rpietila Altcoin Observer

[Este Nuno]

My short take on this, is that the following must be considered:

- Perpetual network security (inflation must always be high enough to secure the network - typically only a problem in the late stage that most coins have not addressed)

- Perception of premine (BCN was rejected outright because the coin was 82% mined when it hit the public; IMO the same will happen with whatever coin and fully regardless if it has been "fair" all the time, the mere fact that it is used by a smallish number of people when it hits the latter part of its issuance is enough to convey this perception, even BTC is problematic in this sense already)

=> Therefore the optimal coin issuance should be either connected to the growth of its economy (which is problematic to do trustlessly, and has not been tried in any coin except perhaps emunie that I don't know about) or tailored to hit its mature phase only when the userbase of the coin is established.

I urge you to read it again because most of the pundits believe that exactly the opposite is good for the coin.

Sounds like the 'S' curve we were discussing earlier in the thread.

[rpietila]

The supermajority (perhaps not of the people, but of the supporters of various altcoins) believe that the initial emission period should be rather short, to "get rid" of the pesky "inflation", so that the coin can "start rising in value".

I believe they are hoping in vain, because the "new money" not yet invested, does not see such a coin as a very interesting investment and do not buy it. So instead of a rise, a fall in value is the result.

The only way around this is to grow the real economy of the coin big enough, before the declining emission really hits. This can hardly be achieved in 1 year, so a considerable longer time before half is emitted should be the case.

[devphp]

The supermajority (perhaps not of the people, but of the supporters of various altcoins) believe that the initial emission period should be rather short, to "get rid" of the pesky "inflation", so that the coin can "start rising in value".

I believe they are hoping in vain, because the "new money" not yet invested, does not see such a coin as a very interesting investment and do not buy it. So instead of a rise, a fall in value is the result.

The only way around this is to grow the real economy of the coin big enough, before the declining emission really hits. This can hardly be achieved in 1 year, so a considerable longer time before half is emitted should be the case.

How does "new money"'s perception of the coin change if the inflation period is long? I mean, what benefits are there in the long inflation period for investors? How is growing economy of the coin dependent on the length of the inflation period?

[nakaone]

The supermajority (perhaps not of the people, but of the supporters of various altcoins) believe that the initial emission period should be rather short, to "get rid" of the pesky "inflation", so that the coin can "start rising in value".

I believe they are hoping in vain, because the "new money" not yet invested, does not see such a coin as a very interesting investment and do not buy it. So instead of a rise, a fall in value is the result.

The only way around this is to grow the real economy of the coin big enough, before the declining emission really hits. This can hardly be achieved in 1 year, so a considerable longer time before half is emitted should be the case.

How does "new money"'s perception of the coin change if the inflation period is long? I mean, what benefits are there in the long inflation period for investors? How is growing economy of the coin dependent on the length of the inflation period?

to put it simple you need enough inflation to network and as little as to keep it as a store of value in a foreseeable future.

[rpietila]

The supermajority (perhaps not of the people, but of the supporters of various altcoins) believe that the initial emission period should be rather short, to "get rid" of the pesky "inflation", so that the coin can "start rising in value".

I believe they are hoping in vain, because the "new money" not yet invested, does not see such a coin as a very interesting investment and do not buy it. So instead of a rise, a fall in value is the result.

The only way around this is to grow the real economy of the coin big enough, before the declining emission really hits. This can hardly be achieved in 1 year, so a considerable longer time before half is emitted should be the case.

How does "new money"'s perception of the coin change if the inflation period is long? I mean, what benefits are there in the long inflation period for investors? How is growing economy of the coin dependent on the length of the inflation period?

to put it simple you need enough inflation to network and as little as to keep it as a store of value in a foreseeable future.

What you said - the latter part - is exactly the fallacy. 

[JorgeStolfi]

How does "new money"'s perception of the coin change if the inflation period is long? I mean, what benefits are there in the long inflation period for investors? How is growing economy of the coin dependent on the length of the inflation period?

Nobody loves inflation, but few people regard it as a horrendous evil to be avoided at any cost.   Normal people do not expect that a hoard of cash will keep its value, much less grow more valuable, by itself, over time.  And, for the good of the economy, they shouldn't "invest" in cash or other "dead" assets: they should use their intelligence to choose productive enterprises, and invest in them.   

Cryptocurrencies were meant to be means of payment; their repurposing as long-term investment has always been criticized by economists.

[rdnkjdi]

How does "new money"'s perception of the coin change if the inflation period is long? I mean, what benefits are there in the long inflation period for investors? How is growing economy of the coin dependent on the length of the inflation period?

