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Author Topic: All altcoins need this formula  (Read 1372 times)
boboniera
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November 03, 2015, 08:42:44 PM
 #1

x=k*p*y   k=1/v

x = total coins
v = coins/sec
p = average value of the transactions
y = total number of transactions
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Mercado
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November 03, 2015, 09:35:52 PM
 #2

x=k*p*y   k=1/v

x = total coins
v = coins/sec
p = average value of the transactions
y = total number of transactions

That's all fun and games but how does that help any coin?

Always look at the bright side of life
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November 03, 2015, 10:17:15 PM
 #3

It is an economic theory.
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November 03, 2015, 10:30:00 PM
 #4

It is an economic theory.

Do you mean this formula should be used to alter blockreward amounts or is it an indicator of the general coin usage?

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November 03, 2015, 10:56:18 PM
 #5

To alter blockreward amounts.
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November 04, 2015, 11:05:53 AM
 #6

x=k*p*y   k=1/v

x = total coins
v = coins/sec
p = average value of the transactions
y = total number of transactions
To alter blockreward amounts.

interesting no coin has tried to use # of transactions / ave value :/

is this a sited economic theory?

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TPTB_need_war
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November 08, 2015, 03:19:53 PM
 #7

x=k*p*y   k=1/v

x = total coins
v = coins/sec
p = average value of the transactions
y = total number of transactions
To alter blockreward amounts.

interesting no coin has tried to use # of transactions / ave value :/

is this a sited economic theory?

He is copying this from the Quantity Theory of Money (M * V = P * Q)

M = money supply
V = velocity of money
P = price
Q = quantity

But OP has an error:

x = money supply (M), i.e. the total value of all coin, not the total coins.

As for the idea of using these metrics to vary the block reward for mining, the problem is the metrics are ill defined in any economy. For example we can't measure the money supply, i.e. it isn't the market cap (because market cap is mathematical nonsense).

boboniera
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November 08, 2015, 08:20:56 PM
 #8

This formula allows stable prices. Bitcoin is unstable.
bit1
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November 08, 2015, 09:57:09 PM
 #9

This formula allows stable prices. Bitcoin is unstable.

So, wich value X to Bitcoin and Litecoin could be?.  

p = average value of the transactions
y = total number of transactions

I guess that y is increased on time and therefore p too, I understand that you mentioned this to establish total supply before of launch a coin, But it is not possible because p and y are always raising.

Edit: I guess that you are trying of say same mentioned  for @Mercado:  alter blockreward amounts.

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boboniera
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November 09, 2015, 08:34:29 AM
 #10

This formula allows stable prices. Bitcoin is unstable.

So, wich value X to Bitcoin and Litecoin could be?.  

p = average value of the transactions
y = total number of transactions

I guess that y is increased on time and therefore p too, I understand that you mentioned this to establish total supply before of launch a coin, But it is not possible because p and y are always raising.

Edit: I guess that you are trying of say same mentioned  for @Mercado:  alter blockreward amounts.


x = total coins, in a period of time, say a year
v = coins/sec, in a period of time, say a year
p = average value of the transactions, in a period of time, say a year
y = total number of transactions, in a period of time, say a year
hughbt
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November 09, 2015, 10:13:00 AM
 #11

This formula allows stable prices. Bitcoin is unstable.

This formula doesn't allow anything since Bitcoin is not backed by any economy(it's only backed by the mining cost). Bitcoins' supply doesn't have any impact on the prices of products which we buy every day.
That's why the value of 1 BTC is in the most basic form - linear function of the total supply. Prices of products are fairly constant, Bitcoin's value is the only thing that is changing.

"p = average value of the transactions, in a period of time, say a year"
P - can't be a value of the coin or transactions. It would have to be something else but there is no other thing you could use, you are linking value of Bitcoin with itself.
Since the value of Bitcoin is changing(for many reasons), the lower it will be the higher will be volume of transactions(you need more BTC to pay for sth).
BTC price=>down
p(average value of transactions)=>up
x(total supply)=>up
BTC price => down(because of the extra supply)
And we end up in an inflationary spiral. Basically every scenario you can think of ends up in a spiral unless the value of transactions is constant as it is in the original Cambridge equation. And it's pretty obvious that not all of the transactions are made for buying goods.

So we are back to our linear function: supply=>up, price of 1BTC=>down. The only solution for this I could think of is the network working as a decentralized central bank, taking informations about the price from all of the big exchanges. With hardcoded fixed exchange rates to the other currencies. And your wallet would be recalculating your amount of coins depending on the average exchange price. If you have let's say 1BTC and price went up from 200$ to 400$, amount in the wallet changes to 0.5BTC, so no matter what - you have the same amount of fiat money.
boboniera
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November 09, 2015, 11:21:24 AM
 #12

It is a way to customize the cambridge equation into the cryptos.
hughbt
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November 09, 2015, 11:47:31 AM
 #13

I know what you mean but it won't work in cryptos. It seems that you don't understand the basic idea behind this equation.
boboniera
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November 09, 2015, 12:57:21 PM
 #14

This formula allows stable prices. Bitcoin is unstable.

