There is enormous misunderstandings about this phrase “Blockchain.” This is an attempt to help people understand them in plain english. While it may not be possible for non-mathmaticians to grasp the complex math surrounding a blockchain and it’s possible uses, the best part is that complication is what should make you feel wrapped in the warm safety that comes from this complexity.
“In fields of specialized knowledge, we aim to render an account that is plain and simple, yet does no violence to the difficulty of the subject, so that the uninformed reader can understand us while the expert cannot fault us. We try to keep in mind a saying attributed to Einstein—that everything must be made as simple as possible, but not one bit simpler.”
The problem with Bitcoin… and all non-balanced reward networks is disproportionate consumption of resources for long term stability.
If a network participant were to ask “Knowing the strategies of the other players, and treating the strategies of the other players as set in stone, can I benefit by changing my strategy?”
The payoff in economics is utility (or sometimes money), and in evolutionary biology is gene transmission; both are the fundamental bottom line of survival. Researchers who apply games theory in these fields claim that strategies failing to maximize these for whatever reason will be competed out of the market or environment, which are ascribed the ability to test all strategies.
[i]t is unnecessary to assume that the participants have full knowledge of the total structure of the game, or the ability and inclination to go through any complex reasoning processes. What is assumed is that there is a population of participants for each position in the game, which will be played throughout time by participants drawn at random from the different populations. If there is a stable average frequency with which each pure strategy is employed by the average member of the appropriate population, then this stable average frequency constitutes a mixed strategy Nash equilibrium.
Digital Currency Solutions both proposed and adopted share risks associated with other non-balanced reward systems that long term stability depends a predictable risk and reward balance for participants over the entire expected life cycle of the system. Each participant in the utilization of the system must evaluate “Knowing the strategies of the other participants, and treating the strategies of the other players as set in stone, can I benefit by changing my strategy?” If it is more valuable to hold than trade token over time, will there be sufficient utility in the tokens beyond speculation?
A contract for utility should reasonably have either a life expectancy or alternative renewal or redemption period. Bulk purchase agreements often allow the balance of risk pools between buyer and seller against market changes over a limited period of time.
Imagine if you will, a Coin Foundry where redeemed tokens are re-fired and re-minted on every reissue event. At a issue/reissue event a newly minted token is generated representing a specific quantity of redeemable units defined by a defined contractual agreement for specific performance or redemption by “specifically defined” and/or limited to “only qualified holders” upon presentment to issuing actor within a specifically defined period of time. Upon presentment for redemption to issuer (or designee) of “performance act token“ or portion thereof for “contracted performance” issuer shall be liable for the holder of “performance act token“ for “obligations under contract memorialized under specific token issuing event.”