Greetings Woodcutters and Log Stackers,
From Isengard, on the occasion of the Solar Eclipse of 2017.
Recent market moves have indicated a tiny bit of rational behavior, so it's a good time to repeat the design considerations that led us to a logarithmic release. We will need to keep repeating these again and again; something worth saying is worth repeating. Even to the choir
Why log?
The logarithmic release is a compromise between two competing forces which affect our choice of money supply curve. These are RATIONAL market forces, and so (more on this later) we rarely see them play a dominant role in the short term.
1) FEES - Coins which require the user to at that moment pay a larger fee to make a transaction WILL LOSE MARKET SHARE to coins which are cheaper for a user to make a transaction. We have seen this appear very slightly when BTC fees went way up and there was a small surge in other coins.
To put it simply: rather than often pay high fees, one is tempted to purchase chunks of a lower-fee exchange commodity to use for some more regular payments. In so much as people using the currency drives the price, we can see that the fee for the use also drives the price. Once someone learns to use one public coin, moving to another is relatively easy.
2) INFLATION - Coins which inflate more rapidly WILL LOSE MARKET SHARE to coins with a fixed maximum supply and/or a lower rate of money supply inflation. Hodlers don't want their hodlings to depreciate with time right?
So what's the problem you say, we need a coin with low fees and a low inflation!
The problem is: we need to pay the miners somehow, otherwise we have no coin.
LOG finds the middle ground between these two forces. It features a continual reward, allowing TX fees to stay low as coinbase rewards continue to fund miners for a *very* long time. Coinbase rewards decrease more slowly than any other release schedule. However it still keeps a cap on supply, meaning that your coins will not be debased.
Rational market forces will therefore favor the logarithmic release coin!!
HOWEVER
Markets are likely to remain mostly irrational in the short term. After all, people are still trading their coins, goods, and services for fiat currency, issued in private in arbitrary amounts at no cost by some folks who appear to mostly be total morons. While this persists, fiat issuers can pump any coin they feel like to any price - at no cost to themselves. How could a rational market emerge under these conditions? Things like the network effect, marketing, glossy websites, fancy logos, and general exuberance are also powerful forces in the markets in the short term.
Peace upon middle earth on the occasion of the eclipse. Congrats on recent all time highs in our hash rate and keep up the good work all woodcutters and woodcoin contributors!!
