Monero Economy

[hbadger]

Savers are useless non-contributors. Not that there's anything wrong with saving, but economies of scale don't depend on it, and so there's no economic justification to encourage it.

You cannot be more wrong. Saving is simply deferred spending. It's spending later vs. spending now. You could argue that incentivizing spending over saving is transferring prosperity from the future to the present. In the end it's a zero sum.

More than that.  Saving is required for capital formation.  Many enterprises and much innovation depends upon capital formation.  Without capital formation it is much closer to net zero-sum.  With capital formation, it is more like win-win than it is without it.

Yup. http://en.wikipedia.org/wiki/Savings_identity

The caveat is that not all investment is actually useful investment. For example, building up inventory of unsold goods is considered investment in accounting terms, even though the goods may not be wanted and may never be sold.

That said, you do need savings for there to be (good) investment.

Guys I'm not claiming that saving is unimportant. I'm talking about savings in the form of unspent currency. I was responding to hbadger's claim that inflation punishes savers. There are plenty of appreciable saving/investment vehicles that will result in greater long term yields. Incentivizing saving in the currency itself, however, will only serve to kill its velocity. Economies of scale require a currency that moves.

I hate to bring fiat into the argument, but despite all it's problems the U.S. dollar does a great job at supporting large-scale economies. Even with a 2.5% - 4% annual inflation (definitely not "saver friendly"), capital formation does not seem to be a problem. Go figure.

It's not a claim, it's a fact. If you make people lose money you are punishing them. And since you don't have the monopoly of violence, you have no power over them and people will simply use a coin that suits them better as a store of value. Individual savers will never care about creating artificial incentives for their economy, let alone a foreign or global economy. Only politicians care about that, because it lets them deliver better looking economic growth indicators which will help them with their propaganda.

Also, you keep pushing the false dichotomy that if someone saves, he can't possibly spend. Meanwhile, actual data shows that bitcoiners spend all the time, but even more during spikes. Go figure.

[Johnny Mnemonic]

You're still dodging the question of why it's necessary to save in-currency! Answer it, please. Smart people store wealth in a diversity of assets outside their currency.

Not once did I say it's "impossible" to spend. I'm saying that in any given moment, spending is discouraged due to perpetually increasing value. Just because people do spend doesn't mean they're spending fast enough.

And Bitcoin has less than 50 million transactions in its entire life, so don't even pretend like you know if it's capable of supporting any economy of scale.

It's not a claim, it's a fact. If you make people lose money you are punishing them.

The people are not punished. Only their behavior is. If you want to save long-term, then invest in mutual funds or real estate or whatever you want, but don't sit on your currency.

people will simply use a coin that suits them better as a store of value. Individual savers will never care about creating artificial incentives for their economy, let alone a foreign or global economy.

I disagree. People will use whatever the hell is put in front of them. The coin that's easiest to get and easiest to spend will be the one that acheives mass adoption.

[NewLiberty]

The economy could use some work but that can be said about any coin I'd say.  All I know is I wish I had bought on the last dip.  Just like any other coin timing is everything!

Until proven otherwise you should assume you have no timing edge and just use dollar cost averaging to buy in.  It works.

This is good advice.  Also consider what constitutes proof of timing edge.

[hbadger]

If you want to save long-term, then invest in mutual funds or real estate or whatever you want, but don't sit on your currency.

Or... I can invest in Bitcoin, which doesn't tell me what to do. That's what it was created for, remember? We are supposed to be in control, and not have our wealth stolen through inflation or other trickery. If you are in doubt of this, go read the genesis block.

A currency that is just like the USD is not interesting and I won't use it, no matter what your theories say.

Bye.

[othe]

If you want to save long-term, then invest in mutual funds or real estate or whatever you want, but don't sit on your currency.

Or... I can invest in Bitcoin, which doesn't tell me what to do. That's what it was created for, remember? We are supposed to be in control, and not have our wealth stolen through inflation or other trickery. If you are in doubt of this, go read the genesis block.

A currency that is just like the USD is not interesting and I won't use it, no matter what your theories say.

Bye.

We have far less inflation then other currencies, after 4 years nearly all coins are mined... you dont have that on ltc for example (at the moment already 28 mio ltc are out - prolly more then we will ever have mro and its still a lot higher priced than mro).

If we have a block reward < 1 mro per block that is simply nothing, i guess it will make up for lost wallets and not more and keeps the incentive to mine.
You don't lose anything and you still have the same amount of mro than u had before...

[Johnny Mnemonic]

If you want to save long-term, then invest in mutual funds or real estate or whatever you want, but don't sit on your currency.

Or... I can invest in Bitcoin, which doesn't tell me what to do. That's what it was created for, remember? We are supposed to be in control, and not have our wealth stolen through inflation or other trickery. If you are in doubt of this, go read the genesis block.

