Noble: Corporate Colored Coins

'Applying Blockchain Technology to Traditional Business Structures as an Experimental Step towards Distributed Autonomous Corporations (DACs)'

6. Incentive to Participate

First published November 2014
Work in progress
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6. Incentive to Participate

One of the fundamental problems coin leadership struggles with is community participation outside of a desire to sell at a profit. Speculating and trading is the name of the game; making money is the purpose and motivation of a good majority of the alternative cryptocurrency community. Encouraging community members to actively get involved, promote and use a coin is difficult despite the positive influence it may have on long-term price. This is not a criticism, rather a reality of the demographic; designing systems that accommodate these motivations is becoming increasing important. This leads us to the questions: how do we encourage traders, speculators and ‘investors’ to participate in an alternative cryptocurrency eco-system for the mutual benefit of everyone? What if we can make using the colored coin as a currency as indirectly beneficial for participants as simply trading?

6.2: Incentive through Increased Scarcity

Initially it was thought that simply by providing and covering global 15% discounts for the largest retailers like Amazon and Newegg we had this issue covered. While it helped from a marketing perspective, it did not work as well as expected and could not compete with mining pressure. This led to envisioning a system that increased the scarcity of coins over time. The core philosophy behind this approach is to design and develop utility, services and systems that contribute in some way to removing colored coins from circulation permanently and returning them to the chest.

Purchase an item on the NXT decentralized exchange and contribute a token 0.5% purchase fee used to remove NOXT from circulation. Purchase an item on the Marketplace and expect 2%-5% of the purchase amount to be covered by Noble and removed from circulation. Have a new favorite coin that you want to have on CoinPayments and e-commerce capabilities? Help your NOXT holdings and your new favorite coin by paying for it to be listed on both services, with full payment in NOXT being taken out of circulation (the potential for 2-4+ BTC worth). These features have been crowd funded by the community, and having them used as intended to provide utility and services is a benefit to all parties involved. Every action you take reduces the available supply of NOXT, increasing its utility, demand and scarcity.

6.3: Maintaining Scarcity Initiatives at Break-even Minimum (Avoiding a Net Loss)

The concern here becomes ‘if Noble is increasingly covering a percentage of trades, fees and discounts from their own pocket, how is this sustainable long-term?’. The answer is it is not, without finding a balance between supporting scarcity and the profitability of Noble business-related projects that help fund the idea. Make no mistake, a number of exclusivity, deals and scarcity initiatives do cause a negative effect on funds and are not self-sustainable without complimenting support. It would be misleading and naïve to assume otherwise. There are a few approaches currently being refined to balance this issue:

  1. Providing services that attract coins rather than costs. For example, a coin might pay 1 BTC (2380 NOXT) per month for marketplace support and listings. Providing the service costs nothing besides time and support (that we are happy to provide for a successful project) then we are in the green. Funds raised can be used to help cover discounts and/or remove colored coins from circulation. This requires service and utility work on our part (which has already been paid and motived for with a crowd fund). However, it also incentivizes community members to promote and encourage these kinds of arrangements with other cryptocurrencies, as they remove NOXT from supply and support their own discounts and perks.
  2. Recovering marketplace discounts and supporting scarcity by actively placing orders at levels that recuperate initial ‘loss’. A common marketplace order is a $100.00 gift card, which would include a discount of 5% and the desire to take at least 2% out of circulation. That means this order cost us $7.00 (for promotion, to incentivize utility, to reward crowd funding participants or as a discount reward – however one wants to categorize it). The coins received for the order will be placed for sale on exchange at a rate high enough to recover this $7.00. This requires patience (an immediate sell is not guaranteed) and encourages promotion and hard work, because unless a rise in price is justified market orders that recover earlier losses will not happen.
  3. Old-fashioned work similar to how we supported the 15% marketplace discounts for ten (10) months. Wages and profit from the ‘real world’, whether related to cryptocurrency, Noble business projects or traditional methods will be called upon when necessary to cover differences. What people sometimes find difficult to accept is that there are a number of people besides ourselves who are happy to put a little more in during the early years (until self-sufficiency can be achieved) to make this idea a success.
  4. We will be aggressively monitoring how ‘Nobility’, discounts, scarcity initiatives and community incentives/participation have an effect on our bottom line and continued success. Reports and actions will be transparently disclosed with community members and we intend to hold many brainstorming and round-table discussions to help strengthen and grow this system. Voting can be conducted in transparent manners using colored coins on important issues and decisions (see Section 11: Crypto-Governance).

It’s important to note that being a relatively young cryptocurrency with a small eco-system these perks and discounts are relatively manageable despite being beneficial long-term to supporters, especially pending a successful crowd fund.

6.4: Incentive through Successful Cycles

The largest incentive of 2015 for all parties involved will be moving forward continuously until the concept is proven and a successful cycle has been completed. A successful cycle could be attributed to a number of factors:

  1. A good portion of services and utility were crowd funded and proven to increase the demand and scarcity over time (through use), leading to more NOXT in the chest rather than being spent on operations.
  2. Real-world demand for business, thought leadership and information systems existed. Through marketing, real-world contacts and use-cases, successful industry representation and consultancy, Noble as a business ran profitably and increased the demand and scarcity of NOXT.
  3. A publication was a major success, with proceeds going towards removing the majority of NOXT from circulation,
  4. An ongoing well-paying contract or investment was established between Noble and a real-world third party, resulting in increased resources and a scheme to return all NOXT to the chest for a reevaluation and refinement of this paper and a new proposed round.

A successful cycle will mean all NOXT coins distributed via crowd fund have been used in one form or another through utility or services (digital or real-world). It will allow for a re-evaluation and refinement of planning and proposals, and if necessary for the burning and crowd funding cycle to be considered again.

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