This coin has 750% annual interest??? That does not bode well for price stability. What's the idea here?
HYP is a very complex coin. As a full member im suprised your just hearing about it now. It has inflation control mechanisms so that inflation does not get out of control. As more coins are being minted the pos difficulty rises to slow inflation. Larger coin blocks are required to stake in the least time possible. Because larger coin blocks are required to stake in the least amount of time, this raises the demand and thus raises the price. Still keeping the 750% annual true. This is the short version. Youll find thousands of satisfied investors here, and the best devs in cryptoland. Youll find it VERY hard to find someone who actually holds Hyperstake that is disappointed. Read the thread, youll see.
Damn, I actually did a good job of explaining that well. hmm.. @presstab you have my permission to post this to the op. It might be an easy way for people to understand.
Vegas
What you are describing is closer to NVCS ("As more coins are being minted the pos difficulty rises to slow inflation"), although NVCS doesn't care about blocksize at all.
HyperStake works differently.
HyperStake gets away with the usual inflation control mechanism found in all pre-HYP high-PoS coin, a mechanism called NVCS (NoVaCoin Stake, after the coin which created it). Instead, it use
two inflation control mechanisms:
max subsidy (no more than 1000 HYP of reward per block, whatever the blocksize) and
max generation (maximum of 960K HYP per day, whatever the amount of HYP staking).
The most dramatic inflation control is
max generation but it had not kicked in yet (and the wiki page on
max generation has a quote by Presstab on why it might not kick in for quite some time).
max subsidy also controls inflation, mostly by lowering compounded interest (since it takes more time for you to get your reward), but it is mostly good for ensuring security of the network. The rest of my post will deal with
max subsidy and so not that much with inflation control.
What is this "security of the network" thing? To understand it and why it matters, a bit of background in necessary here.
Contrary to proof-of-work, where the security of the network comes from miners using electricity to solve complex algorithms (like SHA256 for bitcoin, scrypt for Litecoin, X11 for Truckoin, the mother coin of HyperStake...), proof-of-stake only
simulates these calculations. It requires much less electricity and can be done on a regular computer, which is much better for the planet (one of the main selling point of Peercoin, the first proof-of-stake) and is also better for fighting "mining centralisation" (where basically miners are more and more professionals and less and less ordinary citizens - the opposite of the dream of Satoshi in 2009).
Both PoW and PoS are meant to ensure the security of the network. A common misconception is that mining (and its PoS equivalent, staking) is meant to give you more money. This is not the case and the confusion is understandable, since the real-world mining (mining ore like gold and silver) is really meant for just for that - moar munnies. Instead, the real goal of PoW and PoS is to secure the network, to be sure that the network is reliable and can be trusted. The reward (block) is really only an economical incentive to encourage people to secure the network. Once again: goal is security; reward is just an incentive. When you mine a bitcoin (or stake a hyperstake), this is only the network telling you "thank you for securing me". That's all. Satoshi solved the Byzantine Generals problem by introducing an economic incentive to cryptography.
In cryptocurrency, security comes from... greed.
So, now, you shall have understood the network security. So, how does it relates to
max subsidy?
The HyperStake network is
as secure as its number of blocks. At the very beginning of HyperStake, in June, the network was so insecure that Presstab even considered hard forking for a shorter minimal generation - for 8.73 days, the network was pretty much insecure, because only stacking blocks secure the network, not all blocks.
The bigger the block, the faster you stake (minimum is 8.73 days, whatever the size of the block, though). So, the best strategy should be to have one huge block, to leave the wallet closed for a bit more than one week, to open it, to have the massive block stake in minutes, and to shut the wallet down again - or even worse, to merge the new coin with the oldest one (to have an even faster staking block) before shutting it down.
But there would be a problem here. Each address would have only one block. That means the network as a whole would have almost no block at all (remember, the size of the block doesn't matter, only the number of them does). The network would be bloody insecure (even less than in June 2014, at inception). Particularly considering that, contrary to hybrid PoW/PoS, there is no PoW to protect the network (but a much better carbon footprint than a PoW/PoS).
The is were
max subsidy comes into play. Remember what I said on the aparté about network security: security comes from greed or, to put it in a more neutral way, security is achieved through an economic incentive.
max subsidy states that, whatever the size of your block, you won't get more than 1000 HYP as a reward. Suddenly, the best strategy is not anymore to have One Big Block™, but the opposite: to have blocks that won't "waste" potential. If your block is so large that, by the time of reward, it should have given you 1200 HYP, then you potentially lost 200 HYP. But if you instead split your block into two smaller blocks of half the size, then you get two times 600 HYP (which is below 1000 HYP
per block). So you get your 1200 HYP.
The beauty of
max subsidy is that it offers a win-win situation, for both the network (more block = more security) and for the user (more HYP).
Other coins, like BottleCaps and soon HoboNickels, use
max subsidy. But as far as we know, HyperStake is the only coin to use
max generation. HyperStake from the start is meant to be an experiment in economics and you can be sure we are very serious about experimenting. And this is far from the only experimentation we are running now - without even considering that HyperStake has the most advanced coin control wallet to date, read
Endowment and
HyperPool for instance.
Finally, there is not that much money on HyperLoan, even if everyone gives the money back and less people ask for the HyperLoan.
