Investment Versus Economy

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Wall Street. Lambos. Mooning. Alt-Coin Season. Stock-To-Flow Models. Institutions.

We hear these words a lot tossed around in the crypto industry. Unfortunately, this shows the mindset that is being created surrounding all that is taking place. It summarizes how people view cryptocurrencies in general.

All these words have something in common. They show that people are viewing what is taking place as an investment. The idea is to get cryptocurrency today in hopes that it will go up tomorrow. Wall Street entrance takes this to another level.


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Many feel that Bitcoin is going to be the "money of the Internet". That might end up being true although I find it unlikely. Bitcoin is epitomizes this viewpoint since the price is discussed on a daily basis on financial shows all over the world.

In fact, can anyone name 5 projects that are being built on Bitcoin that have useful application to the average person from a non-financial perspective? The entire development around this blockchain is how to make transferring money quicker and easier.

Of course, this is of tremendous benefit to the world. This is provide a growing alternative to the SWIFT network. However, it does present a problem when it comes to economic development.

The alt-coins fall into the same category. People are looking for the accumulation of tokens to become rich. This is obviously a benefit to being an early adopter. Those who are at the forefront of any new technology are in position to take advantage of that if it goes mainstream.

However, the entire industry appears to be focused upon what to do to get the price of the token up. This is looking at things from an investment perspective.

What is missing is the idea of growing economies. If we are becoming "Netizens", then the networks we are operating upon are akin to nation-states.

Look at the support sites that are out there. We all know what the price of the Ethereum token is. That information is found in a number of locations. Nevertheless, can anyone tell me what the GDP was of that blockchain last year? What was the growth rate in terms of production of the ecosystem? Notice how we do not have those metrics.

Few people in most countries will know if their currency is strong or weak. Unless they follow the financial shows, do a lot of traveling, or deal with imports/exports, it is a non-issue to them. They do not engage upon currency trading so it matters none.


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What does concern them is how their economy is doing. If it is going well, more is generated in the economy, creating more wealth, jobs, and opportunities. Of course, as we are now seeing, the opposite happens when things slow down (or come to a crashing halt).

Cryptocurrency is a wonderful development in that it allows us to monetize peer-to-peer transactions. This is revolutionary when you think about it. Yet, after a decade, what does the crypto-economy look like? How much of an economy do we really see?

We all want the price of the tokens we are holding to increase. This only makes sense. However, the focus upon that results in a series of steps taken to do simply that. Little else appears to be done.

How many people in cryptocurrency, when talking about a particular token, discuss the velocity of the token.

Investopedia defines Velocity of Money this way:

The velocity of money is a measurement of the rate at which money is exchanged in an economy. It is the number of times that money moves from one entity to another. It also refers to how much a unit of currency is used in a given period of time. Simply put, it's the rate at which consumers and businesses in an economy collectively spend money. The velocity of money is usually measured as a ratio of gross domestic product (GDP) to a country's M1 or M2 money supply.

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Is the velocity of money high or low? If we look at most cryptocurrencies, it is almost non-existent. Obviously, there are valid reasons for not utilizing a cryptocurrency, such as staking. In many DPOS systems, there is a benefit to staking which provide more alternatives to individuals such as increased payout. Thus, staking ends up being an investment of sorts.

However, there is a lot of cryptocurrency sitting by idly on exchanges and in personal wallets. This is done because people are speculating on those particular assets increasing in value.

The end result is cryptocurrency will be stagnant as compared to the existing financial system until widespread economies begin to form. When the velocity of a currency starts to rise, then we will see ecosystems starting to accelerate forward.


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Fortunately, there is one arena that is accustomed to developing economies using a virtual token and that is gaming. The gaming industry did a fabulous job arriving at virtual economies. Where the challenge comes in with that is, for the most part, the economies are not tied to the outside world. In other words, once the game is shut off, one is completely disconnected from that economy. It does not transcend the boundaries of the game at all.

This will change with NFTs and cryptocurrency. Blockchain games will likely be the first widespread economies we see forming. Developers will keep building out their projects in ways that add to their games providing their Netizens with a circular economy. The difference is that at any point, individuals can transfer their assets onto exchanges to immerse themselves in other communities.

The future is one where more of our lives will reside on different networks. An idea of being a "Netizen" can alter one's outlook upon our relationship with things online. We can also see how important the formation and growing of economies truly is. Down the road, it will be as, if not more so, important as the economic growth rate of the country we reside in.

Hopefully through the investment of time and money that we are all making, we start to see major economies form within the cryptocurrency world. It is something that humanity really needs.


