Monetary economics of merged mining, aux blockchains. (inflation by proxy?)

[jtimon]

The costs of mining will be shared between mining bitcoins and mining namecoins, but the value of both currencies is not only determined by difficulty but b adoption. The bigger the difference in adoption between bitcoin and namecoin, the bigger the difference in their share of the mining costs.
But bitcoin doesn't have to necessarily lose value, the difficulty can rise to include the namecoin value in the mining costs. I think that is what is going to more likely happen, since all the namecoin miners will start to mine bitcoin too.

My predictions:

1) Namecoin difficulty will rise until eventually equals bitcoin's.

2) Bitcoin difficulty will rise in the short term due to the new miners coming from the namecoin chain.

3) The bitcoin value will be equal (or higher if the increased difficulty also increases adoption).

4) The namecoin value will rise because the increase in difficulty will be huge and will increase namecoin adoption for sure.

5) The diffuculty/value of both currencies will rise.

So I don't see anything wrong with merged mining. It allows other currencies to compete with bitcoin for adoption in a symbiotic fashion (not competing for cpu/gpgpu resources). Much more healthier than miners switching from one chain to another.

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[Ten98]

The costs of mining will be shared between mining bitcoins and mining namecoins, but the value of both currencies is not only determined by difficulty but b adoption. The bigger the difference in adoption between bitcoin and namecoin, the bigger the difference in their share of the mining costs.
But bitcoin doesn't have to necessarily lose value, the difficulty can rise to include the namecoin value in the mining costs. I think that is what is going to more likely happen, since all the namecoin miners will start to mine bitcoin too.

My predictions:

1) Namecoin difficulty will rise until eventually equals bitcoin's.

2) Bitcoin difficulty will rise in the short term due to the new miners coming from the namecoin chain.

3) The bitcoin value will be equal (or higher if the increased difficulty also increases adoption).

4) The namecoin value will rise because the increase in difficulty will be huge and will increase namecoin adoption for sure.

5) The diffuculty/value of both currencies will rise.

So I don't see anything wrong with merged mining. It allows other currencies to compete with bitcoin for adoption in a symbiotic fashion (not competing for cpu/gpgpu resources). Much more healthier than miners switching from one chain to another.

1: Yes.

2: No. Total hashrate for namecoin right now is something like 30Ghash, not enough to have any kind of impact

3: No. Bitcoin value would dip somewhat as speculators traded them for namecoins, and then namecoin hoarders cashed out their bitcoins.

4: Yes.

5: No. Namecoin value would rise but not by a vast amount. Bitcoin value would fall.

[jtimon]

2) Bitcoin difficulty will rise in the short term due to the new miners coming from the namecoin chain.

2: No. Total hashrate for namecoin right now is something like 30Ghash, not enough to have any kind of impact

So you mean, "Yes, but not in a meaningful way".

3) The bitcoin value will be equal (or higher if the increased difficulty also increases adoption).

3: No. Bitcoin value would dip somewhat as speculators traded them for namecoins, and then namecoin hoarders cashed out their bitcoins.

I guess you're right, but speculators could put dollars into namecoin instead of bitcoins. Only if they "quit speculating with bitcoins" for speculating with namecoins btc losses value.

5) The diffuculty/value of both currencies will rise.

5: No. Namecoin value would rise but not by a vast amount. Bitcoin value would fall.

Bitcoin value could fall or not. Only speculators leaving bitcoin will make its value fall.
Namecoin value will rise proportionally to the increase in acceptance that the increase in difficulty produces (Plus the effect of speculators).

[phelix]

I wonder if it would be possible for the bitcoin clients  (assuming a majority) to hurt the namecoins with merged mining... ?