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Topic: Bitcoin and Inflation (Read 420 times)

dnprock

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Just saw this on Pierre Rochard Twitter.

https://twitter.com/pierre_rochard/status/1194399931584450560

"Inflation causes more wealth inequality than luck or skill.

Bitcoin fixes this."

"Due to inflation the USD has become completely unusable as a savings technology, everyone has to immediately invest or consume."

I largely disagree with this.

Currency is supposed to inflate. Store of Value deflates. This is why Bitcoin is not widely used for transaction. I hope the topic of inflation will come up more often. Crypto is too dogmatic about bag holding. We need to depart from this one-sided view of the world.

ðºÞæ

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Fiat (stablecoins) inflate 2-3% on average forever unless high inflation is happening.

Bitcoin does not Inflate it has a coin emission rate
2009 to 2013 about 12.5% per year (aka 50% of all coins mined)
2014 6,9%
2015 6.5%
2016 4,9% (July 9th, 2016 75% of all Bitcoins have been mined)
2017 3,3%
2018 3,2%
2019 ~3,x%

2020 ~1,6% (at third halving 87.5% of all Bitcoins have been produced)
2024 ~0.8% (93,75%)
2028 ~0.4% (96,875% of all coins exist)
2032 ~0.2% (98,4375%)
2036 ~0.1% (99,21875%)
2040 ~0.05% (99,609375%)
.........
2140 ~0,0000000015% ~(100%)
After about 2140 no more new coins, miners receive only transaction fees.

With every reward halving energy consumption more or less is also cut in half.

dnprock

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Quote from: pixie85 on November 06, 2019, 06:50:18 PM

I did not call you a socialist. I asked if you are a socialist which is a different thing.

You said holders should share the cost of running the network which is a socialist idea. Tax those who have money so those who don't have can transact cheaper.

You also said that Normal people can't afford transaction in Bitcoin. Who are those normal people? The poor are normal? I earn less than the average person in my country and can afford to transact in Bitcoin? Who is normal then if I am not? Maybe someone unemployed.

There's always lightning network if you can't afford $1 fee.

Sorry, I took your question as implying that I am a socialist. I don't really know how to answer your question. If I am ok with paying tax for public service, e.g. road, am I a socialist? If that is your definition, then I fit. But I don't think it is fair for the libertarians who pay no tax to drive on the road.

There is cost of running the Bitcoin/crypto network. For the network to be secure, the cost will need to be proportional to the asset price. For example: you don't want the network to cost $1 to mine a $1 million transaction. The cost of running the network would be some percentage point of the active market cap, probably 0.1% to 1%. Someone needs to pay for this. When Bitcoin has no block/small reward, transactors would pay all/more. Hodlers are free loaders. They hold the coins and someone pays for the network operation cost. Inflation is a way to spread the cost out to hodlers. So when it is time to transact, hodlers themselves don't have to pay hefty fee.

Lightning Network is a scaling technology. It's adding another layer on top. This additional complexity will not reduce transaction cost. I think the overall cost of running these networks will increase.

pixie85

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Quote from: dnprock on November 04, 2019, 01:13:41 AM

Quote from: pixie85 on November 02, 2019, 04:28:53 PM

Quote

It'll make Bitcoin more accessible to more people

Please explain how bitcoin is not accessible to people. I always find it hard to understand this argument and I see it appear from time to time in discussions as people say bitcoin is too expensive for an average person. Is that how you see this?

Cheaper Bitcoin doesn't mean more accessible bitcoin and you can see it by looking at altcoins. The coin costs $1 per coin doesn't become more popular and widely used than a coin that costs $100.

Do you want to introduce inflation to Bitcoin to make holders share? Are you a socialist?

I think Bitcoin should have a low inflation rate, maybe 1%. It'd reduce price volatility. I think volatility is a significant barrier of entry. It's not about the tech but psychology.

People laugh at my idea of a coin with 7% inflation. They dismiss the idea, call it weird, ridiculous. But calling me a socialist just raised the bar.

Aabcde

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Yes indeed bitcoin is designed to experience inflation, but only at the beginning of its adoption. So far I have not seen that happen. Because you can see for yourself that the total bitcoin is only 21 millions and there are no additions. In fact, it will continue to diminish as people forget about their privatekey.
We know that inflation occurs when the amount of money in circulation is too much and continues to grow. So that the price of goods increases but the value does not change. Unlike bitcoin, the amount will not increase instead it will continue to decrease and the value will increase.

yohananaomi

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Quote from: ?? on ??

