MC2: A cryptocurrency based on a hybrid PoW/PoS system

[YipYip]

If you could do one more thing, get this coin ready on an exchange site before launch, I think that would help the coin tremendously because it prevents people from getting scammed.

Just my two cents.

+1 I fully agree. If BTC-E can add a copycat coin shortly after launch they should have no problem adding a planned out coin that adds some true innovation like this one (ahead of release). Very pleased with the concept of this coin, nice work tacotime. The way this coin is being released should have been a standard for all of the recent coins. Community feedback, support, planning, and involvement are key to the longterm success of the coin.

We're hoping to have an exchange ready too, yes.

Fixed the section numbering being messed up in the paper (whoops), newest is 0.31 but I'm sure there are lots of typos still in it that need adjusting.

If you're interesting in helping crowdfunding for this coin (and possibly acquiring some coins from it) please head to the thread about it on the official forums: http://platinumdigitalreserve.com/forum/index.php?topic=16.0

The latest means seems to be offering stakeholder tickets, which means that investors will get some coins in the first 91 days in exchange for securing the blockchain.  Unlike a premine, some work securing the network will be used in exchange for coins given to the investors.

Can u give us an ETA mate

1 day ..1 week ... 1 month

[1715225297]

1715225297

[1715225297]

1715225297

[1715225297]

1715225297

[1715225297]

1715225297

[1715225297]

1715225297

[1715225297]

1715225297

[tom_o]

Can u give us an ETA mate

1 day ..1 week ... 1 month


[/quote]

+1 a rough estimate would be good.

[Mageant]

If Litecoin is the silver to Bitcoin, will Netcoin be the platinum to bitcoin?
 

[Mageant]

I would like to ask that the base coin amounts be increased by a factor of 10 or even 100.

The reason for this thinking is the colored coins feature.

If coins are really scarce then you can only issue small amounts of coins in the genesis transactions. So the colored coins will always be very small fractional amounts, like 0.000123, which is very user unfriendly! Also, you would be using up nearly all the available digits after the decimal point.

If the rewards per block are something like 125 (PoS) and 250 (PoW) then there are lots of coins around and that makes it much nicer and user-friendly to generate colored coins currences. You can easily generate colored coins in the hundreds at least.

This would make it really useful as a kind of metacoin.

[YipYip]

If you could do one more thing, get this coin ready on an exchange site before launch, I think that would help the coin tremendously because it prevents people from getting scammed.

Just my two cents.

+1 I fully agree. If BTC-E can add a copycat coin shortly after launch they should have no problem adding a planned out coin that adds some true innovation like this one (ahead of release). Very pleased with the concept of this coin, nice work tacotime. The way this coin is being released should have been a standard for all of the recent coins. Community feedback, support, planning, and involvement are key to the longterm success of the coin.

We're hoping to have an exchange ready too, yes.

Fixed the section numbering being messed up in the paper (whoops), newest is 0.31 but I'm sure there are lots of typos still in it that need adjusting.

If you're interesting in helping crowdfunding for this coin (and possibly acquiring some coins from it) please head to the thread about it on the official forums: http://platinumdigitalreserve.com/forum/index.php?topic=16.0

The latest means seems to be offering stakeholder tickets, which means that investors will get some coins in the first 91 days in exchange for securing the blockchain.  Unlike a premine, some work securing the network will be used in exchange for coins given to the investors.

Have you stabilised the POS issues that PPCoin guys are having ??

Without actually reading in detail I would think that there would be too many combinations of circumstance to cover the POS algo without there being holes where ppl will be able to game the system to unfair or lopsided advantage..or is the POS factoring going to be kept low so as not to cause too much issue if these factors do pop up

[manfred]

To speed up settlement you should really look at Ripple's proof of consensus (PoC), perhaps as a replacement for the PoW in your system.  For commercial use a cryptocurrency has to settle and be confirmed in seconds, not minutes.

Hmmm...  PoC followed by PoS?  A fast, low energy coin with a constant eternal coinbase and perpetual rewards for the users?  That would be interesting

Bitcoins confirmations speed is simply unacceptable, dont matter which way u bend, twist or turn it.
A Crypto cant be revolutionary and then take considerably longer to finalise as an existing system.

[FullLife]

Looking forward to this debut, sounds promising.

[duul]

I added a board to my forum for Netcoin, It would be awesome to get some content about it there. It's at altcoinforum.com

[Michael_S]

Relating to the question on how the money supply should be designed over time for a new coin, here is some visualization of various options. The reference is the "BTC-design" with block reward halving every 4 years and a final amount of 21 Mill coins.

For comparison, all curves are normalized to have the same amount of coins (=2,625,000) after the end of the first year.

What we see:

• For all non-exponential schemes the inflation rate eventually becomes arbitrarily small.
• With the BTC-like scheme, the inflation rate decreases exponentially (=linear in logarithmic diagram).
• With constant linear increase of money supply, the inflation rate decreases linearly (like a y=1/x function), falling below 1% after 100 years.
• With logarithmic increase of money supply, money supply and inflation rate basically behave the same as for the constant mining rate, but inflation rate decreases much faster, depending on tuning of the parameters.

It appears that logarithmic (or even linear) growth could be an alternative to a BTC-like hard limit. Especially the logarithmic solution appears to be an attractive alternative. However, in essence it would have very similar properties as the "hard limit" of the BTC-design. Increase of money supply would not match growth of earth population or productivity [which anyway cannot be predicted upfront], just like for the BTC method, and therefore a coin with logarithmic growth would show a similar deflationary behaviour (just to a slightly lower extend as BTC). The number of coins in existence (money supply) would actually still continue growing when our sun becomes a red giant, billions of years from now (note: with the parameterization of below's figures, money supply for the logarithm method after 100 years is 22.4 Mill coins, and after 1 Billion years still less than 100 Mill coins).



