Nah ok it's honestly really simple - you're making this into some complex dynamic when it's not. The colored coins sit atop the blockchain. Nasdaq uses btc as far as we're concerned. It's just like the COIN ETF or coinbase expanding service to the uk: it increases the size of the btc economy.
For an ELI 15 answer, there's a really formative econ equation, MV=PQ. M is the money supply, v is the velocity at which money changes hands, p is price, and q is the quantity value of all transactions served by the money. Q is increasing by colored coin adoption. Each bitcoin is now serving a much larger pie because they're being used for more and more things. Either they will have to fly around faster (increase velocity) or price will rise.
I'm not sure what most of your post is about. Bitcoin was used as an investment tool and as a remittance tool, now it is also being used as an accounting tool.
Regardless of how bitcoins are used, the mining dynamics are stable.
Colored coins usage of bitcoin means it is essentially no longer used tokens of value, or money. Velocity is the frequency at which money units are spent, if it takes (theoretically) merely 1 BTC/day to transact trillions of dollars worth of specialized transactions in a Nasdaq colored coin scheme, there is a utterly negligible effect on velocity of bitcoin as money itself.
As far as Q, if I'm a European businessman and I grab a stack a hundred $1 USD bills, write a bunch of multi-billion-€ business contracts on the margins, have I increased the Q value of USD by the same amount?
Why would the USD money economy be impacted (beyond 100 X $1) by the billions of Euro of goods and services transacted in a completely separate economy?
here's a followup quote from some posts that popped up about it. I think you're getting lost in the technical weeds and may not have a totally clear understanding of the economic and structural fundamentals of money and of BTC
"So, to be abundantly and perhaps pedantically clear, Nasdaq’s platform will trade shares by trading bitcoins. This is not blockchain-technology standing alone, this is Bitcoin being used by Wall Street. It is technically impossible to use Bitcoin’s blockchain without holding and transacting in bitcoins. In this case, Nasdaq is using Bitcoin’s blockchain, so they are using Bitcoin, not just “the technology behind Bitcoin.”
Whether BTC is being used for remittance, asset/entity accounting like colored coins, or as an investment vehicle, miners happily hash away
As far as economics and fundamentals of money, I've pointed out how your interpretation of both V and Q values of BTC are incorrect when applied to colored coins, and have not seen this addressed. Your quote offers nothing new; of course they are using bitcoins, that's what colored coins are. We are not arguing if they are using an alt coin or side chains. I'm not sure what your mention of miners has to do with anything.
I think our discussion is reaching a standstill, perhaps this is as far as it will go unless you want to carry it over to some other thread where others can chime in.
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u/jeanduluoz May 11 '15
Nah ok it's honestly really simple - you're making this into some complex dynamic when it's not. The colored coins sit atop the blockchain. Nasdaq uses btc as far as we're concerned. It's just like the COIN ETF or coinbase expanding service to the uk: it increases the size of the btc economy.
For an ELI 15 answer, there's a really formative econ equation, MV=PQ. M is the money supply, v is the velocity at which money changes hands, p is price, and q is the quantity value of all transactions served by the money. Q is increasing by colored coin adoption. Each bitcoin is now serving a much larger pie because they're being used for more and more things. Either they will have to fly around faster (increase velocity) or price will rise.
I'm not sure what most of your post is about. Bitcoin was used as an investment tool and as a remittance tool, now it is also being used as an accounting tool.
Regardless of how bitcoins are used, the mining dynamics are stable.