Elastic block reward algorithm based on the difficulty and Moore's Law
The more computational power you throw at it, the more each block will give.
The reward is halved every nine months to preserve the coin's value.
Please correct me if I'm mistaken.
Why would that be a good idea at all? Why would an investor want to hold a coin that increases its money supply as soon as the price rises? In other words, if the price goes up, throw more miners at the coin and dump on the investors buying...
Here is what I think will happen:
- there is an ELC price P (varying over time) where mining ELC is as profitable as e.g. LTC
- assuming a constant LTC price, P decreases as LTC's difficulty rises and vice versa
- if the ELC price rises much above P a lot of hashpower moves to ELC. LTC's difficulty decreases and hence P increases until the equilibrium is found again
This happens with all altcoins. However, ELC reaches the equilibrium to LTC not by increasing its own difficulty, but by printing more coins and driving the price down:
- the increased hashpower in ELC also increases coin generation rate quickly
- the newly created coins drive the price down to the point where mining ELC is as profitable as LTC
- ELC's price therefore will never rise consistently above P
Now let's assume there is no other altcoin like LTC. In that case any price increase of ELC will quickly be sold off by an increase in coin generation. ELC can never rise above the point where mining it is profitable.
Why would an investor buy ELC again? Sorry, I can't see it at all.
