Let me help you out, Bix
As many of my readers know, I am involved with one of the best cryptocurrency projects out there, The Divi Project. In short, the reasons that Divi is one of the few projects I still own coins in is due to the repeated, demonstrated integrity of the team and their advisors, the laser focus on making crypto easy for everyone, and the incredibly inclusive economics of cryptocurrency that I think, despite a field of 5000 other currencies who claim to “bank the unbanked” and make “crypto for grandma”, will be one of the very few success stories, 10 years from now.
Divi is a Proof of Stake (PoS) cryptocurrency originally forked from PIVX. It has cast off most of the original code from that fork, and as the move into PoSV3 happens, it’s evolving into a truly unique coin, and unique project, set to disrupt fin-tech around the world.
Now, without a doubt, in the same way, that governments and most people who take their cash for granted without criticism dislike cryptocurrency in general, Bitcoin maximalists, and those who use fixed supply coins generally have a huge problem with inflationary coins such as Divi. This article was written to help people understand, perhaps, what they are missing about Divi, and maybe pique their interest a little more.
Bix
Now, someone in our telegram group pointed out that a relatively popular crypto you-tuber, Bix Weir, made some comments about Divi on his show. (honestly, I have never heard of him, but apparently, people listen to him). My reaction to his claims was simply “Did you bother to read or learn anything at all about the project before you discussed it on your show?”
While some of the claims he made are ones numerous other people have made and are answerable with some cursory review, some claims were just utterly bizarre, and I don’t even know where they are coming from.
Before I continue, I want to mention something that is probably important. This is not a hit piece on Bix. I’m sure he is a decent dude. I am quite sure he and I are aligned on the fact that we want crypto adopted, that we want it to obviate fiat, that we want it to wrest control from psychopaths who run the halls of government and to return it to the people of the planet. I too want the Fed ended (but for me it’s the Fed and myriads of government organizations I would like to see ended). So, Bix, if you are reading this, have no fear, it is not an attack. We are on the same team. It’s a welcome mat. It is the Cliff Notes for the reading you should have done before covering Divi on your show. Also, I’m a bit loquacious, please forgive me.
The Claims
Ok, in the show, he repeated himself a lot, and what I thought was a myriad of claims and questions only boiled down to three things:
- Divi is centralized
- There is no use case
- The inflation is leading to only sellers and no buyers
There was another question about with banking being on the verge of collapse, why would Divi buy a bank?
So, that is what this article is for, let’s hit each of these and see if we can shine a little light into the dark room he is apparently sitting in.
Divi is not centralized
I will admit that I may be poor in answering this one because I do not understand the logical leaps he took to get to this conclusion. But I will do my best.
Centralization can come in three forms: Coin ownership, node dispersion, and braintrust. I believe he is talking about coin ownership, but I will address all three.
Centralization via coin ownership
This one is the easiest to refute. It’s simply not true. Let’s first ask how the coins got here. The background is that the Divi project made ERC-20 tokens that were to be exchanged by token holders into Divi coins when the main net came online. Divi only held 8% of these tokens, the rest were sold. When the time came and the main net was launched, each token was swapped for 100 coins for each token holder that did the swap. This is a swap, not a pre-mine.
A pre-mine would have looked something like this:
Divi creates 6,171,606 DIVX ERC-20 tokens. Then they allow everyone to swap their token for 100 coins, resulting in 800 million Divi coins right out of the gate. See what happened? 140 million coins appear out of nowhere and ended up in Divi’s pocket. This is NOT what happened. There was a clean 1:100 swap and that was it.
As for the state of coin ownership now? The best way I know how to determine that is via the CryptoID chainz website. Let’s look at wealth distribution among a few coins:
The takeaway here is that coins are distributed better in the Divi ecosystem than even litecoin, while Dash and PIVX are just silly.
Centralization via node ownership
This one is a little harder to show. There are currently about 800 masternode and thousands of stakers. The telegram is filled with people from the US, Costa Rica, Venezuela, Denmark, Netherlands, Nigeria, South Africa, Poland, Italy, Spain, China, Japan, Korea, Brazil and many many more. Those that are not running a masternode are staking, as Divi has two types of nodes, and the masternodes are tiered. This is designed to do exactly what it is doing, lowering the bar to node ownership. It only takes 10K Divi to run a staking node while the tiered masternodes require more. So we want, and expect, a lot of copper nodes and fewer diamond nodes, which is exactly the result we get.
Now a claim could be made that most of these masternodes are of the MOCCI variety (about 3/4), the technology Divi developed first to implement a 1-click launch of a masternode. This would be true. However, MOCCI is a service and not required at all. Divi developers could get hit by a meteor tomorrow, MOCCI could completely die, and there would still be a lot of masternodes, and anyone else could still launch them. It is true, at this very moment MOCCI masternodes are deployed in one area of the world. Tomorrow, that will no longer be true, Divi is further decentralizing as we speak.
