13 ms·

If the crypto community wants to demonstrate that it isn't a giant Ponzi scheme, why not come up with a non-deflationary token, which will not massively reward

by flooow 5y ago

If the crypto community wants to demonstrate that it isn't a giant Ponzi scheme, why not come up with a non-deflationary token, which will not massively reward 'early adopters' at the expense of everyone else, in perpetuity? (A non-deflationary token would be one where the supply grows by some reasonable percentage every year, effectively acting as a flat tax on one's holdings). In reality, non-deflationary cryptocurrencies have been tried on various occasions. Surprise! None of them have taken off because "number doesn't go up".

iso1210 5y ago
Isn't that Dogecoin? (although inflation rate itself is deflationary - dropping from 5% pa about now to 2% in about 20 years)
- Hjfrf 5y ago
  Dogecoin is a copy+paste of bitcoin with a few config values changed. That's why it shares the inflationary model. The reason bitcoin is often described as deflationary is that many coins are lost, and the inflation is somewhat priced-in.
  - woodruffw 5y ago
    How is Bitcoin inflationary? Even without coin lossage (a ridiculous concept in any other financial system, short of literally setting your money on fire), the network is programmed to eventually stop minting coins. Fixed supply on increased demand (if it’s the economic substitute we’ve all been promised) is the precondition for deflationary movement. No amount of “pricing in” changes that.
    - paulgb 5y ago
      It’s an argument of semantics, really: if it will eventually stop printing coins, I’d consider it inflationary until that point in time and non-inflationary thereafter. In practice, current holders are being diluted to subsidize the security of the network.
      - woodruffw 5y ago
        This isn’t consistent with the “priced in” position put forward by the original commenter. An asset class that is going to be fixed in quantity for the rest of time is an obvious target for pricing-in.
        paulgb 5y ago
        By that logic the USD has some inflation baked in too, it’s just that in Bitcoin’s case the number is exact and in USD it’s a guess. It’s really just arguing semantics, though. I get both sides’ arguments.
        woodruffw 5y ago
        I don’t know about “baked in,” but of course the USD is inflationary: that’s been the explicit Fed policy for decades. It’s been the policy because small amounts of inflation have a measurable economic benefit. But again: this doesn’t change the fact that Bitcoin is deflationary. It’s a fixed supply of coins on a ledger that every current stakeholder has a strong deflationary interest in. The fact that there might be inflationary forces internal to Bitcoin’s economy doesn’t change that.
    - lottin 5y ago
      Even if we assume a fixed global supply of bitcoins (which is a big assumption because it assumes bitcoin deposits at institutions will always be backed by full reserves), that doesn't mean that the supply of bitcoins in a particular economic area will be fixed. It most certainly won't, unless international trade stops.
      - woodruffw 5y ago
        > which is a big assumption because it assumes bitcoin deposits at institutions will always be backed by full reserves Where is this assumption coming from? I have never heard this before. > that doesn't mean that the supply of bitcoins in a particular economic area will be fixed. It most certainly won't, unless international trade stops. Putting non-competing sectors of the economy in competition against each other for a slice of a fixed monetary supply is another basic and sufficient precondition for deflation. There’s a very good reason we don’t do that currently.
        lottin 5y ago
        > Where is this assumption coming from? I have never heard this before. The global supply of bitcoins is fixed if and only if financial institutions are not allowed to hold fractional reserves against deposits.
        woodruffw 5y ago
        Maybe I’m missing something obvious here, but it’s not clear why (1) any bank would offer a Bitcoin denominated account, or (2) how it even makes sense to perform fractional banking against Bitcoin. You can’t change the underlying amount in the ledger and the ledger is the value source, unlike physical Federal Reserve Notes.
        lottin 5y ago
        Well, crypto-exchanges already offer deposit accounts backed with reserves. If at any point the reserve ratio falls below 1 (we don't know if this has already happened), the quantity of bitcoins in circulation will increase as a result of that.
    - Hjfrf 5y ago
      I only meant that coins are still being created for now, so the proportion of coins that a specific person owns vs the total is constantly falling, like in any inflationary currency. If you measure current ownership as a percentage of final issued coins rather than current issued coins, then you've already priced in the inflation.
      - woodruffw 5y ago
        That's an internal inflation effect, one that appears to have been amply priced into the current value of Bitcoin. Which is perfectly reasonable, since everybody can see that the future quantity of Bitcoin is fixed and/or diminishing, thanks to lossage. In other words: like the US economy, Bitcoin can have both inflationary and deflationary forces internally. But the overall economic picture of Bitcoin is intrinsically deflationary.
- flooow 5y ago
  Yes, sort-of, the supply grows by a fixed absolute quantity every year. I don't really consider it to be a serious attempt at a useful cryptocurrency though. I suspect any coin attempting price-stability (minimum requirement for a useful currency) would need some kind of central bank to control and guarantee the supply. (We have that already too! It's called Tether and it ain't great.)
  - abacadaba 5y ago
    > I don't really consider it to be a serious attempt at a useful cryptocurrency though. was being widely used for tipping when the lightning network was just a twinkle in btc's eye seems to have declined for that purposed, but was the reason i have a small bag still. maybe missed my chance to sell at $0.70 but my original $70 bag i got to tip an openra server ended up doing quite nice ;) someday my doge will hit $1
majani 5y ago
New Ether gets issued every year
GDC7 5y ago
> In reality, non-deflationary cryptocurrencies have been tried on various occasions. Surprise! None of them have taken off because "number doesn't go up". I am curious to see what will happen when the everything bubble pops If people don’t react in an angry way that’s the clear signal from society that it wants a certain % of ponzi and scams to be allowed and tolerated Much like it tolerates gambling , lottery and games of chance which are all zero sum games
- 5e92cb50239222b 5y ago
  > I am curious to see what will happen when the everything bubble pops … the market is flooded with cheap video cards and we finally have a feast. Unless I die waiting, which is what will probably happen. Please, God, Jesus, Allah, Rama, whoever; I've been waiting far too long already.
  - p2p_astroturf 5y ago
    The video game industry is literally 10x more scummy than the cryptocoin industry. edit: keep downvoting me morons. what is microtransactions? literally the same bullshit you bitch about like NFTs and IPOs. and the video game industry is not just scum for that, but for the terrible code they write and how they drag down the entire computing industry with pervasive poor engineering what is steam? origin? epic store? literally webshit like a cryptocurrency wallet + vendor lock in + a bunch of mutually incompatible software deliberately made that way in the interests of the vendors instead of using open standards
