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I think demand for transactions is an issue. When it fluctuates, miners' earning becomes volatile. Some blockchains, like Grin and Dogecoin, have tail emission.

I think demand for transactions is an issue. When it fluctuates, miners' earning becomes volatile. Some blockchains, like Grin and Dogecoin, have tail emission. But that's a pretty dumb solution. The reward/supply rate would approach 0. It's effectively the same as zero new supply unless dev teams decide to increase rewards. Changing reward defeats the purpose of decentralization. This problem is prevalent in any limited supply crypto. I've been involved with Bitflate, a crypto with 7% inflation. We propose running a parallel inflationary blockchain. Inflation discourages hoarding. People have incentives to spend. We can also "mix" the inflationary crypto with Bitcoin. This mixing allows us to create digital native crypto with any inflation rate. It also creates demand for transactions on the Bitcoin blockchain. More information about the project: https://bitflate.org/ https://bitflate.org/ Whitepaper: https://bitflate.org/bitflate.pdf https://bitflate.org/bitflate.pdf PS: Some bitcoiners think that fee volatility is not a big issue. There will always be demand for transactions. Miners just have to deal with volatility. But fee volatility will translate to price volatility. It contradicts with the claim that Bitcoin will become stable.

generalizations 6y ago
> Inflation discourages hoarding. People have incentives to spend. I'd rather we use a coin that people want more of (deflationary), rather than a coin people want less of (inflationary). There's no inherent reason we want there to be incentives to spend, unless you're some central planner trying to keep the populace invested in society.
- coliveira 6y ago
  The whole economy depends on people spending. If everybody starts to hoard currency, economy will implode. That's why deflation is worse than (light) inflation, from an economic standpoint.
  - cyphertruck 6y ago
    The idea that when purchasing power increases people spend absolutely nothing is the basis if this rationalization for inflation, and it isn’t supported by logic or experience. They actually spend more and more productively, because instead of barely getting by they are able to accumulate capital and start businesses.
    - generalizations 6y ago
      Exactly. People can depend on the value they've acquired to remain valuable, which means they can take on greater risk in the future.
    - kybernetikos 6y ago
      Surely with a deflationary currency, interest rates would need to be significantly higher, making it harder to borrow the capital you need to start a business. As someone with capital the expected rate of return will have to be high to make it worth lending rather than just holding on to it in a deflationary situation.
      - Pungsnigel 6y ago
        Yes and no. Higher savings would also mean more capital to load from. Expected return on investment would be higher, which is probably just a good thing. Lots of non-profitable companies today can keep surviving without doing any real good due to money being cheap.
        kybernetikos 6y ago
        Those savings would be distributed, and difficult to access, especially if they are primarily relying on deflation to increase their value. Saying that the expected return would be higher is just the other side of saying it would be harder to find capital to start businesses. > Lots of non-profitable companies today can keep surviving without doing any real good due to money being cheap. This seems like a huge topic on its own. If there's an 'ideal' availability of money to ensure that companies are providing value, just switching to a supply limited currency is extremely unlikely to luck into selecting the right value. In fact, because it makes it harder to adjust things it makes it pretty much a certainty that at least at some point the wrong value will be selected.
- dnprock 6y ago
  You're comparing want (saving) and utility (spending). They're contradictory. They have different purposes. A functioning money system needs to have: (1) A Store of Value (2) A Medium of Exchange (3) A Unit of Account. Bitcoin is mostly a Store of Value. It doesn't have the other 2 functions. We can try to fit all 3 into Bitcoin. The Gold Standard failed to do it. The US Dollar system is failing. Bitcoin will likely fail to do it.
  - choward 6y ago
    > The US Dollar system is failing. What makes you think that?
    - dnprock 6y ago
      The US Dollar is supposed to be a Medium of Exchange and a Unit of Account. It is also being used as a Store of Value for countries with unstable currencies. Demand for the dollar causes trade imbalance, wealth inequality, and political problems. I think the Fed is doing a fairly good job in managing the dollar. It has becoming more political as the problems are moving closer to the source.
- Majromax 6y ago
  > There's no inherent reason we want there to be incentives to spend, unless you're some central planner trying to keep the populace invested in society. You're confusing spending and consumption. Bitcoin holdings don't do anything. They're a nominal amount on a public ledger, and if bitcoins also serve as the medium of exchange this would be subject to the paradox of thrift. Instead, a healthy economy encourages people to invest. If I have money (or bitcoins) I don't need for immediate purposes, I shouldn't put it under the mattress (or on the blockchain). I should instead loan it out as debt or equity to someone else who wants to expand production in some way, producing a (probable) real return. That's how we become a wealthier society. A deflating bitcoin is not well-suited for these investments, since a rational holder of bitcoin would probably prefer to continue to hold bitcoin (not doing anything) rather than take an investment with an interest rate less than the expected appreciation on bitcoin. At the same time, bitcoin's volatility is also bad for secondary finance because it becomes difficult to properly value future payments. Hoarding currency should never be a viable investment strategy. That it is so for bitcoin is evidence for the speculative bubble hypothesis.

