14 Things We Learned Creating a Million Dollar Hyperdeflationary Currency
The success and legitimacy of the project were still to be determined, but one thing was for sure: people were curious.
The Big Bang
On January 15th, we launched one million BOMB into the digital abyss known as the blockchain. The rules of the currency were simple:
- Only 1,000,000 BOMB would be created.
- Each time the BOMB is transferred, 1% is destroyed
- There would never be a newly created BOMB.
Over the following months, more than 750,000 tokens were distributed for free, over 3,000 individuals participated, and over 20,000 BOMB were burned through transfers and trading (2% of total supply). The social communities grew into the multiple thousands, and many respected projects began getting involved.
- The intention was not to be used as a transactional currency, but rather a consistently deflating hedge against inflation.
- The problem we were attempting to solve (or at least experiment with) is the token velocity problem that plagues many of the tokens in the market today.
- The goal was to become the deflationary currency of the decentralized world. Many currencies focus on speed, cost, and privacy. We focus on deflation.
The reaction of the events over the next months took us down a winding road of adventure and a fair share of heart attacks. One day we would get an endorphin rush after the co-creator of the #OccupyWallStreet movement wrote an article; the next day we would find a major vulnerability in the code that would literally cause us to re-issue tokens.
Through it all, the journey has been a rewarding one, and we learned a lot along the way. Here are the top 14 things we learned while creating a million dollar deflationary currency.
1) A Deflationary Asset Can Survive, At Least So Far.
One of the biggest things we wanted to learn when starting the social experiment was to ask: “Can a deflationary asset survive?”. Good question in theory, but how do you measure that?
Within the community, one of our members recently published a “The Bomb Report”, a case study breakdown of some really interesting statistics and analysis of the currency:
2) If You Build it, They Won’t Come
The blockchain industry consists of some of the most talented technical and visionary minds in the world. However, despite this, most average consumers haven’t experienced a blockchain application or used the currencies built on top of it.
While there is still plenty of time for true mass adoption to occur, it has become clear that the amount of technical value being developed is not equating to the amount of activity or users.
We believe this is not for lack of building, but for lack of storytelling and communication. Average consumers don’t resonate with technological features, they resonate with the stories and the advantages within a solution.
Bitcoin, the most successful cryptocurrency to date, has one of the best stories behind it. An anonymous and mystical figure behind the name of Satoshi Nakamoto took his passion and pain from the financial crisis of 2008 to create a better solution.
The building behind BOMB wasn’t intensive or complex at all, just a few dozen lines of code in solidity. But that wasn’t our story. Our story was our journey and social experimentation of a deflationary currency.
That is why people joined, and this is what keeps people intrigued still to this day.
3) Hodling is Still Alive & Kicking
Despite the average airdrop value sitting over $200 per participant, 84.5% of people have not touched or moved their BOMB. Out of 3073 current addresses, 2604 people would rather hold than sell their BOMB.
4) The Cryptocurrency Industry is Skeptical by Default
This is less something we learned, but more something that was confirmed. Despite giving away all our tokens for free and answering questions as transparently as possible, the default response was skepticism; and rightfully so.
Despite over $13,000,000,000 in public capital allocated to the decentralized world in the first half of 2018 alone, over 1000 projects are now dead. Many of the people who joined the industry joined during this time and still feel the resentment to this day.
While it will probably take many years to overcome this skepticism, and may never go away, we learned it is important to take every comment and negative remark in stride. Some are valid concerns, but a majority aren’t actually mad or disgruntled with you, but at the industry as a whole.
5) Going from 0 to 1 is 10x harder than 1 to 10
Like most projects, after we developed the smart contract, our followers and community count started at zero
During the first few weeks of sharing the story of BOMB with a few friends, the growth was extremely slow (relative to what it is today) at maybe 1–5 people per day.
Nobody wants to be the first to the party. When you’re walking down the street, everyone assumes the crowded bar is better than the empty bar. The one thing you can do to overcome this early stage is making your early adopters feel like absolute VIPs.
More than the early adopters getting more free tokens than everyone else, myself and the co-creators spent endless hours on telegram talking with each and every single person who joined. There was not a lost soul who wandered into our group that didn’t get an overly ambitious introduction.
This is the core and foundation that will set everything in motion. While I no longer introduce myself to every new person to the group, our community does, and its an amazing feeling.
6) Clear & Concise Communication is Everything
When I first started telling my friends about BOMB, the natural response was “What else does it do?”
We as humans have a natural instinct to think more is better. Many founders start with a very clear mission to create something like a comfortable chair but they end up explaining their product as an “Anti-Gravitational Sitting Apparatus to Disrupt the Entire Furniture Industry with Built-in LED Lights and Omni-Rocking Functionality”
The problem is when we try to communicate this vision to the world, our vision becomes convoluted and messy. The most successful projects to date consist of the ones doing one thing better than anyone else.
When people explain what BOMB is, they explain it very clearly and concisely: A deflationary currency. When people explain how BOMB works, they easily recall and reference the three rules of the currency as stated above.
7) Transparently Bad News is Better than No News
The biggest “OH SNAP” moment for BOMB occurred in February, just a few weeks after airdropping our creation to the world. A community member following the project found an error on the code that could open up the currency to exploitation in the future.
Rather than attempting to hide the situation, we made a medium post to explain the situation and news to the community.
Just a few weeks ago, many of our community members began to get anxious about a potential exchange listing that was taking longer than expected. While frustrating to take criticism for items we couldn’t control, we wrote a 19 thread tweet storm titled “Transparency Update”. Despite the negative news, the community loved it and felt closer to the project than ever.