- pclmulqdq 5y ago
  Monero is inflationary, but it has some other features (untraceability) that drive demand. It hasn't experienced the same swings that the gold-like cryptos have, though.
lottin 5y ago
Tokens are neither deflationary nor inflationary. The idea that an asset is deflationary or inflationary implies that the supply of the asset determines its price. This is incorrect from a theoretical standpoint, as well as from what empirical evidence tells us. It's a misapplication of the Quantity Theory of Money. QTM is a theory of money, it doesn't apply to stocks, tokens, assets in general, or in situations where there are competing currencies.
- chewbacha 5y ago
  How would I rectify that against the model of supply and demand, where increasing supply without increasing demand would result in its price deflating?
  - lottin 5y ago
    I don't understand the question.
- fivea 5y ago
  > The idea that an asset is deflationary or inflationary implies that the supply of the asset determines its price. Isn't this one of the most basic properties of supply and demand, though? I mean,what do you expect to happen if your supply is artificially capped and early adopters start to pump up demand for the stuff they own? In fact, isn't that the whole point of these schemes? I mean,do you know anyone who decided to waste their own money subsidizing anything related to crypto? Each and every single evangelist and proponent of crypto is invested in getting in cheap and pumping it up to get out with the maximum possible markup.
  - notahacker 5y ago
    > Isn't that one of the most basic properties of supply and demand though. The most basic property of supply and demand is that price is determined by the interaction of supply and demand, so a fixing the supply alone determines nothing at all about its value, which is why the incessant pumping is necessary. The cryptoproponent's argument that cryptocurrencies must increase in value because there are hard limits on their growth rate is a cargo cult version of the law of supply and demand made to serve the pump
anchpop 5y ago
there are a ton of cryptocurrencies where the supply grows every year. dogecoin, tezos, ethereum (this may have changed recently), etc
bko 5y ago
Isn't Ether (on ethereum), the second most valuable token after bitcoin, non-deflationary? There's no cap and the monetary policy changes regularly. I don't think anyone believes that there is a hard cap. Same is true for BNB, Tether and SOL the third, fourth and fifth most popular coins. What are you talking about? Random shit-coins that have deflationary economics?
- abacadaba 5y ago
  after EIP-1559 eth is now deflationary, part of/related to the switch to proof of stake. https://btcpro.com/2021/09/05/eth-becomes-deflationary-burn/ https://btcpro.com/2021/09/05/eth-becomes-deflationary-burn/
JohnJamesRambo 5y ago
Show me a stock anyone is interested in that isn’t expected to go up and reward early adopters. “If the stock community wants to demonstrate that it isn't a giant Ponzi scheme, why not come up with a non-deflationary stock, which will not massively reward 'early adopters' at the expense of everyone else, in perpetuity?”
- ethanbond 5y ago
  Then stop acting like it’s a currency and/or infrastructure. If it just spirals indefinitely in value then it can’t be used as either. Pretty straightforward.
  - pas 5y ago
    It's value is exactly determined by supply-and-demand. It's just as much a "foreign currency" as let's say Vatican Angelbucks. (We know that only a fixed amount of angelbucks will ever exist. So it's deflatory, and it has no earthly uses. But you can send it to your pals via PrayWire, so you can buy coffee with, and so on.) And if you look at the price graphs it's not always going up. It's a synthetic currency with no real backing economy (and the transaction costs are insane). Pretty straightforward.
    - ethanbond 5y ago
      Sorry, let me clarify. Stop acting like it’s a viable currency/infrastructure. I get that you can arbitrarily label anything as these.
      - tata71 5y ago
        Right, because I should wait days for banking wire transfers to get rescued out of the slush pile underneath a fax machine somewhere if I want to pay someone with a different bank. Literal tens of billions of dollars are using these systems to great success. The numbers are refuting your arguments, and will continue to. When we are all carrying counterfactual wallets, able to hold any number of cryptocurrency, or NFT ownership tokens (of the deed or lease to your house, social club entry etc), with social recovery from your closest family/friends when you smash your iPhone, then what will your argument against technology be, I wonder?
pas 5y ago
It's digital gold. Is gold a Ponzi scheme? No. It's the same as putting money into NASDAQ100 or SP500 and waiting for it to go up only. Is that a Ponzi scheme? No. It's a volatile synthetic hedge against assets with real fundamentals.
- rtpg 5y ago
  Are speculative gold markets good though?
  - pas 5y ago
    Not really. But the markets are not bad either. The bad things are all in the context. For these chains it's the insane energy inefficiency. (Storing the same thing over and over by itself makes little sense.) And the whole "cryptobro culture" (which is the r/wallstreetbet culture, which is a nice essence of how fundamentally small markets are more about the humans who gamble/participate than about the economic properties of the products/stocks/currencies) is not simply bad/good either. Modern monetary systems are not zero-sum. The central banks (and to a lesser degree the legislatures) can very effectively interact with the financial markets to achieve almost any desired outcome. Furthermore legislatures can and do tax whoever they want thanks to people with money having bank accounts. The fact that now a lot of money is/was dumped into various blockchains doesn't mean much. It's just sitting here instead of sitting in a money market fund and doing nothing. Or instead of sitting in the central bank as required reserve.
bokluk 5y ago
>If the crypto community wants to demonstrate that it isn't a giant Ponzi scheme, why not come up with a product that does anything at all?
BenoitEssiambre 5y ago
Exactly. I would consider a token that follows something like Friedman's k-percent rule ( https://en.wikipedia.org/wiki/Friedman's_k-percent_rule https://en.wikipedia.org/wiki/Friedman's_k-percent_rule ), a legitimate token. A token like this would jettison its pyramidal character. If it took off, it might convince me that there is value beyond scamming late adopters. I haven't seen any gaining much traction however.
- deleted 5y ago
  [deleted]
vaxintar 5y ago
I'm currently contributing at Alchemist (https://alchemist.wtf https://alchemist.wtf) which has an inflationary token: 1% of current total supply is minted every 14 days. Half of this inflation is redistributed to crucible holders (wallets) that participate in the ecosystem reward program and the other half is used to pay developers to work on several projects brought to life from within the community that the project gathered. In my opinion the current challenge of the project as a whole is being able to monetize our products and return value to token/crucible holders but it has been less than a year of the project inception and we've done a lot of cool stuff.