Zoomed: First 30 years:

Update note: I did not read the MC2 whitepaper until just now, so I ensure that the similarity of Fig. 2 on page 7 of the whitepaper with the bottom left diagram above is the result of independent work.

Zoomed: First 10 years:


For comparison: US$ exponential growth of money supply (note the logarithmic y-axis):


PS: Here is the source code used for the curves above:

Code:

% Script file for Matlab or Octave, tested with Matlab 2007b and GNU Octave 3.0.0.
%
% This script illustrates the Total Money Supply and the corresponding yearly rates of Money Supply increase
% (="inflation") of a (crypto-)currency, depending on the scheme how coins are brought into existence.
%
% Schemes considered include:
% - constant inflation rate (=exponential money supply growth)
% - linear growth of money supply (i.e. constant rate at which new coins are being generated)
% - logarithmic growth of money supply
% - Bitcoin-like coin generation with regular block reward halving
% - no growth, constant money supply

N = 248; % number of years, must be multiple of 4

timelimit=30; % how much to zoom-in after pressing <Enter>, to show years 0 till "this year"


money_supply_after_1_year = 50*52500; % 52500*50 corresponds to nb of bitcoins after 1 year


%% I. Calculate the Money Supply:
%
% About the index: Index "2", i.e. money_supply_xxxx(2), denotes the amount of existing coins after the end
% of the 1st year or start of year 2.

time = [0:1:N];


%% I - (0) Constant 
money_supply_const = money_supply_after_1_year*ones(1,N+1);

%% I - (1) Linear Growth 
money_supply_linear = money_supply_after_1_year*time;

%% I - (1b) Logarithmic Growth:
% The amount of coins being mined is decreased like this:
% In the first year, coins are mined at a constant rate, and add up to Nc coins at the end of year one.
% The number of coins that are newly created in year n (n>=2) is equal to b/n * Nc,
% where b is a positive coefficient, typically between 0 and 2, but can also be greater than 2.
a = 1.0; % Nc = a*money_supply_after_1_year*ones, i.e. money supply after 1st year can be tuned by this parameter.
b = 1.8; % 0<=b<=2, or b >2 also possible
c = 1.0; % Exponent for "nb of years" variable. Greater values mean slower growth. If =0, logarithmic growth becomes linear.
money_supply_log = a*money_supply_after_1_year*ones(1,N+1);% this is the nb of coins after 1st year, i.e. money_supply_log(2)
money_supply_log(1) = 0;
for k = 3:N+1,
    n = k-1; % calculate for year "n" now:
    money_supply_log(k) = (a*money_supply_after_1_year) * b/(n)^c + money_supply_log(k-1);
end

%% I - (2) Exponential Growth (1% Inflation Per Year)
money_supply_exp1 = money_supply_after_1_year*ones(1,N+1);
money_supply_exp1(1) = money_supply_exp1(2)/1.01;
for k = 3:N+1,
    money_supply_exp1(k) = 1.01*money_supply_exp1(k-1);
end

%% I - (2b) Exponential Growth (5% Inflation Per Year)
money_supply_exp5 = money_supply_after_1_year*ones(1,N+1);
money_supply_exp5(1) = money_supply_exp5(2)/1.05;
for k = 3:N+1,
    money_supply_exp5(k) = 1.05*money_supply_exp5(k-1);
end

%% I - (3) Bitcoin-like Growth
money_supply_BTC = NaN*ones(1,N+1);
money_supply_BTC(1) = 0;
money_supply_BTC(2) = 1*money_supply_after_1_year;
money_supply_BTC(3) = 2*money_supply_after_1_year;
money_supply_BTC(4) = 3*money_supply_after_1_year;
money_supply_BTC(5) = 4*money_supply_after_1_year;
increase = 1/2*money_supply_after_1_year; % block reward halving every 4th year
for k = 6:4:N+1,
    for kk = k:k+3,
        money_supply_BTC(kk) = money_supply_BTC(kk-1) + increase;
    end
    increase = increase/2;% block reward halving every 4th year
end
money_supply_max = max(money_supply_const, money_supply_linear);
money_supply_max = max(money_supply_log,  money_supply_max);
money_supply_max = max(money_supply_exp1, money_supply_max);
money_supply_max = max(money_supply_exp5, money_supply_max);
money_supply_max = max(money_supply_BTC,  money_supply_max);

%% II. Calculate the Inflation Rate:
inflation_rate_const  = inf*ones(1,N);
inflation_rate_linear = inf*ones(1,N);
inflation_rate_log    = inf*ones(1,N);
inflation_rate_exp1   = inf*ones(1,N);
inflation_rate_exp5   = inf*ones(1,N);
inflation_rate_BTC    = inf*ones(1,N);
for k = 2:N-1,
    inflation_rate_const(k)  = money_supply_const(k+1)  / money_supply_const(k)  - 1;
    inflation_rate_linear(k) = money_supply_linear(k+1) / money_supply_linear(k) - 1;
    inflation_rate_log(k)    = money_supply_log(k+1)    / money_supply_log(k)    - 1;
    inflation_rate_exp1(k)   = money_supply_exp1(k+1)   / money_supply_exp1(k)   - 1;
    inflation_rate_exp5(k)   = money_supply_exp5(k+1)   / money_supply_exp5(k)   - 1;
    inflation_rate_BTC(k)    = money_supply_BTC(k+1)    / money_supply_BTC(k)    - 1;
end

