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The System Design of Virtual Currency in the Future

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发表于 2014-10-13 20:59:49 | 显示全部楼层 |阅读模式
The System Design of Virtual Currency in the Future

Theviews as follows do not represent the official view, only personal point ofview!


The United States, standing in the world for 300 years, mostly benefits from itssystem. Existing virtual currency like BTC has a long period without anyinnovation and variation. I think the main reason is that 10 percent of marketcapitalization which the miners took away is no penny used to research anddevelop and promote BTC. Perhaps, BTC would develop better with annual researchand development cost of 100 million dollars and annual promotion cost of 100million dollars.

The most attractive point and also a factor of success of BTC is that itsadditional could be controlled. In the monetary area, it’s called inflation.Now about 10% each year of the additional issuance of BTC is used as so-calledsafety expenses, namely the miners dig. That is to say essentially additionalof BTC is not a continual additional currency but gradual and could becontrolled. But now the system of Ma coin is very risky because Ma’s survivalis depended on if 33.cn is willing to develop this currency. It is alsoa fragile system because development fund could not ensure systematically Mawould never be suddenly on the market by someone. Therefore, if Ma wants tolast 300 years, such a system is not feasible.

I think Bitshares of 3Icorporation is a promising currency.Bitshares has raised some money by crowd funding to develop its currency. Butafter years, if the money is used up and the 3I may quit, this currency wouldnot be safeguarded by no one.
First, let’s take a look at the expenses of technicaldevelopment. Virtual currency technology is open actually. Only if itdeveloped, the technology will be open no matter what good idea you may have.So I think there should be some professional virtual currency technicaldevelopment corporation to provide technology support to many virtual currency.For instance, Ma coin is developed and managed by 33.cn, but in fact, Ma stillneeds to have that kind of management team and board of directors. The board ofdirectors is elected by shareholders, while management team has an initial teamlike 33.cn. However, if shareholders think lowly of its management orperformance, they will have rights to fire this team and then hire anotherteam. Compare virtual currency as state system like America. There must elect acongress and a president, erect cabinet and manage this country by thepresident.

Ofcourse, these system design of western country could avoid the management teamhas too much power and then avoid the tragedy that one person ruins a currency.However, many shareholders and investors are unprofessional, factuallymanagement team professional. The operating efficiency of the whole systemwould be decreased if shareholders and investors often interfere the action ofmanagement team. So I think it must have a good balance in system design.

In my opinion, technology research and development team isshared by all virtual currency. For example, 33.cn is a technology research anddevelopment team, meanwhile, the management team of Ma coin is managed byanother corporation or by all kinds of big names. The management team couldgive us this currency annual technology research and development expenses andwe take charge of developing what the management team asks for. There must bemany technology research and development corporation and until then take chargeof this by competitive tender. Anyway, if management team did a not good job,it can be changed; if technology research and development team did a not goodjob, it can be changed. What’s more, a technology corporation dose not onlyserve a currency. It stands neutral. Another kind of currency like BTC could beoutsourced to us to develop. In this way, this technology corporation could belarger and share resources and functionality and decrease the cost.
Marketand promotion team is also a expense. Promotion team is operated byprofessional promotion corporation and advertising agency rather than a teamerected by this currency. The reason is similar to technology. We can notentrust a currency to the death or alive of a corporation.

Dose Taobao succeed because of free of charge? In fact, Paipaiis also very early and free of charge. The important point is the constructionof ecosystem. At that time, Taobao expend large sum of money, advertise freelyfor merchants. The more money merchants earn, the bigger business Taobao is. Inmy point of view, the success of a system must have a snowball effect. It isimpossible to succeed if you must insert into it without customer’s demands. Evenif you give him money, maybe he do things carelessly. Like giving away for freeof Ma coin, almost of customers can not understand it and even have no businesswith Ma, and they just come to receive free.

Thereason why bitpay joins in BTC system is that it is beneficial in this system.It can financing tens of million dollars to establish a payment system. Allkinds of commercial activities rely on profits. If bitpay did not earn money,nobody will invest it. There is another point in our inner corporation that wepay bitpay certain quantity of Ma coin to build a payment system for us. Bitpayitself earns money with the increasing of Ma coin. A company relies oncontinual profit. Ma coin for free could not support a few years’ expenses. Inthis case, this kind of company exists meaninglessly. I think we mustdistribute resources with the help of market mechanism. Ma coin is a set ofpayment system. In this ecosystem, everyone could benefit from this paymentsystem and thus Ma coin would be lager and lager like snowball.

HongyiZhou always says free of charge, but actually, his company must be profitable.Free model means free to customers but charge to merchants. For example, theinternet explorer free for users, but merchants pay the advertising fee, thesame as  search engine. The same as Macoin, the Ma system is for free or the rate is very low, but other companiescould earn money through this set of system. Take the coming the bank of bitUSDas an example, the bank absorbs bitUSD, actually deposit. They can take outloans to earn money and meanwhile pay a small amount of interests.

Inpersonal opinion, the virtual currency dose not exist as a currency but a setof payment system in recent 10years. There is a realistic problem why everyonebelieves a currency released by foundation can issue additional currency andupgrade at one’s will this moneybag. Its credit is actually far below statecredit. However, as a set of payment system, the only advantage of virtualcurrency is its internationalism, so it can benefit from internationalremittance. Of course, you cannot give them Ma coin and let them be moneychanger. The money changer must benefit from merchants. The risk of moneychangers can not be measured by these Ma coin. Take a view of present BTCpayment market, though merchants could pay BTC through two phones, but thereality is most of the customers’ BTC save in the bitpay or coinbase bitgorather than phone. Therefore, customers must ask merchants if they support thepayment of bitpay. Otherwise, merchants themselves have this payment system,only few people use it.

I think if a currency could succeed and why it can beoutstanding, its main competitiveness is the system design but not one’smistake ruins a currency. Meanwhile, this currency must establish a set ofecosystem, using itself in reality through market mechanism. A great salesmancould sale a razor to a little girl. But the greater is Taobao, because allmerchants know 50% of profit is used to pay Taobao the advertising fee,but theystill do without hesitation.

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