If only the cryptocurrency market were even rational enough for this to work. You have projects like ETC and the many Bitcoin forks that are total junk clones but still have value. You have projects like Tron which plagiarizes their whitepaper and clone ETH and still has value. You have Dash which cloned Monero and the founders took all the coin and it still has value.
A perpetual ponzi scheme will go on forever, because there’s always a endless stream of people who think it’s the person in front of them whose the sucker and not them. That is, even when people KNOW it’s a Ponzi scheme they will still play the game.
That’s the crypto market. Each coin is as close to a perpetual ponzi scheme as you can get. The coins won’t be worthless until there is only a single sucker left.
Among other things, transactions are not cheap, as they were supposed to be. The chain supporters are trying to pivot the whole thing as "Store of Value" which it isn't supposed to be. It does not scale. There are better blockchains offering everything bitcoin does and more (Ethereum for one).
Bytecoin is a scam, whereas Monero is at least pretending to be a well-behaved open-source project. Also, there was a ton of innovations since the fork.
Apparently they've been working on forking out the overdistributed initial Bytecoins. My only concern with Bytecoin atm is they've apparently patented their approach, where that would lead Monero is uncertain to me. I was going to try and reimplement Bytecoin (in another language so I could learn more about how Bytecoin works) but I couldnt get an answer from someone from their group as to what the heck it means that they're patenting it.
I mean, rationally speaking the value of all cryptocurrencies should tend toward zero. But then again, rationally speaking the value of all currency should tend to zero.
Human beings aren't exactly rational - if we were, the modern world would cease to exist, and we'd collapse into a Hobbesian state of nature.
That's not true for all currency. Because Governments generally require taxation to be paid on property/transactions/income in particular geographical areas exclusively in a particular currency, there is a baseline demand which means that such a currency has some fundamental value despite not having "intrinsic" value.
Beyond that, currencies are (in a way) also backed to some extent by the value of the goods and services available to be purchased with them.
So cryptocurrencies can have value of the second type, but if they don't have baseline demand then there's little to stop everybody deciding to switch from one cryptocurrency to another at some point in time, leaving the first worthless - whereas baseline demand makes that extremely unlikely for a currency used in any major country's economy.
Governments are social constructions too. They can & do fail - we tend to forget about this in the developed world because our governments haven't failed within our lifetimes (though in much of Europe, only just barely, and in Eastern Europe / Russia / China that's not true at all), but it's a regular occurrence in other parts of the world. When a government fails its power to tax becomes void, and so (usually) does its currency.
The alternative - for someone wishing to transact in an alternative currency and not pay taxes - is to pay foreign or private powers for protection services and then simply not pay the tax. This is suicide in the U.S. because we have a large & well-organized military, but is commonplace in many other parts of the world - and indeed, the U.S. is frequently the foreign power supplying arms and accepting its currency for many of these rebel groups.
Taxation does create demand for government currencies, but it doesn't necessarily make it more usable in commerce. You could do all your transactions in other currencies, and only convert to the tax currency when you need to pay taxes.
Considering the first order effect, you are right. But because governments tax only in their currency, they have a vested interest in making their currency valuable. This makes the US dollar more reliable than your friend's IOU for a favor.
I also do not fundamentally understand their plan. According to the article they will short XRP, clone XRP, then somehow get people to switch from the now worthless XRP in to their coin which would somehow not be worthless, then they will give people that switch more coins while still keeping the value of their coin high. Sounds crazy expensive and crazy risky.
This is just like the time the USD was hostilely taken over by the GBP and I had to exchange all my dollars for pounds so they wouldn't be worthless. Unless I was a government employee, then I was SOL. Truly the money of the future.
What happens if the takeover fails? Well. Valor has the XRP of those dumb enough to exchange their XRP for the Valor tokens. Valor tokens are worthless and then Valor can just sell the XRP for profit.
Unless they spend too much in shorting they stand to profit from those who believe their takeover will succeed.
That’s the crypto market. Each coin is as close to a perpetual ponzi scheme as you can get. The coins won’t be worthless until there is only a single sucker left.
Among other things, transactions are not cheap, as they were supposed to be. The chain supporters are trying to pivot the whole thing as "Store of Value" which it isn't supposed to be. It does not scale. There are better blockchains offering everything bitcoin does and more (Ethereum for one).
Human beings aren't exactly rational - if we were, the modern world would cease to exist, and we'd collapse into a Hobbesian state of nature.
Beyond that, currencies are (in a way) also backed to some extent by the value of the goods and services available to be purchased with them.
So cryptocurrencies can have value of the second type, but if they don't have baseline demand then there's little to stop everybody deciding to switch from one cryptocurrency to another at some point in time, leaving the first worthless - whereas baseline demand makes that extremely unlikely for a currency used in any major country's economy.
The alternative - for someone wishing to transact in an alternative currency and not pay taxes - is to pay foreign or private powers for protection services and then simply not pay the tax. This is suicide in the U.S. because we have a large & well-organized military, but is commonplace in many other parts of the world - and indeed, the U.S. is frequently the foreign power supplying arms and accepting its currency for many of these rebel groups.
What happens if the takeover fails? Well. Valor has the XRP of those dumb enough to exchange their XRP for the Valor tokens. Valor tokens are worthless and then Valor can just sell the XRP for profit.
Unless they spend too much in shorting they stand to profit from those who believe their takeover will succeed.