Great discussion thread. Decided to go for it, and finally opened an Ethresear.ch account – first substantive contribution here, so pls be kind if the post offends some community norm or whatever. Just getting to know everyone, and so on.
Ok, so about Eth as money. The key thing to note is that Eth already operates as money, and that nobody has a working methodology (and, ideally, methodologies) for assessing the value of this money-form. Current price-based valuation methods simply don’t work for Ethereum. Here’s why:
Today, the “monetary premium” that should attach to Eth/Ethereum is best understood by analogy to paper and the printing press (two inventions that are as integral to our modern understanding of “money” as anything else out there). So, it’s less whether Ethereum is a money form, but to what extent it allows other Eth-based currencies to emerge as money forms. This is the genius of Ethereum, and why it’s one of the most valuable technology projects in development today.
Like paper and printing blocks, it allows for an infinite number of permutations of the money-form, allowing scalable monetary units for an infinite # of socio-economic transactional spaces. Ethereum basically allows people to micro-monetize micro-transactions, on their own terms.
Of course, Ethereum’s not the only game in town, but it has a clear first mover advantage. Can BinanceChain, or BitcoinScale, or whatever, overtake Ethereum? Yeah, of course, just like competing OS systems had every chance to displace Windows. But in tech, once adoption curves start growing exponentially (which seems to be the case with Ethereum), the first-mover advantage is very difficult to overcome.
Now, that being said, it should also be kept in mind that tech crews are also notorious for squandering first mover advantage (myspace, BlackBerry, Palm, etc.). In this respect, the Ethereum community would be well-advised to stop getting high on its own [monetary] supply.
Paper + printing press ≠ money.
Money becomes valuable not only as a “medium of exchange” – that’s too techy and abstract. One of the easiest tests for money-ness isn’t whether you can sell your apples for ETH or BTC. Rather, it’s whether lots of people start agreeing to do labor in exchange for a particular crypto instrument.
Labor and goods are related. One needs labor inputs to grow the apples, harvest them, and bring them to market. But the reason it’s important to emphasize labor now is because it seems to be fading from view. Today, there is much more attention on crypto financialization, collateralization, oraclizing, etc.
“How should we BlockTrack those organic SmartApples from tree to market to make sure they’re not tampered with?”
The question above is very important.
But in order for Ethereum to showcase its full potential (to adopters, and also to regulators, competing chain communities, other stakeholders), cryptoeconomic theorists must be able to explain how Ethereum permits radical expansion of labor markets. To do this, one must be able to point to very simple use cases that permit a normal person to, say, download a crypto app and easily earn crypto. That use case can be as simple as the inevitable integration of ETH into Uber, AirBnB, and so on. But to unlock Ethereum’s monetary potential, we should posit more ambitious micro-transactional targets at global scales (instead of just offering a “more secure” alternative to the greenback, or whatnot).
Bottom line: to understand crypto valuation, and Ethereum’s monetary potential, we have to realize how easy Ethereum has made it to create entirely new labor markets (e.g., getting paid for doing micro-location mapping; incident reporting; litter pick-up; etc.).
(Micro-transactions) x (global scale) x (t) = hyperutility = value
Even though we don’t have firm empirical inputs for the full range of possible micro-transactions and their globally-scaled markets, we can and should start building and refining these models.
Now is a great time to start because platforms like EthBounties will give us a front-row view into the development of these micro-incentivized, micro-transactional, micro-monetary (as opposed to “micro-financial”) exchanges. Right now, EthBounties has 43 live bounties (and a platform total of 200+). When that number is 43K, 43M (and, yes, 43B! by EthBounties and/or competitors), then we’ll actually have world-first quant data sets on global labor markets (beyond just disembodied “financial markets”).
Ethereum will have pulled off one of the most audacious feats in global economic history–bringing actual liquidity to global commodity and labor markets (the biggest % of the world’s real economy pie).
Here, again, lies the genius of Ethereum, and the enormity of the potential that has been unleashed by the indefatigable Ethereum crew. To keep realizing this potential, and to keep striving for this potential, everyone in crypto and especially in Ethereum should understand just how fragile the aforementioned “micro-transactional spaces” are – and how easy it is to extinguish them and stomp them out.
The antidote to financialization at the expense of full-spectrum marketization is simple. Everyone just needs to keep asking one basic question:
What’s the easiest way for a no-coiner to earn crypto by doing socially useful work?
Instead of “what’s the value of all the Eth-based coin out there?” the question should be “what’s the real value of all the Eth-based tokenizable micro-markets out there?”
In addition to making it easy to spend and borrow crypto, we need to make it extremely easy for people to earn crypto.
CryptoEarning dApps are crypto’s tastiest fat reserves.
There’s nothing like winter to trigger the mind to seek out fat.