What’s behind DNotes’ price stability?

The DNotes currency is now known as the most stable altcoin in terms of price, but why is that? How did DNotes manage to set out to be a stable currency and then consistently succeed for over a year? The following are my theories.

Value beyond the coin DNotes launched quietly on February 18, 2014 and almost immediately built and launched the CryptoMoms website and forum. On the Internet, websites and forums, particularly those with traffic, are assets. The DNotes team put as much effort into promoting its online assets as it did in promoting the coin. Right from the beginning DNotes became associated with something of value. You might decide to never own a single DNote, but you still might get a lot of benefit out of being part of the forum.

Further down the road came the DNotes vault, a very nice online wallet at the beginning but which now has a section completely devoted to interest bearing accounts. These interest bearing accounts, promoted as Retirement CRISPs, are very attractive because with the exception of proof of stake wallets, which at this time require a healthy dose of technical knowledge to use successfully and some trading platforms that require logging in to make a daily claim, they are the only cryptovehicles paying out stable interest rates. And you don’t have to do anything other than set up and fund your account to collect interest.

Lots of giveaways If you did join the CryptoMoms forum in those early days, you would have had a difficult time getting very far without being offered a generous amount of DNotes to get started. I picked up DNotes for posting comments and retweeting items–in other words, basically for free. While at the time I wasn’t interested in buying DNotes, I wasn’t going to turn down the opportunity to get them for free. This meant I had to put in the effort to get a DNotes address, which meant I had to find out a bit more about DNotes. The DNotes team still offers giveaways at different times, especially once a new DNotes product is launched. I’ve received generous contributions to each of my childrens’ CRISP accounts as well as my own “retirement” CRISP just for posting the addresses on the giveaway thread. Giveaways are a very useful way to spread a new currency around by putting it in the hands of people who wouldn’t otherwise get it, and the DNotes team has made much use of that strategy.

Encouraging saving Usually when a new altcoin is launched there is really only one thing to do with it: trade it for something else. Because of this often the sole measure of a coin’s health is in trading volume. A “healthy” coin has lots of people buying it because they believe they can sell it higher later, and lots of people dumping it because they got in early or they’re able to mine it inexpensively. All new coin development teams talk about some time in the future when you’ll be able to spend it anywhere, but that seldom materializes. In the mean time, everyone watches trade volume and that’s about it.

When DNotes launched, the team did not indicate any interest or desire to get people to trade it or even to accept it in payment for anything. The team actually promoted DNotes as sort of an anti-speculating coin, never once worried about trade volume, and simply encouraged people to buy a few DNotes here and there and then hold onto them. No promises were made about high future values, other than to mention that the team was planning for a gradual increase in value over time. However, the DNotes team pointed out that cryptocurrencies in general, being a new technology, have appreciated in value since they began and have the potential to appreciate even more in the future. To that end, it made good sense for people to pick a good one, then buy a little of it at a time at weekly or monthly intervals. I remember reading one forum post encouraging people to give up their morning specialty coffee (or equivalent) once or twice a week and use the money to instead buy DNotes. DNotes were promoted as something that could complement someone’s investment portfolio, but which should never make up the entire portfolio. Lots of education about investing and saving up for retirement was thrown into various forum threads and I believe lots of people started putting aside five or ten dollars a week to buy DNotes. It was just so… doable.

In other words, DNotes promoted and nurtured a culture of buying and holding right from the beginning. When people are buying and holding a coin, the price does not suffer rapid drops due to massive dumping, and will tend to trend upwards, especially as more and more people buy and hold it a little at a time.

At first people were encouraged to use their regular wallets to hold onto their DNotes, but then the DNotes vault was released and people now have a safe online wallet in which to accumulate DNotes. All the various CRISP accounts associated with the DNotes vault further promoted the culture of saving. Now we can save for our children’s future, our own retirement, and even our college educations, and there are more possibilities coming down the line.

The DNotes vault is backed up by an amount of DNotes which exceeds the sum total of all individual account holders’ deposits. This is to ensure users will not lose their funds in the event of a breach. The DNotes vault also uses a secure offline transaction signing process to secure its funds, making it unlikely the backup funds will ever be needed. This conscientious attention to security and having backup funds on hand further encourages savings by taking out as much of the risk as possible. While no one can guarantee what the price of DNotes will be a year from now, as an account holder I can be reasonably confident that the DNotes I put in the vault today will still be there a year from now.

