Topic: [StableCoin] Looking for inflationary cryptocurrency developer (3 btc bounty) (Read 3531 times)

Please, do not negate if you add no arguments. I explained thoroughly why inflation is needed and even added references. You said it's not true, but didn't say why. That is a kind of discourse I will not follow.


If you were kind enough to have finished reading my post, you would have realized that that is precisely what I stated. 2% monetary inflation = 2% wasted costs.


I have it bookmarked, but I doubt I will agree, based on how you just presented yourself. Either way, I am sure there is a solution to the unnecessary costs of mining. I am intrigued to learn more about it.

The OP's idea is actually not very sound, because Milton Friedman was talking in terms of a sovereign currency. It does not apply well to bitclones.

Even if you assume that somehow this currency has gained wide acceptance, a 2% yearly increase in the money supply means that close to 2% of the economy's resources will be wasted on producing new money via mining. This is a horrific economic motivator. More efficient mining equipment does not make this better, it just makes new competition. The alternative is to centralize the creation of new money, which is also the source of network-approved transactions. Conflict of interest, anyone?

In my proposal for decrits, this is solved by separating the creation of money from network security. Money does not need to be constantly created, and security is paid for by transaction fees. There's a lot more to it, so I'll just say check out the link in my sig if interested.

It's sad to listen to programmers talk about Economics. The OP's idea about a fixed monetary inflation is actually very sound. It was first proposed by the monetary economist Milton Friedman in the 1960s who, as a matter of fact, won a Nobel Prize for it. Back then, it was technically impossible to implement. Now it is possible, but people forgot about Monetary Economics, it seems.

The OP confuses the terms "monetary base" and "money supply". I suggest googling it. Many of his following posts are backed by flawed arguments, unfortunately, which do not help his cause much. There is no reason to think "2% monetary inflation is best" or "4% monetary inflation is best" although Milton Friedman talked about 4%, I believe. There are several tendencies which go against each other in terms of what the ideal should be. I could list a few:
1) Close to all newly minted coins will be costs in the long run as competition prevents any significant profit on mining. Costs are ineffectiveness of the currency, obviously, and they lower the currency competitiveness. (My home currency, the Czech Crown, for example, has minting/printing costs estimated to about 2% for cash.)
2) The monetary inflation has a strong positive correlation with the money supply. For a growing economy, the closer the change of money supply goes to zero, the higher the speculation on the currency exchange rate. It is so because at zero, the growth of the economy translates fully into the appreciation of the currency. Investing into the currency has the same returns as investing into the economy, but has lower risks, resulting in everyone speculating on the currency exchange rate (everyone who expects risk-adjusted returns to his investments lower than average for the economy). The higher the change of monetary base, the lower the speculation on the value of the currency. More stable currency is then more competitive.
3) Price inflation is strongly correlated to monetary inflation. People prefer price stability. For prices to be stable, the money supply must grow at the same rate as the economy grows (considering constant speed of transactions and liquidity preference etc.)
4) People also like their currency to be the store of value. The higher appreciation of the currency value, the lower incentives to invest using the currency. There is a trade-off between the currency usefulness for transactions and its ability to be the store of value (hence between high and low monetary inflation).


 In a fractional-reserve banking system, the monetary inflation is lower than the change of money supply (the coeficient between the two being called money multiplicator).

As you can see, the ideal monetary inflation depends on people preferences, banking system and it cannot be determined. 2% is probably not a bad guess at all though.

Bitcoin 2.0 as you like to call it, will most likely include some form of long-term monetary inflation. However, there are many other issues with bitcoin that need to be addressed and changing just one will simply not cut it. The ones that I can think of are transaction speed and anonymity. Ripple technology deals with the former, Zerocoin add-in with the latter.

If you could offer a coin with at least these 3 changes as well as security improvements, you would have a chance of beating BTC.

The idea is to create a StableCoin that is complementary to the volatility of BTC. The initial primary users would be BTC speculators. STC gives them a stable, safe counter position to trade into when BTC values are falling. When they think BTC will rise again, speculators will trade STC for BTC. Such a complementary coin doesn't exist.