Yes, bitcoin can definitely help the whole world to stop the processes of inflation.

There is no direct correlation that I have ever gotten the information that bitcoin can stop the inflation process that you say. clearly the difference that cannot be equated that with the presence of bitcoin can have a direct or connected impact on a country's economy, let alone connected with inflation that will occur.

dnprock

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Quote from: Febo on November 05, 2019, 04:48:57 PM

Unless 10-20 years from time Bitcoin developers will realise the need tail emission. And all will be fine. Of course some might still stay at that often 51% attacked chain. But that is their problem.

I find tail emission a silly idea. It's surprising that people really give it serious thought. They didn't take calculus in school. When supply gets very large, a constant tail emission eventually approaches 0%. It will not add any meaningful change to supply. Tail emission is the same as 0 supply. It buys you some time before increasing the emission. It's patching subsidy so miners continue to mine blocks. It's not a long-term solution.

When I discuss Bitflate with 7% inflation rate, people often say it's already done with tail emission. But tail emission is NOT inflation. It's gotta be a percentage point. I'm doing a chain that inflates for real.

dnprock

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Quote from: Bitcoin Seller on November 05, 2019, 12:49:18 PM

This is the best way to promote your Twitter. LOL. If seriously, I cannot still agree that Bitcoin can be compared with gold. Despite the BTC value and demand, we never know if tomorrow we get up and see that this crypto managed to climb to the Everest mountain or if it is again close to the bottom. With virtual things, everything is unpredictable.

I want to promote Bitflate. I often write blog articles on bitflate.org. But this time, I'm kinda lazy, so I write a Twitter thread.

BTC is an interesting phenomenon. I think it has a high chance of survival. It lives on the narrative. The tech is just a mean. If there ever be a catastrophic event in the future, the blockchain can always fork. We've seen one hard fork before between BTC and BCH. People will flock to the prevailing narrative. If BTC is not digital gold, one of its future forks will be. It's good to own some of it.

Bitflate, on the other hand, is designed to inflate. I'm not sure how it'd play out long-term. Maybe, someone will decide to hard fork and reduce inflation when it reaches critical mass. But I think there would be ways to reduce value loss. Its inflation is predictable. It's possible we'd have two chains running together, one deflates and one inflates. The world is run by contradictory forces.

Febo

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Quote from: dnprock on October 29, 2019, 11:44:13 PM

8/8. Higher inflation (but not too high) will make Bitcoin even more accessible to people. But it'll diminish Store of Value use case. Bitcoin won't support this. But no worry, there's @bitflate with 7% inflation.

Unless 10-20 years from time Bitcoin developers will realise the need tail emission. And all will be fine. Of course some might still stay at that often 51% attacked chain. But that is their problem.

Bitcoin Seller

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dnprock

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Quote from: pixie85 on November 02, 2019, 04:28:53 PM

Quote

It'll make Bitcoin more accessible to more people

pixie85

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Quote

It'll make Bitcoin more accessible to more people

dnprock

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Quote from: stephanirain on November 02, 2019, 11:10:17 AM

Bitcoin inflation is more complicated because it will also affect the prices of other coins in the market. Too much inflation of course will result to chaos and too little changes in the prices will make the market dull. It is difficult to point out the exact percentage of inflation needed but it must be positive of course. But then, it is just an idea and cannot be implemented universally. We do not control the prices, yes there are factors that can be manipulated but it is on its own.

I'm the dev for Bitflate coin. Here's how I came up with 7%. I thought about dynamically adjusted rate. But the algorithm can be complicated and contentious. It needs to check price and volume from centralized services. These could be sources of rate manipulation. If the chain goes with a constant rate, what is the right rate? I thought 1-4%. But I think these rates are too low, inflation won't make the chain behave differently from Store of Value. I arrive a conclusion: inflation rate has to be moderately high, somewhere between 5-10%. I picked 7% from Rule 72. It has a nice feature. Supply doubles every 10 years.

Gold has 1.5% inflation. For Bitcoin, I think inflation rate of 1% seems to be a long-term viable option.

Pinkris128

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Quote from: dnprock on October 29, 2019, 11:44:13 PM

I wrote a thread on Twitter about Bitcoin and Inflation.

