FAQ With The Founders Of New Cyclical Demand Crypto Project — Seasonal Tokens Part 2: What Are The Mechanics?

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Recently, Benzinga had the chance to sit down with the founding team of Seasonal Tokens, a novel cryptocurrency project based on the four seasons, and discuss a wide range of topics, here is the second segment:

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How are the relative prices of the tokens controlled?

“They're produced by proof-of-work mining, and they each have a cost of production. Winter is currently the most expensive to produce, and Spring is the cheapest. As a result, Winter is more expensive to buy than Spring.

Next month, the rate of production of Spring will be halved, and the cost of production will double. Spring will go from being the cheapest token to produce to being the most expensive. Spring can be expected to rise in price over time in comparison to the other tokens as the market adjusts to the reduced supply.

Nine months later, the same thing will happen with Summer tokens. Each token, in turn, goes from being the easiest to produce to being the most difficult and stays that way for nine months. The era of relative abundance is followed by an era of relative scarcity, driving the price up over time. This process tends to make the four prices oscillate around one another over the course of years.”

Why are the tokens expected to keep their value in the long term?

“Each token's rate of production is halved once every three years, so they're becoming harder to obtain over time. In 20 years, they'll be produced at less than 1% of their current rate, and they'll be more than 100 times as expensive to produce, presuming that the computational power devoted to mining remains constant. If more people start mining, the cost of production will rise even faster.

This doesn't absolutely guarantee that the tokens will be more expensive to buy in the future, but it provides continually increasing upward pressure on the prices.”

What makes this investing and not speculating?

“An investment involves a guarantee of safety. The tokens provide the following guarantee: Always trade tokens for more tokens of a different type, and the number of tokens in your investment will increase with every trade.

Speculation involves betting that something will happen, and risking a loss if it doesn't. If someone buys Seasonal Tokens with the intention of trading tokens for more tokens over time, they're investing. If they buy the tokens because they think that the project might become popular and the tokens might rise in price as a result, they're speculating.

The tokens were designed to make it possible to increase your holdings without speculating. If you have Bitcoins, you can't use them to get more Bitcoins unless you speculate. You need to sell them when you think the price is going to go down and then buy more of them when they're cheaper. This is risky. You could end up with fewer Bitcoins if the price goes the wrong way.

Trading tokens for more tokens removes that risk, and that makes it investing. There's no need to speculate because, with each trade, you already have complete certainty that the number of tokens in the investment will increase.”

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Stay tuned for the next segment of the FAQ, and learn more about Seasonal Tokens at seasonaltokens.org.

Click here to read Part 1.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.