generalizations 6y ago

> Inflation discourages hoarding. People have incentives to spend. I'd rather we use a coin that people want more of (deflationary), rather than a coin people want less of (inflationary). There's no inherent reason we want there to be incentives to spend, unless you're some central planner trying to keep the populace invested in society.

coliveira 6y ago
The whole economy depends on people spending. If everybody starts to hoard currency, economy will implode. That's why deflation is worse than (light) inflation, from an economic standpoint.
- cyphertruck 6y ago
  The idea that when purchasing power increases people spend absolutely nothing is the basis if this rationalization for inflation, and it isn’t supported by logic or experience. They actually spend more and more productively, because instead of barely getting by they are able to accumulate capital and start businesses.
  - generalizations 6y ago
    Exactly. People can depend on the value they've acquired to remain valuable, which means they can take on greater risk in the future.
  - kybernetikos 6y ago
    Surely with a deflationary currency, interest rates would need to be significantly higher, making it harder to borrow the capital you need to start a business. As someone with capital the expected rate of return will have to be high to make it worth lending rather than just holding on to it in a deflationary situation.
    - Pungsnigel 6y ago
      Yes and no. Higher savings would also mean more capital to load from. Expected return on investment would be higher, which is probably just a good thing. Lots of non-profitable companies today can keep surviving without doing any real good due to money being cheap.
      - kybernetikos 6y ago
        Those savings would be distributed, and difficult to access, especially if they are primarily relying on deflation to increase their value. Saying that the expected return would be higher is just the other side of saying it would be harder to find capital to start businesses. > Lots of non-profitable companies today can keep surviving without doing any real good due to money being cheap. This seems like a huge topic on its own. If there's an 'ideal' availability of money to ensure that companies are providing value, just switching to a supply limited currency is extremely unlikely to luck into selecting the right value. In fact, because it makes it harder to adjust things it makes it pretty much a certainty that at least at some point the wrong value will be selected.
dnprock 6y ago
You're comparing want (saving) and utility (spending). They're contradictory. They have different purposes. A functioning money system needs to have: (1) A Store of Value (2) A Medium of Exchange (3) A Unit of Account. Bitcoin is mostly a Store of Value. It doesn't have the other 2 functions. We can try to fit all 3 into Bitcoin. The Gold Standard failed to do it. The US Dollar system is failing. Bitcoin will likely fail to do it.
- choward 6y ago
  > The US Dollar system is failing. What makes you think that?
  - dnprock 6y ago
    The US Dollar is supposed to be a Medium of Exchange and a Unit of Account. It is also being used as a Store of Value for countries with unstable currencies. Demand for the dollar causes trade imbalance, wealth inequality, and political problems. I think the Fed is doing a fairly good job in managing the dollar. It has becoming more political as the problems are moving closer to the source.
Majromax 6y ago
> There's no inherent reason we want there to be incentives to spend, unless you're some central planner trying to keep the populace invested in society. You're confusing spending and consumption. Bitcoin holdings don't do anything. They're a nominal amount on a public ledger, and if bitcoins also serve as the medium of exchange this would be subject to the paradox of thrift. Instead, a healthy economy encourages people to invest. If I have money (or bitcoins) I don't need for immediate purposes, I shouldn't put it under the mattress (or on the blockchain). I should instead loan it out as debt or equity to someone else who wants to expand production in some way, producing a (probable) real return. That's how we become a wealthier society. A deflating bitcoin is not well-suited for these investments, since a rational holder of bitcoin would probably prefer to continue to hold bitcoin (not doing anything) rather than take an investment with an interest rate less than the expected appreciation on bitcoin. At the same time, bitcoin's volatility is also bad for secondary finance because it becomes difficult to properly value future payments. Hoarding currency should never be a viable investment strategy. That it is so for bitcoin is evidence for the speculative bubble hypothesis.