Wednesday, April 15, 2009

"Choose" How Much Entrecard Credits Should be Worth!?

The admin at Enrecard posed this question: how much money do you want to earn through the Entrecard cashout system?

With more than fifty million credits in the system, the number of credits needs to be reduced as quickly as possible to get some control over the value of credits and advertising through the blogs in the network. If they are reduced too quickly or the value of the credits at cashout time is either too high or too low, it'll lead to more inflation or deflation, depending on the particular circumstance.

Here's what needs to be done with the $1,760 that has been accumulated over the past two weeks:
  • The funds have to be divided somewhat equally to the members that want it and have credits to sell.
  • There needs to be a certain level of credits or a "level" that needs to be reached by a certain level of credits - perhaps set the goal of "deleting" a certain percentage every week depending on how the market reacts.
  • For extremes, see what the market does with the price set at $0.01. This will give everyone a chance to see how much is sold at each price. Gradually increase price until "everyone" starts selling their credits.
  • Under no circumstance should the funds used that have been dedicated to members be used for enticing new advertisers or creating other projects. 25% is already set aside for this and will be used appropriately.
  • It appears that most members of Entrecard do not want to see cash from this, but unless something is done to curb inflation within the system and solve the funding problem, there is no way for the site to remain in operation, it's that simple.
  • Opening up a "closed" system with only certain times throughout the day for cashout would create a stronger demand, limiting some of the timeframe for cashing out - demand/price would rise, and "less" credits would be cashed out in the near-term, if this makes any sense.
This is what the forum post said:
  • If we start buying back at our retail price, $6.00 per thousand, we can buy back 293,000 credits. This would result in the economy deflating by 0.5%
  • at $3.00 per thousand, we can buy back about 600,000 credits. Economy deflates by .1%
  • at $1 per thousand, we can buy back 1.7 million credits.Economy deflates by 3.4%
  • If we start buying credits back at .50 cents per thousand, we can buy back 3.4 million credits. Economy deflates by 6.8%
  • at .25 cents per thousand, we can buy back 6.8 million and the economy deflates by nearly 15%.
What price do you think credits should be placed at from the start?

1 comment:

Apollo said...

This is really a tough one. The extreme low price would allow for plenty of credits to be repurchased but who would want to sell their hard earned credits for 25 cents? Exactly. The higher price would barely have any impact. I assume that is the reason for the $1 per 1,000 credits to start with but again I don't think there will be plenty of members who want to cash-out at that low price.

I think it would be best to wait until more funds will be available from the paid ads where you can offer at least $3-$6 per 1,000 credits and have a deflationary impacts of about 5%.