I'm not a huge fan of the fixed subsidy, but it
is deflationary long-term. Because the subsidy remains the same while the money supply grows (and may shrink due to lost coins), a graph of the inflation rate over time is steadily downward, and will
eventually reach low levels. However, since their stated reason for doing this was to ensure that miners are properly incentivized, it would've made more sense to set the subsidy such that the monetary inflation rate is a constant 0.5% or something. As they've designed it, the inflation rate will start out way too high, and then if grin survives for a very long time, it'll eventually become
too low to actually meet their goal of incentivizing miners.
Inflation will ensure a general downward price trend for at least the first year, I'd expect, and it becomes sort-of reasonable only after 4 years. Will grin survive that long? Not sure. If you think it will, then it might make sense to buy grin at very cheap prices in its first few years, and this thinking could perhaps stabilize the market somewhat.
Grin inflation rates| Year # | Yearly monetary inflation rate |
| 1 | 36500% |
| 2 | 100% |
| 3 | 50% |
| 4 | 33% |
| 5 | 25% |
| 6 | 20% |
| 7 | 17% |
| 8 | 14% |
| 11 | 10% |
| 21 | 5% |
| 34 | 3% |
It's possible that people will get just too fed up with the inflation in the first few years, and everyone will move to a clone, similar to the Bytecoin->Monero switch. Beam is too much of an obvious cheap money-grab to succeed IMO, though.
In addition to the money supply issue, grin is a worse store of value than Bitcoin because:
- The dev culture is built upon a more flexible idea of system consensus. There are expected to be regular hardforks.
- The crypto is experimental, and the currency is far newer.
- Smart contracts are more limited, though at this time I'm not exactly sure how much more limited.
A BTC-backed grin clone could be a Bitcoin sidechain, but you won't see this anytime soon. First of all, there sadly hasn't been that much work on Bitcoin sidechains. Also, although you can do a semi-centralized sidechain without any consensus work or widespread costs, a full-security sidechain involves a softfork which would
require all Bitcoin full nodes to also be grin-sidechain full nodes, increasing full node costs. I'd guess that if it happens at all, it won't be for 3-5 years, after grin has proven itself. At that point grin
could have a significant first-to-market advantage, and its inflation will be reaching reasonable levels.
Unlike the vast majority of other altcoins, grin was basically built in the same spirit as Bitcoin - the same ideology. I'm a "Bitcoin maximalist" because I believe in "the Bitcoin idea/ideology", not as part of some game theoretic strategy to make BTC's price go up. If Bitcoin is out-competed
in all respects (which grin is very far from doing, and other altcoins aren't even in contention for), then it'd be
good for Bitcoin to be replaced by that competitor.
IMO in 10 years:
- 30% chance grin is defunct, but roughly the same basic features are provided by other BTC-based off-chain systems such as LN.
- 25% chance grin is defunct, but basically the same thing exists as a widely-used Bitcoin sidechain.
- 15% chance BTC is the main store of value in crypto, while grin or a very similar altcoin is used for most daily payments.
- 1% chance grin advances significantly, and combined with its first-to-market advantage vis-á-vis its innovations, it out-competes BTC entirely.
- 14% chance some other altcoin out-competes BTC entirely. It won't be one of the existing ones, except perhaps grin as mentioned above.
- 15% chance global authoritarianism makes it very difficult to use cryptocurrencies at all, and the whole sector is reduced to a tiny niche.
