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Author Topic: Inflationary Currencies  (Read 312 times)
savaged
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April 21, 2013, 08:02:42 PM
 #1

I know it's not popular around most BitCoin people but has there been any serious effort to develop a currency which expands/contracts the rate of coin creation? Something which takes into account the number of transactions and amount of coins moved? Obviously would require a transaction fee which also adjusts to prevent gainful manipulation.

It just doesn't make sense for society to convert all trade to any of the established crypto currencies, it would essentially just be a transfer of wealth to earlier adopters. A lot of people with BitCoins like to pretend this isn't a problem and they or other early adopters "deserve" their wealth increase but it's what will keep it from ever becoming a mainstream currency.
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April 21, 2013, 08:22:42 PM
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Some argue that even well-intentioned inflation is the antithesis of a good economy. Regardless, it is currently impossible to algorithmically evaluate an 'optimum' inflation level. The early adopters are like IPO buyers. They took a risk with their money on a new idea, and now they're reaping the benefits of their investments. Please, try to earn your own money, instead of trying to take it from others.

https://en.bitcoin.it/wiki/Myths#Early_adopters_are_unfairly_rewarded
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April 21, 2013, 08:49:37 PM
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Some argue that even well-intentioned inflation is the antithesis of a good economy. Regardless, it is currently impossible to algorithmically evaluate an 'optimum' inflation level. The early adopters are like IPO buyers. They took a risk with their money on a new idea, and now they're reaping the benefits of their investments. Please, try to earn your own money, instead of trying to take it from others.

https://en.bitcoin.it/wiki/Myths#Early_adopters_are_unfairly_rewarded

You are drastically over exaggerating the amount of risk early adopters actually took.

When I refer to early adopters I am not talking about the first 5 people who jumped on board, I am taking about everyone in relation to everyone else. Someone who gets in today, by design, is better off than someone who gets in tomorrow.

It's funny, you accuse me of trying to take money from others while you are perpetuating the myths of a wealth transfer system. I am hopeful that a system can be designed so that someone investing today can always expect very close to the same amount of value that the same amount of investment a year earlier would of provided. The complete opposite of "trying to take it from others".

The amount of risk is greater for each new adopter than the previous, the prices are higher both to purchase and invest into mining. Are you seriously going to try and tell me someone who drops 100k USD of their life savings today into this for 833~ coins is not taking a much greater risk than someone who happened to jump aboard the train earlier and was able to get the same with substantially less resources? The amount to be lost in relation is astronomically different and continues to grow each day.

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April 21, 2013, 09:27:25 PM
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In theory PPCoin is inflationary (at 1%), but at the same time it encourages holding currency (which is deflationary).

I would argue that, right now, cryptocurrencies as a whole are extremely inflationary, in the sense that new alt coins are created continuously and seem to become tradeable without much trouble. Bitcoin is acting as the reserve currency, like the dollar to all the other currencies, and most business is denominated in it, but as long as for example PPC is tradeable I could agree to pay anyone in PPC and it would count as a chunk of inflated liquidity. So it's largely irrelevant which/if any cryptocurrency is inflationary. For now the whole system fluctuates depending on what happens faster, more crypto coins created or more new goods competing for them, but once all goods could be bought with cryptocoins they all would inflate as hard as people was willing to accept new chains.

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April 21, 2013, 09:31:49 PM
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$1 (2010 adj.) worth of bitcoin in 2010 is the same as $1 (2010 adj.) worth of bitcoin today. You just get fewer satoshi for your buck.

There are no "unfair" rewards for early adopters: they aren't forcibly stealing from anybody else. The State and banksters could take a leaf out of that book...

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April 21, 2013, 11:02:40 PM
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In theory PPCoin is inflationary (at 1%), but at the same time it encourages holding currency (which is deflationary).

I would argue that, right now, cryptocurrencies as a whole are extremely inflationary, in the sense that new alt coins are created continuously and seem to become tradeable without much trouble. Bitcoin is acting as the reserve currency, like the dollar to all the other currencies, and most business is denominated in it, but as long as for example PPC is tradeable I could agree to pay anyone in PPC and it would count as a chunk of inflated liquidity. So it's largely irrelevant which/if any cryptocurrency is inflationary. For now the whole system fluctuates depending on what happens faster, more crypto coins created or more new goods competing for them, but once all goods could be bought with cryptocoins they all would inflate as hard as people was willing to accept new chains.

I think all the new alt coins back my point more than anything.

If you are not there from the moment it starts, you get substantially less reward for the equivalent effort. Missed a new launch by a week? Too bad, you'll be lucky to get 1% the amount per day as you would have if you were there at the start.

Why do you think there are so many alt coins? Whether people will openly admit it or not, it's because they want to be the first one in with the hope that they can eventually cash out a value disproportionate to the amount of effort they invested.

The plan works because the new members prop up the value and if they made any kind of investment it's extremely hard for them to step out since they feel obligated to make a return or at least break even. How do they eventually break even or make a return? By hoping people join later than them and are willing to invest more than they did. The newest adopters are always the ones taking all the risk, not the early adopters. All early adopters have more than made a return on their investment. If it all disappeared today, the guys suffering will be the newest not the oldest users.

It really blows my mind how so many people around here profess the concentration of money/power in the hands of a few is a huge problem yet at the same time perpetuate the exact same setup. Only difference is who's on top.
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