing value, you also increase the trust in your operation. Many ICOs I've seen were met with skepticism after it was announced that the token creators planned to keep a huge block of tokens for themselves after the ICO - even if you say a thousand times that you plan to use them to improve the system, people will still believe you're just planning a pump and dump. And when people distrust a new token, its chances of a successful launch go towards zero. And in an interconnected world where everyone can express their views on anything in a heartbeat and be heard by thousands, trust has become even more important in business than it was before.

1 year ago

A good way to hedge against the unlikely scenario of deflation is to have fixed-rate investment--cash or government-issued bonds. As the crypto world grows, additional hedging tools will become available through the block-chain that can help mitigate the effects of deflation.

1 year ago

Simple, with a limited supply, the more a services through blockchain will be use, the more the token will grow in value, but when that services become obsolete, than the token has no more value.

1 year ago

CONTINUED... PART 3
...stagnation, and in the end extinction

What happens when the business is thriving or is successful in a deflationary economy. The success leads increased demand, increased valuation, increasing valuation further increased demand (up to an extent which is driven by the inflationary currencies like USD etc), leading to further increase in valuation. Now more people will "HOLD" than to keep it in circulation. Which might have its own path. More coins held, less liquidity, the business loses value due to the inability of the consumers to buy, leading to devaluation of the currency, leading to decreased "holding" and return of the liquidity. The other path will be that.. if Holding is limited, the liquidity does not change, leading to continuous circulation, leading to good economy........

So going back to the main question, a success of the business is mostly independent of the currency used. It is the inherent property/quality of the business. In an inflationary economy, the success "feels" bigger, while in the deflationary economy it feels "right". For a microcosm of the business is to be successful a model of a deflationary economy with measures to avoid excessive holding behavior will probably work the best. Compared to the inflationary economy, deflationary or static supply economy will be able to provide the "true" value rather than an illusion of growth, which will benefit everyone. It will decentralize and democratize the control over the economy and lead to a better future for consumers and businesses.

[ I am extremely sorry for this long of a message! Please don't hate me :) ]
-Mandar

1 year ago

CONTINUED... PART 2:
... Ok.. So what does it mean for a singular business/micro economy?

Most of the businesses are small and if they are successful, they grow over time. A small business is supported by the entrepreneurs, investors & consumers in their own microcosm. If a business starts using their own token based on a Non-inflationary supply. The value proposition of a successful business will be reflected by the value of the currency. As the success of the business will increase the demand which will lead to increase in value to compensate forces by the demand, which will lead to a balance between the two.

In a noninflationary economy, the supply can be maintained static or it can decrease. The current implementation of bitcoin allows burning of the balance wayyyyyyy tooo easily. One wrong address and the money sent to that address will be lost forever. Burning of the currency is more measured and more controlled version of the same. But both lead to the same outcome "scarcity of the currency". In a conventional economist's mind, it means loss of liquidity. But in a virtual currency with its ability to be theoretically fungible to infinite decimals, liquidity can never be an issue. The current issue of liquidity in the crypto space is dependent more on the portal of transactions (i.e. exchanges allowing only 6 decimals) than the true limit of the fungibility (18 decimals for ETH) of the cryptocurrency. To elaborate it further, the true liquidity is built into the business model than the currency. Plus solutions such as Bancor [combining the right tail of low liquidity currencies into one pool] are always available.

So what happens when the business is failing in a deflationary economy. The business is failing, leading to less demand, leading to decreased valuation (not just in USD or any currency, I am talking about the absolute valuation), decreased circulation, stagnation, and in the end extinction.

1 year ago

Part 1 of the answer:
The perception of the economy can be broadly categorized into 3 categories.

1) Inflationary
2) Deflationary as described by conventional economists
3) Deflationary as described by a cryptocurrency holder!

Simply put, Inflationary economy means the "supply" of money keeps changes at some positive rate (Increasing). So the supply is inflating. Opposite of that, a deflationary economy should be defined as the economy in which the supply of money should decrease, right? Cryptocurrency holder will say that "yes.. that is correct". But if we search for deflationary economy, we see that most of the search results will say that the "Price" if the products decrease over time.

Why did we change the definition from the "Supply" to "Price"? We will discuss it here..
The cursory meaning of "price" is "value". So the perception of the statements by a conventional economist will be that the "value" of the product decreases. The minds of the people who think about the deflationary economy, connect the dots with decreasing value, less demand, less production, fewer wages, stagnation and economic recession, leading to a quick conclusion of the "failing economy" due to the "deflation". This is not what a deflationary economy is.

Let's stick to the "Value" and not the "price" aspect of the definition. What happened to the land prices in the major cities. There is a "finite" resource which is not increasing. More people demanded it and the "Value" of the land skyrocketed. (mind it, that increase in the supply of "currency" caused "devaluation/dilution" of the "Value" of the currency during the same time, so the numerical representation of the "value" in the form of a devaluing currency "increased even dramatically"). What if the same is true for the currency? What if the "supply" of the currency is a finite and predefined number. As the demand increases, the value of the currency will increases. A more extreme example is that if the "supply" of the currency decreases over time, the "value" of the currency should increase even more. Which means even the smaller amount of currencies will impart a much larger valuation. Which does not mean that it is failing or it does not mean that the "value" is decreasing? That is a false perception.


Ok.. So what does it mean for a singular business/micro economy?

1 year ago

Now crypto currencies are the force of blockchain and possibility to send money to any place of our planet.
In future it should completely change the economic and maybe change the fiat money.

1 year ago

I think that for blockchain businesses the path to the success is much easier, if they hold their assets in some cryptocurrency. Let's say that a start-up does an ICO, raises some money and holds them in ETH, creates an annual budget and even if the company exceeds the planned annual budget, it probably still has enough money as Ethereum made 14 000% gain in last 2 years. This is window of opportunity and anyone holding a crypto is part of it and his/her life will be really exciting. ;)

1 year ago