Tying up funds Related to encouraging savings is having a way to tie up new DNotes as they are mined. I mentioned that all funds kept in the DNotes vault are backed up by an equivalent amount of DNotes, which right now is fourteen million. There is also a fund holding close to one million DNotes out of which all the interest bearing CRISPs are paid their monthly interest. Out of an available supply of just under 100 million DNotes, fifteen million is tied up in the DNotes vault.

In addition, all the DNotes vault interest bearing accounts lock up funds for five, ten, fifteen, or twenty years. The longer you are willing to tie up your funds, the better the interest rate, but in the cryptosphere, five years is a very long time to commit to tying up funds, especially considering some coins don’t last that long.

The “Retirement” CRISPs were only released several months ago, after DNotes established itself as the most stable altcoin, so it’s a bit of a chicken and egg question here. Everyone who puts DNotes away into a “Retirement” CRISP is actually making an investment not only in themselves but in sustaining any part of the price of DNotes that’s determined by scarcity. However, the reason people have the confidence to put away their funds in these “Retirement” CRISPs is because even before “Retirement” CRISPs existed, the DNotes currency had a stable value which trended upwards over time. The “Retirement” CRISPs are building on the culture of saving by rewarding it, and by incentivizing people to essentially remove their DNotes from the market for a long time.

The role that tying up so many DNotes has on the current price cannot be underestimated. Many altcoins launch with big dreams and plans. But often times for many reasons, those dreams and plans are delayed. However, the supply of the coin keeps growing as its rate was set in motion at launch. Only, because of the delays in implementing all those features that are supposed to add value to the coin, the increased supply has nowhere to go. This causes people to dump the coin and that pushes the price down. The coin’s reduced value means the development team has fewer resources to put to work in developing those value added features–they were counting on being able to sell the coin as development funds were needed. This leads to a death spiral that will eventually kill the coin. It is actually very important to have a way to tie up new coins as they are mined so that the coin’s supply only grows at a rate that is equal to the growth of its actual economy.

Soon to launch NeuCoin has set up some kind of vault system for early investors which only releases the coin to them over a period of several years following its launch (anticipated in July of this year). This prevents the big investors from dumping and also motivates them to invest their time and talent into making sure the coin will still be viable when their initial financial investment has been fully released. That step alone could be the difference between NeuCoin’s success or failure even though there is actually a lot to love about NeuCoin. Although DNotes didn’t take the same strategy of tying up coins from day one, they now have a good long term and highly rewarding system for investors big and small to voluntarily tie up their own funds for as long as twenty years from any given day.

Reaching out to women Before it became cool to talk about the massive gender gap in the cryptosphere, I was pretty aware that as a woman I was definitely in the minority. I’m also pretty sure that my gender neutral forum moniker spared me from some of the more disagreeable aspects. I think most people on Bitcoin Talk assume that I’m a man and respond to me accordingly. Some people have written about discrimination against women in the Cryptosphere and I’ve honestly not experienced any of that. But there are certain things that women simply do better with in general than men do, especially nerdy, computer geeky sorts of men. One of these things is gracious communication. Women are naturally better at it. This tends to make us better educators, better at welcoming new people, and better at diffusing potential conflicts before they even start. I’m not saying this is true across the board, but in general. My experience with interacting on predominantly male dominated forums has pretty much been a matter of operating in a world that’s largely devoid of the feminine social graces. Not everyone is like this but there is a general tendency for people to be very abrupt in their responses, show little patience for the very basic questions (sometimes even accusing the person asking the question of being too lazy to do their homework before asking such an ignorant question), and for certain types of conflicts to needlessly escalate. Throw a few trolls into the mix and the social aspects of the cryptosphere can be just as volatile as the currencies themselves.

Not only is this a turnoff to women, but it is also a turnoff to many men, especially those whose livelihoods have depended on their ability to communicate graciously. It’s hard to say exactly how much development of Bitcoin and other cryptocurrencies has stagnated as a result of the gender gap and the alienation of many men as well, but I have no doubt it is significant.

On a more practical note, regardless of how much more visible power men may hold in society compared to women, it is common knowledge that for the most part it is the women who hold the household purse strings. The man may be the one earning most of the household income, but the woman is most certainly the one who spends it. How insane is it to develop a currency that exists in a world that excludes most women? And yet, that is how Bitcoin is. That is how most altcoins are.

