6 ms·

The drawings I made as a kid are very scarce, but completely worthless. Demand is what creates value, not scarcity, although scarcity has an amplifying effect

koheripbal 5y ago
Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed. I believe strongly that cryptocurrencies have a strong future, but what is really needed is a crypto that automatically manages its money supply. In the same way a car engine uses an oil pump to automatically ensure engine oil pressure is consistent when the car is revving vs when it is idle. I also think there are better ways to incentivize mining rather than fixed crypto rewards. A better way would be a multi-year bond instrument that would pay coin dividends well into the future so that miners are vested in the future success of the coin, and not just the immediate pump & dump.
- chii 5y ago
  > automatically manages its money supply. that's an interesting question and premis - automatic monetary policy. I wonder if good monetary policy could be encoded as a set of rules that can be followed by a machine.
  - delaaxe 5y ago
    You could even use an oracle network to feed economic data to the chain
    - koheripbal 5y ago
      I think it's easier than this. The Blockchain should be able to calculate the velocity of money just by the amount of currency flowing in the last x blocks. That alone should do it. There's also some potential for a bond-market whereby miners BID for bonds, and thus the Blockchain can determine the community expected future inflation rate, and factor that into its calculation of money supply growth.
  - lottin 5y ago
    In order to reduce the money supply, money needs to be removed from circulation. In other words whoever is in charge of managing the money supply has to "sell" valuable stuff and then destroy the proceeds from the sale.
    - dv_dt 5y ago
      or a different lever there might be to increase transaction fees
      - koheripbal 5y ago
        Brilliant.
  - imtringued 5y ago
    The problem is that we heavily depend on "oracles" in the real world, namely government published statistics and those could be manipulated, even if monetary policy was automated.
- delaaxe 5y ago
  > multi-year bond instrument that would pay coin dividends well into the future That's a great idea. I'm not aware of any blockchain that does this, although some projects with seed funding do have long lockup periods
  - mratsim 5y ago
    Projects related to fixed income I know of are: - https://88mph.app/ https://88mph.app/ - https://alchemix.fi/ https://alchemix.fi/ - https://www.apwine.fi/ https://www.apwine.fi/ - And https://curve.fi/ https://curve.fi/ allows for 4 years lockup of their token to earn more fees.
    - koheripbal 5y ago
      The issue is that if they are based on ETH, then they still have the same problem. We need a NEW coin that has this functionality.
- spinny 5y ago
  i have played with go-ethereum's code in past and that sounds like something that could be implemented as an experimental consensus algo. Have you ever built some sort of model for this reward mechanism?
- imtringued 5y ago
  >Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed. Yes, we mold the currency to our needs, that's why we have abandoned gold. This is one of the reasons the euro is completely flawed. Each eurozone country has different needs, yet there is only one currency that can only be controlled for the eurozone as a whole. Without further political integration it is not possible to actually give each country what it needs. Some countries need a weak currency, some need a strong currency. Paradoxically, the euro is both too strong and too weak at the same time.
tim333 5y ago
It's the interplay of supply and demand. Air to breath is in demand but doesn't cost much due to abundant supply.

koheripbal 5y ago

Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed. I believe strongly that cryptocurrencies have a strong future, but what is really needed is a crypto that automatically manages its money supply. In the same way a car engine uses an oil pump to automatically ensure engine oil pressure is consistent when the car is revving vs when it is idle. I also think there are better ways to incentivize mining rather than fixed crypto rewards. A better way would be a multi-year bond instrument that would pay coin dividends well into the future so that miners are vested in the future success of the coin, and not just the immediate pump & dump.

chii 5y ago
> automatically manages its money supply. that's an interesting question and premis - automatic monetary policy. I wonder if good monetary policy could be encoded as a set of rules that can be followed by a machine.
- delaaxe 5y ago
  You could even use an oracle network to feed economic data to the chain
  - koheripbal 5y ago
    I think it's easier than this. The Blockchain should be able to calculate the velocity of money just by the amount of currency flowing in the last x blocks. That alone should do it. There's also some potential for a bond-market whereby miners BID for bonds, and thus the Blockchain can determine the community expected future inflation rate, and factor that into its calculation of money supply growth.
- lottin 5y ago
  In order to reduce the money supply, money needs to be removed from circulation. In other words whoever is in charge of managing the money supply has to "sell" valuable stuff and then destroy the proceeds from the sale.
  - dv_dt 5y ago
    or a different lever there might be to increase transaction fees
    - koheripbal 5y ago
      Brilliant.
- imtringued 5y ago
  The problem is that we heavily depend on "oracles" in the real world, namely government published statistics and those could be manipulated, even if monetary policy was automated.
delaaxe 5y ago
> multi-year bond instrument that would pay coin dividends well into the future That's a great idea. I'm not aware of any blockchain that does this, although some projects with seed funding do have long lockup periods
- mratsim 5y ago
  Projects related to fixed income I know of are: - https://88mph.app/ https://88mph.app/ - https://alchemix.fi/ https://alchemix.fi/ - https://www.apwine.fi/ https://www.apwine.fi/ - And https://curve.fi/ https://curve.fi/ allows for 4 years lockup of their token to earn more fees.
  - koheripbal 5y ago
    The issue is that if they are based on ETH, then they still have the same problem. We need a NEW coin that has this functionality.
spinny 5y ago
i have played with go-ethereum's code in past and that sounds like something that could be implemented as an experimental consensus algo. Have you ever built some sort of model for this reward mechanism?
imtringued 5y ago
>Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed. Yes, we mold the currency to our needs, that's why we have abandoned gold. This is one of the reasons the euro is completely flawed. Each eurozone country has different needs, yet there is only one currency that can only be controlled for the eurozone as a whole. Without further political integration it is not possible to actually give each country what it needs. Some countries need a weak currency, some need a strong currency. Paradoxically, the euro is both too strong and too weak at the same time.

tim333 5y ago

It's the interplay of supply and demand. Air to breath is in demand but doesn't cost much due to abundant supply.