% Special correction for exponential inflation rates:
inflation_rate_const(1) = inflation_rate_const(2);
inflation_rate_exp1(1)  = inflation_rate_exp1(2);
inflation_rate_exp5(1)  = inflation_rate_exp5(2);

%% III. Plot Results:
figure
subplot(2,2,1);
plot(time, money_supply_exp5,'r-.','linewidth',2); hold on;
plot(time, money_supply_exp1,'r-','linewidth',2); hold on;
plot(time, money_supply_linear,'b-','linewidth',2);
plot(time, money_supply_log,'c--','linewidth',2);
plot(time, money_supply_BTC,'m-','linewidth',2);
plot(time, money_supply_const,'g-','linewidth',2);
grid on;
title('Total Money Supply');
xlabel('Time in Years')
ylabel('Total Money Supply (Coins in Existence)')
legend('Inflation 5% p.a.','Inflation 1% p.a.','Constant Linear Increase',['Logarithmic Increase, a=',num2str(a),', b=',num2str(b)],'BTC-like Increase','No Money Increase','location','northwest');

subplot(2,2,2);
semilogy(time, money_supply_exp5,'r-.','linewidth',2); hold on;
semilogy(time, money_supply_exp1,'r-','linewidth',2); hold on;
semilogy(time, money_supply_linear,'b-','linewidth',2);
%semilogy(time, money_supply_log,'c--','linewidth',2);
semilogy([0.25, 0.5, time(2:end)], [[0.25, 0.5]*money_supply_log(2),money_supply_log(2:end)],'c--','linewidth',2);
% semilogy(time, money_supply_BTC,'m-','linewidth',2);
semilogy([0.25, 0.5, time(2:end)], [[0.25, 0.5]*money_supply_BTC(2),money_supply_BTC(2:end)],'m-','linewidth',2);
semilogy(time, money_supply_const,'g-','linewidth',2);
grid on;
title('Total Money Supply (Logarithmic Scale)');
xlabel('Time in Years')
ylabel('Total Money Supply (Coins in Existence)')

subplot(2,2,3);
plot(time(1:end), 100*[inflation_rate_exp5(1),inflation_rate_exp5],'r-.','linewidth',2); hold on;
plot(time(1:end), 100*[inflation_rate_exp1(1),inflation_rate_exp1],'r-','linewidth',2); hold on;
plot(time(2:end), 100*inflation_rate_linear,'b-','linewidth',2);
plot(time(2:end), 100*inflation_rate_log,'c--','linewidth',2);
plot(time(2:end), 100*inflation_rate_BTC,'m-','linewidth',2);
plot(time(1:end), 100*[inflation_rate_const(1),inflation_rate_const],'g-','linewidth',2);
grid on;
title('Yearly "Inflation" Rate of Total Money Supply');
xlabel('Time in Years')
ylabel('Yearly Increase of Money Supply in Percent')
legend('Inflation 5% p.a.','Inflation 1% p.a.','Constant Linear Increase',['Logarithmic Increase, a=',num2str(a),', b=',num2str(b)],'BTC-like Increase','No Money Increase','location','northeast');

subplot(2,2,4);
semilogy(time(1:end), 100*[inflation_rate_exp5(1),inflation_rate_exp5],'r-.','linewidth',2); hold on;
semilogy(time(1:end), 100*[inflation_rate_exp1(1),inflation_rate_exp1],'r-','linewidth',2); hold on;
semilogy(time(2:end), 100*inflation_rate_linear,'b-','linewidth',2);
semilogy(time(2:end), 100*inflation_rate_log,'c--','linewidth',2);
semilogy(time(2:end), 100*inflation_rate_BTC,'m-','linewidth',2);
semilogy(time(1:end), 100*[inflation_rate_const(1),inflation_rate_const],'g-','linewidth',2);
grid on;
title('Yearly "Inflation" Rate of Total Money Supply (Logarithmic Scale)');
xlabel('Time in Years')
ylabel('Yearly Increase of Money Supply in Percent')
legend('Inflation 5% p.a.','Inflation 1% p.a.','Constant Linear Increase',['Logarithmic Increase, a=',num2str(a),', b=',num2str(b)],'BTC-like Increase','No Money Increase','location','southeast');
a=axis;
axis([a(1), a(2), 1e-3, 1e2]);


disp('--> Press <Enter> to zoom in...')
pause
for k=1:4,
    subplot(2,2,k);
    a=axis;
    if k < 3,
        a4=money_supply_max(timelimit);
    elseif k == 3,
        a4=30;
    else
        a4=a(4);
    end
    axis([a(1), timelimit, a(3), a4]);
end

(Update: added 3rd parameter "c" for the logarithmic curve in the code above. Default c=1.0, while c=0.0 makes the growth linear.)

[tom_o]

The number of coins in existence (money supply) would actually still continue growing when our sun becomes a red giant, billions of years from now

This bit I disagree on, I doubt anyone will still be mining the netcoin blockchain then... but you never know!

[eretron]

So is there any ETA for MC2? Looks promising.

[patrickquinn]

I don't know if you are new to it or not eretron but the golden rule of the Internet is to never request ETAs. You would do well to learn it.

[Luckybit]

Relating to the question on how the money supply should be designed over time for a new coin, here is some visualization of various options. The reference is the "BTC-design" with block reward halving every 4 years and a final amount of 21 Mill coins.

For comparison, all curves are normalized to have the same amount of coins (=2,625,000) after the end of the first year.

