Topic: Monero Economy - page 12. (Read 43688 times)

If population and productivity growth both diminish globally then we will be in a Dark Age, but some where the productivity will be increasing radically (e.g. Eastern Rome as Western Rome imploded), thus the debasing currency would be applicable where it is most useful.

In the Mad Max imploded economies (e.g. Western Rome, where population fell in Rome from 1.3 million to 30,000), they will be fighting and hoarding gold and so it is impossible to help them with a currency (they wouldn't use it any way and instead will bury their money in the ground thus imploding their economy).

Q: What is 3% annual debasement to a layman?

A: $25 per month for $10,000 in savings.

Q: What is 1% annual debasement to a layman?

A: $8.33 per month for $10,000 in savings.

But if the demand increases faster than the supply of the coin (i.e. the population rises) and or the production of the economy rises (i.e. productivity rises), it could eliminate those costs above because in the former case the price of the coin rises and in the latter case the purchasing power of each coin rises.

First you must choose the long-term debasement rate category:

a) declining nominal rate of debasement, i.e. asymptotically nominally 0 a la Bitcoin
b) slight demurrage, i.e. shrinking money supply if you send it to the ether (forgot how Freicoin handles demurrage)
c) fixed nominal rate of debasement, i.e. asymptotically 0%
d) fixed % rate of debasement, a la Inflatacoin (which failed? Was it 10%? Did it exist?)


If you choose d (which apparently quite a few of us think is correct, but we may not be the majority?), then you have to decide the %.

So what determines the ideal %?

I suggested the long-term rate of debasement should mirror the population + productivity growth.

http://www.globalchange.umich.edu/globalchange2/current/lectures/human_pop/human_pop.html


http://www.nber.org/papers/w15834


So that is a range between 1.3 + 1.7 = 3% to 2.1 + 2.05 = 4.2%, i.e. 3 - 4%.

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Another way of framing this question is to consider my theory that if the mining is won by the home miner (who doesn't care about the electrical cost thus crowds out the investment miner) this increases the number of spenders, which due to Metcalf's law, increases the network effects (growth in use) by the square of the increase in spenders.


Thus the ratio in network effects growth between a 0.5% and 1% rate of debasement is ≈ 1 x 1 / 0.5 x 0.5 = 400%.

Thus the ratio in network effects growth between a 0.5% and 3% rate of debasement is ≈ 3 x 3 / 0.5 x 0.5 = 2700%.

Thus the ratio in network effects growth between a 1% and 3% rate of debasement is ≈ 3 x 3 / 1 x 1 = 900%.

The ratio in network effects growth between a 3% and 5% rate of debasement is ≈ 5 x 5 / 3 x 3 = 278%.

The ratio in network effects growth between a 3% and 4% rate of debasement is ≈ 4 x 4 / 3 x 3 = 178%.

The math shows that going to higher percentages diminishes the potential gain in network effects growth for the same difference, e.g. 3 - 1 = 2 and 5 - 3 = 2, but the former is 900% and the latter is 278%.

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One counter argument to the benefits of getting more coin into spenders hands is they spend putting a downward pressure on the price. But this liquidity means the price seen on the exchanges is more realistically the marginal price you will pay. Whereas I had pointed out that when liquidity is low, the market price is meaningless.

The conclusion I was leading to is the same as yours. If bitcoin doesn't remedy the issue it will be abandoned long before such a situation manifests.  I was kicking this horse when bitMonero was still just an idea, and the community's anti-inflation paranoia gets in the way of implementing a solution that can really work.

My hypothesis is that all consensus built via stake (voting) is centralizing.


Satoshi's longest chain rule via Proof-of-work. And we are contemplating improvements to it.


The way open source appears to work best is all discussion is open, but when it comes right down to it, the leader keeps the direction focused. Watch Linus Torvalds explain it (also explains why people get annoyed with my posts).

After Satoshi left, Bitcoin was leaderless and no significant innovation was achieved after that.

Is it possible for consensus to be between miners and stakeholder, so it's not just stakeholders that get a vote? I mean after all it's the miners doing the work.

Also, is it possible for any other mechanism other than stake to reach consensus?

Again, I'm no expert so I have no idea what I'm talking about but just an idea.

P.S. on the subject of how to best run a cryptocurrency, if given the power, how exactly would you dictate your perfect cryptocurrency? What decisions are best left outside the control of the masses?






It actually refers to after all the coins have been emitted and the question of if transaction fees are enough to sustain mining. If tx fees are, then there is no block reward, but if it isn't then some new coins are created, but how many coins is to be decided by the network.

I have an incentive to contribute in that way, because we all benefit from hashing out the ideas.

I meant those who have implored me publicly and privately to contribute actual programming effort. So now they have my answer.

Ah, but you are contributing, by posting on these threads. If you feel that is not a good use of your time, you know what to do.

Even just bumping the threads is contributing in a useful way, and we thank you for that. Relevant on-topic content that provides insightful input to the development process is a bonus.

in general i like the idea.