Most of the other alt-coins have fixed monetary policies similar to BTC. While they don't rise and fall in perfect sync, coins like BTC and LTC do seem to trend together. This makes them competitive rather than complementary. No sense trading out of BTC and into LTC when both are falling, nor when both are rising.

So what makes my StableCoin stable? The BTC speculators' themselves.

I'm proposing a coin with a dynamic minting policy. Let's say we start the system out minting 50 STC a block. Then during each block building period, we let STC owners vote to raise or lower the minting rate of subsequent blocks. STC owner vote by irrevocably burning coins. A vote to raise the minting rate requires burning 1 coin. A vote to lower the minting rate requires burning 1 coin. The vector sum (positive up votes plus negative down votes) sets the direction and magnitude to change the minting rate. So 10 positive votes and 8 negative votes gives a net +2. This means subsequent blocks will mint more BTC per block than the current block will mint.

Consensus on policy can be determined by comparing the vector sum to the magnitude of the vote.
So in this case there were 18 total votes that summed to +2. Mostly disagreement. So we should raise the coins/block rate, but not by much. If however the up or down vote was nearly unanimous then we should change the rate much faster. The ratio of (net votes) to (total votes) describes the external market for coins.

Minters will vote up when they think their personal benefit will exceed the cost of their up-vote. STC hoarders will vote down when they think inflation might eat into the value of their hoard. The "social contract" of the coin is to keep its value stable. When minters and hoarders work together, monetary policy can be adjusted quickly and cheaply. When they work against each other both burn money accomplishing nothing.

Here is how a sudden demand increase for STC might play out as block votes progress:

0:0 = Exchange price is at the StableTarget. Everyone is happy with the current minting rate.
1:1 = (Initial Detection) Exchange price is slightly above target. Increase minting some.
10:10 = (Consensus) Exchange price is way above target. Open the minting flood gates.
6:10 = Exchange price is correcting. Slow rate increases.
0:10 = (Disagreement) Exchange price is correcting. Don't change rate.
-2:10 = Exchange price is over correcting. Reduce the minting rate.
-1:5 = (Growing ambivalence toward change) Exchange price is recovering.
0:2 = (fading disagreement over rate change) Exchange prices is converging to StableTarget

Somewhere in the deltas of those two values is a non-linear function that describes how to change the minting rate. I'd have to look it up, but I'm pretty sure this is directly related to balancing an inverted pendulum.
http://en.wikipedia.org/wiki/Inverted_pendulum

It is of course possible for speculators to "drop the pendulum". In this case that would mean:
1) Run away deflation. (zero minting in the face of growing demand) Or
2) Run away inflation. (continued minting during falling demand)
Letting either of these cases happen runs counter to BTC<->STC speculators' best interest. 1) creates a useless BTC clone that nobody will buy into. 2) creates a crashing STC that speculators can't sell out of.

So the "experimental" nature of this coin explores cooperation among self-interested parties sharing a common goal. Anyone interested?

Once someone gets it into their head to create a scamcoin, rational arguments are usually fruitless.

They are going to do it regardless, even if they end up throwing their rationalisations away and just admitting yeah I wanna make another scamcoin, its a free world, now shut up and let me get on with it.

-MarkM-

This is hopeless.

That's simply not true because total units added have one channel by which they enter the system, and that's through miners.  So, no, total units can never be irrelevant because even if it does not affects units in circulation, it still affects the rational decisions of miners whether or not to mine.

This whole discussion has become convoluted and quite frankly idiotic.

I may have found a developer.  Hopefully, we will see.

Then you misinterpreted me an additional time. I was referring to the mining subsidy, as it does eventually reach zero when bitcoin can no longer shift the bit anymore. I was making the point that even if no new money is created, the money supply can still increase or decrease. Whatever the measure of unit it does not matter. $1, $5, $0.01, mBTC45--those are denominations.

I can't make a point for you if you keep taking some weird misdefinition and completely reinterpreting what I said--exactly what I was warning you about with bitcoinomics.

edit: I looked back and did say "generally irrelevant compared to the changes of the units in circulation" and I could see that being confusing in a bitcoin context, but the sentences I wrote before it should have made the meaning clear. I'm talking delta units in circulation, not the common measure of unit.

s/account/mattress/

I rest my case.

-MarkM-

From that.