What we see:

• For all non-exponential schemes the inflation rate eventually becomes arbitrarily small.
• With the BTC-like scheme, the inflation rate decreases exponentially (=linear in logarithmic diagram).
• With constant linear increase of money supply, the inflation rate decreases linearly (like a y=1/x function), falling below 1% after 100 years.
• With logarithmic increase of money supply, money supply and inflation rate basically behave the same as for the constant mining rate, but inflation rate decreases much faster, depending on tuning of the parameters.

It appears that logarithmic (or even linear) growth could be an alternative to a BTC-like hard limit. Especially the logarithmic solution appears to be an attractive alternative. However, in essence it would have very similar properties as the "hard limit" of the BTC-design. Increase of money supply would not match growth of earth population or productivity [which anyway cannot be predicted upfront], just like for the BTC method, and therefore a coin with logarithmic growth would show a similar deflationary behaviour (just to a slightly lower extend as BTC). The number of coins in existence (money supply) would actually still continue growing when our sun becomes a red giant, billions of years from now (note: with the parameterization of below's figures, money supply for the logarithm method after 100 years is 22.4 Mill coins, and after 1 Billion years still less than 100 Mill coins).



Zoomed: First 30 years:


Zoomed: First 10 years:


For comparison: US$ exponential growth of money supply (note the logarithmic y-axis):


PS: Here is the source code used for the curves above:

Code:

% Script file for Matlab or Octave, tested with Matlab 2007b and GNU Octave 3.0.0.
%
% This script illustrates the Total Money Supply and the corresponding yearly rates of Money Supply increase
% (="inflation") of a (crypto-)currency, depending on the scheme how coins are brought into existence.
%
% Schemes considered include:
% - constant inflation rate (=exponential money supply growth)
% - linear growth of money supply (i.e. constant rate at which new coins are being generated)
% - logarithmic growth of money supply
% - Bitcoin-like coin generation with regular block reward halving
% - no growth, constant money supply

N = 248; % number of years, must be multiple of 4

timelimit=30; % how much to zoom-in after pressing <Enter>, to show years 0 till "this year"


money_supply_after_1_year = 50*52500; % 52500*50 corresponds to nb of bitcoins after 1 year


%% I. Calculate the Money Supply:
%
% About the index: Index "2", i.e. money_supply_xxxx(2), denotes the amount of existing coins after the end
% of the 1st year or start of year 2.

time = [0:1:N];


%% I - (0) Constant 
money_supply_const = money_supply_after_1_year*ones(1,N+1);

%% I - (1) Linear Growth 
money_supply_linear = money_supply_after_1_year*time;

%% I - (1b) Logarithmic Growth:
% The amount of coins being mined is decreased like this:
% In the first year, coins are mined at a constant rate, and add up to Nc coins at the end of year one.
% The number of coins that are newly created in year n (n>=2) is equal to b/n * Nc,
% where b is a positive coefficient, typically between 0 and 2, but can also be greater than 2.
a = 1.0; % Nc = a*money_supply_after_1_year*ones, i.e. money supply after 1st year can be tuned by this parameter.
b = 1.8; % 0<=b<=2, or b >2 also possible
c = 1.0; % Exponent for "nb of years" variable. Greater values mean slower growth. If =0, logarithmic growth becomes linear.
money_supply_log = a*money_supply_after_1_year*ones(1,N+1);% this is the nb of coins after 1st year, i.e. money_supply_log(2)
money_supply_log(1) = 0;
for k = 3:N+1,
    n = k-1; % calculate for year "n" now:
    money_supply_log(k) = (a*money_supply_after_1_year) * b/(n)^c + money_supply_log(k-1);
end

%% I - (2) Exponential Growth (1% Inflation Per Year)
money_supply_exp1 = money_supply_after_1_year*ones(1,N+1);
money_supply_exp1(1) = money_supply_exp1(2)/1.01;
for k = 3:N+1,
    money_supply_exp1(k) = 1.01*money_supply_exp1(k-1);
end

%% I - (2b) Exponential Growth (5% Inflation Per Year)
money_supply_exp5 = money_supply_after_1_year*ones(1,N+1);
money_supply_exp5(1) = money_supply_exp5(2)/1.05;
for k = 3:N+1,
    money_supply_exp5(k) = 1.05*money_supply_exp5(k-1);
end

%% I - (3) Bitcoin-like Growth
money_supply_BTC = NaN*ones(1,N+1);
money_supply_BTC(1) = 0;
money_supply_BTC(2) = 1*money_supply_after_1_year;
money_supply_BTC(3) = 2*money_supply_after_1_year;
money_supply_BTC(4) = 3*money_supply_after_1_year;
money_supply_BTC(5) = 4*money_supply_after_1_year;
increase = 1/2*money_supply_after_1_year; % block reward halving every 4th year
for k = 6:4:N+1,
    for kk = k:k+3,
        money_supply_BTC(kk) = money_supply_BTC(kk-1) + increase;
    end
    increase = increase/2;% block reward halving every 4th year
end
money_supply_max = max(money_supply_const, money_supply_linear);
money_supply_max = max(money_supply_log,  money_supply_max);
money_supply_max = max(money_supply_exp1, money_supply_max);
money_supply_max = max(money_supply_exp5, money_supply_max);
money_supply_max = max(money_supply_BTC,  money_supply_max);

