Would a shortage of ETN cause the price to rise?


#1

Paging all people smarter than I (which doesn’t narrow it down much):

Some people have pointed out that if ETN has millions of users, the average number of ETN that each person could hold would be very small. For example, if a year from now we have 20 million users—as Richard expects—and there are 10 billion coins in circulation, the average number of ETN that each person could hold would be 500.

Obviously, a lot of electronerds hold more than 500 coins.

So here’s the question — does the small average number of coins available to each user matter when you are talking about coins that will be circulating in commerce? Putting aside the network effect, would it likely affect price?

Thoughts from those of you schooled in finance or economics would be most appreciated. As would others.

Cheers, Squidward


#2

The short answer will be yes. more users = price increase.
But active users are way more powerful than hodlers ( from the price perspective)
I failed to see that with BTC. Back in the days I bought btc at~4$ and sold it at 40-50$. A friend of mine told me that BTC will reach 1500$ and another guy said that even 3000$ was possible but they didn’t make any sense with their ideas.
So the BTC value started to move up and up but without a specific reason.
How that something that none is using value so much??
I was wrong …someone was using it.
After a little research, I found the deep net{TOR} and markets SIlk Road followed by AlphaBay, Black Market Reloaded and other clones. I remember that on one of these sites there were almost 8k vendors only in the drug section. I was amazed. Btc had a real market …even a bigger one but I didn’t realize that.
After that, another “market” rise for BTC: Ransomware https://cybersecurityventures.com/global-ransomware-damage-costs-predicted-to-exceed-8-billion-in-2018/.
I am not schooled in finance or economics but I can tell you we need active users to moon and keep mooning. With registered users, we might get 5x-20x but with active users, there is no limit.


#3

It depends how much is your users is worth and how many users you have got. The critical number you are looking at is how much etn in dollars term being used at anyone time vs the “available” amount. Let’s explain this with more simple numbers so we can easier to understand . If the total etn “available” is 100 and we have 100 users trying to process a transaction of 1 dollars in etn then etn will worth 1 dollar. If you have 1000 users all wanted to transact 1 dollars worth then etn must worth 10 dollars for it to work . Now if you only have 10 users and they all want to transact 100 dollars worth then each etn must also worth 10 dollars. Simple? But there is always a but can you see the inverted comma in available? As the supply in etn is finite those hodlers will make the available amount to go down and therefore the actual circulating etn would be reduced therefore in theory should increase the amount worth each etn. But (now you have got the idea) if the available amount is so low that it make accessibility difficult then people may decide it is not worth that much and stop using it therefore the demand go down and price follow and the cycle start again… this is a simple run through of what user numbers could mean.


#4

Also I want to explain a misconception that people have regarding etn. Many felt that why are we going for the “poor” people as they don’t “worth” much. The reasons are
1)accessibility at the moment there are no digital /very few options for the unbank (I.e. poor people) when compared to the western world and therefore they are easiler to attract and costs less when compared to the western world.
2) more to the above , as they found etn useful they are more likely to stay with etn even if there is a better solution (first user advantage)
3) the very clever thing that etn have done if work out is although those users are poor now . Etn is trying to build an ecosystem (git website) where they can be access by the west and therefore enable them to have a route to earn money from the west and therefore better their earning (remember how worth of user affect our equation above). Follow on from above once they work and being stable within the etn ecosystem they are very unlikely to leave and therefore likely to stay a user for a considerable time.
4) by creating an ecosystem where they can spend their etn . We reduced the selling pressure as more etn will be in the ecosystem rather than on the market as a “selling” bid. This is very different from the western world where unless you are a hard core crypto lover your final goal is always to transfer back to fiat .
I hope this explain a little bit more about the ecosystem we are heading toward .


#5

It won’t be that much of a problem, because if we will reach 20 million users, the price should be astronomical as compared to what it is now. So people will start selling, as they will have already gathered a lot of coins.


#6

Very interesting, Family Guy. In your example, do the individuals who want to transact have to want to do so simultaneously for the price to be so affected?


#7

Nope but anyone that does not move it from etn to fiat is counted as “hodler”. That is why the ecosystem is so important for the “money” to stay within. Let me give you an example of WeChat pay in China. It is widely accepted in China and therefore people tend to keep it in their account to spend it later. Therefore the money stay within the ecosystem and tencent (the company that own wechat) never have to cough up that money. In etn terms this money transpire as the growth in price of the token.