I just wanted to post a record of what I said in chat…
Sentinelrv: Let me see if I understand this, or if I have something wrong. If demand for NuBits starts going up, NuShareholders will vote to create more NuBits to sell on the market to meet the increased demand and to keep the price from rising above $1. Let’s say that over time shareholders end up creating 100,000 NuBits to satisfy demand. Selling those 100,000 NuBits at $1 each would generate $100,000 profit, which would then get converted into Peercoin and distributed between shareholders. The amount of dividends you get depends on how many NuShares you hold and how many NuShares are in existence.
Sentinelrv: There are currently 1 billion NuShares in existence. Let’s say I hold 5 million NuShares. If the profit from selling the 100,000 NuBits gets distributed between shareholders, then I would receive $500 worth in Peercoin dividends. If there were 1 million NuBits sold, then I’d receive $5,000 in Peercoin. This is the reward for shareholders to do their job correctly. Abuse of money creation is limited through voting and shareholders knowing that if they create too many NuBits, the peg might fail, destroying the reputation of NuBits and their money making machine along with it. Did I get anything wrong here?
Sentinelrv: I think I’ll make this into a thread.
Chronos: Sentinelrv, that looks correct to me, and I’ve been studying this carefully. Good analysis.
Sentinelrv: There should be a fee taken out for the custodian I think, so it shouldn’t be the full $100,000.
David: And that assumes a 100% dividend rate. The network might decide 50% of sales should go to funding development projects.
David: Completely up to Shareholders how network revenues are spent, just like a physical company
thExit: 50% dividend would mean that if 50% of users knock at your door to get their USD back, they would leave empty-handed.
thExit: But I do understand that there might be other sources of revenue, like mentioned in the whitepaper, e.g. Custodians creating lending services.
thExit: This is where the Nu network should put a lot of emphasis, not just to print money, but to generate profits from their branches of operation.
Sentinelrv: Yes, definitely
thExit: At the beginning, the dividends should be rather small, to build trust, to let people know that their money/value is safe with this system.
thExit: If Nu can mimick what central banks do, and mimick it in a more reasonable way, then there might be a bright future for Nu.
thExit: It’s all up to the people creating the network, people pulling the strings, people voting.
thExit: As mentioned by David, it’s like a physical company, the shareholders need to take care of the needs of the clients, and the clients will return the favor.