7 ms·

Mediums of exchange need to encourage usage, not hoarding.

• nsomaru 9y ago
  Here's an interesting thought: you need a certain amount of liquidity to overcome the liquidity premium (https://www.investopedia.com/terms/l/liquiditypremium.asp https://www.investopedia.com/terms/l/liquiditypremium.asp). However, if the velocity of your asset is too high (nobody has incentive to HODL), then your asset becomes a medium of exchange because nobody wants to hold it due to price risk relative to fiat. So the best digital currency is one that is valuable to be _held_ but still has high transaction counts. The article that stimulated my thoughts on the matter: https://docs.google.com/document/d/1-ix9BDmGie8tPAwrfRKqe9CNUDnakmiwoh7tHfXeV9g/mobilebasic https://docs.google.com/document/d/1-ix9BDmGie8tPAwrfRKqe9CN...
  • kobeya 9y ago
    Do you mean something other than velocity? It doesn’t make sense I’m hat context. (I’m not opening a google doc for security reasons).
    • nsomaru 9y ago
      The article is great and gives context. Maybe use a service like Pocket or a proxy to open the link?
      • kobeya 9y ago
        Velocity is how quickly money changes hands. Did you mean volatility?