Hope this helps spark debate and intrest if nothing else...!
Walter
Nice write-up Walter! I would like to point out a couple of differences between masternodes and stocks/bonds/certs.of deposit etc. In each of the above cases the money invested is still flowing in the economy. It is simply the investor who looses access to it in exchange for a hoped for return. In the case of a stock or bond the holder has a promise while the issuer has the cash and proceeds to use it to buy goods and services. Those who provide the goods or services now have the cash and the flow proceeds. In the case of "savings accts" or certs. of deposits, the funds are loaned out and used to create even more funds on a fractional reserve basis, thus further "greasing the wheels of commerce" and paving the way for societies collapse as the new funds are loaned into existence WITHOUT creating the interest which must be payed back. In any case, unless the funds are kept as cash in the equivalent of a mattress (and losing value to inflation), the funds continue to flow, while the initiator no longer has access to them, and must wait some time before seeing them return to his/her ability to spend them.
Masternodes on the other hand extract existing (or newly created) funds for services rendered in exchange for keeping funds out of circulation. There are a number of subtle trade-offs being made here, the most notable of which is present return in exchange for present restraint in spending. (A side benefit is the reduction of the likelihood of various forms of attack.) Unlike stocks, bonds, or savings accounts, there is no commitment involved, and the funds may be immediately spent with NO penalty. Saving in this model is deflationary, as opposed to the inflationary saving of fractional debt based economies. Not only do masternodes work in an anti-inflationary manner they encourage savings as they lead to the accumulation of an appreciating asset in addition to simply holding an asset expected to appreciate. This works against the pump and dump cycles so prevalent to this point, and serves to cause the currency to appreciate in value as opposed to inflating. At the same time the fundamental utility of DRK as privacy protection and point-of-sale utility will work to drive it into circulation as adoption increases thus limiting the effects of hoarding.
This latter benefit will become more pronounced as the lack of privacy inherent in Bitcoin becomes well known. At this point in time, Bitcoin has only three raisons d'être; privacy, international transfers, and hoarding in hopes of appreciation. With the first removed, the second becomes doubtful, leaving only the third. Sadly, it quickly becomes a case of hoarding something nobody wants; values fall, and then fewer wish to hoard.
The promise of Bitcoin has become blunted as the mystique of privacy has been peeled away by advances in monitoring and blockchain analysis. It seems that its value proposition is now based on the hopes of deep-pocket Wall Street tycoons who would not invest such large amounts without expecting a return. That return of course, is based on the promise of States and their Banks (better said Banks and their States) providing safety through regulation. Hence in coming days I expect we will see some very nice and profitable boom and bust cycles with Bitcoin, accompanied by the loss of its fungibility. The States and Banks will continue to decry its use as a tool of criminals, while at the same time rounding up hoards of drug dealers, pedophiles, and tax-dodgers (who should know better), while the larger criminals continue making profits and eliminating their small-time competitors.
Sorry, I have wandered far from my initial purpose. I am tempted to delete much of this post, but maybe somebody will find my droning interesting.
Peace to you all,
Strix
Quoted excellent post in case Strix decides to delete any of it.
And I can guarantee you that every single one of the '2.0 fancy financial instruments' type coins will fail horribly, just as what they are based on is failing horribly. The last thing a cryptocurrency needs is to try to emulate the insane voodoo that drives the traditional financial sector and is driving all but the 1% ever deeper into poverty.
