The Utility of Seasonal Tokens
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The Utility of Seasonal Tokens - One Single Purpose!

The tokens are designed to allow users to build wealth over time in the form of digital assets, in an ethical way, and without gambling, while reducing risk. Although they can be used for other purposes such as farming, tipping, and hedging the seasonality of other assets, building wealth is their primary purpose.

The Diamond-Water Paradox - Utility Does Not Make Assets Expensive!

In "The Wealth of Nations", the philosopher Adam Smith observed that there are two types of value: value for use, and value for exchange. He said:

"The things which have the greatest value in use have frequently little or no value in exchange; on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarcely anything; scarcely anything can be had in exchange for it. A diamond, on the contrary, has scarcely any use-value; but a very great quantity of other goods may frequently be had in exchange for it."

This observation shows that the common belief that useful assets will be more expensive is wrong. The most useful things tend to be the cheapest. Water, food, and oil are useful and cheap. Diamonds and gold are comparatively useless and are expensive.

We can understand this apparent paradox by reflecting on the following principles:

* Society benefits when useful assets are cheap.
* It does no harm to society when useless assets are expensive.

When a useful asset is expensive, society will try to make it cheaper. For example, oil is very useful, and so we build infrastructure such as oil rigs and pipelines to make oil accessible and affordable. If oil was useless, it would be much more expensive and difficult to obtain.

Should everyone have access to clean, safe drinking water at almost zero cost? Yes. We will build water purification plants and pipes into every home, at considerable expense, because water should be available to everyone.

On the other hand, should everyone be given diamonds for free? No. Nobody needs a diamond. We will invest no money or effort trying to make diamonds cheaper. Diamonds are expensive, but that's okay, because they're not useful. They can remain expensive, and it does no harm.

We Demand Cheap Utility!

Utility can push prices up by providing a source of demand, but this effect is temporary and can't survive in the long term. We don't just demand utility, we demand cheap utility. When the price of something very useful increases because of demand, society starts making efforts to lower the price.

It makes no sense to hold an asset and expect its price to keep increasing because it's useful. Mobile phones are incredibly useful, but someone who buys a lot of today's mobile phones in the hope that they'll become more expensive is going to make a loss instead of a profit. They'll actually be worth less in the future, because society demands cheap utility, and will invest resources to develop better, cheaper phones in the future.

The essential point is this: If something is very useful, it's going to be cheap in the future.

The Diamond-Water Paradox Applies to Cryptocurrencies Too!

Ethereum is much more useful than Bitcoin, because it can be used to interact with smart contracts. This utility has caused demand for Ethereum, which has increased its price over time as the number of users grew. But when it became expensive to use Ethereum to interact with smart contracts, society reacted. New blockchains were developed and deployed to make interacting with smart contracts cheaper. Solana, Cardano, Polygon, Polkadot, and the Binance Smart Chain appeared, and Ethereum has lost about 25% of its market share to these competing smart-contract platforms.

Bitcoin, on the other hand, has lost about 5% of its market share to competing proof-of-work coins such as Litecoin and Dogecoin. There is no demand for Bitcoin's utility at a lower price, because there is no utility apart from being a store of value.

Everyone should be able to interact with smart contracts at close to zero cost. Ideally, Ethereum should be available to everyone for free, like safe drinking water. As technology improves, the cost of interacting with smart contracts will inevitably decrease towards zero. That's something that we'll invest a lot of time, money and effort to achieve. But nobody needs a Bitcoin. Like diamonds, it's okay for bitcoins to be expensive, and society won't make any effort to make bitcoins cheaper. The long-term downward pressure on prices that utility causes doesn't affect Bitcoin. It's precisely because of Bitcoin's lack of utility that it's a good store of value.

The Prices of the Seasonal Tokens Won't Be Suppressed by Utility!

Like diamonds and Bitcoin, nobody needs a Seasonal Token. The tokens can be expensive, and it does no harm, because nobody needs them. There will be no efforts made by society to make the tokens cheaper. The tokens become harder to obtain over time, like Bitcoin, because they're produced at slower and slower rates as time goes on. This makes them suitable for use as a store of value. Today, about ten thousand tokens of each type are produced by mining every day. In 45 years, only about 1 token of each type will be produced every day.

Nobody can absolutely guarantee that the tokens will have a higher price in the future, but if the tokens are still as cheap in 45 years as they are today, then it would take only a few dollars to buy an entire year's supply of tokens, and it would take a year of mining to replace them. A single buyer could drastically increase the prices of the tokens using very little money, so low prices would be possible, but unstable.

This is source of the long-term upward pressure on the prices. The tokens were designed to act as a store of value and a way for users to build wealth over the long term. They have no other utility, because if they were as useful as water, they would inevitably become as cheap as water. By having no more utility than diamonds, they can become as expensive as diamonds, without harming or inconveniencing anyone.