Original Thread: https://twitter.com/bitflate/status/1189401591226355719

1/8. Some thoughts on inflation and Bitcoin. Zero inflation will need high fee to incentivize miners.

2/8. High fee requires high coin price. People are not paying high fee if bitcoins are not worth a lot.

3/8. Price drop and fee drop will drop hashrate. That'll make 51% attack cheaper.

4/8. Bitcoin is going for digital gold use case. So high fee is expected. That'll make Bitcoin money for rich people. Normal people can't afford transaction in Bitcoin.

5/8. A little inflation, like 1%, can reduce fee. The cost of running Bitcoin network spreads to HODLers through inflation. It'll make Bitcoin more accessible to more people.

6/8. 1% inflation is lower than gold. Bitcoin can still be digital gold.

7/8. If you truly believe in digital money for people, you should consider support for small inflation of Bitcoin supply.

8/8. Higher inflation (but not too high) will make Bitcoin even more accessible to people. But it'll diminish Store of Value use case. Bitcoin won't support this. But no worry, there's @bitflate with 7% inflation.

Miners must be compesentated proportionally to ensure that they can profit. Though incentives of miners can also come in another forms of payment like solid alts with worthwile prices. Inflation or not, prices of btc will more likely rise due to other factors in the market. This also makes me think that someday, crypto economics will be teach even in lower years of education because cryptocurrency are getting more relevant in the society.

stephanirain

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Quote from: dnprock on October 29, 2019, 11:44:13 PM

dnprock

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Quote from: sorrros on November 01, 2019, 01:20:37 PM

I do not agree with this claim: " Price drop and fee drop will drop hashrate. That'll make 51% attack cheaper."
Did you see that price drop caused also drop in hashrate in the history? I don´t. Cool

There were brief episodes of hashrate drop during price drop. Bitcoin overall price has increased so its hashrate follows. Other altcoins suffered from hashrate drop. Miners are opex. They'll turn off hash power if there is not expected price increase target.

makishart

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Quote from: sorrros on November 01, 2019, 01:20:37 PM

I do not agree with this claim: " Price drop and fee drop will drop hashrate. That'll make 51% attack cheaper."
Did you see that price drop caused also drop in hashrate in the history? I don´t. Cool

Hashrate will remain the same but if the price will drop it's possible for the hashrate to go down at the same time consider about the miner will be mining bitcoin in loss and that makes sense for these miners to stop mine bitcoin until the miners will get the safe zone to mine bitcoin again. you should know the technical aspect of miners and the price is giving a huge impact to the result of money that will be received by the miners.

sorrros

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I do not agree with this claim: " Price drop and fee drop will drop hashrate. That'll make 51% attack cheaper."
Did you see that price drop caused also drop in hashrate in the history? I don´t. Cool

Sendi blackspade team

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Quote from: nelson4lov on November 01, 2019, 12:41:50 PM

Quote from: Upgate on October 30, 2019, 02:28:17 PM

Is the bitcoin affected by inflation, I have read in articles that bitcoin in not impeded by inflation or deflation however it's not a currency yet so how would the inflation be based

Bitcoin does have a small inflation rate of around 3.81% annually. The inflation is due to mining block rewards that are gotten as tx fee by miners. But it's gotten to change around Q2 2020 as the block reward would be halved. Afterwards, the mining rewards will be relatively low. Contrary to popular opinions, these will hugely influence/affect the price.

a reasonable view for the middle of next year when halving bitcoin happens. relatively small inflation might change when halving happens in the future. but we must be prepared and remain cautious with sentiments from outside the crypto market. it can happen and change the trend of market movements. price changes will occur.

nelson4lov

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Quote from: Upgate on October 30, 2019, 02:28:17 PM

Is the bitcoin affected by inflation, I have read in articles that bitcoin in not impeded by inflation or deflation however it's not a currency yet so how would the inflation be based

squatter

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STOP SNITCHIN'

Quote from: bitmover on October 30, 2019, 06:21:42 PM

Quote from: squatter on October 30, 2019, 03:56:00 PM

He does not suggest that the users would be paying higher fees, as he says later on "there will either be very large transaction volume or no volume."

I don't see how that addresses what I said. He certainly doesn't rule out the notion of higher fees, does he?

