Think you're fundamentally misunderstanding what wiould casue a stable exchange-rate.
I'll assume that, by stable, we're talking about a fairly steady exchange rate (i,e, you don't have to worry that it'll have moved up/down by 10% in an hour's time) not about having an absolutely fixed (pegged) rate.
The main factor which will cause a stable exchange-rate for LTC, BTC or any other crypto-currency has nothing to do with coins/block, hashing difficulty or anything similar. It's simply that there needs to be something exerting pressure FOR stability against speculative moves. The most obvious thing which would achieve that is having significant uses for the currencies which were actually priced in BTC/LTC/whatever rather than, as at present, having everything which has a price be set in fiat and converted to crypto only for the actual transaction.
Imagine there were a significant number of useful/desirable products whose price was fixed in BTC. Then, if BTC starts to fall there's an increased demand for BTC to buy them - pressuring the price back up. Similarly the demand for BTC to buy them decreases if BTC rises - acting as a brake on the rise. It's that sort of thing (and some financial options) which will bring stability to exchange-rates: right now there's nothing exerting any noticable pressure against speculative changes (cost of mining maybe sets a lower bound on rate - but not an upper bound).
Fiddling with details of the implementation won't deliver stability. Wide-spread use will, eventually, lead to the chicken and egg problem getting solved (can't price in BTC/LTC as its unstable, price is unstable because nothing priced in it, etc etc). It's only then that tinkering with minor stuff will have any real impact.
Topic: A cryptocurrency with limited, not predermined supply with stable exchange rate? (Read 1458 times)
November 17, 2012, 10:54:20 AM
November 17, 2012, 10:50:27 AM
Yes it does seem that liquidcoin is being described here. So basically this has already been done. How is it turning out so far?
-MarkM-
-MarkM-
November 17, 2012, 09:43:18 AM
Propose for a minute there is a constant difficulty: What would happen is that block rates will be accelerating hash rate which would result in increasingly faster transaction times and more inflation. However if the hardcoded block reward decrease is kept the total number to be issued will still be limited. On the other hand there would be no early adopter benefit except the within the scheduled adjustments of the block reward.
Of course this has some obvious disadvantages: The block rates could get so high that network latency and orphaned blocks becomes a serious issue. This would lead to increasing centralization of mining and thus creating a trust problem. At some point even the speed of light becomes an issue making orphaned blocks a certainty.
Liquid coin conforms to this idea i believe...
Difficulty is fixed at 0.5, and block reward decreases (exponentially over time... or block? sorry i forget the exact maths)
I believe there are a number of orphaned blocks in this chain, most likely from what u describe, but I have not looked into this fully so other users may be able to provide more info
have i interpreted your suggestion correctly?
November 17, 2012, 09:13:09 AM
Currently Bitcoin, Litecoin and others use a predetermined supply with a constant block rate and regulated difficulty to archive a predetermined number of coins.
I say this is not necessary and there is a way to archive both a limited supply and a stable exchange rate with another approach.
Propose for a minute there is a constant difficulty: What would happen is that block rates will be accelerating hash rate which would result in increasingly faster transaction times and more inflation. However if the hardcoded block reward decrease is kept the total number to be issued will still be limited. On the other hand there would be no early adopter benefit except the within the scheduled adjustments of the block reward.
Of course this has some obvious disadvantages: The block rates could get so high that network latency and orphaned blocks becomes a serious issue. This would lead to increasing centralization of mining and thus creating a trust problem. At some point even the speed of light becomes an issue making orphaned blocks a certainty.
However I think this problem can be solved pretty easy, but before I continue I'd like to hear some feedback on the concept.
Disclaimer: Don't discuss PPCoin or in this thread, I consider it highly OT and will report it. No criticism of this disclaimer is allowed.
I say this is not necessary and there is a way to archive both a limited supply and a stable exchange rate with another approach.
Propose for a minute there is a constant difficulty: What would happen is that block rates will be accelerating hash rate which would result in increasingly faster transaction times and more inflation. However if the hardcoded block reward decrease is kept the total number to be issued will still be limited. On the other hand there would be no early adopter benefit except the within the scheduled adjustments of the block reward.
Of course this has some obvious disadvantages: The block rates could get so high that network latency and orphaned blocks becomes a serious issue. This would lead to increasing centralization of mining and thus creating a trust problem. At some point even the speed of light becomes an issue making orphaned blocks a certainty.
However I think this problem can be solved pretty easy, but before I continue I'd like to hear some feedback on the concept.
Disclaimer: Don't discuss PPCoin or in this thread, I consider it highly OT and will report it. No criticism of this disclaimer is allowed.
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