[XMR] Monero - A secure, private, untraceable cryptocurrency

[jehst]

Just wait for it

I think thats the problem bigj. Ppl have been waiting for a long time now. Devs have done some fantastic work, but have been up against it for a huge array of reasons... and things just aren't happening quickly enough for some. Plus, there seems to be so many HUGE dumps each day on XMR lately, any upwards momentum is immediately squashed... and that scares people so smaller investors get spooked and move on to something else.

Value investing lies in spotting the diamonds in the rough.

[fluffypony]

Just wait for it

I think thats the problem bigj. Ppl have been waiting for a long time now. Devs have done some fantastic work, but have been up against it for a huge array of reasons... and things just aren't happening quickly enough for some. Plus, there seems to be so many HUGE dumps each day on XMR lately, any upwards momentum is immediately squashed... and that scares people so smaller investors get spooked and move on to something else.

We've said this before, and it bears repeating: Monero is not an "investment". In fact, we are actively working against the price "naturally" rising merely as a result of us fudging some numbers. You see, Bitcoin's price rose because of an artificial scarcity created by a fixed number of coins and a diminishing block reward. Now that's all well and good, but the sudden creation of quite a bit of wealth for some early adopters has had several interesting consequences. The most interesting of them is the Coattail Riding Effect. That is to say: the vast majority of altcoins that are released nowadays, and this is especially true for proof-of-stake coins, exist solely to try and ride Bitcoin's coattails, making the group of early adopters in that altcoin tremendously wealthy.

With Monero we have opted not to repeat that process, and instead of simply running with a deflationary currency and hoping for some form of profit, we have instead aimed to aggressively move in the opposite direction and make it slightly inflationary. This means that Monero is NEVER going to become incredibly valuable overnight, and it's not going to make insta-millionaires out of anyone. It means that its value is going to come entirely from utility and usefulness, and that hoarding it for 6 months or a year or maybe even 2 years is not going to make you rich.

If you want Monero to grow in value and you want to be part of advancing technology...well, be prepared for the long haul, be prepared to ignore the price, and make a concerted effort to build something for the Monero economy. The core team will endeavour to make things progressively easier for end users and for integrators / merchants / automation systems, but that should not prevent you from spending your spare time making Monero useful and usable through your own projects. It's the reason we have the External Projects section in the Missive now:)

If we become a community of builders, of creators, of innovators in things beyond the core of Monero, we will truly have something remarkable and revolutionary on our hands.

[rpietila]

To the excellent piece by fluffypony, may I add:

CK the Game is growing at a tremendous speed (%-wise). It is played solely with XMR and the value of the world is already 141,000 XMR. Since it was only 82,000 XMR 22 days ago, the growth rate is 2.5% daily at present. Let the wise draw their conclusions

[Oscilson]

We've said this before, and it bears repeating: Monero is not an "investment". In fact, we are actively working against the price "naturally" rising merely as a result of us fudging some numbers. You see, Bitcoin's price rose because of an artificial scarcity created by a fixed number of coins and a diminishing block reward. Now that's all well and good, but the sudden creation of quite a bit of wealth for some early adopters has had several interesting consequences. The most interesting of them is the Coattail Riding Effect. You see, the vast majority of altcoins that are released nowadays, and this is especially true for proof-of-stake coins, exist solely to try and ride Bitcoin's coattails, making the group of early adopters in that altcoin tremendously wealthy.

With Monero we have opted not to repeat that process, and instead of simply running with a deflationary currency and hoping for some form of profit, we have instead aimed to aggressively move in the opposite direction and make it slightly inflationary. This means that Monero is NEVER going to become incredibly valuable overnight, and it's not going to make insta-millionaires out of anyone. It means that its value is going to come entirely from utility and usefulness, and that hoarding it for 6 months or a year or maybe even 2 years is not going to make you rich.

What is the new emission rate?

With T=2^64-1 unit in total and the (T-A)/N emission per block, when the total reach T in a few years, can you still use a small inflation to increase the total number of units? Or you have to change T = 2^128-1, for example?

[superresistant]

What is the new emission rate?

