Ponzifying Devtome – My Response


A Devtome user named diedicar recently made a post about how to ponzify devtome. While I think that this post had good intentions, I believe that he is taking the completely wrong approach to the situation that we are experiencing. This article is my response and my ideas related to what he wants to go for.

A Look At the Problem

The problem that diedicar is attempting to fix is in relation to people dumping coins 1). When coins are dumped on the market, they are filling up buy orders. This leads to lower and lower buy orders, which also causes people to start lowering their sell orders to match up better with what is claimed as the new value at that point (rather than waiting for the prices to start bouncing back). More or less, when someone decides that they are going to go out and dump millions of their coins on the market, the prices start to tank. This also works in the opposite direction, in that if someone buys millions of coins they can cause the price to rise. But what we are focusing on here is the negative, so the lowering of prices.

Diedicar's Solution

To shorten it down a bit, diedicar's solution is to create a system where people earn more if they hold the coins they have earned. As time goes on, their earnings (per share or word) go up or down according to how many coins they have earned, and how many of those have been spent2). The idea behind this is that dumpers will be getting less coins to dump (meaning they will affect the market significantly less) and holders will be earning more (as they are helping keep the supply down, which in effect raises the prices of Devcoins). In a sense, we can view this as being like a Proof of Stake system, where interest is earned. The only difference is that here, the interest earned is based on your earnings and what you have spent, rather than simply by what you hold. Along with this, those who have not earned anything, and instead just bought their coins, would not get anything extra whether they hold or dump.

My Thought

While I completely agree that people dumping their coins at lower and lower prices is a bad thing3) (as it lowers the value of all of the existing coins and reduces Devcoin's market cap), I do not think that getting directly involved by punishing people for doing it is a good idea. Let us think about this from the perspective of those who earned them. They should be free to use them as they wish.4) Just because we do not agree with their usage does not necessarily mean we should be taking away their earning potential. Just as we earned our coins and can choose to hold, they earned theirs and can choose to sell. We can all make our own decisions there.

I think a better option that straight up punishment or rewards is to simply work on educating people. A lot of people (or, dare I say, most) do not know much about economics. They do not realize that they are hurting themselves, as well as everyone around, by making bad choices. Some do not even know that they are making a bad choice; they think that they are simply “cashing out.” Working on education would go a long way towards helping increase the value of the coins, working on keeping that value stable, and letting everyone that is part of Devcoin benefit at the same time. On top of this, these trading principals can be applied to every other coin as well. Basically, we just need people to start understanding what they are doing. I think most people would stop if they realized they were throwing their money away.

If you really want to take a strong positive view, you can also look at it like this: the price of Devcoins have always bounced back up. They will go up and down, and if you buy at the bottom you can earn some significant profit. It is all just a game of waiting.


Diedicar's note: not at all, the problem I would like to fix is the upper bound on how much one can invest on Devtome,check the bitcoin analysis on the original article. The discussion continues here:http://coinzen.org/index.php/topic,608.0.html
Diedicar's note: that's seriously misleading, please check the original article's charts, ther is no “punishment” for the dumper, which is not at all a good idea (see also discussion of the present page) the rating never goes under the base rate, there is a reward for the hoarder, but that makes a huge difference since the hoarder by definition doesn't cash it out. Nobody can think about proof of stake systems as “punitive”
Diedicar's note: misunderstanding, the scheme's aim is to allow dumping safely
Diedicar's note:like to say that proof of stake coiners ar not free? you can compare hoarding rating with Peercoin's coin age here http://www.reddit.com/r/peercoin/comments/1twavl/proof_of_stake_explained_sort_of/

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