# Economics 101 and 102 > A plain-language crypto-economics primer in the project's own voice, drawn from the "Economics 101" writing — how markets, money, politics, and blockchain fees actually work, so anyone can trade and… Canonical: https://wiki.soapbox.community/wiki/Economics_101_and_102 Last updated: 2026-10-20 Publisher: Library of Ashurbanipal (Van Kush Family Research Institute), https://wiki.soapbox.community 1. Economics 101 and 102 A plain-language crypto-economics primer in the project's own voice, drawn from the "Economics 101" writing — how markets, money, politics, and blockchain fees actually work, so anyone can trade and build **knowingly**. It is the practical, markets-and-trading companion to the structural account in Money, Currencies, and the Debt System. This is **education, not financial advice** — trading is risky and most of the specific tactics below can lose money. ## 1. Trade Instruments — Money Represents Value, It Isn't Value Currencies — fiat and crypto — and **stocks** are **trade instruments**: tools that facilitate trade. They contain **no value in themselves**; they **represent** value. A stock represents a share of a company (the company does the work that makes the share worth something); fiat represents the goods and services of a nation; a cryptocurrency represents the goods and services of its network. Each trades in its own venue — fiat through banks and forex, stocks on exchanges like the NYSE, crypto on crypto exchanges — and each rises or falls with real factors (industrial/technological advancement, trade volume, inflation). The practical rule: trade your instruments at the **highest value you can** and convert them into **real things** — precious metals, livestock, software, machines, seeds, land — then use those to get more instruments. ## 2. Trade Volume, Inflation, Supply and Demand, Bubbles - **Trade volume** — how many people are buying and selling a thing. More buyers → the value rises. - **Inflation** — when too much money is printed, each unit is worth less, so it takes more of it to buy the same goods (milk at $3/gallon one year, $5 the next). It drives minimum wage and benefits, which are pegged to the cost of living. **Uncapped** cryptocurrencies inflate forever and lose value unless demand keeps growing. - **Supply and demand** — how many want a thing vs. how many exist. A new iPhone is priced higher than it "should" be; as the tech ages, the price falls. - **Bubbles** — value held artificially high: the iPhone again, or gasoline, whose price rises on the mere speculation that we might run out. ## 3. Whales, Bulls and Bears, Buy Walls and Sell Walls - **A whale** holds a large quantity of an instrument and can move the market — dump a big share to crash the price, or hold to make it scarce and dear. - **Bulls strike upward** (horns): a bull buys when a market is strong and likely to climb, then sells into the rise. - **Bears strike downward** (claws): a bear profits as the market falls — buying from frightened sellers who spent $5 and panic at $4, then waiting for the bounce. A bear hunts something that has done well long-term, is down now, and is likely to recover. - **Buy walls / sell walls and the bear whale** — a "buy wall" is the stack of standing orders below the last price. A **bear whale** (tens or hundreds of thousands of coins) dumps enough to smash through that wall; the falling price scares others into selling, driving it lower, and the whale buys the bottom — ending with far more coins than they started with, bought back cheaper than they sold. ## 4. Coin Caps and Inflation — Milk vs. Gold A **capped** supply (Bitcoin ~21M; the project's own coins capped) can hold value like gold. An **uncapped** coin (DevCoin minted 180 billion a month) is "like holding **milk, not gold**" — it spoils in value unless the market constantly expands. The only way an infinitely-inflating currency survives is to **keep growing the market**; taken to its limit, "if you can colonize the Moon and Mars, you can maybe keep markets alive forever" — the frontier as the release valve for inflation (which ties to the interplanetary thread). ## 5. Liquid vs. Commodities **Liquid** means instantly spendable: cash is liquid, Bitcoin is liquid. **Gold, cattle, and oil are not liquid** — you can't buy groceries with a gold bar or a cow. Those are **commodities**. The pattern: use your **liquid trade instruments** to acquire **commodities, land, machines, software, and services**, which hold or build value, then convert back when it suits you. ## 6. Politics Moves the Economy — ISIS, Brexit, and the Rest Politics directly moves a nation's currency and markets, and the same is true for crypto: - **ISIS / Mosul:** when ISIS took Mosul and seized the gold in its bank and the investment outlook collapsed, Iraqi money became far less valuable — even though Britain had printed Iraq new notes after Saddam's fall. A coup or invasion hits a currency the same way. - **Vietnam (the opposite):** a civil war the U.S. over-involved itself in, followed by **opening the markets** — and the currency and investment did well afterward. - **Tax cuts (Trump):** the wealthy who hold stocks and companies got tax breaks, so they spent and took bigger risks, trusting the administration — lifting markets. - **Brexit:** panic — stock markets dropped in the U.S., Britain, and Asia, and the **pound fell**. Bad for British savers (their money was worth less overnight); good for outsiders, who could buy pounds cheaply (a cheaper British vacation, or buy-low-and-wait-for-the-rebound). You can move back and forth within markets as events hurt and help different currencies. ## 7. The Blockchain Bottleneck and Fees — The Toll Booth and the Immigration Line A blockchain can only fit so many transactions in each block. When more people want in than there's room, you get a **bottleneck** — and the clearest way to picture it is physical: - **A toll booth / an immigration checkpoint.