Bottom line, that miner revenue needs to come from somewhere. I don't see the math supporting this idea that users can pay pennies (USD) for on-chain transactions forever.

Quote from: bitmover on October 30, 2019, 06:21:42 PM

Quote

He's merely stating what I did, that the system is currently being subsidized by inflation.

I think He is stating the opposite: that rewards will be subsided by a high volume of transaction.

That's not the opposite. Satoshi's point that inflation subsidizes miners in the bootstrapping phase is pretty obvious. I can't elaborate any more on that.

You're ignoring the crux of what I'm saying. I'm not denying that he expected a high volume of transactions. There already are an extremely high volume of transactions compared to when he said that. What do you expect another exponential increase in volumes to do to fees?

Quote from: bitmover on October 30, 2019, 06:21:42 PM

Quote

So, what exactly do you mean when you say "higher fees?" How high is too high, in your opinion?

My bet is that will remain small, in the same USD value.
Maybe in later BIPs we will be able to set sub-satoshi/byte fees..? Who knows. Only a fork is needed to do that.

In less than 13 years, the mining subsidy will be 0.78125 BTC. Could you give me an oversimplified back-of-the-envelope guess on where total block rewards and average mining costs might be at that time?

Quote from: bitmover on October 30, 2019, 06:21:42 PM

Anything higher than today's usd value in fees is "high fee" imo.

Why are you thinking in terms of USD value? 0.01 BTC was a perfectly normal mandatory fee in 2011.

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Quote from: squatter on October 30, 2019, 03:56:00 PM

He does not suggest that the users would be paying higher fees, as he says later on "there will either be very large transaction volume or no volume."

Quote from: Carlton Banks on October 30, 2019, 06:05:00 PM

There is a very long time to wait before any problems with Bitcoin's present miner incentive scheme begin to show. Literally decades. I expect that either Bitcoin will switch to a 2nd layer solution that outperforms blockchain tech, or that Bitcoin itself will be wiped out by something unknown. I also expect that either could take a long time to happen, again, perhaps decades.

In the meantime, the mining reward schedule that we're already using along with payment channels on the 2nd layer can buy a huge amount of time for people to work on a permanent solution. And there are risks in switching to a constant inflation schedule, most of the people who took an interest in Bitcoin did so because the inflation schedule was designed to go to zero, people were attracted by those economic principles.

So what are the inflation-happy people going to do if we all stop using Bitcoin and switch to another anti-inflation money? Will you keep following us every time we change to the latest non-inflating money, and start the same debate all over again? Bitcoin already is the "we-don't-want-inflation-leave-us-alone" coin

So thanks for your help, but no thanks Undecided

I don't think bitcoin will be wiped out... if something unkown shows up because of scaling problems, bitcoin will become the digital gold imo. Fees may be a bit higher, but it will be a very robust system, much cheaper than gold transactions for example.

Carlton Banks

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Quote from: squatter on October 30, 2019, 03:56:00 PM

Offchain solutions can't provide equivalent security to the blockchain.

you meant "existing offchain solutions"

I think it's important to remember that this is a very immature tech. There are people working on other possibilities for offchain tech, check out the Scaling Bitcoin conference videos for a few examples.

There is a very long time to wait before any problems with Bitcoin's present miner incentive scheme begin to show. Literally decades. I expect that either Bitcoin will switch to a 2nd layer solution that outperforms blockchain tech, or that Bitcoin itself will be wiped out by something unknown. I also expect that either could take a long time to happen, again, perhaps decades.

In the meantime, the mining reward schedule that we're already using along with payment channels on the 2nd layer can buy a huge amount of time for people to work on a permanent solution. And there are risks in switching to a constant inflation schedule, most of the people who took an interest in Bitcoin did so because the inflation schedule was designed to go to zero, people were attracted by those economic principles.

So what are the inflation-happy people going to do if we all stop using Bitcoin and switch to another anti-inflation money? Will you keep following us every time we change to the latest non-inflating money, and start the same debate all over again? Bitcoin already is the "we-don't-want-inflation-leave-us-alone" coin

So thanks for your help, but no thanks Undecided

dnprock

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Quote

Where do you get the Gold supply inflation rate? I tried to search the internet but didn't found any satisfying data.

