proposal for inflation for crypto-currencies

[exhumer]

I am kind of new to economics but i think i have an idea that might be a good idea. I have heard that in currencies inflation is a mechanism that prevents hoarding of the currency. I also feel exponential inflation might be a bit much, but what about a built in mechanism that makes it so that if there's less transactions in the given block the next block mints more coins if the # of transactions is high the amount minted goes down. this would discourage hoarding cause the risk of losing that hoarded value over time with inflation, and instead encourage trading behavior not to mention it would help miners fit their bill with the combination with inflation and networking fees. also would help with coins that go into the abyss if someone sends it to the wrong address and then those coins are gone forever but with this those coins might be refilled back into the economy.

btc tips: 1D4zFmWMtrkkMoDWwK4T1g1soWchwMn5ou

[odolvlobo]

Your plan might reduce hoarding, but it would also increase bogus transactions (people just sending bitcoins to themselves). Look up Freicoin. I think that does what you want, but uses demurrage instead.

There is a problem with your goal of eliminating hoarding, and that is that if nobody wants to hold money, that makes it worthless, and you can't buy much with worthless money. I don't think that you will find many friends here with your inflation-is-good belief.

[exhumer]

why would they send it to themselves?  it would be way to expensive. they'd literally be just giving money to the miners that way.

[Beliathon]

If you think it's a viable idea, you are free to create your own altcoin implemented it. Best of luck.

[Lethn]

The idea that inflation 'prevents' hoarding and 'encourages' spending is absolutely laughable, I've had to think a bit to figure out this bullshit PR spin they're using but what they're actually doing is forcing people to spend, not encouraging it. They do this by destroying the value of the currency that people are using so much that people have no choice but to fill the pockets of the ones who initiate the inflation in the first place and then those people buy up everything else dirt cheap.

Look at what happened in the last crash, the central banks rushed to the rescue buying everything up at a cheap price to make sure that everyone got in on the scam again to keep things going, I wouldn't be surprised if the next move of these bankers will be to create some kind of global currency to repeat the process all over again and get even more wealth.

[BitCoinNutJob]

Hoarding is good unfortunately, bitcoin providing the best investment returns over the last few years is one of the reasons it has attracted big players to the market.

[Beliathon]

Hoarding is good

Hoarders Give Bitcoin Value

The initial price of bitcoin was caused by people who wanted to hold it, not people who wanted to spend it. Furthermore, each subsequent step in Bitcoin’s advance must begin with more holders, not more spenders. The business that bitcoins can absorb is limited by its market cap. At a market cap of two or three billion dollars, Bitcoin can absorb many small businesses but it cannot be used for international oil trade. It would have to be dozens of times more expensive for that, and it can only achieve that if the peoples’ desire to hold bitcoins continues to increase faster than their desire to spend them. Thus, one who wants Bitcoin to become mainstream should never want its price to be lower. He should want an ever-increasing supply of hoarders.

It is true that Bitcoin’s price can occasionally and temporarily outpace the growth in its real prospects, but this is merely a byproduct of Bitcoin’s phenomenal success. A commodity which increases in price as quickly as bitcoins can be expected to experience shocks and manias on its way up because it would be difficult to tell the difference between a sustainable price increase and short-term speculation. However, does it make really sense to prefer an alternative history for Bitcoin in which its price has increased slowly enough that it never developed any manias? I do not see how that could possibly be preferable. The faster Bitcoin grows, the more complete and decisive will be its victories, and the more difficult it will be for its natural enemies to react to it.

http://themisescircle.org/blog/2014/02/12/im-hoarding-bitcoins-and-no-you-cant-have-any/

[blatchcorn]

If you increase supply, you reduce price assuming demand is held constant.  Therefore you cannot reward miners with inflation.

Infinite divisibility of Bitcoin means there is no need for inflation