The relationship between the speed of token issuance and the success or failure of a project.Preface

The governance mechanism of token ecological economies faces many challenges. Balancing the interests of all parties and establishing reasonable rules and systems to maintain the healthy development of the ecology is a complex issue. In practice, many token ecological economies have undergone continuous trial and error and adjustments, with some successfully finding paths suitable for their own development, while many projects have failed for various reasons. These successive trials and errors provide us with rich learning materials, allowing us to better understand the operational mechanisms and internal laws of token ecological economies.

So far, we may not have found the regularity of how tokens can be replicated and scaled in bulk.

However, a lot of trial and error has at least allowed us to summarize some rules and understand the situations in which success is impossible. Although the methods for success today remain speculative, we are still on the path of trial and error.

By summarizing lessons learned, we can provide useful references and guidance for the development of future token ecological economies, promoting continuous progress in innovation and transformation.

Main Text

The greatest value of the token economy is the incentive for early network effects; therefore, the initiators of the tokens must consider using real products or services to stabilize the market position in the later stages of the project; otherwise, the token value may drop to zero. The spread of consensus and the establishment of communities require time; a token economy established too early or too fast is difficult to maintain its value.

Looking at the design of Bitcoin's mining mechanism from this point: a total of 21 million coins, one block is generated every 10 minutes, regardless of the current computing power, it is ensured to be around 10 minutes. This design makes the speed of Bitcoin mining predictable, and the establishment of the community and the increase of consensus are controllable. Bitcoin was issued starting from the cypherpunk movement and gradually expanded outward, with this process being strictly controlled. On November 1, 2008, Satoshi Nakamoto posted in the 'Cryptography Mailing List' stating, 'I am developing a new electronic currency system that uses a completely peer-to-peer form, without the need for a third party's intervention,' and published the paper (Bitcoin: A Peer-to-Peer Electronic Cash System). At that time, there were about 1,400 'cypherpunk' users.

On November 28, 2010, WikiLeaks released hundreds of thousands of diplomatic cables between the U.S. State Department and U.S. embassies abroad, most of which were classified documents. This action infuriated the U.S. government, which not only attacked WikiLeaks' website to incapacitate it but also pressured major financial institutions, including banks, credit card payment agencies, and even PayPal, to block financial accounts related to WikiLeaks founder Julian Assange. Subsequently, Julian Assange appealed for help to the world via Twitter, stating that he was willing to accept Bitcoin as a source of funding.

Satoshi Nakamoto's attitude on this matter: 'No, do not do this. This project needs to grow gradually so that the system can become stronger. I urge WikiLeaks not to use Bitcoin. Bitcoin is still in the beta testing phase. You will not raise much money through it, and the pressure you bring will destroy Bitcoin at this stage.'

Assange said his team considered this matter and agreed with Satoshi Nakamoto's suggestion. Therefore, they decided not to adopt Bitcoin in the early stages, allowing it more time to mature and grow into an alternative means of payment. WikiLeaks only began accepting Bitcoin donations in June 2011. This was the last time Satoshi Nakamoto made a public statement.

In the early days of Bitcoin, when the number of consensus participants was still very small, Gavin Andresen, the chief scientist of the Bitcoin Foundation and head of the Bitcoin core development team, developed a website that distributed Bitcoin, giving away 5 Bitcoins for free to each customer. This plan was known as the 'Bitcoin faucet.' The distribution continued until January 30, 2013, when the 'faucet' was closed.

At that time, the price of Bitcoin had already risen significantly, and the mission of market promotion had been accomplished.

The establishment of a community and the deepening of consensus require time accumulation; the development of Facebook also follows this principle: expanding one school at a time, starting with Ivy League schools, then to other universities, and then to other countries.

Ten years later, let's imagine what the Bitcoin ecosystem would look like if its current scale were achieved within just one year.

For example, FCoin was also a great token experiment, with many successes and failures worth analyzing and summarizing. Among them, FCoin successfully employed the 'trade-to-mine' model for the first time, but its token model design had a fatal flaw: it did not set a daily limit on token issuance, leading to an excessive mining speed while the community could not keep up, consensus had not formed, and market position had not been established. Ultimately, it resulted in chaos.

The transaction fee for Bitcoin is unrelated to the amount being transferred; it is charged per byte. A typical transaction is about 250 bytes, with a fee of approximately 0.001-0.0015 Bitcoins. Based on calculations, Bitcoin is expected to be mined out around the year 2140; some estimates suggest that, due to the issuance speed exceeding 19.28%, Bitcoin's total output time should be about 25.5 years earlier than expected (132*19.28%), meaning Bitcoin will be mined within about 106.5 years, around 2114. In other words, Bitcoin will complete its issuance approximately 100 years after its launch. After that, Bitcoin miners will primarily gain incentives from transaction fees. In fact, before the last Satoshi is mined, the development scale of the Bitcoin community will gradually reveal the increasing importance of transaction fees.

This way, even if the coins are all mined, the community has not yet grown, and the transaction fees are insufficient to incentivize community miners, which could lead to the collapse of the Bitcoin system.

Text by Dai Jian Jian Dan Qin Xin

Coin Review: Tokens, economic incentives, market stimulation need to make friends with time. Just like the reform and opening up and the development of the market economy, if it is rushed, it may lead to chaos, similar to the A-shares.