Market Driven Money Supply..

[thaaanos]

As I said in the OP, if you could take the Human element out of the equation, maybe some of this stuff is not soooo terrible..

There are some Moral Hazard issues here
Can you "ethicaly" make a decision NOW that will be used in the FUTURE without knowing the specifics then and possibly not even have a stake?
I.E.
Would you design a Car that automaticaly stops at red lights?

So I belirve ultimately the decision to inflate or deflate the economy lies with the stakeholders,
The luck with cryptocurrencies BTC-like is that even if me/you/some random guy/we decide to inflate the economy,
he doesnt get to distribute that extra money

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[thaaanos]

Ok after reading the thread I came to the realization that my proposal above could simply work with just constant rate of invalidations and expansions
and that perhaps the stability could be achieved by the internal trading of older for newer minted coins at market rates.
I expect baskets of mixed-age coins wll be created that can act as a stable index?

[spartacusrex]

thaaanos! ('Thanos Rising' by Jason Aaron was almost my favourite comic of last year..)

Thanks for your input.

I'm not quite sure I get your idea.. let me try..

There are old coins and new coins.

Old coins stop working after a while. new coins take their place.

If you have old coins does that mean they become useless after their expiration date ?

Then you can trade these coins on an exchange. Old for New. And the price on the exchange determines whether we print more or less money ?

Can you explain it in a little more detail ?

[thaaanos]

thaaanos! ('Thanos Rising' by Jason Aaron was almost my favourite comic of last year..)

Thanks for your input.

I'm not quite sure I get your idea.. let me try..

There are old coins and new coins.

Old coins stop working after a while. new coins take their place.

If you have old coins does that mean they become useless after their expiration date ?

Then you can trade these coins on an exchange. Old for New. And the price on the exchange determines whether we print more or less money ?

Can you explain it in a little more detail ?

EDIT:I hope my first post has not gone unnoticed? https://bitcointalk.org/index.php?topic=382204.msg4375345#msg4375345

Yes coins get to have an expiration date

Now I wonder I'm not there yet my mind races in 100 directions
But One thought is:

Bitcoins this way gain a true utility value that of: age

Will even with a constant rate of invalidations/minings so that number of bitcoins stays constant.?

Can Price stability  be achieved by the internal trade of newer for older coins, and fluctuations overspiled/captured  in the age dimension rather that the count of bitcoins?

So I wonder if my train bellow is correct:

As economy is in recession newer coins gain more utility value and will be traded at higher value as people will try to "harden" their Bitcoins for fear of low transaction volume that will rot deposits, so there is an ad-hoc deflation of currency as people will try to compress their "Age Band"

As economy grows older coins still have good enough utility as people are more confident that they will use/get rid of them because of higher transaction volumes before they become a *problem* so they expand the "Age Band" thus currency inflates.

So maybe we don't really need to print or not more money as Market chooses the confident "Age Band" of usefull coins.

I find this thoughs very intriguing as they lead to a very KISS system, Can someone validate my thoughts so I know if I need to look elsewhere?

[spartacusrex]

Thinking out loud..

If a coin has an 'expiration date', then the older it is, the closer it is to expiration, so the LESS it is worth. This sounds very similar to demurrage ? I can see why Impaler invited you
 
Trying to keep track of how old coins are, whilst keeping the same value, seems quite complicated. I think that the demurrage principal used by freicoin, where the coin is worth :

(It's value) * (-5% per annum), is simpler for people to understand.

Your idea of buying newer coins with older ones seems THE SAME as simply applying demurrage to all coins ?

The newly minted coins will be worth more since the demurrage has not had a chance to affect them as much.

What I do see as different is that if you had an exchange for older to newer coins, the AMOUNT of demurrage would effectively be set by the market, and would not be set in stone.

This could be a useful metric in deciding the state of the economy, and whether money needs to be injected or not. Hmm..

So, what if the coin amount inflated by 2% per annum, or some amount. BUT the amount of demurrage that was applied to each coin was decided by a some kind of on chain exchange. Similar to exchanging old coins for new.

If the demurrage was set to more than 2% you would have monetary deflation, otherwise inflation ?

I'm not sure if the money injection would be done per coin, or just given straight to the miners.

[Impaler]

Money with a fixed expiration data was a common means to issue a defacto-demurrage currency in the middle ages.  At a fixed date in the future a unit of currency would be subject to mandatory recall and it would be exchanged for some amount of gold/silver less then it's face value, possibly with a sliding scale for any early redemption.  This established a predictable decline in value for the currency very similar to demurrage.  So I think their is some merit to the concept even if it is more complex then demurrage as implemented in Freicoin, one thing I like is that it makes the money more like a bond and makes market based control mechanics seem more natural to people.

But I would make a modest initial change, the 'expiring' coins need to be redeemable for some quantity of new coins, they can't just be completely voided, that would introduce too much instability on the downward slide in value, you want to have a floor to establish some minimum valuation even as you approach the expiration/recall data.  The amount received might be subject to change of course.

The whole idea of a variable sized 'window' of how long coins last as a way to expand or contract supply is also interesting but I need to see a way to get a handle on how the market would work to know if I really like it.

With regard to inflation and demurrage, I generally envision demurrage being fully reintroduced to the money-supply automatically so demurrage can be set to any rate without changing money-supply.  In Freicoin the rate and the recycling are both fixed and were externally computed to be equal, but so long as one tracks the total money supply it's a simple matter to make recycling continually match demurrage fees programmaticly.  Then a separate 'true' inflation mechanism would add more to get a real expansion of the money supply or if we want contraction some of the demurrage recycling stream gets diverted to the void to satisfy the desired reduction rate.  So ideally demurrage and inflation are completely separate variables that can move up or down independently.

[thaaanos]

I was thinking along the line of Fresh coins constantly debasing the olders out of existance...
I don't think this will be a linear process but more like exponential decay, but the parameters decided by the "Hand" lol

Ok lets define as "Age Band" the timeframe of  ages of coins a user/market feels they have some value like a comfort zone
Local markets develop their own "Age Bands" that shift forward or backward as they grow or recess, a single currency of variable "Hardness"

Redeemability
If I offer some redeem of new coins for invalidated coins then I could not recycle lost or unaccounted or stagnant coins,
That would put a floor as you say to the coins value, is that necessary? I like the idea that the only value stored in the coin to be the utility as exchange, more like exchange tokens. So If you don't use it for exchange then it has no value something like anti-bitcoin.
Would not people?l trade them as soon as coins get out of their stated "Age Band"
Besides maybe there is a market even for near expiration coins: let the children play .

Variability of the Valid Block Window.
It occured to me that markets will define their own Subwindow in the form of "Age Band" and possibly making the size of the Block Window irrelevant, as long as of course the block Window is sufficiently large to encompass the various markets needs/Age-Bands.
So markets expand/shrink - inflate/deflate their bands at their will.

On the lighter side:
how do you like naming my coin ouro from http://en.wikipedia.org/wiki/Ouroboros multiple puns intended
I even have found a symbol for ouro :Ȣ or ȣ  http://en.wikipedia.org/wiki/Ou_(ligature)

comments?