Topic: Is Ether in unlimited supply? (Read 8419 times)

Never discuss with alt trolls who FUD BTC and call it kinda dead

Yes, this is an (educated?) guess of mine.  It was exactly bitpay's old charts that made me believe that at least until 2016, there wasn't much volume in bitcoin as a payment system.  Of course, I cannot really know what is the true volume of bitcoin for payments, but I know that all the volume on exchanges is mostly NOT for payments.  And I remember that the 2016 charts of bitpay indicated a minuscule volume as compared to the volume on exchanges.  Of course, I don't know how many people pay for stuff without going through such a payment processor.

https://qz.com/931810/cheapair-and-bitpay-data-show-rising-bitcoin-btc-payment-volumes/

In December 2016, there was a total volume of $169 million processed by bitpay.

That is less in a month than the DAILY volume of bitcoin on exchanges.  That puts bitpay at 3% of the bitcoin volume, and, if we follow Fisher's formula, the market cap sustained by "currency" of bitcoin, at 3% of its announced trading market cap.  Now, let us assume that bitpay is only capturing one half of the bitcoin commercial volume, we are at 6%.   Add dark markets, its principal commercial application, and we are maybe at 15%, but that is a generous guess.

Was it Ethereum or Monero who justified some inflation because each year some will get lost. For example people will die and no one will know their public key...etc

i don't know if you are joking or what but this is not 100% correct. bitcoin demand is rising, and this demand is in very different forms.
yes most of it is in form of traders accumulating bitcoin, knowing it is limited supply and price will rise and they want a big ass profit in a couple of years from now when price is five digits!
but a big part of it is also because many are seeing bitcoin as a decentralized cryptocurrency that nobody can control. they get a good level of privacy and reaching anonymity with bitcoin is also a possibility. so they use it also as a currency.

and this:
is nothing more than your personal guess!
there is no easy way of proving this but we can see the different merchants that start accepting bitcoin every day, we can see the volume that is going in and out of a payment processor like bitpay (which has been growing with a fast speed each year by the way). we can also see countries like Japan adopting bitcoin as currency and other countries talking about it.

i will add the bitpay charts here if i can find any updated version of it for 2017.

EDIT:
and that is just Bitpay (a third party bitcoin payment processor working with a small portion of all bitcoin accepting services) and in 2016 their numbers have doubled and it continues growing processing 200,000+ transactions per month.
now consider all the other smaller and big services accepting bitcoin "directly". and this is the demand that i was talking about and it is growing.

Link in case it doesn't show up for some weird reason: https://i.imgur.com/MCVctOP.png

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it is funny a year has passed and ether has still not made up its mind about its unlimited supply. LOL

Well, I'm not sure.  That's not rhetoric to say "I'm convinced of the opposite".  It is a true statement: I don't know.

But I have my doubt about the validity of the rebuttal on "deflationary spiral".  In the bitcoin wiki, this is waved away with the following argument:

https://en.bitcoin.it/wiki/Deflationary_spiral

"Everything is the opposite of the popular fractional reserve banking system (because Bitcoin isn't a debt but an asset). Bitcoins only deflate in value when the Bitcoin Economy is growing. "

In other words, this took the stance that bitcoin was mainly a currency, and that its value increased because of Fisher's formula: people were buying more stuff with it, the demand for bitcoin, in order to buy more stuff with it, increased, and that increases the price of bitcoin (decreases the price of stuff as measured in bitcoin).  In other words, that bitcoin's price was backed by the "economy" that could be bought with it as a currency, which is the usual backing of a normal currency.

But this is clearly NOT what is happening.  Bitcoin's price is not rising because of the rising demand for it to buy stuff on the internet.  Bitcoin's price is totally determined by traders wanting to see it as a speculative asset, which is the argument of a deflationary spiral, that if people notice that their "currency" is gaining more value by just HODLing it, they would be crazy to spend it.  So they don't use it as a currency (they use a substitute, here, fiat, for that).  Of course, you can spend it, if you take into account a *KNOWN* deflation (or inflation): you correct for the prices and the time lapses.  But nobody knows the deflation of bitcoin (the value growth of bitcoin).  And very few people spend it as a currency.

So bitcoin becomes essentially a hoarded asset, and the amount of bitcoin in circulation is small as compared to the amount of hoarded stuff, giving a false impression of a huge market cap.  This is fine and dandy as long as the price is rising, which will be the case as long as *new capital* (mainly new users) are flowing in, because the price is rising.  However, at a certain point, this influx in capital will dry up: there is not an unlimited amount of capital outside, available to flow into this ; at a certain point, the influx in capital needed to sustain a rise, larger than most ROI in the rest of the economy, becomes larger than what is available.  So the rise cools down to less than spectacular deflation.  What happens then ?

People thinking they are sitting on a trillion $ worth of coins cashing out ?  The market cap is simply not representing the stored value, but only the size of the coin pool, times the *last* gains, when there was only a small amount of coins in true circulation, all the rest hodled.

The question I don't know how to answer, is: can such a system potentially be maintained at that high level without extra growth, or will it necessarily crash down when people don't see growth any more, and want to cash out ?

