THREAD: As transaction and exchange costs approach 0 the only factor that determines the value of a token is if there is an incentive to HOLD the token. So lets explore the different models that we have seen so far.
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Replying to @koeppelmann
Exchange costs do not naturally go to 0. At a minimum, they have to pay the market maker to hold a risky inventory.
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Replying to @ArthurB
Sure. I still think relying on friction (exchange costs) as part of a token model is a bad idea. In this sense assuming 0 is the most safe assumption.
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Replying to @koeppelmann
That's what money is though. It's what you hold when you don't know what you're going to end up buying and therefore want to maintain optionality by minimizing future transaction cost.
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Replying to @ArthurB
I actually think tx/exchange costs of tokenized assets or baskets of tokenized assets will be maybe even smaller then money’s. I think money relies on tx costs and might play a smaller role in a low tx cost future.
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Replying to @koeppelmann
Global markets + wealthier population does reduce the demand for money as a larger fraction of wealth can be held more cheaply as non monetary instruments. Still, my point is that "tx fees" and "hodl" are two sides of the same coin.
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Actually I believe if Bitcoin succeeds in its fixed-supply form, the total amount of wealth held in it, in 2018 USD terms, will be higher than $90T currently held in Fiat. Think about it. If $90T is held in inflationary/dilutable/depreciating instruments today, how big BTC'll be.
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