Centralization via development
This is common for most crypto projects. Almost every cryptocurrency on the planet has a single, core development group for blockchain, and then other developers make things that use it. While bitcoin and Dash and Energi and Grid have core blockchain development groups like Divi does, other developers make wallets, tools, and informational outlets based on the blockchain. Divi is no different. I myself, not an employee of Divi, have created tools for their CLI wallets, experimented with different hardware for running the wallet. Polispay and Midas Protocol have incorporated Divi into their wallets. PolisPay in particular, right now offers gift cards and debit card features for Divi. Coinpayments have incorporated Divi into their suite of payment utilities making Divi a payment possibility at thousands of places. Not only can you buy wonderful coffee at divi.coffee (with part of proceeds going to help impoverished Costa Rican school children), the developer of that site made his tools available for anyone to incorporate Divi payments into their sites. So Divi can be used on other sites (and only Divi) like to buy syrup. Development that utilizes the Divi blockchain is not bounded by the actions of the Divi Project or Divi Labs. They are just setting the blockchain free for everyone to develop on.
Development for Divi is not centralized, or at least not more centralized than any other blockchain.
The Use Cases of Divi
This one can be dismantled pretty easily. Divi is a better blockchain than Bitcoin or litecoin for any use case they have. Divi (and frankly, lots of coins) is faster, has a more psychologically conducive price point (and will forever), and the project is dedicated to making it easier for everyone to use via finally making a UX for the masses and lowering the barrier to entry (psychological and financial) as much as possible. Bitcoin and a few others have had a decade to achieve this. They are a shambles in this arena. Keep in mind cryptocurrencies have no adoption at all relative to fiat on this planet. So the future use cases of Bitcoin, Dash or Litecoin that you may have in your head, are also use cases for Divi. Look at what Divi will be releasing this year in terms of usability.
- Launching masternodes from a phone wallet
- Launching staking vaults from the phone
- Launching nodes of other coins from the wallet
- Swapping between coins within the wallet, not a separate service
- Swapping between fiat and crypto within the wallet (with the help of the bank they bought, Ridivi, more on that later)
- Using debit card features from within the wallet
- In wallet global remittance features
- 1-click KYC for any add ins to the wallet via Ridivi
This and much much more, coming out this year, with laser focus attention to making it easy for everyone. Because adoption will not come through utility alone. People have to want to use it, and better yet, be able to use it without instruction or getting a PhD in the use of cryptocurrencies. That is what the new Divi wallet is offering. Until this is the norm, adoption simply will not happen anywhere.
So if you can list off what you think are the use cases of Bitcoin as a currency, you are listing the use cases of Divi, but Divi can do it faster, cheaper, and easier. Further, you mentioned that what makes a good currency is scarcity. This is simply untrue. Scarcity is not a characteristic of a good currency. Scarcity is what makes Bitcoin a good store of value. Speed and ease of use are what make Divi a superior currency, and not a store of value.
Inflation is not leading to sellers and no buyers
This claim that all rewards are being dumped can be dismantled in several ways. When someone says this (and it happens often), they are demonstrating that they are conflating crypto monetary inflation with fiat monetary inflation.The difference is vast. I wonder if Bix understands that BTC is currently inflationary.
FIAT INFLATION
When the government and banks add to the monetary supply that money is used by the government and banks. When the banks use that money to extend loans, and consumers go shopping — that monetary inflation turns into price inflation by diluting the value of that financiall unit (like the dollar), because not enough is done to regain the value. An increase in production costs and wages can also lead to price inflation. However, it is a common misconception that monetary inflation will automatically translate into price inflation. If It is spent on debt, or hoarded by banks, or worse — used for speculation, it does not create velocity(this is why we have not been experiencing the runaway hyperinflation everyone has been calling for over the last decade — because the environment is too deflationary despite their best attempts). Thus the people who are mostly helped by monetary inflation in a fiat system, is the government and the banks, everyone else tends to suffer.
CRYPTO INFLATION
This is not necessarily true in an inflationary cryptocurrecy. Unlike The Federal Reserve’s deranged and wholly experimental attempt to create illusory paper “wealth” through speculative overvaluation, which creates more wealth transfer and wealth disparity (by printing money and lowering interest rates to zero, thus hurting savers and encouraging speculation), The most important aspects to note is that the inflation is distributed to node owners, NOT 100% to the Divi project (some of the inflation goes there to pay for development, marketing and charity — 17% total). Meanwhile all the rest goes to benefit node owners directly. Only if our supply on exchanges was high (ie people wanting to “spend”) would it affect the coin value.
Right now the vast majority of the DIVI community see the value of this project, and keep holding. If people aren’t spending all those printed dollars it’s hard for prices to rise and the dollar to fall in value. If people aren’t selling all those minted divi it’s hard for divi to fall.
The difference here is, this “monetary inflation” goes to help divi holders and their savings so to speak. The fiat monetary inflation goes to help bankers and speculators and hurts savers
Ok, so the contention is that these rewards just get dumped on the market. Some certainly do. But here is a super important point: if you don’t keep buying, your ROI goes down. That’s because Divi is not inflationary on a percentage basis (like say EOS). Each block reward of 1250 Divi, is a smaller and smaller portion of the total supply. Further, each year, the block reward will reduce also. So the expansion of the supply is not exponential, it’s asymptotic to zero…almost like… bitcoin.