%% II. Calculate the Inflation Rate:
inflation_rate_const  = inf*ones(1,N);
inflation_rate_linear = inf*ones(1,N);
inflation_rate_log    = inf*ones(1,N);
inflation_rate_exp1   = inf*ones(1,N);
inflation_rate_exp5   = inf*ones(1,N);
inflation_rate_BTC    = inf*ones(1,N);
for k = 2:N-1,
    inflation_rate_const(k)  = money_supply_const(k+1)  / money_supply_const(k)  - 1;
    inflation_rate_linear(k) = money_supply_linear(k+1) / money_supply_linear(k) - 1;
    inflation_rate_log(k)    = money_supply_log(k+1)    / money_supply_log(k)    - 1;
    inflation_rate_exp1(k)   = money_supply_exp1(k+1)   / money_supply_exp1(k)   - 1;
    inflation_rate_exp5(k)   = money_supply_exp5(k+1)   / money_supply_exp5(k)   - 1;
    inflation_rate_BTC(k)    = money_supply_BTC(k+1)    / money_supply_BTC(k)    - 1;
end

% Special correction for exponential inflation rates:
inflation_rate_const(1) = inflation_rate_const(2);
inflation_rate_exp1(1)  = inflation_rate_exp1(2);
inflation_rate_exp5(1)  = inflation_rate_exp5(2);

%% III. Plot Results:
figure
subplot(2,2,1);
plot(time, money_supply_exp5,'r-.','linewidth',2); hold on;
plot(time, money_supply_exp1,'r-','linewidth',2); hold on;
plot(time, money_supply_linear,'b-','linewidth',2);
plot(time, money_supply_log,'c--','linewidth',2);
plot(time, money_supply_BTC,'m-','linewidth',2);
plot(time, money_supply_const,'g-','linewidth',2);
grid on;
title('Total Money Supply');
xlabel('Time in Years')
ylabel('Total Money Supply (Coins in Existence)')
legend('Inflation 5% p.a.','Inflation 1% p.a.','Constant Linear Increase',['Logarithmic Increase, a=',num2str(a),', b=',num2str(b)],'BTC-like Increase','No Money Increase','location','northwest');

subplot(2,2,2);
semilogy(time, money_supply_exp5,'r-.','linewidth',2); hold on;
semilogy(time, money_supply_exp1,'r-','linewidth',2); hold on;
semilogy(time, money_supply_linear,'b-','linewidth',2);
%semilogy(time, money_supply_log,'c--','linewidth',2);
semilogy([0.25, 0.5, time(2:end)], [[0.25, 0.5]*money_supply_log(2),money_supply_log(2:end)],'c--','linewidth',2);
% semilogy(time, money_supply_BTC,'m-','linewidth',2);
semilogy([0.25, 0.5, time(2:end)], [[0.25, 0.5]*money_supply_BTC(2),money_supply_BTC(2:end)],'m-','linewidth',2);
semilogy(time, money_supply_const,'g-','linewidth',2);
grid on;
title('Total Money Supply (Logarithmic Scale)');
xlabel('Time in Years')
ylabel('Total Money Supply (Coins in Existence)')

subplot(2,2,3);
plot(time(1:end), 100*[inflation_rate_exp5(1),inflation_rate_exp5],'r-.','linewidth',2); hold on;
plot(time(1:end), 100*[inflation_rate_exp1(1),inflation_rate_exp1],'r-','linewidth',2); hold on;
plot(time(2:end), 100*inflation_rate_linear,'b-','linewidth',2);
plot(time(2:end), 100*inflation_rate_log,'c--','linewidth',2);
plot(time(2:end), 100*inflation_rate_BTC,'m-','linewidth',2);
plot(time(1:end), 100*[inflation_rate_const(1),inflation_rate_const],'g-','linewidth',2);
grid on;
title('Yearly "Inflation" Rate of Total Money Supply');
xlabel('Time in Years')
ylabel('Yearly Increase of Money Supply in Percent')
legend('Inflation 5% p.a.','Inflation 1% p.a.','Constant Linear Increase',['Logarithmic Increase, a=',num2str(a),', b=',num2str(b)],'BTC-like Increase','No Money Increase','location','northeast');

subplot(2,2,4);
semilogy(time(1:end), 100*[inflation_rate_exp5(1),inflation_rate_exp5],'r-.','linewidth',2); hold on;
semilogy(time(1:end), 100*[inflation_rate_exp1(1),inflation_rate_exp1],'r-','linewidth',2); hold on;
semilogy(time(2:end), 100*inflation_rate_linear,'b-','linewidth',2);
semilogy(time(2:end), 100*inflation_rate_log,'c--','linewidth',2);
semilogy(time(2:end), 100*inflation_rate_BTC,'m-','linewidth',2);
semilogy(time(1:end), 100*[inflation_rate_const(1),inflation_rate_const],'g-','linewidth',2);
grid on;
title('Yearly "Inflation" Rate of Total Money Supply (Logarithmic Scale)');
xlabel('Time in Years')
ylabel('Yearly Increase of Money Supply in Percent')
legend('Inflation 5% p.a.','Inflation 1% p.a.','Constant Linear Increase',['Logarithmic Increase, a=',num2str(a),', b=',num2str(b)],'BTC-like Increase','No Money Increase','location','southeast');
a=axis;
axis([a(1), a(2), 1e-3, 1e2]);


disp('--> Press <Enter> to zoom in...')
pause
for k=1:4,
    subplot(2,2,k);
    a=axis;
    if k < 3,
        a4=money_supply_max(timelimit);
    elseif k == 3,
        a4=30;
    else
        a4=a(4);
    end
    axis([a(1), timelimit, a(3), a4]);
end

(Update: added 3rd parameter "c" for the logarithmic curve in the code above. Default c=1.0, while c=0.0 makes the growth linear.)