BUT: i think a possible unlimited inflationary money supply would fear many investors away

does your idea mean that miners only get rewarded by transaction fees or do they get nothing?

i'd like to see an working example with miners working only on fees! that sounds intersting...but more as an experiment.

the next problem is how to reach consensus in the second chain. in btc side-chains or merged mine chains are possible so i'd say it could be implemented...) the tough questions are: how to vote: pos like with your current stake (by submitting it to a pow proofed sidechain) or by burning some of your coins?

edit: imagine a very big exchange gets robbed. it could bribe holders with fiat to vote for a bigger supply to make it possible to recover that loss. i am unsure if i like that. need to think more about it

I hope you understand that all voting (consensus by stake) mechanisms are centralizing.   (don't tell me you are surprised that for example the Bitcoin Foundation ended up as centralized and corrupt)

And so now you have my answer why I don't contribute to the development of Monero. Because design-by-commitee (or worse, design-by-the-mob consensus) is proven to be an abject failure. All great open source projects have a Benevolent Dictator (For Life), who makes these key decisions correctly after fielding all input from the community. I don't see strong enough leadership (I believe there isn't even one leader, i.e. it appears to be leaderless organization) nor do I see agreement with the concepts I want implemented in an altcoin.

If you look at what works (and what the Apaches actually did) is many leaders each leading their own competing projects (families or clan). The competition is what ends up forming the overall outcome of leaderless (resilient) organization but optimally because each competing entity is not leaderless.

The breakthrough of Bitcoin was the creation of a protocol for the network to reach consensus on how the next block was created. But this is for deciding transactions (and yes it just so happens that block rewards are also given at that time too) but what if there was another protocol created so the network can reach consensus on how much reward is created?

So there are camps of people that like the current setup with Bitcoin having a hard cap, and then there are proposals for a fixed constant block reward (e.g. 1 coin per block) or even block rewards based on a fixed exponential growth (e.g.. 0.5%-1% per year), but what if the block reward is instead reached by network consensus?

So in that case, it may be possible that the network can go 100 year without ever raising ANY reward, so you get absolute hard cap on supply. But if the network decides that there needs to be some new coins released, it does that and the effect may be tiny growth, maybe even on the order of 0.0001% or even as large as 2% depending on how much coins have been lost, or how expensive it is to process transactions. In this case, no hard limit is set on the amount of new coins created, (i.e. some people are very against say 2% growth), the amount is flexible (may even be 0%), and entirely decided by the network (i.e. it is "fair").

Do you think such mechanism is possible?

Hyperinflation never happens to the reserve or empire currency. It only happens to fringe and revolutionary governments. Martin Armstrong explains this in great detail on his blog.


You can join Kurzweil in his vacuous nonsense.

The human economy has always been and always will be using inflationary currencies, your selfish hardtardmoney delusion aside.


You think the target market of crypto-currency are investors. No that wouldn't be a currency. The target market are spenders and users of the facilities (network effects) it brings.

The key to beating Bitcoin is making a currency that is more popular TO USE, not just to invest in.

Think for example social media.


I couldn't disagree more.

You've got to create uses for the coin. And the best way to do that is put the coin in the hands of as many spenders as possible so as to stimulate the demand for such facilities and network effects. The whales will be buying the spent coin and the virtuous spiral (spenders mine -> spend -> investors accumulate) spirals upward.


Please do fixed nominal debasement or some tiny % such as 1%.

That will leave the door open for a coin to do it correctly. Thank you very much.

You are conflating the debasement of the dollar with the artifacts of the power vacuum of democracy.

The repeating cycles of failure of the collective is not due to debasement. Debasement is absolutely required because growth of the population and productivity is exponential (percentage, not fixed nominal amount)-- hard money tards would rather savings eat productivity because it means capital can grow in purchasing power merely by sitting in hole and not being productive. Even the Bible admits this when it says in numerous versus about money "it will grow wings and fly away" and the punishment given to the tard who buried his hoard in a hole (to "keep it safe") in the Parable of the Talents was all his hoard was taken from him and given to the one who put it to productive use earning a compounded interest.

The centralized control over debasement is one of the levers afforded to the power vacuum, but it does not logically follow that decentralized debasement is.

Finally someone gets it.  

I figured that out a year ago but most everyone was looking at me cross-eyed.

I am still having difficulty agreeing that human population growth + productivity has only averaged 2%.

The currently low birth rates in the west are an artifact of the massive bankrupt socialism, so this will end.

No, what it means is, people abandon the coin, stop using it, and move to a coin that has a fixed, non-zero subsidy of most likely 1-2%.  In other words, Bitcoin itself will either have to dwarf every other coin in market cap and liquidity, by exponential magnitude forever to avoid this, or even BTC itself will die if they refuse to fork to non-zero block reward.

The demand for liquidity has presumably also increased proportionally, so I don't think your postulate is correct?


That may not be the case if the masses are mining with electricity costs that are a multiple of the income from mining. The fat cats would then have to mine at-scale at huge losses. So instead they must buy at market prices which drives the prices higher thus supporting my claim that price scales to mining demand.

OTOH, even if I am correct that price will scale to mining demand and if this caused mining to always be profitable for masses (which I don't think follows, because in economics we have the very important concept of marginal vs. average price), the balance of distribution shifts towards masses due to second order effects (velocity not just position).


Capital will chase adoption because price yield scales to demand.


All monetary history disagrees with you.


Debunked above?

You are assuming the masses hold most of the wealth, that is likely false. Yeah grandma may do the wrong thing. George Soros probably won't. For that matter, her grandkids (or theirs) probably won't either. It's a bit like getting scammed on the internet today. Grandma is a far higher risk than the grandkid.

There are lost coins at least. Without new coins the money supply will definitely shrink forever.