People many times don’t mind what happened, as long as they understand why you did it, and the reasoning behind it. Yes, there will always be that 10% that won’t accept your answer. But the people who truly care about your vision and value will stick with you. Those are the people who matter.
8) You Don’t Need to Spend $25,000 on an Exchange
Getting on an exchange after raising zero capital was definitely hard. We made a commitment early on that we would never ask our community for money, so everything we did had to be extremely scrappy and resourceful.
To help get us off the ground, a few of our early members kept talking about a community/technology called ParJar. In short, this was a telegram bot we could implement that allowed our community to openly trade BOMB instantly and feeless whenever they wanted.
There are a lot of items that helped us build our community, but we believe ParJar gave us more native engagement than any other campaign we have done. This organic incentivization ecosystem for individuals to exchange assets was and continues to be the backbone and foundation for our growth.
9) Not All Exchanges Are Created Equal
Even at the peak of the bear market, exchanges attempted to charge anywhere between $20,000 and $250,000; and those were the low-level ones. We definitely couldn’t afford this.
After doing more research, we narrowed down our goals with exchanges and what we were trying to accomplish. While many projects immediately want to get on the “bigger volume” markets, research showed there were only a handful of exchanges that had real volume. The rest were doing a lot of wash trading.
Instead of going after the top level exchanges, we focused on connecting with other respected and up-and-coming exchanges that would be willing to work with us on integration. The deflationary features inside our contract make us incompatible with many exchanges. This was a full-time job in itself.
After many months of searching, we were able to really connect with the team at DDEX (an exchange that is venture backed by reddit’s co-founder) that saw the potential in BOMB and took a chance on us.
10) Liquidity Premium is a Real Thing
While I have heard the term ‘Liquidity Premium’ before, I didn’t quite know how this would impact a deflationary currency. In short, a liquidity premium occurs when something costs more/less because it has high/low liquidity.
The best way for me to think of this is a house. Although houses are valuable, they many times take months to be sold or liquidated for cash. Because of this, prices can be up to 20–30% lower than it would be if it were liquid.
In relation to BOMB, our goal from the beginning was to decrease token velocity as much as possible. The side effect of this was low liquidity.
As soon as we reached Mercatox (a centralized exchange that didn’t burn the tokens) BOMB value increased by nearly 25–50% overnight.
Of course, we can probably attribute some of this to new eyeballs and demand, but it has been interesting to watch the arbitrage between a DEX (burns BOMB) and a CEX (doesn’t burn BOMB).
11) The Market Decides Value, Not the Founders
One of the biggest questions we got in the early days was:
How much are BOMB worth?
When we explained that the tokens were being given away for free, many equated this to no value.
In traditional coins or tokens, the value is determined (or at least decided) by the founders at the price they are willing to sell them at. If XYZ project decides to launch an ICO and sell them at $1, that is the given “value” of the token.
The problem with this premise is that this initial value is completely arbitrary and theoretical until it can be actively traded. I can attempt to sell my car for $250,000, but if the market will only pay me $250, that’s what its worth.
If we learned one thing from the 2018 bear market, its that the founder’s of projects are very bad at knowing the intrinsic value of their own tokens; many times 90–99% off.
Rather than giving our token an arbitrary number, we gave every single token away for free and let the world decide its value.
12) Capital is a Luxury, Not a Necessity
In the startup world, people many times reference the Lean Startup approach. The premise is pretty simple, get your idea into the world for as little amount of money as possible, and see if the world is willing to give it value. In the cryptocurrency world, everything seems to be backward.
Cryptocurrencies spend months planning an ICO, then another few years developing a project, only to find out if their idea is worth building. Millions of dollars are spent on the building before confirming the demand.
IF you truly believe you have an idea that people want or need, and IF you are willing/able to build an MVP first, and IF you want to build a community fueled project; give a portion away for free and let the market decide your fate.
Then, if the market gives it a thumbs up, you have some liquid capital to build your grand vision; all while raising zero capital.
13) Code is Replicable, Community is Not
One mission of BOMB from the beginning was to hopefully provide a financial case study for other people to learn from and implement into their own tokenomic structure.
We anticipated and expected others to do this. But, what we did not expect is the number of exact copy cats that would arise of the first weeks. At this time on Etherscan, there are more than five other replicas of BOMB that people created.
While we were originally discouraged at others attempting to directly imitate our project, we quickly learned that what made BOMB special was not the code, but the community of people around what we were creating.
You can copy the code, but you can’t copy a community
14) People Who Truly Believe in Something Will Go Above and Beyond
To this day, we haven’t paid anything beyond a few #BombUp rewards to our community. And yet, they do some of the most creative, amazing, and impressive creations we could have ever asked for.
Bomb Report: An in-depth financial and data-driven report on BOMB explosions, price, and analytics trends.
Bomb Art: Everything from designs to stickers for the community to use and play with.
Bomb Up: A community member-run group that gives away BOMB every day for playing telegram games
Bomb Articles: Some of the most passionate people writing in-depth articles about the project.
There is no doubt that to some, BOMB will be nothing more than a meme coin, and we are okay with that.
One of the most fascinating parts of this experiment has been watching our original meaning, goal, and vision of BOMB change and evolve for other people over time. Instead of attempting to control the dialogue, we let the community interpret the project in whatever way they want.
This individual empowerment has truly given the currency a life of its own and the amount of fun, insight, and overall awesome people we have been able to connect within our short lifespan has been nothing short of amazing
At the current rate of deflation, if the current pace stays constant the last BOMB is expected to be destroyed by 2031.