How do supply and demand determine Maxcoin market prices?

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Meconomy153
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How do supply and demand determine Maxcoin market prices?

Post by Meconomy153 » Sun May 03, 2015 4:50 pm

Mike Murphy wrote:What determines the value of Maxcoin? Of course, it's supply and demand.

Elasticity is an economic term used to describe the situation in which the supply and demand for a good or service are unaffected when the price of that good or service changes. Inelastic means that when the price goes up, consumers’ buying habits stay about the same, and when the price goes down, consumers’ buying habits also remain unchanged. For example, if the price of an essential medication changed from $200 to $202 (a 1% increase) and demand changed from 1,000 units to 995 units (a less than 1% decrease), the medication would be considered an inelastic good. If the price increase had no impact whatsoever on the quantity demanded, the medication would be considered perfectly inelastic.

The demand curve for a perfectly inelastic good can be depicted as a vertical line, because the quantity demanded is the same at any price. Supply could be perfectly inelastic in the case of a unique good such as a painting. No matter how much consumers are willing to pay for it, there can never be more than one original version of that painting. This is the case for cryptocurrency Maxcoin also. New cryptos can be created, but they must have extremely high network hashrates to compete at that point, which is a huge barrier to entry. So while cryptocurrency Maxcoin is not perfectly inelastic, it's supply is certainly inelastic to a large extent because it is fixed.

The supply of Maxcoin is precisely known (unlike with most other commodities or financial assets) and predictable. Demand is the variable here which will increase over time as per the network effect, and during the next economic crash where there is a flight of capital out of existing financial markets.

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