The Ideal Alt-coin

[Imerman2]

I can't understand why every crypto-currency eventually stops creating new coins, if the market chose gold and silver as money and they always have increasing rates of production, wouldn't the market choose a crypto-currency that mimics this characteristic?  If the market chose a money that has a small exponential increase in quantity every year this means that this type of money is the most economically efficient.  Also this would be much more profitable for miners so wouldn't you be able to rally all the miners around this coin because it is the one that is in their best interests in the long-run.  So if it is more economically efficient and better suits the interests of the miners, doesn't it make sense to create a crypto-currency that will eventually stabilize at around 1-4% increase in quantity per year which mimics silver and gold production?

Don't tell me goldcoin is based off gold mining production because it isn't, its mining reward is always decreasing, it would have literally taken the owners 1 minute to find out that gold production is always increasing, but obviously they didn't.  This really irritates me, but I'm not here to rant about goldcoin.

For a chart to show the annual gold production you can either search google or use this one I found http://goldratefortoday.org/world-gold-production-1900-2010/ .  Also, the fact that the use of gold during the 1900s as money was not constant is a point to bear in mind, but if gold were used as money the entire period, the rate of production would have increased more rapidly because gold would have had more value.

Granted I'm not terribly familiar with the Bitcoin/Litecoin code structure so there could be something in the code which prevents this from being a possibility, but I highly doubt it and even if this were true I would think you would be able to fix it.

So what do you think?  Would a crypto-currency that begins with a high rate of production that steadily lowers to around 1-4% annual increase in total coin supply be ideal?  Or is there something I am missing?

[Imerman2]

We have never claimed or intended that Goldcoin be based on modern "gold production" in terms of a parallel timeline.

To do that, we would have to invent a time machine and start the coin thousands of years ago. These charts have already been studied in great detail. Our generation rules condense the entire history of gold production from the beginning to the end when Earth's finite supply is finally exhausted, into a practical 100-year model. I'm truly sorry if this irritates you and wish you the best with your coin ideas and future endeavors.

Again the purpose here is to discuss the idea of a cryptocurrency that has a long run annual rate of coin creation somewhere around 1-4%, but I feel I should respond.  In this thread https://bitcointalk.org/index.php?topic=317568.0 , which I'm assuming was made by someone associated with Goldcoin you make the following claim

What makes Goldcoin different?

Coin generation rules modeled after physical gold.

Also the rates of production will never decrease, there is gold ready for mining in space and there are already chemical "alchemy" experiments that have been successful, they would just need to be improved to become cost-effective and this would keep the rate of production at an increasing level for millenia.  But this discussion is much too long for this forum as we would need to explain in detail why a slow exponential rate of increase in quantity continued forever would be ideal, so I'll leave it at that.  I think your idea was the best of all the crypto-currencies that have been created thus far (it is the idea I am pushing after all), so don't take this as an insult to your coin, I just think your delivery was flawed and it was the fact that you were so close that made me irritated.

[tubbyjr]

A coin that doesn't cease production. I think that is the greatest fallacy with the bitcoin, the fact that its supply will stop at one point, and is ever decreasing. It is great for investment, but definitely not a bartering currency, not to mention, the eventualy cessation will probably make it worthless, as even at these early stages, only about 20% or so of the coins in circulation are being transacted, the rest have not budged out of their originally mined wallets.

[MicroGuy]

Also the rates of production will never decrease.

I think this statement is highly speculative. I guess you're saying that Gold is not a limited finite resource.

But thank you for your comments. I will read over your posts again thoroughly and update any informational resources as necessary. Please keep in mind that when the current development team took over we were highly limited as to how much we could adjust (fork) the coin generation rules and had to take several things into consideration before engineering the final ruleset.

[waltermot321]

I can't understand why every crypto-currency eventually stops creating new coins, if the market chose gold and silver as money and they always have increasing rates of production, wouldn't the market choose a crypto-currency that mimics this characteristic?  If the market chose a money that has a small exponential increase in quantity every year this means that this type of money is the most economically efficient.  Also this would be much more profitable for miners so wouldn't you be able to rally all the miners around this coin because it is the one that is in their best interests in the long-run.  So if it is more economically efficient and better suits the interests of the miners, doesn't it make sense to create a crypto-currency that will eventually stabilize at around 1-4% increase in quantity per year which mimics silver and gold production?

Don't tell me goldcoin is based off gold mining production because it isn't, its mining reward is always decreasing, it would have literally taken the owners 1 minute to find out that gold production is always increasing, but obviously they didn't.  This really irritates me, but I'm not here to rant about goldcoin.

For a chart to show the annual gold production you can either search google or use this one I found http://goldratefortoday.org/world-gold-production-1900-2010/ .  Also, the fact that the use of gold during the 1900s as money was not constant is a point to bear in mind, but if gold were used as money the entire period, the rate of production would have increased more rapidly because gold would have had more value.