** A wide highway narrows to a few toll lanes; travelers queue to enter a country at a few checkpoint windows. Throughput is capped by the number of lanes, so a line forms, and **a fee is the priority lane** — pay more and you're waved through first; pay too little and you wait, or get turned back. - **What that looked like on Bitcoin.** At peak congestion, sending any Bitcoin cost around **$5 or more** in fees (more for speed), low-fee transactions were **rejected and returned**, and **BitPay stopped processing payments under $100** because the fee ate the value. The **miners decide which transactions pass** — they run the toll booth. - **The monopoly point.** Those miners are a **de-facto chokepoint** — "99% of the market, but given to them" by everyone choosing Bitcoin, not seized by a secret cartel. The project compared this to the old **E.C. Knight "Sugar Trust"** (which controlled ~99% of U.S. sugar, yet the Supreme Court said that wasn't legally a "monopoly," since a true monopoly is one the **law** grants exclusively). Either way, the effect is the same: a narrow pipe, and whoever controls it controls who gets through. - **The lesson (and MELEK's answer).** Usability is **throughput plus fees**. A chain with **more lanes and no per-transaction toll** doesn't jam. The **Graphene chains MELEK runs** are built for exactly that — four-second blocks and the feeless, resource-credit model of Steem/Hive/BLURT — so posting and transacting don't hit the Bitcoin toll booth. Fast lanes, no booth. ## 8. Practical Strategy (Education, Not Advice) From the primer, with the caveat that each can lose money: - **Arbitrage:** the same coin can cost more on one exchange than another; sometimes you can buy on one and sell on another, especially crypto-to-crypto. - **Use coins to create, not just consume:** buy software, tools, and textbooks you can build value with — make a product. - **Don't buy above spot:** when trading instruments for a metal, buy as close to the metal's global spot price as you can. - **Build the rails:** you can **create a currency** (Satoshi open-sourced Bitcoin for this) or **create an exchange** (transaction fees add up and you can help new coins list). - **Look beyond one country:** America is not the be-all-end-all; invest abroad. ## 9. The Legal Layer — Income, Corporations, and Rights The primer grounds the economics in law: - **16th Amendment** — Congress's power to tax incomes "from whatever source derived." - **Eisner v. Macomber (1920)** — capital is "the tree or the land," income is "the fruit or the crop": income is the gain **severed** from capital and received for your use, not mere growth in the value of the investment. - **Santa Clara County v. Southern Pacific Railroad (1886)** — the root of corporate "personhood" under the 14th Amendment. - **Citizens United (2010)** — corporate/union political spending as protected speech (PACs). - **Burwell v. Hobby Lobby (2014) / RFRA** — the religious-exercise standard the project's own case work relies on. ## 10. The Vision — Everyone Makes a Currency The through-line: "when Google has a coin, your neighbor will start one for his T-shirt shop, your mayor will want one for your town, and McDonald's will hand out mining instructions instead of Monopoly pieces." The future of coins is **not owned by programmers — only supplied by them**. The path for an ordinary person runs from a **comfortable social-media platform → an exchange → Bitcoin and other coins → making or joining a currency → building a company inside the network** — "so everyone can always start from scratch." That is precisely what MELEK is built to be (see Money, Currencies, and the Debt System §7, DeFi). ## 11. Safety — Not Financial Advice Everything here is educational. Markets are risky; leverage, whales, bubbles, and congestion fees can and do wipe people out. Never invest more than you can afford to lose, verify before you trade, and treat trading tactics as things to **understand**, not instructions to follow. ## See also - Money, Currencies, and the Debt System - Crystal Technology, Signaling, and the Interplanetary Mesh — DevCoin, the Galactic Milieu, interplanetary markets - Solar Mining ## Sources - This project's "Economics 101" Bitcointalk thread (immakingacoin, 2018): trade instruments; inflation/volume/supply-demand/bubbles; whales, bulls/bears, buy-and-sell walls; coin caps (milk vs. gold, Moon/Mars frontier); liquid vs. commodities; politics (ISIS/Mosul, Vietnam, tax cuts, Brexit); the Bitcoin transaction bottleneck and the E.C. Knight "Sugar Trust" monopoly framing; practical trading notes; and the legal cases (16th Amendment, Eisner v. Macomber, Santa Clara, Citizens United, Hobby Lobby/RFRA). - Standard references for the toll-booth/immigration-line analogy of blockchain throughput and priority fees, and for the Graphene (Steem/Hive/BLURT/MELEK) block-time and resource-credit model.