Nobody loves inflation, but few people regard it as a horrendous evil to be avoided at any cost.   Normal people do not expect that a hoard of cash will keep its value, much less grow more valuable, by itself, over time.  And, for the good of the economy, they shouldn't "invest" in cash or other "dead" assets: they should use their intelligence to choose productive enterprises, and invest in them.  

Cryptocurrencies were meant to be means of payment; their repurposing as long-term investment has always been criticized by economists.

I think anonymint hit this nail on the head.  The issue is not inflation it's how the inflation is distributed.  Which is generally NOT to the people responsible for creating production (knowledge, workers, investors)

[nakaone]

The supermajority (perhaps not of the people, but of the supporters of various altcoins) believe that the initial emission period should be rather short, to "get rid" of the pesky "inflation", so that the coin can "start rising in value".

I believe they are hoping in vain, because the "new money" not yet invested, does not see such a coin as a very interesting investment and do not buy it. So instead of a rise, a fall in value is the result.

The only way around this is to grow the real economy of the coin big enough, before the declining emission really hits. This can hardly be achieved in 1 year, so a considerable longer time before half is emitted should be the case.

How does "new money"'s perception of the coin change if the inflation period is long? I mean, what benefits are there in the long inflation period for investors? How is growing economy of the coin dependent on the length of the inflation period?

to put it simple you need enough inflation to network and as little as to keep it as a store of value in a foreseeable future.

What you said - the latter part - is exactly the fallacy. 

explain to me how this shall work if a cryptocurrency which is issued by nothing but its scarcity and its function will be adopted without having a store of value.


I am not talking about a 7 days fast-mine pump and dump, but a design with a slightly decreasing block reward seems somewhat convincing to me

[nakaone]

Cryptocurrencies were meant to be means of payment; their repurposing as long-term investment has always been criticized by economists.

cryptocurrencies superiority comes from its neutrality a) as a store of value and b) as a medium of exchange of value. neutrality is meant in a way that they are free from an appraisal of a single authority. these authorities can be banks, governments or service providers.

it is yours as long as you have the keys.

[cAPSLOCK]

The supermajority (perhaps not of the people, but of the supporters of various altcoins) believe that the initial emission period should be rather short, to "get rid" of the pesky "inflation", so that the coin can "start rising in value".

These people have no interest in the long term success of a cryptocurrency platform.  The are interested only in making a quick buck.  It is a viewpoint entirely fueled by greed.  Though this motivation is understandable it is exactly the opposite of what the market will reward.  The market cannot reward this any more than we can defy gravity.  If it did there would be thousands of tremendously successful altcoins.  And where would this value come from?

[rpietila]

How does "new money"'s perception of the coin change if the inflation period is long? I mean, what benefits are there in the long inflation period for investors? How is growing economy of the coin dependent on the length of the inflation period?

Nobody loves inflation, but few people regard it as a horrendous evil to be avoided at any cost.   Normal people do not expect that a hoard of cash will keep its value, much less grow more valuable, by itself, over time.  And, for the good of the economy, they shouldn't "invest" in cash or other "dead" assets: they should use their intelligence to choose productive enterprises, and invest in them.   

Cryptocurrencies were meant to be means of payment; their repurposing as long-term investment has always been criticized by economists.

(besides that I entirely disagree with separating means of payment from a store of value,)

My view is more practical. I believe it is a good idea to have an uninflatable store of value (this is the original Bitcoin thinking). But if I am faced with a choice to buy into a coin whose community is growing and consists of people willing to store their savings in this inflatable currency, or a coin whose community is eager to unload their stash to the next generation at greatly higher prices and live well off the proceeds, I go with the former. That I am currently part of the latter also, should not be a distraction.

Bitcoin was the best choice in 2010-2013. Now I have been the early promoter of this thinking, and the coin I believe best suits it, Monero. The amount of actual attacks speaks about that it is taken seriously.

[beitris.dwlul]

I have no doubts that you informed about all issues and would be happy to see a result when you finish that.

[btcney]

Opinions on Bitmark?
https://bitcointalk.org/index.php?topic=660544.0

[smooth]

If Bitcoin was fully mined, such as Quark, there would be nobody even remotely interested in buying it, and the price would be down even more, with no sign or prospect of recovery.

I must assume from that sentence that you plan to sell your Bitcoins in a near future, lets say when 18-19 millions are mined? And/or the plan is that by time BTC is 10-20 times worth more? what will prevent that price to plummet then? adoption? thanks.

The wide adoption should really be achieved by then, which would give a reason to hold it or buy it (for use). Otherwise it likely won't ever be.