I found the numbers here: https://materials-risk.com/the-gold-stock-to-flow-model/

"While the entire amount of gold ever mined totals approximately 190,000 tonnes (the stock), annual production is about 2,900 tonnes (the flow). If you divide the stock by the flow you get a stock-to-flow ratio of 66 years. Silver meanwhile has a stock-to-flow ratio of ~22."

Quote

I'd say goodluck with your altcoin, but 7% is A LOT.

Thanks. 7% is a lot and designed to behave opposite of Bitcoin.

Quote

You can have more transactions.
In the first case we will have much more transactions per block (some solution for scaling will show up).
Do you think only rich people use bitcoin?

You can't. Block size and block time is fixed.
Off-chain scaling will add more fee to transactions if you want to secure on-chain transactions. I think high fee will prevent average people from using bitcoin.

Quote

So, what exactly do you mean when you say "higher fees?" How high is too high, in your opinion?

I think 1% is near gold inflation. So if Bitcoin does not have inflation, fee needs to rise to cover similar amount. So that would be about 210000 BTC for 1% or 105000 BTC for 0.5% per year. Bitcoin is digital and more efficient than gold. But it'll come in as some percentage of supply.

Quote

In 2011 and prior, it was common for transactions to require a minimum transaction fee of 0.01 BTC.

I think this is because price has been rising much faster than hashrate. When price growth slows, I think fee will rise.

squatter

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STOP SNITCHIN'

Quote from: bitmover on October 30, 2019, 03:14:15 PM

Quote from: squatter on October 30, 2019, 12:06:42 PM

Can you elaborate on how that's supposed to work?

You can only fit more transactions by increasing block size. Of course, increasing block size reduces fee pressure and allows everyone to pay lower fees.

You can reduce transaction size, like segwit. Who knows if in future something that reduced even more transaction size appears. Increasing block size is not the only option.

You can scale offchain as well. You can use both solutions. Neither of those change block size.

Offchain solutions can't provide equivalent security to the blockchain.

Transaction optimization is important but fairly limited. They are linear scaling improvements. Segwit technically didn't optimize transaction size either; it just moved data outside the base block with a block size increase.

Quote from: bitmover on October 30, 2019, 03:14:15 PM

It does not require a magical solution, but a rational solution. We are in 2019 with thousands of transactions per day and you can still confirm transactions with 1 sat/byte using legacy addresses.

Actually, it is the opposite that is written there. That there is an incentive now that will last a few years. When the incentive is over, they will survive just in fees. This is what is written there. And at that point the reward would be so small that it would be only a small fraction of the fees.

Quote from: satoshi on February 14, 2010, 10:52:23 AM

Right. Otherwise we couldn't have a finite limit of 21 million coins, because there would always need to be some minimum reward for generating. In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes. I'm sure that in 20 years there will either be very large transaction volume or no volume.

Satoshi expected a very large transaction volume not a small transaction volume with higher fees.

Satoshi was comparing the situation in early 2010 -- where there was virtually no transaction volume nor full blocks -- to the future. Nothing he said suggests that users would always be able to pay cheap fees. He's merely stating what I did, that the system is currently being subsidized by inflation.

Also, keep in mind that bitcoin-denominated fees are drastically lower now than in earlier versions of Bitcoin. In 2011 and prior, it was common for transactions to require a minimum transaction fee of 0.01 BTC.

So, what exactly do you mean when you say "higher fees?" How high is too high, in your opinion?

bitmover

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Quote from: squatter on October 30, 2019, 12:06:42 PM

Quote from: bitmover on October 30, 2019, 05:37:50 AM

Quote from: dnprock on October 29, 2019, 11:44:13 PM

Zero inflation will need high fee to incentivize miners.

I do not agree.
You can have more transactions.

Quote from: bitmover on October 30, 2019, 05:37:50 AM

When incentive/ inflation is near zero, there will be two scenarios for Bitcoin: or everyone will be using, or nobody will be.
In the first case we will have much more transactions per block (some solution for scaling will show up)

There's no magical solution that will allow people to transact for cheap on the mainchain. Users are supposed to pay higher fees as the subsidy disappears -- that's the design. If you're not willing to pay the real cost of transactions, you won't benefit from Bitcoin's security.

Right now, miners are subsidizing user fees based on speculation and inflation. Not many people around here are planning for what comes after.

I don't agree and I don't think that this is the design (that users should pay more fees). This is not written in the whitepaper and it is not what is happening.