A currency that is just like the USD is not interesting and I won't use it, no matter what your theories say.

Bye.

Currency cannot behave like currency if the value constantly trends upward. An asset's value appreciation tends to be the inverse of its liquidity.

If you like Bitcoin so much then invest in Bitcoin. That's the whole point I'm trying to make. The bulk of your wealth should not be liquid, because that's not what currency is for, and you will likely not see a comparable ROI.

I'll just go ahead and link to this again: http://physics.umd.edu/~yakovenk/papers/PhysicaA-299-213-2001.pdf
Power-law wealth distribution means that with a finite money supply, your wealth is pretty much guaranteed to be eaten over time, as more money flows into the infrastructures of the economy than flows back to the consumers.

You want to be in control and not subject to the whims of banks and governments? Me too. We are on the same team.

Do you want to continue to pay pay 2-4% per year (plus income/capital gains taxes) to greedy bankers who only want to take countries and people into debt? Or would you rather pay 2-4% per year back to the miners to reduce wealth centralization, prevent escalating transaction fees, stabalize trade value, and maintain the overall security of the network?

If your answer is "neither" then I'd love to hear some of your free solutions to the above problems. If you think Bitcoin (or any other crypto for that matter) is untouchable by centralized parties, then tell me right now what's stopping banks/governments from
lending out debased "bitcoin-backed" dollars at super low interest rates and calling it Legal Tender?

How much are you willing to pay to keep the greedy fatcats out of the cookie jar? I would love more than anything to see a "bullet-proof" crypto, but lets not fool ourselves into thinking that such security comes at no cost.

[FreeTrade]

Currency cannot behave like currency if the value constantly trends upward. An asset's value appreciation tends to be the inverse of its liquidity.

Crypto-equities are something new. You can't take the results of a body of economic theory that applies to a single nation, governmentally mandated currency system and just transfer the theories seamlessly to something fundamentally new. You need to return to fundamentals to see if the assumptions backing the theories still hold.

[aminorex]

You're still dodging the question of why it's necessary to save in-currency! Answer it, please.

I anticipate keeping the bulk of my savings in a private form, immune to theft, which protects me and my family from extortion, kidnapping, &c, by its privacy.

Productive assets need not be in-currency, in fact cannot be in-currency, because currency is not productive.  Savings and transactions in XMR are compelling exactly when privacy is most important -- i.e. when you have the most to lose.

Currency cannot behave like currency if the value constantly trends upward. An asset's value appreciation tends to be the inverse of its liquidity.

Infinite divisibility means that the floating portion is always capable of providing a transmission mechanism.  Increasing value means less of the float is required to perform the transmission function.  It is a self-adjusting mechanism.

How much are you willing to pay to keep the greedy fatcats out of the cookie jar?

In the long run, demurrage games have vanishingly small impact compared to the forces they would mitigate.  Any distribution improvements would be a tiny marginal one.  The cost of those improvements would be destabilization and shrinkage of the in-currency economy, as capital fled to other media.  Separating transmission and storage creates a friction, an inefficiency and ill-liquidity in conversion, which I expect does more damage in aggregate than any improvements in distribution would be able to offset.  Most of the social value created by a currency is created by liquidity.  Any impairment of liquidity is catastrophic, if only because competing media will not suffer the same impairments, and hence will dominate.

[Johnny Mnemonic]

Separating transmission and storage creates a friction, an inefficiency and ill-liquidity in conversion, which I expect does more damage in aggregate than any improvements in distribution would be able to offset.  Most of the social value created by a currency is created by liquidity.  Any impairment of liquidity is catastrophic, if only because competing media will not suffer the same impairments, and hence will dominate.

As great as it sounds, a coin that "does it all" will neither be a great store of value nor a great exchange medium. Instead, it will be mediocre at both.

[sonoIO]

Considering block reward, I'm sure that most if not all can agree that vanishing reward model is not unconditionally stable, and that fixed inflation model may not be sustainable on finite resources. Fixed block reward model, as the one proposed by devs, is in between those two - where the soft spot is. A note to skeptics, in it inflation also tends to zero with time - but much slower than in vanishing reward model.

[dreamspark]

I would put my hand up for a fixed block reward model. To me it seems prefereable to a vanishing reward implementation.

[drawingthesun]

I suggest focusing on the block reward once the primary supply has been minted in several months, at the moment Monero needs focus on the core code, the GUI, the marketing in general, fighting the FUDsters.

Too much is going on right now to have a real serious discussion about the final immortal supply. Remember this doesn't come into effect for many years anyway.

My vote has been for 1 Monero fixed per 2 min blocks. But we'll see when the developers are ready for this to be decided. At the moment keeping this coin alive is the most important thing. Many people on this forum are actively trying to destroy Monero through FUD.

