Stop kicking the can down the road: Fix the terminal endgame crypto flaw

[r0ach]

As you may have noticed, most coins have a block reward eventually reaching zero with expectations to run off transaction fees, while other coins have a perpetual, non-zero block reward.  Not much attention has been given to the relationship between these two parties.  While Bitcoin can be used as a store of wealth, the Bitcoin protocol's primary usage is a transaction medium.  The zero sum market dynamics will face each coin type against each other, the ones with zero block rewards, and the ones with perpetual, non-zero block rewards.  For a person using the Bitcoin protocol as a transaction medium, as I mentioned was it's primary usage, and not a store of wealth, that person should always find lower transaction fees in a coin with perpetual, non-zero block rewards.

The point I am getting to is, one party has already won this war before it started.  The zero block reward, transaction fee only coins will either have to adapt or be destroyed.  This doesn't mean that cryptocurrency has to become Keynesian, or highly inflationary in nature.  Through accidental loss due to strong encryption, human error, misplacement, death, a large number of coins will be lost per year in any cryptocurrency.  Estimates can be made as to what the average percent of coin count per year that number is.  This number can then be leveraged as a non-zero block reward.  The goal of a transaction medium after all, is not to be deflationary in the first place, it's to remain constant in nature.

Satoshi didn't like the use of "magic numbers" in the Bitcoin protocol, but I think a clear range of values will be discovered for optimal non-zero block reward.  My personal estimate is between 1-2%.  People such as Anonymint have argued 2%.  Using the upper limits of 2% would most likely introduce a small form of decentralized inflation, so that is a factor to take into account.

*This post ignores the proof of stake element of currency, since that model has not yet proven to be as reliable as PoW.

[devphp]

Dogecoin fixed it already, didn't they? Well, it's not exactly 2% starting in 2015, but rather 5%, but eventually it will be as the coin supply grows, and the reward remains the same. Unless they decide to change some parameters so here you go, your PoW popular coin that doesn't have that flaw. Don't like the dog's face? What does this have to do with the currency's merits?

[aminorex]

Monero solves this by constant emission, 1 coin per block, which is deflationary:  Economic growth is exponential.  Constant growth in money supply is functionally indistinguishable from constant money supply, because any compound growth in the economy will always swamp constant emission.  It means the value of the block reward, once it stops declining exponentially, will increase exponentially with a much smaller exponent.

[digitalindustry]

obviously i +1 this.


the EQ reward allows for:

- near zero fees, perfect for micro transactions

- lost currency replacment

- help secure against malefactors in Government (Treasury seizure laws) or Banks agencies (such as NSA and In-Q-Tel) (if the initial distribution was not subject to too much monopoly)


My opinion on the % is that due to the divisible nature of crypto a "fixed" design could work just fine (obviously this opinion is coming from my bias) but however we will see other designs in the future i would say.


*
i agree PoS is a non starter in fact it does the complete opposite in regards to my last point - for example if Bitcoin moved to PoS now the system would align up nicely with our current banking system to all intents and purposes. because of the combination of a powerful mining monopoly + the ability for that monopoly to mint the future currency

^^

That is almost our current banking system- and i fully well expect Bitcoin to move that way then collapse fairly quickly afterwards. (in both price an'd confidence) how to measure this vector is to measure centralized media's ability to "shape opinion and reality" which seems to be in full terminal decline.

** when i say "collapse" there is scenario of course, in the same way that  "The stock market" is rising today, BTC could be just traded back and forth among this monopoly of primary % owners and the price virtually bid to whatever they want, but however , in a field of infinite competition, in this scenario the common productive people of the society may be "in aww" of Bitcoin but likely work and transact for another crypto that will be much more accessible and less centralized.  i.e one they can "participate in".

i guess time will tell.