The Cryptosphere Teaches Economics
We do not learn economics from sitting in class and listening to a professor. We solely learn economics through practice. The cryptosphere offers one of the top places to learn economics in practice because we see how economic actors behave with each cryptocurrency or crypto-asset’s constructed reality. Since this reality varies significantly, the behavior of actors will vary – for instance, an inflationary cryptocurrency will have far fewer savers than a deflationary cryptocurrency. This page also explains some elements on FinTekNeeks EcoRealities.
Bitcoin proves that good ideas are copied, creating competition. When I was a boy, I would get frustrated when my brothers would copy me until my granny pointed out one time that “imitation is the sincerest form of flattery.” She was right. No one copies bad ideas because they’re bad ideas, but good ideas will have thousands of imitations. When people tried to argue against bitcoin because “I could just copy it” I was laughing so hard at their pathetic arguments because it actually proved the very opposite of what they were saying! If bitcoin was a terrible idea, it would have no one trying to imitate it and yet look at how many other copies of it exist. In economics, we call this competition, but the winner is generally the early bird.
Steem teaches inflation. The cryptocurrency Steem experiences 100% inflation per year forever, unless this is later changed. When I first warned people of this fact, no one cared because “OMG, bright shiny speculation” and there were some people who were dropping $10,000 into the currency Steem at $2+ per Steem, thinking that it would eventually rise to $100. Then inflation did what it’s good at: more Steem kept being printed and people who actually value their time and money didn’t buy or hold onto Steem and the result was that it inflated. In fact, Steem experienced such strong inflation that after we suggested to get rid of it, Steem subsequently crashed over 90% in value! The great thing about Steem is that it’s teaching people how destructive inflation is. As my buddy Fred pointed out, he saw his account “value” drop 80+% in a few months. Does low inflation sound like a problem to you? Didn’t think so.
Zcash shows us a supply shock. Zcash’s first day of trading came with only 100 Zcash. There were points during this day that people were paying over 1000 bitcoins (about $730,000) for 1 Zcash. One Zcash. Welcome to a supply shock! If the world ran low on water tomorrow because of a major drought, you’d see the price of water rise so fast and furious that you’d be horrified at the prices some people would pay around the world. In fact, as I type this right now, there is a shortage of sugar in Egypt – a supply shock due to low supply and the result is massive inflation in the price of sugar. Supply shocks are painful for most people, though in the case of Zcash, early investors were just fools and fools and their money are soon parted.
We noted that Zcash was significantly overpriced and our theoretical FinTekNeeks Hedge Fund has been obliterating the Zcash longs. As I wrote about Zcash, which is one of many reasons I have no interest in it from the long side:
From my view, it lacks any of the infrastructure that bitcoin has and the community is solving a problem that’s already been solved (Dash, Monero, Shadowcash, Boolberry, etc), so they’re late to the party. Even if they later catch up completely on privacy, these other cryptocurrencies are two steps ahead of them and are working on the next innovation.
In most cases, supply shocks bring a lot of economic hardship to people, such as the sugar supply shock in Egypt that is presently underway (listen to my talk on
blockchain-based solutions with commodities where I mention it). Zcash is not comparable as it was self-inflicted, but it does highlight a good example of one.
Dash is to the cryptosphere as Rome was to Eras. The Roman Era lasted from about 800 BC to 1400 AD – an era that lasted over 2000 years (Roman Kingdom, Roman Republic, Roman Empire, Byzantine Empire). Rome started as an early agricultural empire that went unnoticed for quite some time, but was fundamentally founded on the principal of the natural republic – a system where people with merit rose to the top and ruled over those without merit. Dash is the closest model to the Roman Era in the cryptosphere; with its Masternodes, governance model, and miners, Dash provides users with routes to help govern the success of Dash. For a simple example of this, you can earn 8.65% Dash a year with a Masternode, but it requires 1000 Dash principal. Noting that you will have to set aside Dash for this, would you vote on ideas that will hurt Dash when you’re holding a lot? No. This is what the Roman Era understood and this is what Dash also gets. In modern times, we teach this system in game theory and advocate that a system which encourages cooperation over the long run will succeed for a long time.
