Why Economics MATTER in Cryptocurrencies: A Case Study
On June 20, 2017 I wrote an article warning investors about ZCash and its massive inflation rate - paid to miners. Even Monero currently has a large inflation rate, which has been declining while transaction fees are climbing (to offset compensation to Miners).
I'm a big believer in Privacy Focused Cryptocurrencies. Over time, with greater government interference, market preference (and PRICE) will shift from pure public blockchain to Private Cryptocurrencies. Privacy cryptography is computationally heavy (EXPENSIVE) when paying other computers to process.
This is why it is the LOWEST COST PRIVACY Cryptocurrency will rise higher and higher in market preference. Which Cryptocurrency is designed to have lock solid Privacy AND Lowest Cost?
PIVX.
PIVX is owner run. So only owners get paid block reward to provide permanently robust computing power. All Privacy Fees (minting /spending Zerocoin PIVX will have small computational fee) and all Transaction Fees, because everyone is running the Blockchain, are burned out of coin supply. This means PIVX has a flat Coin Supply capped by use at approximately 10 Transactions per second.
So let's compare how an Owner Run Currency (PIVX) compares to a Miner run Currency (ZCash).
On June 20, 2017 if you owned $10,000 worth of each you would have:
ZCash Price: $406.01 - 24.63 ZCash. Since then, Miners would be given all new ZCash generated.
PIVX Price: $1.74 - 5,747.12 PIVX Since then, running the PIVX Wallet, you would have received on average 115 MORE PIVX - you're getting paid, not Miners.
On September 15, 2017. Your Portfolio would look like this:
ZCash: $3,925.
PIVX: $16,530.
Economics doesn't make a difference, does it????
Pivx has good branding and online presence as well. This could be big.
PIVX is quietly building a solid foundation of long-term success while the market sorts itself out. The market is reacting to the wild gyrations of the current crypto climate. As the market seeks stability and equilibrium, it will become increasingly more evident that PIVX has been on the right track all along.
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STOPI think you should rather compare the ratio investor's coins/total coins.
For example lets say you bought 1 zch and 1 piv and there were total 100 coins of both of them (You have 1% in them) 2 months ago.
Today you will still have 1 zch but the total zch will be 127 which means you will have less than 1%.
The total pivs will be 101 and if you are staking you would have 1.01 piv which is still 1%. (You would have even more because not everyone is staking).
I think you should not compare the price to usd because tomorrow zcash can be 300% up.
With a 2.4% WEEKLY Inflation paid to Miners, ZCash can't go up a whole lot in fiat. It needs 2.4% new money every week to not go down (or just "hope" the miners are HODLers). PIVX doesn't need any new money to stay stable. That's the economics of a stable, owner run Currency.
I know that. I just think that if you compare them to usd you should calculate as if the market cap wasn't changed the last three months.
PIVX had a big jump I think about two months ago from average market cap $100 million to $200 million and now it's $180 million. Zcash had $600 million market cap and know it is $400 million.
If the market cap wasn't changed the difference would be a lot smaller.
In your example without the market cap increase you would still have $10K of pivx but you would have about $6K zcash. I think this is a better way to compare them.
Don't get me wrong, I love pivx and I'm all in it. I just think that your numbers are a bit misleading because of the market cap change.
This is a good study, I agree with @dekelito that the comparison to USD does add some confusion but I also accept that its warranted. People tend to be suckered in by 'HIGH REWARDS' also not knowing that rewards often equal inflation. Where this inflation goes is extremely important and often overlooked. I'm obviously a big fan of PIVX and I think factors like this need to be highlighted more to educate people on sensible economics.