2/ "Price Inversely proportional to velocity" here is not a vague correlational statement, but an exact one from "MV = PQ", which was my grandfather's license plate: https://en.wikipedia.org/wiki/Equation_of_exchange …
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1/ This article on velocity in cryptocurrencies misses a deeper problem: since token price is inversely proportional to velocity, token holder incentive is to *decrease* velocity; ie keep txs slow.https://www.coindesk.com/blockchain-token-velocity-problem/ …
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4/ You can argue that faster txs = greater utility = more future demand, and there's some truth, but that's an indirect/distant/second order effect compared to the direct/immediate/first order effect of velocity decreasing price.
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5/ This suggests that store-of-value and medium-of-exchange uses are in opposition. Hodlers want high prices, which means a slow network. Exchangers are price-indifferent but want speed.
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6/ This makes investing in tokens for any non store-of-value a sketchy proposition. An effective enabler of exchange (financial, storage, CPU, bandwidth, whatever) must be fast & low-friction, which is opposed to token appreciation.
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Via
@AriDavidPaul, here's a more detailed explanation by@cburniske of how velocity relates to price for cryptocurrency using the equation of exchange:https://medium.com/@cburniske/cryptoasset-valuations-ac83479ffca7 …Show this thread
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