It's variable. It reduces at every block.

[mik_druid]

To the excellent piece by fluffypony, may I add:

CK the Game is growing at a tremendous speed (%-wise). It is played solely with XMR and the value of the world is already 141,000 XMR. Since it was only 82,000 XMR 22 days ago, the growth rate is 2.5% daily at present. Let the wise draw their conclusions

What is Ck the game? Never heard of it?

[fluffypony]

What is the new emission rate?

With T=2^64-1 unit in total and the (T-A)/N emission per block, when the total reach T in a few years, can you still use a small inflation to increase the total number of units? Or you have to change T = 2^128-1, for example?

We haven't changed the emission curve. Per the OP: "Actual number of atomic units is M = 264 - 1. A minimum subsidy may be implemented in the future with <1% annual inflation to preserve mining incentives."

Since we're definitely moving ahead with that minimum subsidy in future, it'll basically just get to a point where block reward is, say, 0.3 XMR, and that will be the block reward indefinitely (actual numbers still need to be graphed and we need to evaluate the most appropriate minimum subsidy, but it's honestly not something we have to rush out the gate).

[fluffypony]

To add to what I said earlier, I'd like to point to this excellent comment from junkit33 I just discovered on Reddit -

Speculators have owned the market since very early days.

The easiest way to think about it is what would be the price of bitcoin if zero people were buying for investment purposes? It would probably be a lot closer to a $1 than $300. Well, that smaller amount is about the order of power that consumer sentiment has on the price of bitcoin.

Consumer sentiment won't have any impact on the price until either a) the actual consumer userbase grows significantly, or b) the price of bitcoin continues to drop significantly.

I say: let Monero be priced on our actual usefulness and not merely on speculation.

[jehst]

With Monero we have opted not to repeat that process, and instead of simply running with a deflationary currency and hoping for some form of profit, we have instead aimed to aggressively move in the opposite direction and make it slightly inflationary.

You overstate this a bit. A bit of tail emission to incentivize mining won't prevent great fortunes to be made in XMR. Greed as a bootstrapping mechanism was part of bitcoin's genius. I hope you agree that in the end, it will be people's willingness to hold Monero rather than their willingness to use it as a payment system that will keep Monero alive. And if people don't think it will be worth more in the future (i.e. a good investment), then they won't hold XMR. If all merchants end up using the Bitpay-equivalent of Monero to immediately receive USD and consumers use it temporarily to buy what they need anonymously because no one wants to hold it, then it becomes a game of Hot Potato.

[farfiman]

To add to what I said earlier, I'd like to point to this excellent comment from junkit33 I just discovered on Reddit -

Speculators have owned the market since very early days.

The easiest way to think about it is what would be the price of bitcoin if zero people were buying for investment purposes? It would probably be a lot closer to a $1 than $300. Well, that smaller amount is about the order of power that consumer sentiment has on the price of bitcoin.

Consumer sentiment won't have any impact on the price until either a) the actual consumer userbase grows significantly, or b) the price of bitcoin continues to drop significantly.

I say: let Monero be priced on our actual usefulness and not merely on speculation.

That is all true but- To lure in the community of builders, creators and innovators you need incentive- and that -maybe sadly- is based very much on price and "investability" of the coin. Bitcoin would not be anywhere close to where it is if the spectulators didnt push the price up to where it made it visible on the radar.

[fluffypony]

With Monero we have opted not to repeat that process, and instead of simply running with a deflationary currency and hoping for some form of profit, we have instead aimed to aggressively move in the opposite direction and make it slightly inflationary.

You overstate this a bit. A bit of tail emission to incentivize mining won't prevent great fortunes to be made in XMR. Greed as a bootstrapping mechanism was part of bitcoin's genius. I hope you agree that in the end, it will be people's willingness to hold Monero rather than their willingness to use it as a payment system that will keep Monero alive. And if people don't think it will be worth more in the future (i.e. a good investment), then they won't hold XMR. If all merchants end up using the Bitpay-equivalent of Monero to immediately receive USD and consumers use it temporarily to buy what they need anonymously because no one wants to hold it, then it becomes a game of Hot Potato.

