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Author Topic: Effect of BTC/NMC merged mining on prices  (Read 1015 times)
ineededausername
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September 20, 2011, 09:44:18 PM
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What would the effect of a large pool adopting merged mining with BTC/NMC be on btc prices?

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randomguy7
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September 20, 2011, 09:48:04 PM
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It might have an effect on the nmc price but why should it affect the btc price at all?
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September 20, 2011, 10:31:30 PM
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It might have an effect on the nmc price but why should it affect the btc price at all?

I think the idea is, you get extra namecoins, which you can sell for BTC and sell BTC for USD. How much effect will there be? It depends on BTC/NMC exchange rate. Though, if the exchange rate is high, that means demand for Namecoins is high, which has the adverse effect. If you assume that Namecoin's value comes from its utility as a name association system* and not as a generic value exchange medium, then in equilibrium, the effect on USD/BTC should be zero.

Also, the same amount of namecoins are already generated without merged mining, at least in theory. It is different, because you don't get extra bitcoins while mining namecoins. But keep in mind that with merged mining, that hashpower is added to Bitcoin, so it makes mining more difficult for every Bitcoin miner, even if it's for a miniscule amount. So those extra bitcoins are not free after all. Therefore the effect on USD/BTC should ideally be zero, again.

(*) If you are considering that NMC can also be used for exchange, which inflates the space, it already is the case regardless of MM.

IMHO, the only real effect is that, since this solves the high difficulty problem of Namecoin, more namecoins will be generated, which will depress the BTC/NMC exchange rate for a short period, and can have an infinitesmal effect on USD/BTC.
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