DNotes is specifically reaching out to women, inviting them to get involved in cryptocurrencies, and providing them a very nice place (CryptoMoms forum) to learn the ropes and ask all their questions. Anyone asking a question on CryptoMoms can expect a gracious reply, even if the question has been asked many times before. The atmosphere of CryptoMoms is that of looking out for the common good, and generally women find that attractive (as opposed a the dog eat dog, every man for himself atmosphere).

If DNotes succeeds in alleviating some of the cryptocurrency gender gap by drawing in significant numbers of women and getting them to acquire DNotes, they won’t have much else to worry about. If a critical mass of women decides that DNotes is good money, then it’s good money. If that critical mass of women lets on to retailers that they have a wallet full of DNotes that they’d love to spend at their establishment, then merchant adoption will happen on its own because retailers understand this dynamic very well.

It doesn’t matter which cryptocurrency was first, nor which one has the best or most innovative platform. The currency that will be king is the one which the women adopt. The DNotes team has a major head start in making that happen for DNotes.

Lack of trolls Trolls can exist in the male or female variety, and they can diminish the value of whatever they are running down if left unchecked, especially in the cryptosphere. I personally own an investment that was undervalued for months because of trolls. If you run a forum, you need to be prepared to moderate and censor trolling behavior. The DNotes team either has a great forum moderator or DNotes simply has an invisible troll repellant shield, but trolls don’t seem to be much of an issue, and that is good for its price among other things.

Thoughtful planning and patience I am not too familiar with the DNotes strategic plan as a whole, but I do know that there is one and that it is well thought out, and I get bits and pieces of it here and there. I know that part of its plan was to intentionally solve many of the challenges posed by Bitcoin, including the gender gap and volatility. I also know that merchant integration isn’t a priority until year three because successful merchant integration requires the foundation being laid in year one and two. As people suggest new ideas to the DNotes team, they are always considering how each idea fits into the overall strategy. Only ideas that fit are implemented, saving other good ideas for a better time.

There is also a willingness to wait for the right time to launch a new feature and also to make sure the feature is fully tested and developed before it is launched and announced. Half-baked ideas are not promoted in the hopes of drawing in more investors. Along with that comes a resistance to making decisions based on externals such as trading volume or price. Right now the price of DNotes is trending downwards, but no one is panicking about it. They have their plan and they’re moving forward with it regardless of what the short term circumstances look like. Adjustments are made in light of the bigger picture.

No preannouncements This is key to eliminating a lot of unwanted volatility and other kinds of drama. While many altcoins will announce a new feature in its platform long before it’s even ready to release or will release it while still very buggy, DNotes doesn’t announce anything until it’s not only ready, but here. If no one knows about an upcoming wonderful feature until it’s released, then it’s pretty hard to speculate on how said upcoming feature will positively affect the price. Instead, the new features are released with appropriate press releases and promotion but no hype or fanfare and the price reflects the added value after the fact. The DNotes price chart has a number of stair step increases in price that coincide with the release of new value added features, such as the DNotes vault and the various CRISPs.

DNotes has enjoyed a stable and overall upward moving price for its entire lifetime, an incredible accomplishment for a cryptocurrency. It turns out there are quite a few factors contributing to its price stability. When all (or most) are considered together, then the price stability makes a lot of sense.

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One Response to What’s behind DNotes’ price stability?

  1. Mark Blair says:

    Wiser, before I retired, I spent some years studying the biological underpinnings of human sexuality in relation to classical left political theory — ‘nature-nurture.’ The political left (I am ex-left centrist) would be furious at the underlying idea expressed in the Reaching out to Women section, that is, that these ‘gracious’ behaviours are natural.

    Well, there’s a wallopin’ chunk of data to the effect that they are; and I thought you might be interested to know of the very best text I came across on the subject:
    Susan Pinker’s ‘The Sexual Paradox.’

    I remain — for reasons I’d happily explain — embedded in the Unobtanium camp; but since Day One, as IndiaMikeZulu’s theorist (and that rarest of things, a male feminist), I have been seething in frustration about how blind the crypto realm is to what you and I see as so obvious:

    ‘If [AnyCoin] succeeds in alleviating some of the cryptocurrency gender gap by drawing in significant numbers of women and getting them to acquire DNotes, they won’t have much else to worry about.’

    Fine journalism. Thank you kindly.

    Mark (IndiaMikeZulu), Australia

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