Cryptoeconomics - Hot potatoes vs Musical Chairs

in cryptocurrency •  last year 

In the classic children's game,

Hot Potato, players sit in a circle and toss a small object (often a potato) around while music is playing. Once the music stops, the player left holding the potato loses the game.
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credit: gameonfamily

Musical Chairs, on the other hand, has players run around a scarce number of chairs while the music is playing. Once the music stops, the player left standing without a chair becomes the loser.
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credit: strengthpowerspeed

In each of these games, the rules and incentives determine the holding time (H) of the asset (in this case, potatoes or chairs). In hot potato, players are incentivised to get rid of the asset as quickly as possible, giving it a short holding time. In musical chairs, players are incentivised to hold on to the asset as much as possible, increasing its value.

Are you holding a hot potato or a scarce asset?

Using this simple analogy, it helps to consider the holding time (H) of the asset you are buying into. For example, a decentralised taxi coin TAXI that is used to access taxis has a short holding time. You, as a user would buy it from an exchange, use it to pay the driver, who would then immediately sell it back to the exchange.

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This arrangement creates continuous selling pressure on TAXI, where no player is incentivised to hold the token and simply passes it on to the next player, like a hot potato. Vitalik has a great post on this where he mathematically defines (H) and states:

if someone creates a very efficient exchange, which allows users to purchase an appcoin in real time and then immediately use it in the application, then allowing sellers to immediately cash out, then the market cap would drop precipitously.

Simple tokens whose utility could be replaced by another token or fiat are weakly coupled to the economy, and are prone to economic collapse or at the least, poor gains.

HODL Tokens

Like musical chairs, some tokens are designed with strong incentives to hold, where there is an economic advantage to hoarding as many of the tokens as possible. This acts as an economic sink, where the available token supply decreases with time. William Mougayar has a great post where he describes how the utility of tokens can be built. In it, he states simply that

Usage without value linkage is a waste

In other words, a simple medium of exchange, 'use it and lose it' token could lead to economic failure.
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Vitalik and Mougayar argue that not all tokens are created equal, in terms of economic incentives and safety. Let us go through some example tokens with strong incentives to hold and good economic prospects:

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Steem:

Holding on to STEEM lets you vote, comment, publish, etc, while earning on the fastest growing blockchain powered social netowork. STEEM will also be needed to power social networks that start to use its Smart Media Tokens

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OmiseGO:

Holding on to OmiseGO let's you stake in their network, and earn transaction fees in any currency of your choosing. (USD, ETH, BTC, etc).

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LOOM:

Holding on to LOOM let's you develop and use large-scale online games and social apps on Ethereum, and also stake on their network.

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KIN:

KIN acts as a massive economic sink, where tokens flow from investors into an insulated economy of millions of users, and are held in a growing ecosystem of apps, websites and social networks. Holding on to KIN lets you participate in these networks.


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Each of these systems has a strong incentive for its users to hold on to the tokens. This way, tokens flow from an exchange and become 'locked' or vested into these ecosystems. Before investing into a token, remember to consider the holding time (H), which could affect the future value of your investment. In other words, always ask yourself - Where is the sink?
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credit: pinterest


Let me know which of the three tokens, OmiseGO, LOOM, or KIN you would like reviewed in detail

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Shame on you bro! Steem is staying $2.50 because of people like yourself abusing the system and doesn't allow new steemians any chance to get some reward they deserve

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Steem is staying at 2.14 because all the cryptos are down because corrupt governments are thinking about regulating cryptos. I like boobs

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You like boobs too? Fuck man.. what a coincidence!

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  ·  last year (edited)

You should probably read the steem whitepaper before making conclusions, @nathanmars ;-)

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Steem is not the perfect system yet and will not be for a while. Incentive methods are still being tested and pros and cons being evaluated. Still, curation in STEEM should improve even further with GPT's - where upvotes/ downvotes have greater effect than votes gotten from advertising.

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Don’t justify it man, listen to me, you know deep down you’re buying votes and audiences.

