Cryptocurrencies explained to a child: There are 5 people in a

Question

Cryptocurrencies explained to a child: There are 5 people in a

room. There are 5 tokens and one guy has them. Each guy has $1 in his pocket.

He tells the other guys in the room that the tokens are going to be very valuable. He will sell one for $1. Two guys buy them.

One of the other guys wants to get in on the action. But now, none of the guys want to sell. One agrees to sell a token for $10 which means the new guy only gets 1/10 of a token.

The other 2 guys feel left out. They want in. One wants to buy. The only guy who will sell is the guy who has 1/10 of a token. He'll sell 1/100 of his token for $1. The two left out guys buy at that price.

Questions:
What is the market cap of the token?
$500

How much money is in the room?
$5

What has happened here?
The guys have transferred some money between themselves.

Now add in a player who sits at the side and takes a cut of the money each time a transaction is made (miner). And take another player who takes a cut each time someone buys and sells a token (exchange).

How much money is left between the 5 guys if we add those parties in?
Less than $5

What is the market cap again?
$500

The way to win the buttcoin game is not to get involved in the game at all. The current price of butts doesn't matter. The market cap doesn't matter. Keep your cash out of game and you win.

0

11.01.2018

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Taken from the net.

0

11.01.2018

Watzon 🍉🇵🇸

Really though this is basically the same way fiat currencies work as well. They really hold no value other than that given by society.

0

11.01.2018

ＭＵＴＨＵ・ＫＵＭＡＲ「メーカー」 🔺 · Accepted Answer

ＭＵＴＨＵ・ＫＵＭＡＲ「メーカー」 🔺

While I agree with your point, this is the case with stock market as well.

0

11.01.2018

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