Yes, there is no limited supply, but it can be changed if needed, and after the transition to PoS, the daily production will be much lesser. I would not worry about that.

as a store of value it's more than perfect. as long as enough people want in the only way is up.

Yes it will be "unlimited" if time is infinite, but it isn't in the sense that only a certain amount of Ether can be made every single year. Even after switching to proof of stake.

Actually, this "limited supply" of bitcoin was one of its biggest mistakes if ever bitcoin intended to become a currency (which it isn't going to be).  But it was a brilliant marketing gimmick.

First of all, "limited supply ever" is a silly notion, because nobody cares what will happen when the Sun will swallow the earth 1 billion years from now.  So we can say that whatever we do, all of our plans are going to be limited to at most 1 billion years.
Well, within 1 billion years, a coin with tail emission such as ethereum will also have a "finite supply".

The belief that it matters whether after 1 billion years, there will still be coins emitted or not, is ridiculous, I hope you agree.  Now, consider a coin that emits a constant block reward for "the first billion years, and then stops emitting rewards".  Strictly speaking, that is a coin with limited supply, like bitcoin.  Only bitcoin does it over 140 years, and this coin, over 1 billion years, but in principle, both are coins with limited supply.

Now, consider another coin, that has the same emission as the first one, but doesn't stop after 1 billion years.  This is an "evil coin with unlimited supply" because it will emit still coins at 3 billion years, while the first one, and bitcoin, both stopped.

There's honestly no difference between both: their emission schemes are identical for the first billion years, and after that, none will exist.

Bitcoin has been emitting new coins ever since it got in existence, and most probably, bitcoin will disappear before 140 years.  So bitcoin will also be a coin with "unlimited supply during its life time".

But the fundamental reasons why this decreasing supply is problematic are the following:
1) "unlimited seigniorage".   The early adopters got their masses of coins, which were easily produced, for very low costs, and will, as time goes by, be able to spend them to obtain more and more value.  Being able to make money at a much lower cost than it represents afterwards, is exactly what seigniorage is about.  So these early adopters are the equivalent of central bankers printing money almost for free, and being able to buy a lot of stuff with it.  In fact, the emission curve of most coins, like bitcoin, is inverse to what it should be.  Ideally, the emission curve should follow adoption: in the beginning, almost no coins, and then, as adoption increases, emitting more and more coins, so that a price stability follows, and all participants have similar seigniorage (which they burn with PoW).

2) deflationary spiral and hoarding.   An asset that is rare and of decreasing supply, takes on value in many cases.  As such, one has no reasons to spend these coins, but rather to hoard (hodl) them.  But then, they are not used as a currency.  You'd be crazy to pay someone with a coin today against value X, if you know that that coin will be worth 2X tomorrow.  You keep your coin, and you pay the guy with some less valuable asset like fiat.   So nobody is really interested in using bitcoin as a currency, but wants to buy it mainly to hodl and "invest".

Uh, wat? No hard cap is terrible for everything.

if the elites wanted to counter bitcoin do you honestly think they'd come up with something as crazily convoluted as ethereum? nope. it would look like a pokemon game or something.

as for a hard cap, i don't think it makes any sense for something that wants to be a currency. great as a better gold, terrible for day to day use. in this case monero has it right. i can't keep up with ethereum's plans.

72 Million premine, no hard limit (limitless supply).  NO WAY WILL I EVER BUY ETH!

The blocktime was originally 10sec, that's where the 5m eth goes 

I am still confused about how this exactly works and can't find a helpful answer in the internet.
I unterstand the block reward is 5 Ether and the block time is 14,6 seconds (https://www.etherchain.org/). So let's calculate:

5 Ether / 14,6sec * 60sec * 60min * 24h * 365days = 10800000 ETH/year

In the whitepaper is stated that the yearly supply is 26% of the presale (60102216 ETH). This equals 15626576 ETH.

Where does the missing 5M Ether come from?

It doesn't matter investors ROI were huge enough and everyone doesn't care about it anymore. Win-win situation for Vitalik and his team.

Since the "gas" concept burns tokens (I think , or does it redistribute them to miners), it seems they will have to create new coins eventually. On top of that, the banks would not be clamoring over a non inflationary currency. Where's the fun in that?

Comparing Bitcoin to Ethereum is like comparing Elvis Presley and New Kids on the Block. Elivis is always King of Rock and Roll. New Kids on the Block where replaced within some time.

Clearly the Ethereum shrills in reality that ether is going to overtake Bitcoin as a currency. This has Fedreal Reserve and major banks written all over it...

Wrong 72M Ether premined.

There was an additional 17% premine by the devs. WTF

https://www.etherchain.org/tx/0x9c81f44c29ff0226f835cd0a8a2f2a7eca6db52a711f8211b566fd15d3e0e8d4

Bitcoin is Bitcoin. It will still exist. Ether is used as fuel to run dapps. It can only work with a steady price.  How will DAPPS work if ether is bubbling like Bitcoin. Inflation decreases exponentially down to 1% after 100 years anyway. 

Bitcoin will still be inflationary in 100 years as the last coins are mined.

Bitcoin and Ethereum can coexist in fact you can run Bitcoin through Ethereum anyway.  Ethereum blockchain is designed to do totally different things than Bitcoin blockchain can do.