Bitcoin Forum

The number of bitcoins issued is halved roughly every four years.
In the future this number of releases will be small.

Why not consider a fixed low interest rate mechanism to ensure that Bitcoin is more suitable for current economic activity?
For example, if you hold 1 bitcoin in an address, you will be rewarded 0.02 bitcoin after holding it for 1 year.
Interest is calculated and paid every year or before you will pay to another address.

firstly halving is one deflationary mechanism

another is the hashrate competition (more competitors=less slice of reward each)

then there is the electric, as fiat electric prices go up. the price per btc changes too

then there is the markets

there are many deflationary features.
jut learn to buy low sell high and not wait for the high before buying

Yes, indeed why not? But who would know why Satoshi didn't include this particular feature? We could only guess.

Is it because having a limited, in fact fixed, amount is generally more preferable and beneficial to the overall design and vision? After all, incorporating this certain feature would only mean the supply of Bitcoin is infinite. Bitcoin, then, isn't unlike fiat at all.

Anyway, this is something currently offered in centralized platforms. Although highly discouraged, this is indeed something that could be taken advantage of right now. But not in the protocol itself, of course.

Also, isn't it enough that by HODLing whatever amount, you are already sufficiently, albeit indirectly, rewarded for it through the price increase? In a way, HODLing is rewarded. And that's due precisely to the fact that Bitcoin's supply is predictable and fixed.

a low "interest" mechanism that continues endlessly is not deflationary

its the poors mans lottery of thinking they are gaining something for nothing, getting free things

i see alot of small minded people always looking for ways to scam a system for free coin for doing nothing. such as trying to get BTC to change to PoS so people can stake at zero loss for passive income

many even say if coin is locked for 10 years it should be treated as lost and the redistributed to everyone

all these silly idea's are not to have something deflationary. but to just hand out "pennies on the dollar" to everyone to make everyone think they are getting more coin for free, like a free accumilator system.. but not realising that this free accumiliator system of passive incomes the want fo doin no work. ends up with the conversion rate to native fiat not be deflationary, meaning they end up gaining nothing in the long term

but yet people dont want asset investing/saving for long term (retirement, kids college) they just want quick free extra to cash out asap and return to fiat better off.. not realising once back in fiat the value of that amount is then lost

bitcoin is something completely different to the fiat system
if you want 5% a year interest.. go play with a PoS coin

if you want something thats better than share/stock trading for long term investment. then bitcoin is th thing. with the extra's of having the ability to move spend or redistribute without needing a bankers account and a manager to sign you into terms of use

Why should you be paid more money just because you own money?

You see just because the existing flawed financial system does that, it doesn't mean it is the right thing to do. As the economy experts are starting to slowly realize, printing more money is the only reason why the global economy is this shitty today.
One of the reasons why Satoshi invented bitcoin was to avoid everything that is flawed in existing monetary system.

Not to mention that what you suggested would ensure inflation in bitcoin. In other words it makes sure that bitcoin would lose its value over time just like any other shitcurrency like dollar, euro, ruble, yen, yuan, etc.

There will only be 21 000 000 coins mined and who will be issuing this interest and from what coins? Yes, the protocol can be changed to add features like this, but will we get consensus from all the full nodes to implement this?

The coin cap will have to be increased to allow for "extra" coins to be mined to pay for this... and the moment when changes to the coin cap are made, people will lose trust in the experiment and their coins will be devalued. (You can use sites like Freebitco.in to earn 4%+ interest on your deposited coins, so a change in the Bitcoin protocol is not needed to do this)  ;)

Not sure if you would like centralized exchanges and whales to have more and more bitcoin with time just by holding, then dump all those earned BTC all over our faces.

So you are talking about an incentive just because you are HODLing BTC. That's the goal? It would be hard for the planktons in the BTC scene and easy for the whales. Every year they could dump that interest and lower the price of BTC or something like that.

Having something similar to banks wouldn't be beneficial, IMO.