Think of this another way. Bitcoin has only 21 million coins that will ever be mined. For all intents and purposes, Divi is the same, but with a far higher number. That’s ok, it’s a currency, if the price gets to $1, that will be fine. You can see this by the following graph. In time, the growth of the supply is virtually nonexistent.
If inflation is bad, then Divi will have dropped it’s inflation rate further and faster in its first 15 years, than Bitcoin will have. If inflation is bad, then Divi has the ability to change to lower inflation or even no inflation. Can anyone predict what the market conditions for crypto will be in 20 years? What happens if China chooses to raid the mining facilities to control bitcoin? Will it matter if there is a coin supply cap? Can you actually tell a tangible difference between Divi and BTC in year 70 that matters or has relevance?
(BTW, in the show, you said Divi will be adding 5 billion coins to the supply. This is false. In 8 years, the supply will be about 5 billion. Yes, picking nits)
Frankly, unlike in Bitcoin, if the people running nodes don’t like this inflation, they can vote to change it. The important part to realize is that inflation is high in the beginning in order to attract people to get in while earnings are higher. To maintain their reward rate, they will have to continue to buy.
Most of the Divi is locked up in nodes. Check out this chart:
This is the current state of the Divi ecosystem. 45% of all the coins are locked in about 800 masternodes. This number has grown almost 3x this year. Assuming there is about the same amount staking (it’s a good assumption, there are great benefits to staking as opposed to masternodes for those who can keep a computer going). Thus it can be assumed that 90% of the coins generated are held in nodes, not getting dumped on the market.
The Divi Project has written a whole article around inflation and the various methods by which they can have monetary inflation while controlling price inflation (These are two different things). Mostly, the ideas are around gamification of the economy.
Finally, if all people are doing is dumping coins on the market, how do you explain this:
- How did the price of Divi rise 350%?
- How did the price of Divi rise while BTC was falling?
- Why, throughout the year, if “everyone is dumping” does the Divi price rise despite the supply increasing 106%?
The answer is: because Divi continues, week by week, to add value to their blockchain, wallet, ecosystem, and community. All four are important, scarcity doesn’t drive price by itself. Something can be scarce and valueless (lots of art fits in this category). But even things with a large (not infinite) supply have value, like water or sand, or Tomagotchi eggs. That is why the market cap of Divi has risen by 800%. Value AND supply are increasing.
Nick Saponaro said it best. “What if we released MOCCI and then said, “OK we are done”. In that case, I would totally agree with you. The monetary inflation would cause the price to fall (Hello, GINcoin). But that is not what is happening here as you can see.
Each week, the community and cryptoverse gets an update. Sometimes it’s about technical acheivements. Sometimes it’s about commercial acheivements. Sometimes it’s about social achievements. Each week, specific advancement has been made and this constant plodding forward, constant innovating, constant relationship making, drive the price up because the added value outstrips the added supply.
Clearly, people are not just dumping rewards (except maybe at your outburst on your show last time, which I hope this article has helped you reconsider). Cleary, Divi has and will continue to innovate and improve the cryptocurrency so that the hodling mentality remains in the coin.
Why would Divi buy a bank?
There is a very straighforward answer to this: Bitcoin and Crypto will not be replacing governments and banks tomorrow, next week, next year or even this decade. Not just that, this path to moving banking back into the hands of people and away from the current batch of psychopaths is not through pretending they are not there. It won’t happen by force.
The path to acceptance is by utilizing the status quo in a way that builds trust and experience in a well crafted crypto. That is why they bought a bank.
“Bought a bank” rather than “have a relationship with a bank” or “a contract” is a huge distinction. Anything less than “buying a bank” puts the control and outcome of the crypto in the hands of the bank. Doing that makes no sense at all, when banks are trying to stay relevant.
So the bank is the trojan horse by which Divi brings crypto into fin-tech markets. Now, they can do things no other project can do. They can simplify KYC, make it almost frictionless. They can swap to fiat, right in the wallet with no third party. They can use Divi for brick and mortar remittance facilities around the world and ALWAYS beat the competition pricing. This is all just the start. By having a bank supporting the interface between crypto and fiat, the fin tech possibilities become truly endless.
And yes, we all hope, one day the banking system as it currently stands, crumbles apart. That will be OK also. But it isn’t soon. Until then, it’s a 200 billion dollar market that Divi and Ridivi can innovate in as it brings the foundations over to crypto.
Wrap up
I hope this article has been helpful in debunking many of the claims that have been leveled at such an incredible project as Divi is. I encourage anyone to get into their telegram and look around. The coin, the project, and the community is unlike anywhere else in the cryptoverse. Come on aboard!
Acknowledgements
I want to thank telelgram members for helping me put this together so fast. @oriz123 for his constant education on economic subjects and review of this document. @nicksap,@RobertSZ, for proof reading before releasing to the main telegram group. I also wanttothank @BeeLady1946, for bringing this video to my attention. It really gave me qa chance to write down everything I have been thinking every time someone comes into our telelgram chat and says. “Inflation=sell pressure!”