The Value of Gridcoin -- A Continuation and Response -- An Alternative Rain Proposal

in gridcoin •  11 months ago

I am seriously enjoying these in depth conversations that the Gridcoin community is spawning. So let's continue! = ). If anyone thinks it would be better to have these conversations in the comments of a single thread, please speak up. I personally think the length of these dialogues doesn't really work in comments, but I'll do whatever.

This is in response to:

My Thoughts on the Value of Gridcoin by @decayingzombie

which is the third post in a continuing conversation so far consisting of:

  1. Long Term Goal of Gridcoin by @applepiee
  2. Response to Appliepiee's Post "Long term goal of gridcoin" by me, @jringo

GRCSteemitHeaderBlur - Purple.png

I agree with the day to day utility of what you call value, @decayingzombie, and I very much agree with the connection you draw between time, energy (or work), and your definition of value, however I think there is confusion of terms when you talk about value. I am by no means an economist, just someone who studies economies. What I’m describing here is only my understanding as such.


But why do I accept a $20 bill in exchange for moping Joe's floor? I accept it because I know that I can go down the street to Sally's coffee shop and use it to get a sandwich and a coffee. Sally accepts my dollars because she can then use the dollars I've given her to pay someone to mop her floor or buy herself goods. The cycle continues and we have a very rudimentary and simplistic view of an economy, at least from the perspective of trading time for money. My apologies to the economists in the crowd. Of course, rooted in all this is the high-level backing of the currency by debt or gold or beaver pelts or whatever else society deems as THE determiner of value.

What you’re describing here is a standardized currency. A standardized currency is not required for an economy to function. And the backing of debt or gold, beaver pelts or tulips, is not required for an economy or currency to exist. The value of a currency is based on its ability to be traded easily. Consider, standardized currency wasn’t common place until we learned how to make little metal coins.

Currency needs to move around for a true economy to develop around it (again, sorry economists for gross oversimplifications).”

Since currency isn’t needed for an economy, this can’t be true. It’s an oversimplification for a reason = ). And I’m not an economist!


A commodity is a thing that can be sold and used. This thing has to fulfill a few more requirements to be called a commodity, but I won’t get into that. It's things like gold, oats, coal. Gold, as I mention in my post you link to, has held value as a commodity throughout history because it is useful, rare, and beautiful. We had a commodity based economy until 1971.


Fiat is defined as “a formal authorization or proposition; a decree.” It does not stand for anything. Fiat’s second definition is “an arbitrary order.” If we take the enjoyably pessimistic point view, all formal authorizations or decrees are arbitrary, so fiat economies are economies of arbitrary law. It sounds harsh, but it’s what it is. Fiat, as with most economic systems, dates back thousands of years. We live today in a debt based fiat economy meaning that arbitrary laws create an economy which prioritizes debt as a determiner of value.


An economy is nothing more than the resources of an entity, called “wealth” in capitalism. Capitalism also makes economies particularly focused on production and consumption, but at its roots, economy is just the resources of an entity. Its second definition ties it into management of these resources. There is nothing about exchange, though management often creates exchange.


An asset is a useful thing. That’s it. Literally. Anything can be an asset if it's useful. A house, a stock (which is useful in our system), a skill, a book, these are all examples of assets. Remember this: Commodities and assets are both things that meet wants and needs, but not all assets are commodities while a commodity is always an asset.

How does Gridcoin fit into all of this?

Gridcoin represents a unit of volunteer processing power on the platform BOINC. Gridcoin is not a commodity and I would argue is not quite an asset, though it is closer to an asset than a commodity. We simply don't yet have the language to describe block-chain assets. Governments are hard at work to solve the problem.... xD

One thing that is certain: Gridcoin is not just a currency. "Cryptocurrency", as Gridcoin might be called in day to day conversation, is a mislabel the same way that global warming is a mislabel for climate change. -- If I have to explain to 1 more person that it reaching record cold temperatures last year is a result of climate change and not evidence that climate change is a hoax.... -- this is not just semantics.

So that’s a bit of my view on the value of Gridcoin from a more practical lens. It is a block-chain based digital asset(ish) which represents a unit of volunteer processing power on the platform BOINC. In the same way that Bitcoin seeks to replace centralized 3rd party financial institutions, entities with real market value which is now getting transferred over to bitcoin, Gridcoin seeks to replace centralized 3rd party super computers, things that are only going to become more valuable as society gathers and processes more and more data. That is the value I see in Gridcoin, and it is very possible that we are shifting into an asset (multi-currency) economy faster than we realize.

In general, I do not think we should be using the definition of currency to describe the value of Gridcoin, something that is not a currency.

Regarding @decayingzombie's Proposed Project Rain (there are 3 so far)

Instead of talking about the dangers of setting up a profit based BOINC project economy, I am going to suggest another way we could help fund projects looking to get some compute done on BOINC while keeping volunteer processing an absolute priority of Gridcoin. If we begin to look more like Golem, iEx, or SONM, what’s the point? If we get into it, I can describe the danger I see in your proposal later. Not saying I don't support the idea, just that I think it needs to be seriously explored before any action is taken.