First, Bitcoin is not a bank. Bitcoin doesn't give interest. If you want interest you could just use a PoS altcoin, which gives interest to it's users.
Or maybe you could use services like Nexo, if you want interest from your coins. I don't recommend such services, though.
Second, Bitcoin is divisible into a million satoshis, so the problem with "extreme scarcity" doesn't exist. When BTC becomes too expensive, the Bitcoiners will start measuring everything in satoshis.
I don't understand why do you think that we should be fighting deflation? Is deflation something bad? BTC being scarce isn't actual deflation. It's more like having a high price elasticity. A small change in demand leads to big change in the price. You should read about this in some books about economics.

Satoshi who created the BTC tech and algorithm probably thought about this, before someone can create a tech as good as BTC they would have thought of many options and how they want their production to work, BTC wasn't supposed to work like the traditional financial system in any way other than the both of them being currencies, this fixed low interest rate would be of no benefit to the BTC tech, and will only create more holders than spenders.

If you want an 'interest' you should probably go into mining of BTC if you have the finances to do so and be rewarded with BTC anytime you mine a block successfully, or you can use the old successful way of just holding your coins. But interest rates will never be a thing, the algorithm has been set already, and only useful implementations are made through consensus.

That would require moving to PoS.

Their is no leadership of bitcoin, meaning no one to coordinate a conversion to PoS.
You also have the PoW cult members that cry when anyone mentions Proof of waste is about to be banned.

Look to a PoS coin , if interest is what you are looking for,
the bitcoin community is unable and unwilling to fix their coin problems.

I believe many who replied got the OP wrongly as they replies based on the general interest rate, but the OP is not referring to that. He's just referring to the interest that could be garnered from holding BTC in our wallets. The assumption is a low interest of 0.02BTC per year, which is approximated to about $400 each year judging by the present market price.

For me, this is not a good bargain if the interest accrued is the target of the holder. Because one could make multiples of such an amount if they are doing business with their money.

You are wrong, it is not the lack of a leader that stops BTC conversion to the POS, even if Satoshi was here he surely would not act like Vitalik ;). Proof of stake is just another centralized algorithm that will make BTC one of the many centralized shitcoins in the market, and neither the devs, miners, nodes or BTC users want that.
You mean centralized, censoring shitcoins?
If decentralization is the "coin problem" you mean, then we don't want it fixed!

ok we had 10.5m coins in 2012
so if each coin generates 0.02coin per year
2013  10.5m = 10.71m
...
2048 20.99m =   21,418,817

so its already going to go passed the 21m limit in a 25 years

and by the actual bitcoin estimate of year 2140 = 132.4m

sorry but no.. inflation of coin with never ending supply is a cut away of multiple features of deflation

if you want an interest rate.. go play with the fiat market.
bitcoin is deflationary to hedge against fiat interest

Bitcoin halvenings are already interest payments in and of themselves, but you just don't see that in numbers.

It's human nature to compare something going up/down relative to something else, but it's much harder for them to see when it's intrinsic value is going up or down as the numbers themselves stay the same.

I think interest only comes with a centralized system like banks and centralized exchanges are doing. The reason you get interest when you put money in the bank is because they use your money to lend to others at a higher interest rate and they will give you back a small amount of interest. If this applies to bitcoin then who will pay that interest to us? while miners to mine bitcoins, they also spend a lot of money to get bitcoins, while you just hold and demand interest is unacceptable.

Remember you asked.  :)

BTC problems
Energy Waste
Low onchain Transactions capacity
Lacking Smart Contracts
Very Slow Block Speed
Security dependent on a mere 4 mining pool operators not colluding to 51% attack btc  *Same security no matter how much energy wasted.*
Lack of Community direction, ie: leadership

Why award the wealthy instead of awarding those who actually work for it? No. As I said here, Bitcoin awards meritocracy, not oligarchy (https://bitcointalk.org/index.php?topic=5387588.msg59382848#msg59382848). And that's just perfect.
Is this meant to be just a more subtle way of asking "why not PoS?"? Because that was answered already in another topics.

@NeuroticFish

Why don't you end all of this PoS topics questions.
Because they are all happening, because people are worried about the coming US & Europe PoW bans.