This formula doesn't allow anything since Bitcoin is not backed by any economy(it's only backed by the mining cost). Bitcoins' supply doesn't have any impact on the prices of products which we buy every day.
That's why the value of 1 BTC is in the most basic form - linear function of the total supply. Prices of products are fairly constant, Bitcoin's value is the only thing that is changing.

"p = average value of the transactions, in a period of time, say a year"
P - can't be a value of the coin or transactions. It would have to be something else but there is no other thing you could use, you are linking value of Bitcoin with itself.
Since the value of Bitcoin is changing(for many reasons), the lower it will be the higher will be volume of transactions(you need more BTC to pay for sth).
BTC price=>down
p(average value of transactions)=>up
x(total supply)=>up
BTC price => down(because of the extra supply)
And we end up in an inflationary spiral. Basically every scenario you can think of ends up in a spiral unless the value of transactions is constant as it is in the original Cambridge equation. And it's pretty obvious that not all of the transactions are made for buying goods.

So we are back to our linear function: supply=>up, price of 1BTC=>down. The only solution for this I could think of is the network working as a decentralized central bank, taking informations about the price from all of the big exchanges. With hardcoded fixed exchange rates to the other currencies. And your wallet would be recalculating your amount of coins depending on the average exchange price. If you have let's say 1BTC and price went up from 200$ to 400$, amount in the wallet changes to 0.5BTC, so no matter what - you have the same amount of fiat money.


Goods or services. Whats the difference?
hughbt
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November 09, 2015, 02:29:02 PM
 #15

This formula allows stable prices. Bitcoin is unstable.

This formula doesn't allow anything since Bitcoin is not backed by any economy(it's only backed by the mining cost). Bitcoins' supply doesn't have any impact on the prices of products which we buy every day.
That's why the value of 1 BTC is in the most basic form - linear function of the total supply. Prices of products are fairly constant, Bitcoin's value is the only thing that is changing.

"p = average value of the transactions, in a period of time, say a year"
P - can't be a value of the coin or transactions. It would have to be something else but there is no other thing you could use, you are linking value of Bitcoin with itself.
Since the value of Bitcoin is changing(for many reasons), the lower it will be the higher will be volume of transactions(you need more BTC to pay for sth).
BTC price=>down
p(average value of transactions)=>up
x(total supply)=>up
BTC price => down(because of the extra supply)
And we end up in an inflationary spiral. Basically every scenario you can think of ends up in a spiral unless the value of transactions is constant as it is in the original Cambridge equation. And it's pretty obvious that not all of the transactions are made for buying goods.

So we are back to our linear function: supply=>up, price of 1BTC=>down. The only solution for this I could think of is the network working as a decentralized central bank, taking informations about the price from all of the big exchanges. With hardcoded fixed exchange rates to the other currencies. And your wallet would be recalculating your amount of coins depending on the average exchange price. If you have let's say 1BTC and price went up from 200$ to 400$, amount in the wallet changes to 0.5BTC, so no matter what - you have the same amount of fiat money.


Goods or services. Whats the difference?

Most of them are just for transfering the coins from an exchange to a wallet. So those transactions shouldn't be aggregated for the purpose of this equation.
And your equation - to put it simple - looks like this: Total supply = BTC value of all transactions/(coins/sec)
It's not going to help to stabilize the prices in any way, because prices are not backed up by anything of value other than mining costs. Maybe if the value of BTC as a whole was measured as a total cost of mining and put it as "p"... Maybe then it would make any sense. But still you just presented this equation and didn't explain how would you like to apply it. I suppose that the idea which i wrote in my previous post would be easier to execute since it wouldn't require any time for a network to adapt to the new conditions. With the fixed value even staking finally would make sense.
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November 09, 2015, 04:52:56 PM
 #16

I know what you mean but it won't work in cryptos. It seems that you don't understand the basic idea behind this equation.

I think it is not something impossible. I think someday all cryptos will function with this formula.
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November 09, 2015, 04:59:27 PM
 #17

I know what you mean but it won't work in cryptos. It seems that you don't understand the basic idea behind this equation.

I think it is not something impossible. I think someday all cryptos will function with this formula.

It wont work. In order to control the price you need to be able to reduce supply as well as increase it. This just alters inflation.
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November 09, 2015, 07:41:05 PM
 #18

I know what you mean but it won't work in cryptos. It seems that you don't understand the basic idea behind this equation.

I think it is not something impossible. I think someday all cryptos will function with this formula.

It wont work. In order to control the price you need to be able to reduce supply as well as increase it. This just alters inflation.

And what is the problem?
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November 09, 2015, 07:59:50 PM
 #19

Quote
It wont work. In order to control the price you need to be able to reduce supply as well as increase it. This just alters inflation.

And what is the problem?

Highlighted the problem
boboniera
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November 09, 2015, 08:34:14 PM
 #20

Quote
It wont work. In order to control the price you need to be able to reduce supply as well as increase it. This just alters inflation.

And what is the problem?

Highlighted the problem

And why is this a problem?
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