[hodlmybtc]

I suggest focusing on the block reward once the primary supply has been minted in several months, at the moment Monero needs focus on the core code, the GUI, the marketing in general, fighting the FUDsters.

Too much is going on right now to have a real serious discussion about the final immortal supply. Remember this doesn't come into effect for many years anyway.

My vote has been for 1 Monero fixed per 2 min blocks. But we'll see when the developers are ready for this to be decided. At the moment keeping this coin alive is the most important thing. Many people on this forum are actively trying to destroy Monero through FUD.

Today I installed the Monero Windows GUI wallet by Jojatekok (https://bitcointalk.org/index.php?topic=683365.0) and so far it's working great.

It was a little struggle to import my old wallet in there but with the help of this post (https://bitcointalk.org/index.php?topic=683365.msg7830399#msg7830399) I got it working in a few minutes.

Also most of the people trolling Monero seem to be Bytecoin shills who are either paid by the Bytecoin devs with their 82% premine stash, the Bytecoin devs themselves with alt accounts (since almost all accounts are newbie or jr. members) or they just don't understand what it means if a coin is 82% premined

No matter how many times people point to the facts they just keep going on, well can they do whatever they want with their premine coin which will be worth 0.001 satoshi soon. We all know it will all ends up in tears but they can't say they haven't been warned

[rpietila]

Dear sirs,

I made some calculations on the distribution of XMR balances using the same methodology that I use in BTC wealth distribution calculations. Please refer to the link for methodology.

- I use 1 XMR as the cutoff grade since it is a nice round figure and its value is reasonable to be the lower threshold of what can be considered an investment.
- Other than the cutoff, there are the parameters that specify the:
  * largest holding;
  * number of holders;
  * j-value ("wideness" of the distribution);
  * to which extent power law applies to the high end (increasing the number and share of large holders).

To compose the result, we need to set the parameters. With any coin, especially XMR which is anonymous, it is impossible to know the parameters. So they must be estimated. The laws of statistics and the law of large numbers dictate that the actual holdings between the endpoints do conform to the calculated result, if the endpoints (parameters) are estimated correctly.

Estimate 1:

Parameters:
- Largest holding: 100,000 XMR
- number of holders: 6,800
- j value = 0.58
- power law: no

Results:
10,000 or more: 23 holders
1,000 - 10,000:   435  <=half of the XMR are owned by this group
100 - 1,000:    2,300
10 - 100:    3,000
1 - 10:     1,050.

Questions, comments, what parameters to change in order to get a more realistic calculation?

[canonsburg]

Estimate 1:

Parameters:
- Largest holding: 100,000 XMR
- number of holders: 6,800
- j value = 0.58
- power law: no

I don't doubt the other numbers but how did you extrapolate the number of holders?

[TooDumbForBitcoin]

Results:
10,000 or more: 23 holders
1,000 - 10,000:   435  <=half of the XMR are owned by this group
100 - 1,000:    2,300
10 - 100:    3,000
1 - 10:     1,050.

Booyah!  I am in the top 85% of XMR hodlers.  (Except I'm a swing trader).

Good thing it's anonymous, or chicks would be after me.

[rpietila]

I hate to bring fiat into the argument, but despite all it's problems the U.S. dollar does a great job at supporting large-scale economies. Even with a 2.5% - 4% annual inflation (definitely not "saver friendly"), capital formation does not seem to be a problem. Go figure.

You could not be more wrong. During the unfettered fiat standard (1971-), the by-far-the-most-glorious-and-economically-strong-empire-the-world-has-ever-seen has reduced itself to a miserable leech, a cancer to the world's economy, destroyed its productive capacity, essentially producing almost nothing that the rest of the world wants, utterly dependent on extorted energy and finished goods from the rest of the world, with half of the middle class already destroyed, youth unemployment soaring etc.

I could not have envisioned a better way to reduce the land of the free and home of the brave to its current wretchedly pitiable state than fiat money.

[GreekBitcoin]

I will just post this because i am laughing hard every time i see that picture!

[rpietila]

Estimate 1:

Parameters:
- Largest holding: 100,000 XMR
- number of holders: 6,800
- j value = 0.58
- power law: no

I don't doubt the other numbers but how did you extrapolate the number of holders?

I was checking the poloniex accounts and estimated how many of them have bought XMR.

Do you think the largest holding is realistic? It would have to be a guy that we know. Myself, I don't have nearly that many

[smooth]

Estimate 1:

Parameters:
- Largest holding: 100,000 XMR
- number of holders: 6,800
- j value = 0.58
- power law: no

I don't doubt the other numbers but how did you extrapolate the number of holders?

I was checking the poloniex accounts and estimated how many of them have bought XMR.

Do you think the largest holding is realistic? It would have to be a guy that we know. Myself, I don't have nearly that many

It is fairly close