This is a copy and paste of my response to @nightshift1134’s post. It’s just a rephrasing of his idea describe in that post. I have added one line from that comment to this one.

This might look like:

We make a project, let's say GRCStarter@home. The data processed by this project changes based on the decision of whoever runs it -- community, an individual, whatever. The Mag awarded to every CPID on GRCStarter@home is based on the average GRCStarter@home RAC of all CPIDs working on the project.

To find out which projects award you how much of your magnitude, type

list explainmagnitude

in the debug console.

Debug Console.png

The project can change data.


  1. Topical data processing = good for media.

  2. Can not run out of data, with proper maintenance.

  3. Researchers can submit compute requests to be hosted on GRCStarter@home and they will get the attention of many new users and philanthropic heavy magsters.

Low mag users can work on this project to increase their mag. High mag users can work on this project to help new or low mag users.


  1. Heavily invested entities can help Gridcoin and BOINC without requiring direct involvement.

  2. Publicly traceable philanthropic competition.

The process of getting a new user onto Gridcoin and BOINC is condensed into the clients required to operate Gridcoin and BOINC -- a massive simplification.


  1. An additional measure of network health and statistics.

  2. The project website could be a hub of information for new users -- tutorials, FAQ, tech documents, BOINC info, project info, etc.. Education!

What do ya'll think?

I know this is a long post. Thank you for taking the time to read it! It gives me a lot of confidence in Gridcoin to see people proposing endeavors with so much thought and discussion behind them.

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Credit for the animation goes to @dutch

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Hey jringo,

if you remember our other conversation: I have done my reading, now knowing what you mean! ;) I truly like your idea, having an "umbrella" covering small projects, making boinc more approachable for less tech-savvy researchers. This contains the voluntary approach and spirit of BOINC and Gridcoin, but I can image this could also be tricky to implement, but the tech part (how WUs are created)I know nothing about!

One aspect I liked about the rain proposal is that this creates a very real use and incentive to get GRCs: "Buying" computing power. As long as this is e.g. cheaper or easier than renting a cluster, many institutions might go for it and acquire Gridcoin, or even start mining themselves. Who does not know vast offices with tens or hundreds of PCs idling senselessly? But I see the other side of the medal that you pointed out - the possibility to abuse.

Thank you for putting so much thought into this! I might have an idea myself to benefit the community and Gridcoin, I just need to write it up. Together for Gridcoin! :)


hey there = )

It's my pleasure. Thank you for your thoughts! GRC at its roots is something that is going to happen one way or another, some day by someone or some company or by us.

One aspect I liked about the rain proposal is that this creates a very real use and incentive to get GRCs: "Buying" computing power.

I cannot say this enough: If this is the incentive for buying Gridcoin, why would anyone buy Gridcoin? Personally, I would move my investment and time to a more established and developed system with hundreds of millions of dollars backing it -- one of our competitors... if they ever end up making a functional product.

The only difference between GRC and "Project Rain" grid computing platforms like Golem, iEx, and SONM, is that GRC lets a free market prioritizes the research produced. As soon as you restrict projects by tying their potential processing power to the asset created by a blockchain you destroy the free market and force it into a "pay-to-play" market: Those with the most money will dictate which projects are worthy of crunching and projects will cater their work and design to those with the most money so they can get their work processed. This centralizes control to the extreme.

The current BOINC economy leaves the decision of which projects are worth crunching up to the volunteer crunchers. They move to the project which they deem worthy, regardless of how much cobblestone they make off of it. This is a major aspect of BOINC which GRCStarter@home seeks to amplify -- a free market based on scientific results instead of money. @bullshark you should love that part! = )

There already is a very real reason to buy and hold GRC. It is both a commodity and an asset and also sort of a security. I would recommend researching these economic items and how they have been used and exploited through history to see the incredible value they posses. We do not need to remove the volunteer priority of GRC to give it value it already has! (Project Rain removes the volunteer priority unless heavily regulated, which I have seen no intent of from any of the proposals).

As it stands, if a researcher has work to be processed, they make a BOINC project and push to get it crunched. If they convince people that their project is worthy of the limited processing resources of the BOINC network, people will crunch their project! That's it! No need to buy anything or add layers of bureaucracy!

With GRCStarter@home, if that researcher does not have enough work to create an entire project, they can apply for GRCStarter@home, or any of the dozens of other projects which might spawn from a GRCStarter blockchain.

If that researcher does not convince enough people to work on their project, they can apply for GRCStarter@home or any of the dozens of other projects which might spawn from GRCStarter.

Other projects could be projects that: Crunch only environmental research, crunch only financial data, crunch only social data, crunch anything but send WU only to mobile devices, crunch anything but send WU only to arm devices. Crunch only environmental data on arm devices... there are endless possibilities.

Together for Gridcoin! = )

And regarding implementation, there are dozens of protocols that will work with a GRCStarter blockchain ;)


i'm going to move this conversation into the thread on GRCStarter@home

I really love how this kind of discussion is taking place and it really shows how committed this community is to making gridcoin work in the long run.