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Author Topic: A coin with a floating supply. Is it possible?  (Read 350 times)
d5000
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April 28, 2018, 05:39:00 PM
 #61

Well, I expected you to say these things, but the main issue hare is that there is no viable and consistent theory or working approach on how to distinguish between changes in prices caused by the change in the value of things/goods themselves due to a change in consumer preferences, production, whatever, and changes caused by the monetary supply, either due to it being constant, shrinking, or expanding. In real economy, changes in the economy (which are the driving force) translate automatically into changes in monetary supply via credit. In other words, this mechanism is built in with credit money and thus fits in naturally.
You are right, but the external effects (consumer preferences, seasonal prices etc.) should only have a limited - and mostly short-term - impact on the general price level. In an initial state of a "floating currency", as the trading volume is still low, the impact of these "external" price movements may be significant, but once the usage increases they probably can be ignored.

For this reason I think the best option is to try to adjust supply according to the demand for the currency itself - so it can work as a "currency" with relatively stable prices, as an "unit of account". And demand impacts in the price level (=more demand for the currency, lower prices/higher exchange rate).

I don't see another way of measuring the "state of the economy". In earlier discussions about "stablecoins" some mentioned the transaction rate, but this indicator can be manipulated very easy.

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The anchor is the state of the economy. The problem is how to translate it into the respective changes in the supply of coins.
Exactly. There is an additional problem: We must distinguish between the "economy as a whole" and the part of the economy which is driven by the respective cryptocurrency (e.g. Bitcoin, or our "floating cryptocurrency"). Only the latter should have direct influence to the supply of a "floating" currency. In some cases, we can even see the "real economy" conctracting while the "crypto-economy" is expanding (an example: Venezuela in 2016/2017).

But if the anchor is "soft" (=if we have no "hard number" to guide ourselves, like it is the case with a peg) then it is very difficult to know if small changes in demand/price level are caused by sustainable demand changes or if they are caused by short-term speculation. I am eagerly awaiting the final Radix release (although I don't really like their licensing policy) so we can see if and how their system works. Wink

This doesn't sound very plausible to me. If the demand for the bonds goes almost to zero as the bear market progresses, why should it be there at all in the first place when the bear market just starts? Bear means people dump the coin, so why should they buy its derivatives, bonds or whatever?
Because of two effects:
- first, in almost all dumps that start a bear market there are market participants that think that they can "buy cheap" and "buy the dip". These will be most likely the first buyers of the bond. The only exception may be a dump for catastrophic fundamental reasons (e.g. an ongoing attack) where demand can fall almost to zero.
- second, in the Basis protocol the first buyers are the first being paid out when currency supply expands again, so they have the lowest risk that their bonds expire - the more people already bought bonds, the higher that risk. Once the first "chunk" of bonds have expired, demand can increase again as I explained in the earlier post.

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KorakPawon
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April 28, 2018, 10:39:37 PM
 #62

indeed this is a discussion that has long been discussed but there has never been a way out, when the first time bitcoin launched hoping to simplify a transaction it turns out hope so high so many are looking for it, and other alternatives when we want to enter the world crypto must be good at picking coins, see the best-selling bitcoin hunted many people with fantastic coin prices that others began to emerge and could be other alternatives indeed from the price is very different but there is still hope.

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June 01, 2018, 05:47:13 AM
 #63

This doesn't sound very plausible to me. If the demand for the bonds goes almost to zero as the bear market progresses, why should it be there at all in the first place when the bear market just starts? Bear means people dump the coin, so why should they buy its derivatives, bonds or whatever?
Because of two effects:
- first, in almost all dumps that start a bear market there are market participants that think that they can "buy cheap" and "buy the dip". These will be most likely the first buyers of the bond. The only exception may be a dump for catastrophic fundamental reasons (e.g. an ongoing attack) where demand can fall almost to zero.
- second, in the Basis protocol the first buyers are the first being paid out when currency supply expands again, so they have the lowest risk that their bonds expire - the more people already bought bonds, the higher that risk. Once the first "chunk" of bonds have expired, demand can increase again as I explained in the earlier post.

Still, I don't think it would play out good in a bear market. It can work somehow in a sideways market when people are mostly sitting on the fence. But when the prices start to go down, they go down and you simply can't support them from inside economically. If you really could, they wouldn't go down in the first place. It is like trying to pull yourself out of the swamp by your hair.

In other words, you are simply assuming that there will be some demand surge when demand goes down because some people want to "buy the dip". There are always such people but this doesn't prevent prices from crashing massively until the market sentiment changes. But then you don't need these "bonds".

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