MobileGo is not the equivalent of a share split for GAME. It’s a marketing fund and smart contracts application to drive it forward.
At the beginning of March, shares in the beleaguered Deutsche Bank fell over 6% in one day, followed by further falls in the week after. The reason was the $8.5 billion rights issue planned to shore up the bank’s books after a series of poor financial decisions and huge fines from regulators had brought it to the brink of collapse.
‘A capital increase is probably the best option given the alternatives,’ commented one asset manager. ‘Everything else would cut into real business. But it will be an enormous dilution for shareholders at the current price-book ratio.’
Shareholders rightly react to news like this with a sell-off, because the creation of new shares results in lower per-share profits for everyone. Shareholders own a proportionally smaller slice of a larger pie as a result. The fixed or algorithmically-determined supplies of coins are one of the things that tend to attract investors to cryptocurrencies. (If new coins are created, due to malicious activity or a flaw in the protocol, the total supply has been diluted and rendered less valuable.)
It is not just the supply of a coin itself that this applies to. If development of a given coin stalls, and developers move on to a related but different project, then value may be split between the two. Right or wrong, when Nxt announced its Ardor project, many holders were angry that the two different blockchains might share the existing value of the Nxt blockchain between them, resulting in a fall in the value of NXT.
There have been similar fears with MobileGo: that it will be used as a payment mechanism alongside or even instead of GAME, meaning that MGO will effectively dilute the supply of GAME and make it worth less – if not worthless.
However, this misunderstands the nature and purpose of MobileGo. MGO will not be used as a means of payment – GAME is the only payment coin within the GameCredits ecosystem, and all purchases of funds for use by gamers will be channelled through the GAME wallet. MobileGo exists to increase the volume of these purchases and therefore to make GAME more valuable – perhaps many times over.
The only sense in which MobileGo might negatively impact the value of GAME is if traders sell their gamecredits to buy MGO. If they do so, this would be a short-term fall in price, since MobileGo exists solely to raise the price of GAME.
Moreover, there is no need for holders to sell GAME to buy MGO. The MobileGo crowdfund will accept GAME as a currency for deposits, and at a premium (meaning there will likely be some temporary rise in price through arbitrage as it is bought for its superior investment power). GAME collected in the crowdsale will not be sold at market, but used instead for larger OTC trades when businesses want to own a tranche of GAME for their own purposes.