And allowing middle mans to get more Steem power. Middle mans don’t contribute anything to the Steemit ecosystem.

These post promoters are similar to the bankers who made the financial crisis happen in 2008 by negatively affecting billions of people’s life around the world and they still get their fat arse bonuses. And we created Bitcoin to take the power away from the bankers and those greedy bastards.

Now they’re coming to Steemit with wearing different uniforms and they want to control us. You’re not them, but you’re letting them in and take the power from the people.

Karma is a bitch and it’ll come at get you wherever you’re.

Don’t hide. Stand up for your rights and fight for people and fight for good system that benefit all of us.

If you just want to make money please go and make it some where else. Dan created Steemit and it’s up to us the good Steemians will make Steemit great !

We don’t need people who feed the greedy bankers in the expenses of innocent people

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They can't buy votes unless someone sells votes. Also isn't advertising basically buying an audience?

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Yes I’m fine with buying audiences to announce a Steem application updates etc. For example today trending page’s eSteem app updates and I commented to support steemit community.

Basically I’m happy with buying votes to promote good things and I’ll be one of the person there to upvote 100%

You know what, My sister used to live in a council house when she actually had the ability to earn decent income in her own to rent a decent house. However she decided to use other people’s tax money funded council house. I told her to the face what you’re doing is very wrong and the system was build for unfortunate people who doesn’t have the means to earn the money to rent a house and the system is their to protect them. Anyway I don’t like my own sister that much because of what she did.

I don’t want to associate with people who abuse the system whether they poor or rich. And it’s not the right thing to do. Those people might think they’re smart and they never will be able to enjoy life to the fullest. I want to live a meaningful life and I don’t want to get the blame for my grand dad killing thousands of people.

I’ll take full responsibility for my own actions and I know how to get rich and live a happy life by not abusing others and system in place.

I’m getting better human by every FUCKING day and I hope human race can move positively forward:)

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First

Let me just clarify something - I'm not actually blogging to make money, I do it because I enjoy writing, and if people didn't like my work, I would immediately stop (no point!).

Second

I'd like you to see some of the thoughts I have regarding steemit's ranking algorithm - as I said, it's currently not perfect.

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As you can see, I'm in the chats wondering/ suggesting how we - me, you, everyone can make it better.

Finally

If you are interested in a genuine discussion, check this article and tell me how STEEM becomes valuable without advertising - then we can have a proper chat.

As I see it, STEEM needs to balance both advertising and super linear rewards in order to get good content to the top.

If you have a better idea, @nathanmars, or counterpoint - then let's hear it, man!!

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First of all I appreciate you time and energy for engaging with criticism from your fellow Steemian.

First - I’m happy to hear you love writing and you agreed you’re not blogging to make money and I believe it’s true.

Me - I’m here to do what I can in my own power to make this platform beneficial for billions of people around the world and make sure the new steem citizens respect others and the wonderful community and the they don’t abuse the system for their own financial benefit.

Because some people say to me all the time and they’re making the world a better place. Let me tell you, world is much better Place and Without humans. Very few people in power makes this world filled with war and corruption, etc

And I don’t want the power to end of in the wrong people. Yes I’m here to make my billions dollars so that I’ll have the power to do good things for others.

I love my money so much and I want to be billionaire and it’s already written in the stars for me. And I’m going to use that money to make positive impact in the good people’s life. And my life is short so yours.

Do your thing bro and I’ll do mine. Respect

I hope you’re good person and continue to be a wonderful person.

I apologise for what I said and I’m extremely sorry if I make your feel bad. I’m so happy that I can what I want within Steemit and I love my freedom to express my feelings. And it’s your freedom to listen to me.

I love helping people and I’ll continue to help them and I’m greedy to make more money even more greedier to help more and more people.

Thanks for reading and Enjoy writing on Steemit.

One advise take it onboard if you agree otherwise ignore “ If you do quality work and you maintain direct relationship with your audiences and they’ll follow you wherever you go, Steemit might not be here tomorrow but your audiences want to read what you write and they want to feel you appreciate them”

Peace out :)

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Steem has advertising under the promotion area (under utilized).