You miss the point.

We don't want to exactly duplicate the dynamics of fiat. Freicoin already tried that, to a large degree, with their demurrage effort. Who uses Freicoin today? No, the point is not to preclude making "great fortunes" with Monero, it's just that the process of making such fortunes should not be as simple as buying $500 worth and hoping for the best. It should require genuine, honest effort and work...or it should at the very least require you to be a fairly intelligent criminal...just like with cash:-P

Edit: just to add that I also don't disagree with the share model (where you own shares in companies that make money) but again, you should be purchasing shares in a company because you have done due diligence. Owning some cryptocurrency should not be the same process, even though it pretty much is at the moment.

[fluffypony]

That is all true but- To lure in the community of builders, creators and innovators you need incentive- and that -maybe sadly- is based very much on price and "investability" of the coin. Bitcoin would not be anywhere close to where it is if the spectulators didnt push the price up to where it made it visible on the radar.

I don't disagree that you need incentive.

So, tell me then, what is it about the US Dollar's price and "investability" that makes people build, create, and innovate products that are denominated in USD?

[farfiman]

That is all true but- To lure in the community of builders, creators and innovators you need incentive- and that -maybe sadly- is based very much on price and "investability" of the coin. Bitcoin would not be anywhere close to where it is if the spectulators didnt push the price up to where it made it visible on the radar.

I don't disagree that you need incentive.

So, tell me then, what is it about the US Dollar's price and "investability" that makes people build, create, and innovate products that are denominated in USD?

The might of the US government and "tradition"  

[fluffypony]

I don't disagree that you need incentive.

So, tell me then, what is it about the US Dollar's price and "investability" that makes people build, create, and innovate products that are denominated in USD?

The might of the US government and "tradition"  

Very true:) I think the point I'm trying to make is this: all controversy aside, people like Bill Gates or Mark Zuckerberg or Steve Jobs didn't make money through good fortune alone, nor by buying some rare token and hoping it appreciates. They made money by creating and innovating, and they did so despite any currency fluctuations or movements. Monero is merely a vehicle that happens to provide advantages over Bitcoin in the area of privacy (and hopefully in future in the area of usability), but the stuff that will make Monero useful comes from external projects that are created by people truly wanting to change the world.

[scamkiller]

XMR is so cheap now

[jehst]

With Monero we have opted not to repeat that process, and instead of simply running with a deflationary currency and hoping for some form of profit, we have instead aimed to aggressively move in the opposite direction and make it slightly inflationary.

You overstate this a bit. A bit of tail emission to incentivize mining won't prevent great fortunes to be made in XMR. Greed as a bootstrapping mechanism was part of bitcoin's genius. I hope you agree that in the end, it will be people's willingness to hold Monero rather than their willingness to use it as a payment system that will keep Monero alive. And if people don't think it will be worth more in the future (i.e. a good investment), then they won't hold XMR. If all merchants end up using the Bitpay-equivalent of Monero to immediately receive USD and consumers use it temporarily to buy what they need anonymously because no one wants to hold it, then it becomes a game of Hot Potato.

You miss the point.

We don't want to exactly duplicate the dynamics of fiat. Freicoin already tried that, to a large degree, with their demurrage effort. Who uses Freicoin today? No, the point is not to preclude making "great fortunes" with Monero, it's just that the process of making such fortunes should not be as simple as buying $500 worth and hoping for the best. It should require genuine, honest effort and work...or it should at the very least require you to be a fairly intelligent criminal...just like with cash:-P

Edit: just to add that I also don't disagree with the share model (where you own shares in companies that make money) but again, you should be purchasing shares in a company because you have done due diligence. Owning some cryptocurrency should not be the same process, even though it pretty much is at the moment.

I think you are discounting the valuable role of speculators in any market. A month or so ago, I've committed to eventually owning about 0.1% of all XMR. I do not intend to provide any "genuine, honest effort and work" to XMR besides buying it. Yet I believe that my efforts will pay off within two years, and I believe my actions will contribute to XMR by soaking up some supply. I don't think this makes me a criminal, either. As you say in your edit, this is the share model. But I disagree that owning crypto shouldn't be the same process. I hold currencies that I believe will do well. That's the only reason I hold them. Otherwise, I hold just enough of my local currency to make the purchases I need to make. Crypto will be the same, now and forever.

