Help with the Economics of a New Gaming Cryptocurrency

[chrisguns521]

I'm creating a new coin that will be the currency used on my company's gaming website. The site will host weekly tournaments for popular games (league of legends, hearthstone, call of duty, etc). In addition to weekly events, there will be an arcade of mini games that cost a small amount to play competitively and give you a chance to earn some coin. There will also be an online store to purchase gaming cards and accessories. No credit cards accepted, just crypto.

What kind of supply schedule would be best for a coin that's used like this? (block time, coins per block, halving time) I don't want to put out too many coins too fast like Dogecoin did, but on the other hand we also expect rapid growth in the first year so supply should be somewhat front loaded. During the first 6 months, we hope to attract tens of thousands of unique players to the arcade and to our online tournaments and grow rapidly throughout our first 24 months. I know the whales on exchanges can make for a volatile trading environment, but it would be nice if we could devise a schedule that would encourage price stability, since it will be used for the same fixed fees daily, and also release them at the correct rate that grows the coin organically over time as more people start using them.

[Relnarien]

Allow me get the "not the best idea" discussion out of the way first:

(You can skip over this part if you want. It's still a noteworthy discussion either way.)

By branding a cryptocurrency as the official "currency" of your company, you are unintentionally causing other entities to not provide professional merchant support -- i.e., merchant support from other legally established entities -- to it. Whether we like it or not, most people come to the mistaken conclusion that a cryptocurrency can and should only be used by one company if that cryptocurrency's branding is intrinsically tied to that company. Take GPUcoin, for example. It could have been used for other things, but its supporters immediately rejected it once the company associated with it started to fail. What this means is that your company will have to provide unique merchant support to your cryptocurrency because it is extremely possible that, aside from people trading it for Bitcoins or other coins, your company will bear all the financial burden of supporting the growth of your coin.

There is also the issue of price manipulation. Since cryptocurrencies are, by definition, decentralized, then your cryptocurrency will surely experience extreme swings in its spending value. While it's true that you can peg the actual value of your coin to the the service that you offer as a merchant, you cannot stop people from trying to force you to adopt the value of the coin as pegged to fiat. Sooner or later, you will have to decide if you will set the price of your services based on the fiat trade rate of your coin or risk having the value of your coin dumped due to a conceived disproportion between the price of the coin and the price of your service.

Having said that, let's move on to your question.

In my opinion, a reasonable distribution scheme for a cryptocurrency with such a purpose is a 70/30 split rate between the miners and your company during the first week of its launch. Ideally, your website should be at least 80% functional and have been operating for at least 2 weeks beforehand. A 45-second target with an 8-transaction confirmation period should be fast enough for most transactions that involves online games. A 60-transaction dormancy period for newly mined coins should be good enough to secure your website from transactions made by amateurish malicious miners. The block rewards and halving rate don't really matter. You would want to adjust the block rewards manually relative to how much your services cost, while halving only makes a difference if you intend to keep generating coins beyond what you can provide merchant support for. You don't want to generate new coins past the first 6 months because it will keep your old coins from circulating, causing you to not make any profit (other than your own coin, which only you provide merchant support for). That poses the problem of how to keep the blockchain running though.