It does not require a magical solution, but a rational solution. We are in 2019 with thousands of transactions per day and you can still confirm transactions with 1 sat/byte using legacy addresses.

Actually, it is the opposite that is written there. That there is an incentive now that will last a few years. When the incentive is over, they will survive just in fees. This is what is written there. And at that point the reward would be so small that it would be only a small fraction of the fees.

Quote from: satoshi on February 14, 2010, 10:52:23 AM

Satoshi expected a very large transaction volume not a small transaction volume with higher fees.

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Quote from: kryptqnick on October 30, 2019, 01:45:18 PM

Quote from: figmentofmyass on October 30, 2019, 12:58:04 AM

Quote from: dnprock on October 29, 2019, 11:44:13 PM

Zero inflation will need high fee to incentivize miners.

agreed.

there are 2 forms of inflation:
1. price inflation, a sustained increase in prices. https://en.wikipedia.org/wiki/Inflation
2. monetary inflation, a sustained increase in the money supply. https://en.wikipedia.org/wiki/Monetary_inflation

we are discussing the second form. the OP is referring to bitcoin's fixed money supply. right now, the inflation rate is actually quite high, 3-4% annual but eventually it will be 0%.

so the issue at hand is, how do we keep miners incentivized to secure the chain? inflation is keeping them incentivized for now. later on, high fees will need to do it instead.

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Is the bitcoin affected by inflation, I have read in articles that bitcoin in not impeded by inflation or deflation however it's not a currency yet so how would the inflation be based

Kyraishi

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Why do you think Bitcoin requires an inflation model as well? Are you sure the coin needs something like constant interest for it to work?

I would disagree, Bitcoin is made in a way where inflation can be easily avoided and with miner fees and block rewards being given out there actually not much of a need for inflation with this system.

Also, fees aren't that bad currently, it's fairly decent fees to send out a couple transactions and it's nowhere as bad as wire transfers.

Harlot

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I see no direct correlation when it comes to inflation on the effects it will have in the industry. Inflation is simply the rate of the prices of basic good went up and if we simply have 0% inflation then it translates to a low demand for those basic needs thus increasing anyone's buying power with their money. With that being said I don't think that miners should be incentivize more because they actually have a higher or at least a retained buying power with the money they are currently earning now. You might be thinking about higher rates of inflation and you see the effects completely in a different way on how it can affect the industry.

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Quote from: figmentofmyass on October 30, 2019, 12:58:04 AM

Quote from: dnprock on October 29, 2019, 11:44:13 PM

Zero inflation will need high fee to incentivize miners.

agreed.

I am having problems even with this first point. Inflation means that the coin's value is decreasing. One needs more of the coins to buy the same stuff as in the past. Alternatively, it can be described as an increase in the price of goods and services. To make it more evident, let's say that in 2019 the price was 0.01 BTC, and in 2020 it's 0.015. This is inflation. Now, if this devaluation does not occur, why the fees to incentivize miners have to be high? And high in comparison with which fees? Higher than if there was inflation? I fail to see how these two are related. And I can see that it's not just me struggling to see why it is so. So could the op or you elaborate on that?

ChrisPop

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There is no need at all for inflation. That's what makes Bitcoin valuable and a viable store of value asset - because it is a deflationary currency. It has a limited supply that needs to be distributed around the world. Don't tell me that Bitcoin is not accessible to people. That is exactly why Satoshi put the decimals in the equation, so one does not need to buy an entire Bitcoin and we have denominations like mBTC, uBTC and Satoshis. Why would you need inflation for?

If miners don't get enough block rewards they won't sell BTC at lower prices or stop mining thus the hash rate drop and results in more block rewards per miner who keeps mining/verifying blocks. Less miners make the network more vulnerable, but at that point I'm sure the adoption will be so much higher for BTC. The big holders and believers are working on that. We're already seeing increased adoption of Bitcoin and I'm sure we'll see major changes especially in crypto friendly countries in the next years.

squatter

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STOP SNITCHIN'

Quote from: bitmover on October 30, 2019, 05:37:50 AM

Quote from: dnprock on October 29, 2019, 11:44:13 PM

Zero inflation will need high fee to incentivize miners.

I do not agree.
You can have more transactions.

Quote from: bitmover on October 30, 2019, 05:37:50 AM

bitmover

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Quote from: dnprock on October 29, 2019, 11:44:13 PM

Zero inflation will need high fee to incentivize miners.