Why is it that I keep seeing the same arguments from mathematician types about how we need more total coins and all of those arguments are going like "When the market cat reaches 20 trillion then we will run out of decimal places so we need to launch Netcoin with 10 trillion coins to prevent this from happening".  <-- This is an actual argument on mathematic merit which can be countered by simply stating that the total number of possessed coins per capita measured and charted should include all cryptocurrencies (Bitcoin and all altcoins). Since we have Feathercoins, Litecoins, PPcoins, and there will continue to be more coins like these inflating the total units in the market I see no point in straying far away from the Bitcoin deflationary model.

When I promote the deflationary model I'm saying that I expect and the mathematics currently support that the total amount of alt-coin variations will increase, the total amount of coins held per capita will increase, so that inflation will happen that way even if Bitcoins have a hard limit of 21 million. I'm also saying Netcoin should at least start out for the first 30 years as being less inflationary than Bitcoin so that it can compete with Bitcoin in scarcity but there is also no reason why we cannot after 30 years vote on a level of inflation. When you start looking ahead 100 years however, and looking all the way until the sun burns out, that is the sign of a mathematician who is divorced from reality. It's pointless to try and predict 100 years into the future when we don't even know if capitalism will exist 100 years into the future. That is just too far away when you consider the technological rate of change to expect Netcoin to even exist. Windows 95 dominated the 90s, Windows 2000 and other operating systems like XP and Vista were popular in the 2000 era. Bitcoin is going to dominate at least for the next 5 years but Netcoin might ultimately win long term.

The point I'm making is we don't need to produce a coin with 1 trillion units, or 1 billion units, or even necessarily greater than 21 million units, I want the coin to be as scarce as necessary, so inflation grows very very slowly and with diversity. My thought is that it's better if per capita we have a handful of very rare very valuable coins with unique properties rather than to have a whole lot of a specific coin which floods the market with units and dominates through inflation. I'm saying that for something like micropayments it makes sense to have more units and faster transactions but then when you want to buy a car, a house, or actually work and get paid in that currency then to me it doesn't make much sense to have trillions of units because then the value of each unit as a negotiable instrument of payment in my opinion tends to decrease, buying power tends to decrease, credit and debt tends to increase and while I'd like to be wrong about this, this is what has happened to the dollar.

I think maintaining diversity of different coins and having some coins act as deflationary hedges while others are used for micropayments and quick spend is a good balance. I see Bitcoin as being the new normal on the bellcurve of total units making 21 million the absolute center because Bitcoin is the center right now. I think going significantly less than Bitcoin or significantly more is a risk and I don't think we should trust mathematicians because if their formula is for instance expecting a 20 trillion market cap then yeah it starts making sense to have a lot more coins but a 20 trillion market cap is an extremely unlikely scenario and even the biggest bulls aren't predicting more than a few trillion market cap in the next 10 years. Also if you look ahead 100, 1000, or 1 million years then you're going to get very different math than if you look ahead a more reasonable 10, 20, or 30 years.

In the next 30 years in my opinion a strongly deflationary currency makes more sense. I cannot speak for what life will be like 100 years from now to even know capitalism will still be needed. We might not even have to work at all in 100 years so having to discuss 100 years into the future is probably an error in judgment.  What would be best for the next 10 years?

In my opinion the main issues we have right now in 2013 are credit, debt, the psychological inability to save, corporations thinking only of short term quick profits and in short quarters instead of the long term, the environment and as a result our health suffering from the lack of long term investor mentality. I think it's critical that the alt-coins do everything possible to avoid promoting the destructive short term profit mentality that is the current normal. If alt-coins are going to change the world and cryptocurrencies are going to make a better society then they must promote better economic behavior and that means long term investing, saving, actually thinking about the big picture, and deflationary currencies seem to be better at doing that.

From the look at how Bitcoin is influencing behavior it seems people aren't likely to waste their money.  Sure some people are trading thousands of Bitcoins for a pizza and now feel guilty about it but I think this guilt they are feeling is a good thing. It's this guilt that ultimately will make them think long and hard about future purchases. Bitcoin makes us think before we buy instead of the sort of inflated currencies that make us impulse buy or the micropayment currencies where we monetize everything so everything gets a fraction of a cent and while this might be a fair way of doing it, it's not a guarantee that everyone will be able to survive on a fraction of cent income a day in all parts of the world. This means the actual exchange rate between the currency with 10 trillion units has to be favorable to get people to trade trillions of dollars for it. If we assume 20 trillion dollar market cap then 10 trillion units might work, if we assume 500 billion to 1 trillion dollar market cap how exactly will 10 trillion units work?

[Michael_S]

Hi Luckybit,

1.) I am not a mathematician (although I admittedly was the best-in-class math student at highschool) But now I have become an engineeer since a long time already.

2.) When I mentioned the point in time when our sun burns out, and what would happen by then, I forgot to add this symbol:    (I thought the intention would be clear anyway)

3.) I did not mean to make any recommendation to one thing or the other (except not feeling comfortable with exponential growth), my main focus was to provide some illustrations to support the discussion. Personally, I see no big difference in logarithmic growth or total cap of coins like for BTC/LTC etc., as I have also stated (logarithmic growth was proposed elsewhere in the thread, that's why I included it here). From that I am personally inclined to favor the "total cap" approach like in BTC/LTC etc., because it is supposed to have a similar long-term deflationary effect on coin value as logarithmic or linear growth, but makes the coin easier to understand by the public (which one should not underestimate).
But in principle, from design point of view, I would also not strongly oppose a carefully parameterized logarithmic approach (though I do not see the big benefit in it).