Granted I'm not terribly familiar with the Bitcoin/Litecoin code structure so there could be something in the code which prevents this from being a possibility, but I highly doubt it and even if this were true I would think you would be able to fix it.

So what do you think?  Would a crypto-currency that begins with a high rate of production that steadily lowers to around 1-4% annual increase in total coin supply be ideal?  Or is there something I am missing?

In the long run, gold and silver will ran out.. Thats how Bitcoin and most altcoin is working...

[MicroGuy]

A coin that doesn't cease production. I think that is the greatest fallacy with the bitcoin, the fact that its supply will stop at one point, and is ever decreasing. It is great for investment, but definitely not a bartering currency, not to mention, the eventualy cessation will probably make it worthless, as even at these early stages, only about 20% or so of the coins in circulation are being transacted, the rest have not budged out of their originally mined wallets.

Why would the cessation of bitcoin production make it worthless?

[Imerman2]

Also the rates of production will never decrease.

I think this statement is highly speculative.

But thank you for your comments. I will read over your posts again thoroughly and update any informational resources as necessary. Please keep in mind that when the current development team took over we were highly limited as to how much we could adjust (fork) the coin generation rules and had to take several things into consideration before engineering the final ruleset.

I guess I should say that there will never be a total stop in the production of gold, the quantity produced will increase and decrease from year to year so you are correct and thank you for correcting me, however there are theoretical reasons that a money that does not increase its quantity will eventually be replaced by one that has a very slow rate of increase.  I have an argumentational proof that backs this theory up (it draws heavily on Mises's work, and I may not be an authority on the subject, but I think he is) and gives a range of where the ideal ratio should be found, but unfortunately the best you can do is make educated guesses as to what this ratio would be, it cannot be precisely predicted.  I will be trying to create a new cryptocurrency as soon as I lose my newbie status and can contact other members, but I am not an expert computer programmer so without help it will take me longer than I would like, although I don't know as much computer programming as I would like what I do know is the economics of money.  But, seeing as you know the programming, I think you might be interested in hearing my proof.  If you would be interested let me know, if not I'll have to look elsewhere.  The only reason I created this account was to find alt-coin developers who might be interested in my idea, I just didn't expect to find any in the newbie area.  I had already worked out the specific characteristics of what I thought needed changed in Bitcoin's specs, and seeing as how the main theme of your coin, mimicking the rate of gold creation, would be the same theme I would be trying to create in mine you might find the ideas useful and you would be able to create the coin with much less trouble than I.

[Imerman2]

In the long run, gold and silver will ran out.. Thats how Bitcoin and most altcoin is working...

That's if you only use the amount of gold on earth, if you think humans are destined to be stuck on this planet forever, then yes you are correct, however in the long run this is unlikely.  The total amount of gold in the universe is 66 trillion times the mass of the sun.  Granted we will probably never retrieve all of this gold, or even a small fraction of it, but it will take a very long time until humans have no way to produce more gold.

[MicroGuy]

I guess I should say that there will never be a total stop in the production of gold, the quantity produced will increase and decrease from year to year so you are correct and thank you for correcting me, however there are theoretical reasons that a money that does not increase its quantity will eventually be replaced by one that has a very slow rate of increase.  I have an argumentational proof that backs this theory up (it draws heavily on Mises's work, and I may not be an authority on the subject, but I think he is) and gives a range of where the ideal ratio should be found, but unfortunately the best you can do is make educated guesses as to what this ratio would be, it cannot be precisely predicted.  I will be trying to create a new cryptocurrency as soon as I lose my newbie status and can contact other members, but I am not an expert computer programmer so without help it will take me longer than I would like, although I don't know as much computer programming as I would like what I do know is the economics of money.  But, seeing as you know the programming, I think you might be interested in hearing my proof.  If you would be interested let me know, if not I'll have to look elsewhere.  The only reason I created this account was to find alt-coin developers who might be interested in my idea, I just didn't expect to find any in the newbie area.  I had already worked out the specific characteristics of what I thought needed changed in Bitcoin's specs, and seeing as how the main theme of your coin, mimicking the rate of gold creation, would be the same theme I would be trying to create in mine you might find the ideas useful and you would be able to create the coin with much less trouble than I.

I've seen this model before and I understand the concept.

The problem is how do you convince people to begin using and investing in a currency that is increasingly inflationary. This might work if the currency were already popular and in use but in the beginning this is going to be a very tough sell. It would probably take a lot of capital resources to make this work.

[chaosknight]

A coin that doesn't cease production. I think that is the greatest fallacy with the bitcoin, the fact that its supply will stop at one point, and is ever decreasing. It is great for investment, but definitely not a bartering currency, not to mention, the eventualy cessation will probably make it worthless, as even at these early stages, only about 20% or so of the coins in circulation are being transacted, the rest have not budged out of their originally mined wallets.