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And don’t blame Steemit perfection blame your unperfections.

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Is an idealist... great!

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Come back in few years my friend and what’s the reality is.

I’m real man with real value and I push positive and afraid of saying my opinion wheather it’s right or wrong.

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You're an idealist... that's my point of view. And I'm sure that my opinion don't comes against your ideas or opinion. fact is that you discussion was great. That's is my point of view. I really respect your opnion.

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Thank you and sorry for misunderstanding.

Opinion matter !!!

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I actually respect your post too and appreciate it, man. Lot's to think about.

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I've witness how @hitwill helped steemians a while ago by upvoting them and replying to their comments. And I'm one of those!

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🖐🏽👊🏽

I am more bullish on Steem than any other Cryptocurrency. Especially with the latest grading system made public by china and a B+ rating given by Weiss. Nothing compare to Steem now and it is only matter of time. I only now stick on the best blockchain.

Screenshot_20180518-092343_Chrome.jpg

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$$$$ well well well!!$$$$$

Have been tracking OmiseGO for some time now. It seem to be very interesting to me.

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OMG is beast..... the next few years should be a wild ride. I came across this article today..... their vision is world changing.

"OmiseGO is not building a currency in itself. Instead, it’s looking to accomplish the spirit of the original Nakamoto vision of Bitcoin, the original Ripple vision (pre-blockchain Ripplepay), the original Paypal vision. They’re building a massive scalable, decentralized exchange uniting all fiat and crypto that will be freely available to regular end users via widely deployed digital wallet infrastructure. OmiseGO is looking to build a decentralized exchange for the whole world, and once it’s up, it won’t be stoppable."
https://medium.com/@upwolf88/omisego-tokenization-of-an-economy-a87cde0ffb90

Well done my friend .. good for you
It sounds like an enjoyable experience
Thanks for sharing your ..

agreed, a review of OMG would be cool, I have not looked deeper into their product
But if you have the time there is actually quite a big community here on Steem from smartcash that also does staking and masternodes (really affordable) which might be worth looking into...

and if you would also be able to take a look at adding a witness vote for @swisswitness, we are a new witness on the block hosting our server in the alps, as secure as can get... (i can see you are only voting for 2 witnesses for the moment and your support would go a very long way)
this new link from steemconnect lets you easily vote
https://steemconnect.com/sign/account-witness-vote?witness=swisswitness&approve=1
thanks in advance for the considereation

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Thanks, @felander - will look into smartcash, hadn't considered it yet. I'll definitely add OMG to the mix ;-)

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Agreed on OMG, I loved this article and would like to see your view on this project.

The issue is not are we holding a Hot Potato or Musical Chairs. The real issue is WHEN will serious government come to CryptoCurrency, and HOW HARD will it come down.

That is the true X-factor.

I think OmiseGo.

if possible please review NEO. It looks China may adopt NEO

Which one do you think is 2nd best behind Steem? I heard Bitshares was #2.

Hi friend, time not knowing about you, we already missed you here, do not miss much. The truth is that OmiseGo raises my curiosity a lot, I've taken the time to read a lot about it, and I'm really impressed, it's for more , greeting from South America

Indeed a really liked much more the discussion that was did fight between @nathanmars and the post's author @hitwill due this last one did buy votes for his post. Something like a discussion between an idealist and a Capitalist que have money to buy a lot of votes. Great discussion! Really more interessting that the post!
;D

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🖐🏽👊🏽

@hitwill,
An interesting analogy. Great graphics and I like the kitty in the sink!
@Lymmerik

I love Steemit because of all the great arguments. Trying to learn and understand the purpose of particular coins and their future functions is a never-ending pursuit. Steemit definitely helps this study.

WHAT? I thought this post was about Hot Potatoes!
Bring back the "WIGGLES'

On a more relevant note, Thanks for letting me know about those other platforms and currencies.

Now, If you'll excuse me, I have some research I have to go do.

DAMN, The block chain learning never ends.