When someone buys, someone else sells. Which translates what you just said to "give a reason to hold it or buy it or sell it".

That is somewhat accurate. If there is no compelling reason to participate at all (hold, buy, sell, mine, etc.), then you ultimately have a stagnant system that really goes nowhere.

[Este Nuno]

Opinions on Bitmark?
https://bitcointalk.org/index.php?topic=660544.0

Interesting timing. Poloniex just implemented marking as their user reputation system.

[Johnny Mnemonic]

I believe they are hoping in vain, because the "new money" not yet invested, does not see such a coin as a very interesting investment and do not buy it. So instead of a rise, a fall in value is the result.

This is why I've always believed in a perpetually increasing (or difficulty-dependent) block reward... it encourages use as a currency (medium of exchange) as opposed to an investment vehicle, and new adopters are never punished for arriving "late".

Imagine a coin with a difficulty-adjusted block reward of 10 coins per 1 billion. Block rewards would be very small during the coin's early growth, but would scale up or down with the network. When difficulty reaches 1.45 billion (XMR's current difficulty), the reward would be 14.5 coins. If the network stagnates, then you essentially have a fixed-reward (perpetually decreasing) inflation. This would also be the most fair and fungible crypto, as all coins would cost roughly the same hash power regardless of when they're mined.

[NewLiberty]

I believe they are hoping in vain, because the "new money" not yet invested, does not see such a coin as a very interesting investment and do not buy it. So instead of a rise, a fall in value is the result.

This is why I've always believed in a perpetually increasing (or difficulty-dependent) block reward... it encourages use as a currency (medium of exchange) as opposed to an investment vehicle, and new adopters are never punished for arriving "late".

Imagine a coin with a difficulty-adjusted block reward of 10 coins per 1 billion. Block rewards would be very small during the coin's early growth, but would scale up or down with the network. When difficulty reaches 1.45 billion (XMR's current difficulty), the reward would be 14.5 coins. This would also be the most fair and fungible crypto, as all coins would cost roughly the same hash power regardless of when they're mined.

I like this notion and have fostered it myself, though I don't think it is the whole picture.

Bitcoin is perpetually inflating.
In the current picture up until 2140.
It goes well beyond this when the decimal point moves.

Coins are lost/destroyed over time too increasing scarcity.  So there is more to it than just the difficulty, but that should be considered.

[Johnny Mnemonic]

I believe they are hoping in vain, because the "new money" not yet invested, does not see such a coin as a very interesting investment and do not buy it. So instead of a rise, a fall in value is the result.

This is why I've always believed in a perpetually increasing (or difficulty-dependent) block reward... it encourages use as a currency (medium of exchange) as opposed to an investment vehicle, and new adopters are never punished for arriving "late".

Imagine a coin with a difficulty-adjusted block reward of 10 coins per 1 billion. Block rewards would be very small during the coin's early growth, but would scale up or down with the network. When difficulty reaches 1.45 billion (XMR's current difficulty), the reward would be 14.5 coins. This would also be the most fair and fungible crypto, as all coins would cost roughly the same hash power regardless of when they're mined.

I like this notion and have fostered it myself, though I don't think it is the whole picture.

Bitcoin is perpetually inflating.
In the current picture up until 2140.
It goes well beyond this when the decimal point moves.

Coins are lost/destroyed over time too increasing scarcity.  So there is more to it than just the difficulty, but that should be considered.

Bitcoin is different because the money supply is finite. I don't see how lost/destroyed coins are an issue with an undefined/infinite money supply that grows with the network. Am I missing something?

What I'm suggesting basically means the same hardware will yield the same profit whether it's used for mining now or 10 years from now, because every contributed hash will always have the same return over time (CPU mineable forever?). I'm guessing this would also reduce the profit incentive for special hardware manufacturing.

[iCEBREAKER]

DarkNote just gave the CN community a wonderful gift - encrypted messaging with the same privacy protection as transactions!   

Encrypted messages Cryptography implementation is now on github - opensource

https://github.com/ducknote/darknote/commit/caf9925c34eb0f9ffa7a842f4ae3b4bb5a069154

Now we can pass notes in class, with no fear of being caught or having them read out loud.   

[smooth]

What I'm suggesting basically means the same hardware will yield the same profit whether it's used for mining now or 10 years from now, because every contributed hash will always have the same return over time (CPU mineable forever?). I'm guessing this would also reduce the profit incentive for special hardware manufacturing.

I don't get it. How does manufacturing an ASIC that hashes 1000x more efficiently than a CPU not have a high profit incentive if rewards are tied to hashes?