4.) About the time it takes till nb of coins in circulation saturate: This has to be designed carefully, because the miners need an incentive. If we go too soon from block reward financed miners to fee-financed miners, we may see the situation that there is not yet enough market cap in the coin, such that it is not worth while for the miners continuing operation, and as a result many miners switch off and the network gets prone to attacks. I suppose that Satoshi has thought about this carefully and has set the parameters of the BTC protocol carefully having this in mind.
I am not recommending any values here, I am just saying that this aspect also needs to be carefully considered, we have to look at it from all sides, user side as well as operation side, to get an overall balanced solution. Priority should be to have a secure and sustainable coin, then the rest (user demand) will come automatically. Otherwise, it will be just another "pump&dum(b/p)" coin.

5.) Last not least: I completely disagree with the "ideology" that scarcity of the coin is essential. You are promoting this view in several threads in this forum, and I have just written a long reply here "https://bitcointalk.org/index.php?topic=199353.msg2123332#msg2123332", where I am trying to show the flaws in this reasoning. In essence, I guess we can all agree that the question where the decimal point of a coin is (i.e. what its nominal final cap limit is in currency units) does not primarily lie in the protocol itself, but in the marketed (and in the clients implemented) currency unit. We could well define two or three names of units for the same currency, that both use the same protocol.
EXAMPLE: We could say:

Base unit = 1 taco (like "1 satoshi" in BTC world)
1e5 tacos = 1 mNTC
1e8 tacos = 1 NTC (= 1000 mNTC)
1000 NTC = 1 MC2 (= 1000 NTC)

Cap limit (for example) = 168 Million NTC = 0.168 Mill MC2

In the clients the user can set the unit that he wants to use (MC2, NTC or mNTC), just like today the user can already select amongst mBTC and BTC in many major clients. Then the user is free to use the "MC2" unit if he wants to act as a "collector of rare coins", or he can use the NTC unit (and later the mNTC unit) if he rather wants to use the coin as a medium of exchange for real goods and services (here too many zeros on either side of the decimal point are unpleasant).

Note that also in today's world we have different accoutning units: We have Dollars (or Euros) vs. Cents, we have dimes, quarters, pennies etc., and on the other side we have a "grand" referring to 1000 USD.

So all this is rather a marketing than a protocol topic, and there are much more important topics to be discussed to make MC2/NTC a good (the best) coin.

[Rex_Heston]

So is there any ETA for MC2? Looks promising.

Thing is, Netcoin's (it's official name) got to be developed first, and as you can see, there is still a rather scholarly debate going on as to how to implement some things. It will get done, but if this coin is going to be any better than Bitcoin, Tacotime (the guy who proposed it) needs to get it right. That takes time, and so there is no ETA at the moment. Just keep checking back. The way it's going to work, we'll be given plenty of notice before mining commences.

And welcome to the forums!

[Luckybit]

3.) I did not mean to make any recommendation to one thing or the other (except not feeling comfortable with exponential growth), my main focus was to provide some illustrations to support the discussion. Personally, I see no big difference in logarithmic growth or total cap of coins like for BTC/LTC etc., as I have also stated (logarithmic growth was proposed elsewhere in the thread, that's why I included it here). From that I am personally inclined to favor the "total cap" approach like in BTC/LTC etc., because it is supposed to have a similar long-term deflationary effect on coin value as logarithmic or linear growth, but makes the coin easier to understand by the public (which one should not underestimate).
But in principle, from design point of view, I would also not strongly oppose a carefully parameterized logarithmic approach (though I do not see the big benefit in it).

I agree also that a carefully parameterized logarithmic approach can work, but the key word is it has to be very careful. This would require a mathematician or math genius to pull off and it just seems easier to take a known model which works (Bitcoin) and tweak it up or down a few percentage points because you can just use chart history to have an indication of how that market operates. Going entirely into the theoretical mathematics approach is considerably more difficult in my opinion because now you will have to run some simulations to have any idea how it will work. I'd be open to this idea if you'd like to run some simulations on a test network and analyze the results. If you can show that it can work in a simulation or through a case study that would be enough for me to become a believer but right now I favor the approach that Satoshi used with some miner tweaks, basically I'll call it Bitcoin on steroids. Take what worked with Bitcoin and do it slightly better, make it slightly faster, slightly more secure, slightly more scarce. In some areas perhaps it might even be that Netcoin is much more secure. I'd like to see Netcoin become the Platinum to Bitcoin gold while also being faster and more secure.

4.) About the time it takes till nb of coins in circulation saturate: This has to be designed carefully, because the miners need an incentive. If we go too soon from block reward financed miners to fee-financed miners, we may see the situation that there is not yet enough market cap in the coin, such that it is not worth while for the miners continuing operation, and as a result many miners switch off and the network gets prone to attacks. I suppose that Satoshi has thought about this carefully and has set the parameters of the BTC protocol carefully having this in mind.
I am not recommending any values here, I am just saying that this aspect also needs to be carefully considered, we have to look at it from all sides, user side as well as operation side, to get an overall balanced solution. Priority should be to have a secure and sustainable coin, then the rest (user demand) will come automatically. Otherwise, it will be just another "pump&dum(b/p)" coin.

I agree. I'm open to look at it from all sides as well. Please continue to support Netcoin with your knowledge on mathematics, I actually value that contribution because I learn a thing or two even if I don't always agree it advances the debate in the right direction.