Why would the cessation of bitcoin production make it worthless?

Because anything that is too much is cheap....

[raspcoin]

In the long run, gold and silver will ran out.. Thats how Bitcoin and most altcoin is working...

That's if you only use the amount of gold on earth, if you think humans are destined to be stuck on this planet forever, then yes you are correct, however in the long run this is unlikely.  The total amount of gold in the universe is 66 trillion times the mass of the sun.  Granted we will probably never retrieve all of this gold, or even a small fraction of it, but it will take a very long time until humans have no way to produce more gold.

This is an important point that many pure economists miss. Mining companies like Planetary Resources, Inc. and Deep Space Industries are already emerging today, so gold inflation should not be too far off (my guess is 10-20 years, but I am optimistic here).

[Rupture]

Eventually we will be able to make gold. The technology just has to get there. We can already make diamonds that are better than the kind you dig up.

Sure you can make artificial things like that, problem is, they cost 100x the price of a real one to manufacture!

[hoewer4what]

In the long run, gold and silver will ran out.. Thats how Bitcoin and most altcoin is working...

That's if you only use the amount of gold on earth, if you think humans are destined to be stuck on this planet forever, then yes you are correct, however in the long run this is unlikely.  The total amount of gold in the universe is 66 trillion times the mass of the sun.  Granted we will probably never retrieve all of this gold, or even a small fraction of it, but it will take a very long time until humans have no way to produce more gold.

But it will take well over 100 years before no more Bitcoins are mined. So I doubt it is an issue, after this, there will always be transaction fees to pay miners

[Hfleer]

I can't understand why every crypto-currency eventually stops creating new coins, if the market chose gold and silver as money and they always have increasing rates of production, wouldn't the market choose a crypto-currency that mimics this characteristic?  If the market chose a money that has a small exponential increase in quantity every year this means that this type of money is the most economically efficient.  Also this would be much more profitable for miners so wouldn't you be able to rally all the miners around this coin because it is the one that is in their best interests in the long-run.  So if it is more economically efficient and better suits the interests of the miners, doesn't it make sense to create a crypto-currency that will eventually stabilize at around 1-4% increase in quantity per year which mimics silver and gold production?

Just another twist on an alt-coin.  We've seen tens or hundreds of different strategies for trying to make the next popular alt-coin, so I'm not surprised by this.  Mostly I'm sticking with Litecoin for my alt-coin needs, fast confirms and scrypt, but I keep open minded about the future.

[Sythyn]

Eventually we will be able to make gold. The technology just has to get there. We can already make diamonds that are better than the kind you dig up.

Sure you can make artificial things like that, problem is, they cost 100x the price of a real one to manufacture!

Maybe not when technology gets better and when they found a better way to make diamond....

[Undefeatable]

In the long run, gold and silver will ran out.. Thats how Bitcoin and most altcoin is working...

That's if you only use the amount of gold on earth, if you think humans are destined to be stuck on this planet forever, then yes you are correct, however in the long run this is unlikely.  The total amount of gold in the universe is 66 trillion times the mass of the sun.  Granted we will probably never retrieve all of this gold, or even a small fraction of it, but it will take a very long time until humans have no way to produce more gold.

Well, 66 trillion times the mass of sun is still not unlimited supply like USD....

[Imerman2]

I've seen this model before and I understand the concept.

The problem is how do you convince people to begin using and investing in a currency that is increasingly inflationary. This might work if the currency were already popular and in use but in the beginning this is going to be a very tough sell. It would probably take a lot of capital resources to make this work.

If you think I mean it will have stable value from its creation that's not what I'm trying to create.  You want to create a coin that will be stable in value after it has been adopted as the universal money, but before it is adopted as a universal money the coin will have a rapidly increasing value just as Bitcoin does.  You basically create a coin that has very similar rates of coin creation to Bitcoin, but instead of leveling off with a stable quantity like Bitcoin, you level off at around 2% increase in coin production per year to match total growth of wealth in the economy.  You have to make sure you model the long-term stable coin creation rate after total wealth growth in an economy, not production, because they aren't the same thing.  But yes, you do need an initial period that would allow for massive rises in value of the coin to generate initial investment, but after the coin eliminates all other competition, you want it to retain stable value, but this period won't occur until a few decades after the coin has been introduced and even if the rate of growth leveled off before it had reached its the highest ratio of market capitalization possible, there would still be room for its value to rise until it was adopted as the universal money, which is what you want.

[bitdwarf]

Somewhere in the future YAC would cap about 1-5%/year. Proof of Stake is 5%, but only a fraction of all coins would remain idle to collect it, and the added Proof of Work coins will tend to be negligible. The good thing is, the more people saves (idles), the higher the PoS inflation will be, the more people spends, the lower the inflation will be. It's a nice way of economic autoregulation.