Where are you getting this "changing the decimal point" stuff?

I thought the argument had been that coins people hide in their mattresses do not count regardless of whether they ever dig them back out of their mattress thus also regardless of whether they even still have the ability to dig them out.

-MarkM-

Unless you're also using unorthodox definition of units in circulation.  I responded to this statement you made.


The claim you seem to be making is that any units lost would be dwarfed by changing the decimal point.  What your stating is impossible because changing the units will necessarily also change the units of all coins lost.  So if you lose 10 coins and i change one unit to 1000, then i have lost 10,000 coins.  So no, changing the units will not be eclipsed by routine changes in the money supply.  Your statement is false.

If i change the decimal point i don't have a larger supply of bitcoin, i have a revised definition of bitcoin.  Changing the unit measurement of a bitcoin will not increase the total units of bitcoin.

There's also a reason people don't routinely change units.  It's because contracts are written and signed for specific quantities and changing units would be disastrous to debts and contracts.

Changing the definition of bitcoin is not equal to increasing the supply of bitcoin.

The problem is that Litecoin is not really the silver to bitcoin's gold, or, if it is, then really scrypt coins are silver to SHA256 coins' gold.

So it is SHA256 based coins in general, or scrypt coins in general, that would need to be constrained to the 2%, not any one "specie" or "species" of such coins.

To merely plonk that arbitrary number onto just one brand / imprint / blockchain of such coins is more akin to one specific form of gold having been stable in price at 2% inflation of that specific brand or form.

Have gold ear-rings been inflating 2% per year all that time?

have Canadian Maple Leafs?

How about Golden Guineas?

Etc.

One individual blockchain is more akin to one of those than to a raw material such as gold, cryptography, or even blockchains in general.

You are confusing the raw material - cryptocoins, or blackchain-based cryptocoins, maybe, more likely than which hash type of cryptocoins - with one particular imprint / brand / blockchain built out of such raw material.

-MarkM-

By any economist's definition, it is the defining factor of the base money supply. You are free to use definitions that are not accepted, but all this does is create a microcosm of bitcoinomics. Nobody outside this sphere of influence is going to know what you're talking about.


I think you have made an honest mistake here in reading what I wrote. Twice I said that lost coins are irrelevant. I did not say equivalent.


Of course it affects the supply, I'm saying it will far outweigh any notion of lost coins causing some deflationary spiral or whatever it is that you're implying that needs to be fixed with this currency proposal. This currency will have almost the exact same problems as bitcoin. Pyramid, pyramid, pyramid. Just because it is slightly less top heavy does not mean it is not a pyramid.

How will you adjust according to demand?

Gold has been inflating at a rate of 2% per year since 1850, so it is primarily based on that fact.

Secondly, a coin that has a constant block reward will become deflationary and have the same problem as Bitcoin.  There is not much difference.  I can't find much of a reason anyone would favor it over bitcoin.

Did you get anyone yet Sweft?

I want to implement an interesting coin that can inflate forever and adjust its inflation according to demand. It is different from what you are proposing but it will be a lot more interesting of an experiment than any other alt-coin.

I wrote the gist of the concept here.
https://bitcointalksearch.org/topic/m.1942413

If you are interested, a 3 coin bounty might be a fun reason to actually implement it.

My point is that hoarded coins have an affect on the demand on coins since the hoarders demand is altered by the act of hoarding.  Thus, the hoarding is reflected in the supply and demand of coins.  The reasoning is sound.

If we use (minutes per year / minutes per block) do you know the maximum amount this can vary?  If it is within a couple of weeks it shouldn't matter much since anywhere from 2-2.5% inflation is acceptable.

Etlase2's point is that the exchange market dose not distinguish between lost and hoarded coins, it deals only with circulating coins and the demand for those coins, the supply curve is what is actually offered, not what could theoretically be offered if every coin ever made was in circulation and offered for trade.  

If you say hoarded coins can be enticed by high enough prices to come back into circulation then is simply admitting the correctness of Etlase2's point in that only once those coins have become circulating coins do they have an effect on the valuation that we call inflation, so long as they are not circulating they have no effect.  To the market a sufficiently ballsy long-term hoarder is indistinguishable from a bozo who lost his private key.