[fluffypony]

I think you are discounting the valuable role of speculators in any market. A month or so ago, I've committed to eventually owning about 0.1% of all XMR. I do not intend to provide any "genuine, honest effort and work" to XMR besides buying it. Yet I believe that my efforts will pay off within two years, and I believe my actions will contribute to XMR by soaking up some supply. I don't think this makes me a criminal, either. As you say in your edit, this is the share model. But I disagree that owning crypto shouldn't be the same process. I hold currencies that I believe will do well. That's the only reason I hold them. Otherwise, I hold just enough of my local currency to make the purchases I need to make. Crypto will be the same, now and forever.

I'm not discounting them at all - I'm merely saying that a rise in XMR's value should come directly from utility, and not directly from speculators + fudging numbers to create artificial demand. That's not to say that speculators are at all bad, it's just that they should be along for the ride instead of being the ones solely responsible for the ride!

Maybe I must put it differently: if genuine demand for Bitcoin by "ordinary" people (ie. not speculators) was the sole price driver, what would Bitcoin's price be? $1 - $3 maybe? (I have no idea, I'm thumb-sucking here) Either way, the gap between that and the current price means that speculators are propping the balance of the price up. What we are hoping to achieve with Monero (in particular with the infinite tail emission) is to reduce that gap so that the price of Monero in the far future more closely reflects the actual demand than any artificial demand. Who knows if we're on the right path or not, but I do sincerely believe it's a better path than just cloning Bitcoin;)

[jehst]

Maybe I must put it differently: if genuine demand for Bitcoin by "ordinary" people (ie. not speculators) was the sole price driver, what would Bitcoin's price be? $1 - $3 maybe? (I have no idea, I'm thumb-sucking here) Either way, the gap between that and the current price means that speculators are propping the balance of the price up. What we are hoping to achieve with Monero (in particular with the infinite tail emission) is to reduce that gap so that the price of Monero in the far future more closely reflects the actual demand than any artificial demand. Who knows if we're on the right path or not, but I do sincerely believe it's a better path than just cloning Bitcoin;)

You're right. Bitcoin's market cap without speculation is probably not much. But I don't think that infinite tail emission changes this in XMR at all. Predictable changes in supply will constantly be factored into speculation. DOGE's value went down during halvings. People knew the changes in supply were coming. The majority of XMR's value will always be based on speculation. It's inescapable, sorry to say.

[farfiman]

Maybe I must put it differently: if genuine demand for Bitcoin by "ordinary" people (ie. not speculators) was the sole price driver, what would Bitcoin's price be? $1 - $3 maybe? (I have no idea, I'm thumb-sucking here) Either way, the gap between that and the current price means that speculators are propping the balance of the price up. What we are hoping to achieve with Monero (in particular with the infinite tail emission) is to reduce that gap so that the price of Monero in the far future more closely reflects the actual demand than any artificial demand. Who knows if we're on the right path or not, but I do sincerely believe it's a better path than just cloning Bitcoin;)

You're right. Bitcoin's market cap without speculation is probably not much. But I don't think that infinite tail emission changes this in XMR at all. Predictable changes in supply will constantly be factored into speculation. DOGE's value went down during halvings. People knew the changes in supply were coming. The majority of XMR's value will always be based on speculation. It's inescapable, sorry to say.

Just as the price of gold is mostly because of hoarding and speculating. It's "utility only" (electronics and jewelry lets say) value is so much lower.

[nioc]

The value of gold is that it is shiny and if you bury it and come back in a thousand years it is still shiny.

I saw an exhibit in a museum of artifacts worn by the Kings and Queens of Korea when they were buried long long ago.  The silver looked like crud and the gold was shiny.  That quality of gold is what man has desired since he found out the inevitable.  But looking at it another way, who would want to be inert?