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April 05, 2018, 02:13:47 AM |
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I have an idea that is related to one of the main issues I see with Bitcoin and crypto in general. The hard cap on total supply of 21 million is often touted as a strength but in reality I see it as a definitive weakness that prevents it from operating as a true currency rather than a speculative asset. In essence, Bitcoin is deflationary in nature with the advent of a hard cap on supply and block halving events. If there is increased demand then the price will inevitably go up but this creates speculation and hoarding. This means that there is very little incentive to actually spend Bitcoin to pay for goods. My idea, probably for an altcoin, is to have a dynamic block reward that moves in relation to the demand of the currency. I have an algorithm that I am testing but the general idea is that if there is increased demand then there will be an increase in inflation via the block reward to offset that demand. If there is a decrease in demand then the block reward will decrease to move the price within the desired equilibrium. The idea is to factor in the delta of transactions, addresses, and volume in a given period of time into the algorithm by using a weighted scale. I realize that potentially this could be exploited by spamming the network with transactions just to increase block reward in future blocks but this would be very costly in the form of fees and once the exploitation ended the algorithm would once again find a market equilibrium. I really would love to create a stable decentralized crypto that is actually useful for people to spend and use. At the moment, only anarchists and libertarians will use Bitcoin as a currency out of beliefs rather than incentives. The masses will not adopt something without stability so I am trying to provide that stability. I foresee, if successful, that such a currency could be a great stable trading pair superior to the USDT in every way without needing to be tied to a fiat currency or needing to trust a third party. Is there any flaws in my logic? Please do critique me as harshly as you want and allow me to further mold this idea into fruition.
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