Supply and demand both impact price, though other parameters can have an impact, like the belief that a label has value due to it being produced by a manufacturer. In the case of Bitcoin and Dash, we measure supply by the estimated total in existence, whereas with Platinum, Gold, and Silver, we measure these in the current estimated total measured in ounces. These precious metals do have new supplies coming online at certain rates – for an example, Gold is seeing about a 2.2% increase in its supply while Platinum is seeing about a 1.5% increase. In the case of Oil, we measure the supply in total barrel production worldwide. Unlike the cryptocurrencies and precious metals, oil production is in permanent decline.
Ratios are economic and financial measurements meant to convey the value and pricing accuracy of an item. A simple example of this is a price-to-earnings ratio; a security with a price-to-earnings ratio of 200 means that the security’s price is 200 multiples of its earnings. Our ratios look at the supply ratios to compare value.
Indicators show health assessments or measurements of economic parameters. For an example, if inflation is 3.5%, this is an inflation indicator showing that the currency experiencing inflation is losing 3.5% of its value every year. Economic Indicators and Strategies are exclusive for clients and these update from time to time so that clients know how we see markets and where we see opportunities. For the Beta release, the Indicators and Strategies are the FTN COSIWA, FTN Inflation, FTN NII, and FTN Allocation.
On behalf of the Evolution Backend team I’m pleased to announce the ‘testnet’ release of Dash Payment Processor. This system is meant to be operated by a merchant to allow for the usage of Dash as a payment option without third parties being involved.
The quickest way to get a feel for how this system works is to visit http://payment-processor-testing.slayer.work and place an “order”. You’ll notice that after the submit button is pressed a response will be provided back containing payment information. If the requested payment is sent you’ll see a “Payment Callback” occur. It’s also worth mentioning that this system fully supports InstantSend.
Included in this release is a WooCommerce Plugin. This plugin was created to act as a “Proof of Concept” for the system as a whole. It enables WooCommerce to use the Dash Payment Processor as it would any other payment method. Plugins and extensions for other e-commerce platforms can be developed in the same way; these libraries facilitate the checkout process and also allow for block confirmations to occur before the sale is finalized. A demonstration of this plugin is available at http://store.slayer.work.
Dash Payment Processor uses a BIP32 HD Wallet Seed or Electrum Wallet Seed as the basis for Payment Address generation. More information on this and other mechanics of the API is available in the Official Project Wiki.
Official Project Wiki:
Interested in setting up your own Payment Processor? There’s a bit of setup involved, if you have any questions please contact me through PM and I’ll try to give you a hand as quickly as I can.
Prerequisites (Ubuntu 14.04 or 16.04 recommended):
1. Node Version Manager: https://github.com/creationix/nvm#install-script
2. LAMP Stack: https://www.digitalocean.com/commun…x-apache-mysql-php-lamp-stack-on-ubuntu-14-04
3. WordPress: https://www.digitalocean.com/community/tutorials/how-to-install-wordpress-on-ubuntu-14-04
4. WooCommerce: https://wordpress.org/plugins/woocommerce/installation
Part 1: Install Dash Payment Processor
nvm install v4.0.0
(close terminal window and reopen for nvm to take effect – important!)
npm install -g bitcore-node-dash
bitcore-node-dash create mynode -d ~/.bitcore/data –testnet
bitcore-node-dash install insight-api-dash
bitcore-node-dash install dash-payment-processor
nano AppConfig.js // configure wallet seed and worldcoin api key
cp DBConfig-template.js DBConfig.js
nano DBConfig.js // add mysql database user/pass
mysql -u<mysql username> -p < mysql-schema.sql
At this point, you should have a full Bitcore node up and running. This node will sync the entire Dash Blockchain and provide a local Insight API that the Payment Processor can use to detect and verify transactions. At this point we can proceed with installing the WooCommerce plugin.
Part 2: Install the WooCommerce Plugin
1. Download Dash-Woocommerce-Plugin.zip from https://github.com/snogcel/dash-woocommerce-plugin/blob/master/dist/dash-woocommerce-plugin.zip.
2. From the WordPress Admin interface, click plugins then click “Add New”.
3. At the top of the screen find the “Upload Plugin” button and choose the zip file download previously.
4. Click the “Activate Plugin” button, once the plugin has been activated you’ll find it included in the listing of Installed Plugins.
5. From “Installed Plugins”, locate “Dashpay – WooCommerce Gateway” and click on Settings.
6. Select “DASH Checkout” from the list of available payment methods.
7. Check the “Enable this payment gateway” checkbox.
8. Configure the “Payment Service API” and “Insight API” option to point to your server.