5.) Last not least: I completely disagree with the "ideology" that scarcity of the coin is essential. You are promoting this view in several threads in this forum, and I have just written a long reply here "https://bitcointalk.org/index.php?topic=199353.msg2123332#msg2123332", where I am trying to show the flaws in this reasoning. In essence, I guess we can all agree that the question where the decimal point of a coin is (i.e. what its nominal final cap limit is in currency units) does not primarily lie in the protocol itself, but in the marketed (and in the clients implemented) currency unit. We could well define two or three names of units for the same currency, that both use the same protocol.
EXAMPLE: We could say:

Base unit = 1 taco (like "1 satoshi" in BTC world)
1e5 tacos = 1 mNTC
1e8 tacos = 1 NTC (= 1000 mNTC)
1000 NTC = 1 MC2 (= 1000 NTC)

Cap limit (for example) = 168 Million NTC = 0.168 Mill MC2

In the clients the user can set the unit that he wants to use (MC2, NTC or mNTC), just like today the user can already select amongst mBTC and BTC in many major clients. Then the user is free to use the "MC2" unit if he wants to act as a "collector of rare coins", or he can use the NTC unit (and later the mNTC unit) if he rather wants to use the coin as a medium of exchange for real goods and services (here too many zeros on either side of the decimal point are unpleasant).

Note that also in today's world we have different accoutning units: We have Dollars (or Euros) vs. Cents, we have dimes, quarters, pennies etc., and on the other side we have a "grand" referring to 1000 USD.

So all this is rather a marketing than a protocol topic, and there are much more important topics to be discussed to make MC2/NTC a good (the best) coin.

You make a very interesting point about how clients can deal with this. I agree that is the approach which should be used because what we are talking about is mostly a psychological thing and not a technical thing. Somehow Satoshi pulled off something unique because he turned Bitcoin into a digital gold and I think this psychological accomplishment is important to the success of a coin. I propose Netcoin clients actually implement something like this from default, like perhaps let the user decide between Netcoin and MC2.

I do think scarcity is important but only early on. The purpose of scarcity or at least the effect it seems to have in the Bitcoin experiment is that it creates bubbles. There are many who argue these bubbles are a bad thing because of the collapse but if you look at the overall trend of Bitcoin it's going up and these bubbles actually are creating media attention and attracting people to Bitcoin. I think Netcoin could launch without having the same kind of bubble growth and collapse because by the time it launches there will be much more actual currency infrastructure. That being said the price of a Netcoin being high for whatever reason I cannot explain, it's like once the price of a Netcoin surpasses the dollar now it's considered a major currency, now it's passed a psychological barrier,  and when Bitcoin passed $100 it passed a psychological barrier and now it's still over $100 only in my opinion because it was over $100 previously and surpassed that psychological barrier. When it got over $100 it also attracted attention from the media, and people started asking questions about it. If each Bitcoin were 50 cent right now it would be much more difficult to bring it up in conversations but if the price is $100 or $1000 each then it gives users the excuse to be talking about it.

Basically I'm saying scarcity is good for marketing and PR if it results in high prices and the idea that Netcoin/Bitcoin/Litecoin is ahead of the dollar in the currency race and ahead of whatever the most expensive currency is. It's all psychological, can you explain to me why this happens? Can you also explain to me why the dollar and Euro are considered to be of greater value than other currencies besides ideology, politics and psychology? I don't see what else the dollar and Euro have going on beyond the fact that a lot of people want them, view them as valuable, and want to move to Europe or the USA to work for them. The American dream explains why people want dollars, that and the fact that with dollars you can send money back home, what can attract dollar holders to Netcoins in the same way? What about Euro holders?

Yeah you can say Netcoins is technically superior, mathematically sound, a global currency, but it's going to be considered a sort of play money until it passes the psychological barriers and then it becomes "real" money to most people. Bitcoin had to go through that phase and only when it passed $100 is it being considered real money.

[smoothie]

This is interesting. Will be watching.

[3Dfilament]

Overall psychology in the currency markets is a vile hatred for inflationary fiat currency. So the bitcoin, deflationary, tightly reigned in finite model is well received. Any attempt to "better" bitcoin with more units by some great degree is bad as the current psychology is a true hatred for any model that even speaks to inflationary.

The only way to compete with and compliment bitcoin is to adhere to the basic tenants of the pure bitcoin model and improve on transaction speed, security and provide for a more level playing field for miners as adoption to mine the coin is essential.

And to provide some type of sure fire method, (or really sincere attempt), to "launch" the mining of the coin so as to avoid any stench of "pre-mining" is absolutely and completely required.

[BubbleBoy]

Overall psychology in the currency markets is a vile hatred for inflationary fiat currency. So the bitcoin, deflationary, tightly reigned in finite model is well received. Any attempt to "better" bitcoin with more units by some great degree is bad as the current psychology is a true hatred for any model that even speaks to inflationary.

Clearly, an inflationary coin cannot have the same success pathway of Bitcoin, with people simply hoarding it. Maybe just for the first leg, when it starts from zero. After it has reached a decent value, you need to spend it or face the inflation tax.

On the other hand, if the inflation tax is small, it's earned by charities and the result is a decent coin that is stable and drives trade, than it could kill bitcoin for mere practical reasons. Most people are not that dogmatic about inflation and understand full well they shouldn't keep cash as is. "Store of value" is antithetical to "money".

[Impaler]

BubbleBoy:  That's the Freicoin model, but even if NetCoin dose not go that route I still see some good experimental potential in this coin concept.  Any time an innovative coin is created we have more 'DNA' to cross-pollinate with and try to develop a better protocol.