So just explain to everyone why PoW will be able to survive the US & Europe ban and how they will still be able to trade PoW coins, even if the PoW bans include banning trading PoW coins on exchanges, and the price not collapse.
I won't even comment after your post, to leave that explanation post unsullied.  ;)

I'll consider it a fairly tale to help me sleep, but the rest might believe you.

 8)

Well, why don't you stop trolling?
Whatever is happening in your mind, doesn't make it real. Sleep well.

Your  proposal is what POS offers, BTC already rewarding miners and that is strong enough economic value. The best way to benefit from bitcoin and accumulate more if you're not a miner, is to buy low and sell high and repeat same with the hope you won't get caught by the market.

Here it will create an additional problem, which is that everyone will prefer not to spend his money because he knows that it will increase in the future, and the lender will try to give a higher interest, otherwise it is better to leave the money in his addresses.

The pattern you mentioned is already in the Cardano ADA crypto. You can check it out to see if it is effective in increasing the price or not.

Why would you want to fight deflation? To prevent price from increasing so quickly that it keeps it from becoming a better medium of exchange? If the purpose is to prevent price from increasing so quickly,, it will most likely not work because supply would decrease and demand increase when lots of people hold that way to earn rewards.
Besides, things are not that simple. Such payment will only be meaningful if the saved bitcoins are put into good use or are useful for the network to keep it profitable/valuable otherwise a worthless network will pay worthless rewards.
In reality such fixed payment or rewards would be non-guaranteed and can only be based on how profitable your company's or organization's is otherwise you get paid worthless interest.

The deflationary model remains the best option for long-term holders who wish to earn valuable rewards that are non-guaranteed. It could encourage people to work harder to increase demand and sustain a price increase. The guaranteed reward like you suggested can be very deceptive and unsustainable

Having a limited number of bitcoins can ever exist, is itself a deflationary measure. Then we also have halving where the mining reward decreases to half at certain stages. I believe Satoshi has already implemented two very powerful deflationary measures for bitcoin.

Adding interest rate to bitcoin holding can surely help. This will encourage people to hold their bitcoins which can have a decreasing effect of supply which will eventually drive the price up. But it needs to go through consensus mechanism.

You don't fight anything this way. If, given that the interest rate is 2% annually, all users were entitled to this reward, it'd nullify its purpose. If everyone became slightly richer, with constant national gross product, then nobody would actually gain anything. Prices would just rise, that's all.

Inflation and deflation are complex problems, that require complex solutions. Commonly political problems. That's why you shouldn't try searching for a simple technical solution.

So you understand the whole concept wrongly...

If there is something called interest rate then who is going to give that interest and how that it will be created? So if there is a mechanism which creates bitcoin out of nowhere then its inflationary right then how can you say it is a solution to fight deflation of having.

I was waiting before I responded to this, for some explanation on why inflation doesn't solve anything, which BlackHatCoiner made excellently:


PoS (and PoW) coins that provide everybody subsidiaries, also have inflation problems.

Precisely. The key points of BTC is that there is no central authority and that there can never be more than 21 million BTC. Well, technically actually 20.9999999 million.

So:
Just who/what would be monitoring every address that is holding coins and checking how long they are held so interest could be paid?
Coin dates checked by incoming tx date and the interest being calculated and added when the coins are spent?
By what mechanism would the coins be generated?
Would the interest paid come out of the 21 million or would that rule be thrown out to create more?
So many things wrong here...

That’s the point, the price could drop in any investment, it is up to you to profit from it or be upset about it. If you are simply just upset because the price dropped, then you are going to do nothing and you are not going to benefit from it, crying over the price and deflation (which is none if you ask me) is not going to solve any of your problems and would just be empty whining.

However, if you buy more when the price drops that means you are going to end up with some profit and that is the way you could get out of this with less harm done to you and more profit chances when the time comes. That’s the only beneficial method during any of the bear markets that we have faced so far.

when you go into the one of the investment markets, of course, you want to get profit later on. so just hodl if you truly believe on this market. that one day, you can reap your rewards of holding. but if you are not very sure about this market, better look for other assets (tangible ones preferably) if you do want to diversify and make sure you will not be at the losing end if one of them failed your expectations.