Modeling Cryptocurrency Systems
There are visceral participants who believe in the system and conceptual participants who believe in belief in the system.
In the beginning, there is no system, and so there is no system to believe in, but yet there are conceptual participants who believe in belief in the system.
Single currency system
Conceptual participants invest in the system by mining the coin or buying it with cash. Initially, there is no other use for the system.
The number of coins grows.
Some of the conceptual participants no longer believe in belief in the system. But they have coins so they are visceral participants. They want to use those coins. The main thing they can do is to sell those coins to remaining conceptual participants, who will buy them, for fiat currency or for goods, at a rate lower than the mining cost. The price exists but it drops. Miners are buying rather than mining and so the difficulty falls.
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