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The problem is the traditional investment is all too tightly coupled with the economy and thus if the economy fails all your investment is gone or might be your investment will be done considerably.

Bitcoin can and will be or even other crypto are not that tightly coupled so I think everyone should invest in it so that you will not lose your money if the economy crashes.

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The difference is that at any point, individuals can transfer their assets onto exchanges to immerse themselves in other communities.

Kinda reminds me of sword art online and the whole seed network thing where you have one account and can take your assets to any vrmmorpg out there.

I'm personally hoping @vimm has some really awesome plans for making a circular economy around their streaming platform. There's probably a lot of things they could do. I'm personally curious how they might do subscriptions, custom emotes, and generally gamifying the platform to amplify engagement and entertainment.

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Absolutely. A platform like Vimm has enormous potential to build its own economy around streaming and content creation. There are many different models that people can implement.

The digital realm enables the gamification of just about anything. Thus, there is great opportunity to evolve into circular economies that grow at a very fast rate.

Unlike the physical world, "production" can happen at a much quicker pace.

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in the west, nobody is a real entrepreneur anymore, just employees who actually want to dress like their boss

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Virtual assets will lead the way for the new economy. As automation and software eat away at manual labor jobs, gaming and virtual world tending will replace these jobs. Unfortunately, this transition will occur out of necessity rather then choice. Central bankers and Governments around the world will force this choice via helicopter drops.

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Hey, @taskmaster4450.

I'm glad someone around here is talking about economy vs. investment.

There has been a disconnect for a while now as to just what the purpose of first STEEM, now HIVE is. I guess it's easy to get blinded when investments go up and airdrops are a dime a dozen. The future looks bright while value is increasing and the tokens are plentiful.

But then reality sets in and that world comes crashing down and the next thing you know, you're back to using fiat in order to subsist because the digital world doesn't yet make food you can consume, or a roof that you can put over your head, or clothes you can put on your back.

Bitcoin was certainly heading in that direction as late as 2018 when I got seriously involved on STEEM. But thanks to the so-called crypto winter, I'm not even sure who all might still except Bitcoin, let alone some other alt coin.

I think as long as crypto is mostly tied to investing, it can not become an economy. Until a lot more than a few someones take the plunge and seriously get into the space of using the blockchain to buy and sell products and services—particularly beyond the digital realm—I don't see how the crypto winter, with perhaps a few exceptions, ever truly ends. And what I mean by that is, I don't see how HIVE's intended, expected, or true worth is ever achieved when it's so totally tethered to investing and the whims of speculation.

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I would disagree that the crypto Winter cannot end without the use cases. Markets can take off and all that is required is some more investment. That is still a real scenario that can happen although it might not be the most optimal way of doing things.

In the end, token prices will do what token prices do. Markets push them up and they get pushed down.

In the meantime, we need to see the expansion of the development to allow for the creation of economies.

That is my hope anyway.

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I mean, sure a crypto winter can appear to end when the value goes up, but until we're out of the perpetual pump and dump phase, I don't see how we totally get out of it. Unless we're looking at incremental climbs, like we may be in now. So far, as far as crypto goes, the scarcity model is still the predominant investment, which is something HIVE might be able to at least partially do were the inflation part of it to be tamed to whatever degree necessary, but that doesn't appear to be in the cards yet. And so, if we're talking going utilitarian, we'll need more use cases. Much more. And actual HIVE will need to be spent and earned, like you outline in your post.

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I agree that the "velocity" in almost all cryptocurrencies is non-existent.
The majority are holding or staking expecting an increase in price. The challenge here is to build incentives for this cryptocurrencies to flow between people.
Hopefully we'll see more and more in the future.

Cheers!

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The key, to me, remains in use cases. We need a path for people to pursue to use their HIVE (or whatever cryptocurrency). The fact is, for the most part, there is not a way for people to get basic goods and services using cryptocurrency.

That is likely the next leg of what we are looking at in the evolution of crypto. Marketplaces will need to be built out to offer people options.

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Very very enlightening. Blockchain developers and crypto owners should find a way to penetrate and add value to the economy. Please do you mind putting like full meanings of some abbreviations may br at the end of your post. DPOS, NFTs

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I live in country with a weak currency and believe me its MATTERS a lot. All imported goods are cost more, and export is oil - so $ are going to oil oligarchs, and people get worthless rubles (

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Awesome post! I might have to get myself into the crypto gaming revolution. I haven't yet taken the leap, but this post certainly unveils the supply & demand elements of underlying value in crypto. It might be a lot of fun, and that fun may become a worthy investment! Thanks for posting.

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