Topic: Is there merit to a fixed supply increase rather than fixed supply cap? - page 3. (Read 534 times)

The truth is no one probably knows. Cryptos in general are a totally new concept to economist and there is no way to prove those theory correct or wrong. What you've suggested is essentially a tail emission model, where there is a steady monetary inflation rate after a period of time. This ensures stability by providing miners with a stable block rewards, and isn't like Bitcoin where miners have to rely on the fees.

Bitcoin as a currency is very different from fiat, where financial institutions are able to introduce measures to manipulate the economy.

How about because you don't need to.
There are tons of alt-coins out there with different options and coin amounts and features.

But think about this as of now BTC is #1 in market cap.
Adding the market cap of #s 2 through 20 you still don't get to the BTC market cap.

So keeping it the way it is really seems to work better then mucking about. You want more coins / more decimals / something else go to the altcoin section.

-Dave

maybe certain people dont understand fixed supply..(two other network fans suggesting dividing bitcoin(facepalm))

when someone says increase the decimals. they are actually advocating to increase the supply.
when these people learns about sharable units(doubt they know) and understand increasing sharable units=increasing the supply they might learn that whether its increasing it at the top or bottom is the same thing.

the unit btc. is not existent in the blockchain, nor raw tx data..
its just a multiplication for human easy reading.
the actual rule of supply is at the lowest unit of measure. not the basket/box term of convenient math multiplication

at code level there is only one unit of measure.. (sat)
and since 2009 it had 5000000000 units every block produced which halved every 210,000 blocks
that is the real scarcity rule..

by increasing the units per block is increasing the supply
it does not matter if you call this new supply
6.25000000000 btc
or 625000000000 msat
at user graphic interface level..

at the code level its the same amount of sharable units being created per block
(1000x more than current)
..
lets stick with the scarcity rule
625000000 halving in a couple years.. not becoming:
625000000000(1000x less scarce)

the only reason a certain few people in this topic is advocating for an 'increase in the decimals' is because they are a fan of another network created less than 6 years ago that uses 11 decimal tokens and they want bitcoin to become more compatible to this other network.
destroying bitcoins scarcity code (units of measure limit) purely to pump the ideology that people should use this other network instead.


in short. no one should change the units of measure of bitcoin..
if you want a different measure go play with another network and leave bitcoin alone

A fixed supply cap only assumes that there should be a set amount of money within circulation, the bad thing about this set up is, money lost within the circulation would still incur value and since rendered unusable, the central bank must make up for the lost banknote by creating another of that denomination. Thing is this will negatively affect the value of the currency, which in turn could cause inflation due to overprinting of money. On the other hand, having a total fixed supply ensures that no money can be made after all have been released into the public, keeping its value and importance intact, and even if some of the money gets lost in circulation, knowing that there's no way to create more money means that the coin's value stays relatively the same, at the expense of less hands who can get to use the money which is not that good either. Bitcoin may not be able to make up for the additional humans who would have to use the currency as he/she grows up. This could result to people resorting to a much more abundant currency to accomodate their purchases. This is one downside of a deflationary currency like bitcoin, it only ensure the value of the coin, never the amount of people who can use it.

On practice it's irrelevant to the world, because Bitcoin has so little users that you can't observe its macroeconomic effects. With the current level of adoption it would take hundreds of years until Bitcoin will start having some wait, and not only because so little people use Bitcoin (estimated 30-50 million right now), but also because these users mostly just bought it and hodl without using it as a payment method.

The thing we will be worrying about in 20-30 years is if transaction fees will be enough to guarantee enough security against 51% attacks. If not, then that could be an incentive to adopt uncapped supply and block rewards, but it's still too early to theorize about it.

Because I reject the notion that removing the fixed limit is either "something small" or an "improvement".

Bitcoin is well known for having a fixed supply. Even people who know little else about bitcoin, know it has a fixed supply. Removing the fixed supply and moving to an inflationary model is not something small, but rather is changing one of the fundamentals of bitcoin; a fundamental that many people based their decision to buy bitcoin on. The uproar would be massive. I can just see all the low quality clickbait headlines now about how there are now potentially "infinite bitcoin" and therefore it is guaranteed to be worthless in the future. If we can change something so fundamental to bitcoin, something that Satoshi himself set, then what stops us changing anything else? What stops us making it 10% a year, or 100% a year?

As DooMAD has said, if you need "more" coins, then you can simply divide them in to small denominations. Changing the fixed supply is fundamentally changing bitcoin.

Because with a fixed supply cap, we don't have to worry about the price of the coin going down, with a limited supply and close to infinite demand, we will see a high price for each of the coins in the supply because it's limited and it's getting scarce each day. An increase in supply cap is going to make the prices go down since there's a lot for many to go around.

AFAIK, current popularity and sky high price of bitcoin is because of its fixed supply of 21 million coins. There are successful hard forks of BTC but none even came closer to break the popularity of BTC. BTC despite all odds still has confidence of its community. After every halving we see change in BTC price, which clearly tells that this controlled inflation has worth.

Credibility isn't to be underestimated.  If we start breaking guarantees that were made at the start, where do we draw the line?  A few vital fundamentals need to remain set in stone for Bitcoin to be credible.  No one will take it seriously if we set a precedent that we can just move the goalposts whenever and that certainty isn't assured.

Why do you think a fixed supply cap is better?

I understand the "move slow, don't break things" mentality that surrounds Bitcoin developers, but I don't understand the resistence to change. If there is something small that can be improved why not just do it. An example is certain parts of the code erroneously require certain fields to be in "reverse byte order" while other fields don't. This was clearly a coding error from Satoshi. Why not just change it?

The tricky thing with questions like this is that some people will like the idea, while others won't.  In order to implement the idea, it would involve a hard fork.  Many would opt to stay on the original chain.  In effect, you end up creating a weaker chain with fewer users than you would have if you just left things alone.  Yet another forkcoin like BCH/BSV/BTG/etc.  It doesn't really get you anywhere.  Sticking with the status quo will generally result in a stronger network.

Whether an idea has merit or not isn't sufficient justification in my view.  Upgrades have to be regarded as necessary if they are to be successfully implemented via hard fork.  

Personally, I would prefer to look at increasing the number of decimal places, allowing for greater divisibility.  Increasing overall supply above 21 million is a red line for me.

Global population growth is about 1% every year.

A fixed total supply means the currency is deflationary, after accounting for population growth and lost coins. Could this system potentially over-incentivise saving?

Would it be better to have a fixed supply increase of 1% every year instead? Under this system, it would be only mildly deflationary due to lost coins. This means that in the long term, $1 today would still be worth more slightly more than $1 in the future (a "reward" for delaying gratification and still satisfying positive time preference). I know 1% pa is probably not much in the scheme of things, but wouldn't this be a more neutral choice which doesn't over-incentive saving nor over-incentivise investment?