Thanks for the post and HODL.

What goes around comes around.

Nice one, Will :) Hehe You can explain stuff like no one else.

I hate to say this, but I think utility tokens and non-currency based tokens will see the most amount of traction in the near future. I think that currency based tokens open themsevles up to being securities and thus harder government crackdowns. Especially privacy based one.

I like omisego more, it was a great post thanks for sharing

@hitwill Excellent analogy to describe ''hot'' versus Buy and Hold Add On Dips assets.

Interesting your analogy to explain your content is great, I share the essence when you say:
"A simple means of exchange, a token of" use it and lose it "could lead to an economic failure".
Thanks for the guidance in reference of the examples with strong incentives to maintain and good economic prospects, I will review them in detail!

Out of all of the tokens you mention only Steem provides real world utility right now. In addition those other tokens seem a lot like securities. Promises to pay shareholders a revenue share in transaction fees? Dubious, high risk, low return on investment. Why not buy a dividend stock which pays right now?

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Look at LOOM - they already have games running on their network. You are right about OmiseGo and KIN though - still 'whitepapers under development'

What a great analogy! I am holding nebl and it keeps going down. I almost feel like I am holding the potato! Thanks for the great article!

You've opened my eyes on investments steemit truly is a place to learn and grow keep it up!

First of all it's so nice to see you back on steemit after so long and Omisego is the coin which I want to review in detail, and again I want to say we missed you, Will.

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thanks for this - OMG is a pretty interesting project. I will definitely review it soon!

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It is very well explained to you. Good Job Bro

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Hoping to see you around now.

You really used a nice analogy to explain your concept of holding on to the right token... thanks for the insight... I would love you to review KIN

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Thanks for the feedback, @sammielaboi - I'll definitely add Kin to the list. They're doing something pretty unique that's pretty ballsy. No telling if they'll succeed, but their model is interesting.

the crypto show is really getting interesting the patience is what it is testing but some crypto which has a real life usage are shining great to see you back :)

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Thanks, @blazing! Yeah, it's all about patience and evaluating the stronger tokens

Nice representation with hot potato and musical chairs. I think you nailed it. But I think that the market is a mix of both games. it's like playing hot potato while you are playing musical chairs.

Cryptos are abit like hot potatoes and a lot of the time they hit the floor! I am still yet to climb back out of my hole :( lost too much money!

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  ·  last year (edited)

haha - a lot of them are legitimately hot potatoes. But there's a select few who's value can be calculated using the discounted future earnings method - like OMG (and vitalik's tweet in this article).

The ones that use the token as a fee model only are pretty much a no no for me, even if they solve a legitimate problem in industry

Verge baby! lol

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Haha - that coin is being passed around like a ho for free lol

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Yea, the only thing that keeps it in my mind is that it keeps on keeping on. It's like one of those rough hoes that just doesn't give up lol. gets beat around and such but it might strive on. Either way though, cryptos are all so correlated that the whole market moves as one really.

WELCOME BACK TO THE PLATFORM AGAIN. ITS REALLY PLEASURE.
its really a great presentation of Hot potatoes vs Musical Chairs. love it
thanks to you @hitwill

Hello @hitwill This Manegment or arrangement rates continuous selling pressure on TAXI, where no player is incentivised to hold the token and simply passes it on to the next player, like a hot gogoroo Vitalik has a great post and welldone think.great post i wellcomed your post and just resteemed.

Can you please review OmiseGo. Thats the one I'm most interested in.

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Will definitely do it - many people have requested this.

Everyone asks OMG :)) But I learned this well. I'm interested in your opinion about LOOM

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Thanks for this - I will also do LOOM, which is super interesting.

WOW! Amazingly you explained everything in a very crystal clear way. I love it.

KIN is in my mind already. OmiseGo i have already in my Portfolio.

By the way i am a traveler so you may like my travel blog too. Travel Series (Part #3) St. Lucia Iceland, A Romantic Getaway

Thanks for this kind of post. Amazing!