[/quote]

I do not agree.
You can have more transactions.

When incentive/ inflation is near zero, there will be two scenarios for Bitcoin: or everyone will be using, or nobody will be.
In the first case we will have much more transactions per block (some solution for scaling will show up)

About bitcoin being a digital gold only for rich people... It is not now, there is no reason to think it will be in the future. Do you think only rich people use bitcoin?

Op you just didn't think or made enough research about the subject, and you are using wrong premises to create conclusions which are wrong as well..

CryptoBry

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Quote from: joniboini on October 30, 2019, 12:10:40 AM

Where do you get the Gold supply inflation rate? I tried to search the internet but didn't found any satisfying data. One issue with this inflation solution is how unpredictable the market will react. Even if it's only 0.1% inflation, then the 'no inflation ever money' argument, which makes some use Bitcoin in the first place, is no longer valid. When that happens, regardless of how logical it is, some people will ditch it. We don't know how to measure such a possibility imo. Another solution for this incentive problem is to use other coins to reward miners (like RSK).

That can be a very good idea but that can be implemented years from now when the Bitcoin mining rewards may not anymore be feasible to do the mining which can threaten many operators to just abandon their business. Rewarding them with an altcoin created for the sole purpose of mining can be one big good idea worth exploring rather than make the transaction fees more expensive as it is. This will surely be cropping years from now when rewards available are not going to be viable anymore and continuing the mining business can already be either just a break-even or worse a losing proposition.

Going back to the main topic, I think allowing inflation in whatever form, type, size or percentage to come in to the Bitcoin ecosystem can surely be subjected to heavy debates and I don't think this can be taken well by the many "hodlers" and enthusiasts of Bitcoin as this seemingly harmless idea goes against the very basic principle that holds Bitcoin as it is. That is like allowing the cat to bark or the dog to meow...very unacceptable and maybe even so unlikely to happen.

figmentofmyass

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Quote from: dnprock on October 29, 2019, 11:44:13 PM

Zero inflation will need high fee to incentivize miners.

agreed.

Quote from: dnprock on October 29, 2019, 11:44:13 PM

High fee requires high coin price.

not necessarily. the difficulty algorithm was designed to adjust to mining profitability. so as long as miner revenue (denominated in BTC) doesn't drastically decline along with the inflation rate, the system should work as designed.

in practice, transaction fees and price will probably both rise to an extent.

Quote from: dnprock on October 29, 2019, 11:44:13 PM

A little inflation, like 1%, can reduce fee. The cost of running Bitcoin network spreads to HODLers through inflation. It'll make Bitcoin more accessible to more people.

1% inflation is lower than gold. Bitcoin can still be digital gold.

If you truly believe in digital money for people, you should consider support for small inflation of Bitcoin supply.

a permanent 1% inflation rate may have been an optimal security measure, had it been implemented early on. it would have allowed us more leeway in allowing block size increases, knowing that transaction fees weren't the sole provider of future mining revenue.

it's too late now. the idea is far too controversial to gain traction.

mk4

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Paldo.io 🤖

I don't think higher fees is necessarily the only way to incentivise miners. They could also be incentivised with higher trade volumes hence more fees for the miners to collect in total, though it's debatable which is better for them financially.

Also, high fees aren't necessarily "expected". For on-chain transactions sure, pretty much for the bigger transactions. But there's a reason why second-layer solutions like the lightning network are being developed, for the sort of "coffee transactions".

As for the low inflation solution, the same has been proposed by Peter Todd in the past, and he pretty much received a good backlash for it.

Quote from: dnprock on October 29, 2019, 11:44:13 PM

But no worry, there's @bitflate with 7% inflation.

I'd say goodluck with your altcoin, but 7% is A LOT.

joniboini

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Where do you get the Gold supply inflation rate? I tried to search the internet but didn't found any satisfying data.

One issue with this inflation solution is how unpredictable the market will react. Even if it's only 0.1% inflation, then the 'no inflation ever money' argument, which makes some use Bitcoin in the first place, is no longer valid. When that happens, regardless of how logical it is, some people will ditch it. We don't know how to measure such a possibility imo.

Another solution for this incentive problem is to use other coins to reward miners (like RSK).

dnprock

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Bitflate developer

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