undefined | Better HN

0 pointsrglullis6y ago0 comments

Your arguments do not follow:

> which is the ideal state for a commodity, there is no economic profit.

No. A commodity is simply any kind of good that is considered equivalent no matter who made it. Oil is a commodity, there is plenty of competition and there is still plenty of profit to be made (current crisis excluded)

> While it is very hard to make an economic profit selling grain, many people do farm grain and many enough money.

The analogy here would be to get people to (a) "farm" disks (and electricity/internet) and (b) with some profit to justify their work. (a) is impossible (except for freeloaders) and you agree with me that (b) seems to be unlikely.

So the question is: who would be interested in taking the supply side of the filecoin network, when there is no profit to be made?

0 comments

anchpop6y ago

> Your arguments do not follow:

> > which is the ideal state for a commodity, there is no economic profit.

> No. A commodity is simply any kind of good that is considered equivalent no matter who made it. Oil is a commodity, there is plenty of competition and there is still plenty of profit to be made (current crisis excluded)

You cut off the first half of my sentence. The full sentence was:

> In perfect competition, which is the ideal state for a commodity, there is no economic profit.

Oil is not in perfect competition because of OPEC, a gigantic state-sanctioned cartel. Since there's imperfect competition, there can be economic profit.

> who would be interested in taking the supply side of the filecoin network, when there is no profit to be made?

If we assume the filecoin network is technically able to do what it's supposed to, there will likely be profit to be made. Just not economic profit. Economic profit is different from accounting profit because economic profit takes into account opportunity cost.

In the real world many people, such as grain farmers, do seem to be interested in taking the supply side of a transaction even when their economic profit is 0 (or negative). I don't see why filecoin would be any different.

rglullisOP6y ago

I am sorry. Just like I am missing how someone would work on a farm without any expectation of return on their investment, I fail to see how "there is profit to be made", however you want to call it.

Also, with farming at least there is the notion of resource constraints. To be a farmer one needs to have access to land and dedicate some time to actually work on it.

With storage, unless the hard disk manufacturers start holding their production and use it to offer storage directly, what is the resource that other people can't have?

What would stop anyone to see that Filecoin network bids of (say) $1/TB-month and think "oh, I can buy some disks and offer $0.95/TB-month, and I will get my money back in 3 months", only to be outbid by someone who thinks they can offer $0.90/TB-month and recoup costs in six-months", until we get to the point where the time to break-even gets longer than the lifetime of the disks...

scoopertrooper6y ago

You could hardly say a market dominated by a giant state-sanctioned cartel was a good example of a commodity market in the state of perfect competition.

> So the question is: who would be interested in taking the supply side of the filecoin network, when there is no profit to be made?

There would likely be some short term economic profits at the beginning, which would attract market entrants. The economic profit would tend to zero over time, but keep in mind economic profit as a concept incorporates the notion of the entrepreneur paying themselves a competitive wage for their time.

rglullisOP6y ago

> giant state-sanctioned cartel...

Point still stands. All else being equal, oil from Saudi Arabia is the same as the oil from Canada or Denmark. If you don't want to use oil as an example, use coffee, milk, chicken meat, soy, cotton, oranges, electricity, potable water...

> There would likely be some short term economic profits at the beginning, which would attract market entrants.

The first market entrants are the ones selling extra capacity they have. For those that already have sunk costs of the disks, sure, they can make a profit on this. My point is that once that capacity is gone and there is more demand for data, people will have to actually go and buy disks and let them run 24/7, and this would cost more per GB stored than they will be able to sell.

jhoechtl6y ago

The point is perfect competition, highlight on perfect. In oil business there are profits because competition is not perfect. Note that perfect here is rather a theoretical, economic term. In reality, market regulations and peoples socio-economic attitutes prevent a perfect competition.

The mentioned missing trust could be alleviated by IPFS becoming a widely trusted, distributed, unstoppable service.

rglullisOP6y ago

Are we talking past one another?

My point is exactly that if Filecoin does get to be a place that gets "perfect competition" as you say, then there is no profit to be made. If there is no profit to be made, what is the economic incentive to spend on disks/internet/computers and be a storage seller?

Before you say "there is a market for those with excess capacity", answer me this: if the market is focused on those with excess capacity, what mechanisms are in place this "perfect competition" to remove all chance of profit and get the price of excess capacity to reach basically zero?

I get IPFS, I think. I do believe that it technically it makes sense. What I don't get is Filecoin.

j / k navigate · click thread line to collapse

0 comments

anchpop6y ago

> Your arguments do not follow:

> > which is the ideal state for a commodity, there is no economic profit.

You cut off the first half of my sentence. The full sentence was:

> In perfect competition, which is the ideal state for a commodity, there is no economic profit.

Oil is not in perfect competition because of OPEC, a gigantic state-sanctioned cartel. Since there's imperfect competition, there can be economic profit.

> who would be interested in taking the supply side of the filecoin network, when there is no profit to be made?

rglullisOP6y ago

I am sorry. Just like I am missing how someone would work on a farm without any expectation of return on their investment, I fail to see how "there is profit to be made", however you want to call it.

Also, with farming at least there is the notion of resource constraints. To be a farmer one needs to have access to land and dedicate some time to actually work on it.

With storage, unless the hard disk manufacturers start holding their production and use it to offer storage directly, what is the resource that other people can't have?

scoopertrooper6y ago

You could hardly say a market dominated by a giant state-sanctioned cartel was a good example of a commodity market in the state of perfect competition.

> So the question is: who would be interested in taking the supply side of the filecoin network, when there is no profit to be made?

rglullisOP6y ago

> giant state-sanctioned cartel...

> There would likely be some short term economic profits at the beginning, which would attract market entrants.

jhoechtl6y ago

The mentioned missing trust could be alleviated by IPFS becoming a widely trusted, distributed, unstoppable service.

rglullisOP6y ago

Are we talking past one another?

I get IPFS, I think. I do believe that it technically it makes sense. What I don't get is Filecoin.

j / k navigate · click thread line to collapse