I like the hot potatos and music chairs analogies, it's a very creative way to explain this concept. I would like to explore the LOOM token more. Gaming is an interesting application to build around blockchain

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Thanks for this - I will definitely add LOOM to the list!

@hitwill I already created my account in OmiseGO. It really is interesting :))

Very nice analogy...I would like to see more on OMG. Thanks @hitwill

beautiful post ever.thanks

I think if you aren't holding a hot potato asset you might as well have your money sitting in a bank losing money to inflation every year.

Hi @hitwill. I just voted on your post 15%.

Please support my Crypto Project

imageedit_16_9399487011.gif

(click on image)

Bitcoin to the moon!

BTC-chart.jpg

go for it!

This game is called running chairs in our country. The game requires a little time to play, but it is very interesting. Other games are very fun.

@hitwill Hey travel lover, how are you?
I have raised the charity for A cancer Patient, I request you to be a part of it,
just visit my profile to know more.
you can send sbd to support the cause.

p.s Not posting the link here because it is against the rules :)

Thank you.

Great content!

Great post, never thought about it in those terms.

''

GOod work sir you are superstar
Sir I'm new steemit user plz help me nd upvote my posts

Nice

Buen dia amigo @hitwill, he estado rastreando OmiseGO desde hace un tiempo. Me parece muy interesante

Nice article!

fantastic game...

This post has received a 40.98 % upvote from @boomerang.

Ohh no....
Brother so sad!

Thanks for the information friend

wow very excellent post Thanks for sharing i will done upvote...../////

you made an incredible post mate keep up nice one

wow this is really amazing

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Do not understand mind
Somehow my love is mine
Kadai Bhasha Priya
Two lenses of the eyes of the eye

Great show, I like it!
I really like this post ....

We played this game as a child.

Hot phototo

excelente

a very good game, patun to be developed on earth

Do not be frustrated.please go on Musical Chairs just play

This post was resteemed by @steemvote and received a 99.36% Upvote. Send 0.5 SBD or STEEM to @steemvote

good comparison, I liked it )

yess very very good

You got a 69.29% upvote from @upme thanks to @hitwill! Send at least 3 SBD or 3 STEEM to get upvote for next round. Delegate STEEM POWER and start earning 100% daily payouts ( no commission ).

You got a 97.09% upvote from @upmewhale courtesy of @hitwill!

Earn 100% earning payout by delegating SP to @upmewhale. Visit http://www.upmewhale.com for details!

Great

I like how you think that HODLing crypto is like musical chairs / hot potatoes.

hello good initiative

I support you @nathanmars

Posted using Partiko Android

You got 35+ upvotes from @oceansbot courtesy of @hitwill!

it's nice

Good

I’m learning so much about Crypto currency from informative posts such as yours.thank you.by the way the cat peepin in the sink 🤣 priceless!

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Los juegos musicales siempre caen bien en una reunión, para disrutar. Musical play always get a good place in a meeting so it´s enjoy

Great post! I will be look forward to reading your new post. We seem to have similar interests. If you get a secs please check out my posts. I'm new to this and its hard to get viewers. It's very disheartening to put so much time into something and get no views. Do you have any tips to reaching a wider audience?

you made an awesome post

mejor explicación imposible gracias gracias nos vemos más adelante

wow so lucky post really your steem $1047

Fallow My channel :)

All the above seems passive income coins

Very informative

Wow..very interesting

Well explained bro !!! 😉

What a great analogy! I am holding nebl and it keeps going down. I almost feel like I am holding the potato! Thanks for the great article!

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Give opportunity for the weak so it can be kemenagan and spirit for them @hitwill

Guys I know absolutely nothing about Crypto but I would love to learn. A friend of mine @geniuscrypto is an absolute wiz (he also introduced me to steemit) and he started explaining it to me but I would love to watch a few "for dummies" tutorials... Any links? Suggestions?

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Try finding ted talks on crypto - they are usually a pretty good starting place. Also look up videos by andreas antonopoulos

All about crypto..... Thanks for the information

If we be patient than it will increase defiently priously it was about $4.8