by flooow 5y ago

iso1210 5y ago

Isn't that Dogecoin? (although inflation rate itself is deflationary - dropping from 5% pa about now to 2% in about 20 years)

Hjfrf 5y ago
Dogecoin is a copy+paste of bitcoin with a few config values changed. That's why it shares the inflationary model. The reason bitcoin is often described as deflationary is that many coins are lost, and the inflation is somewhat priced-in.
- woodruffw 5y ago
  How is Bitcoin inflationary? Even without coin lossage (a ridiculous concept in any other financial system, short of literally setting your money on fire), the network is programmed to eventually stop minting coins. Fixed supply on increased demand (if it’s the economic substitute we’ve all been promised) is the precondition for deflationary movement. No amount of “pricing in” changes that.
  - paulgb 5y ago
    It’s an argument of semantics, really: if it will eventually stop printing coins, I’d consider it inflationary until that point in time and non-inflationary thereafter. In practice, current holders are being diluted to subsidize the security of the network.
    - woodruffw 5y ago
      This isn’t consistent with the “priced in” position put forward by the original commenter. An asset class that is going to be fixed in quantity for the rest of time is an obvious target for pricing-in.
      - paulgb 5y ago
        By that logic the USD has some inflation baked in too, it’s just that in Bitcoin’s case the number is exact and in USD it’s a guess. It’s really just arguing semantics, though. I get both sides’ arguments.
        woodruffw 5y ago
        I don’t know about “baked in,” but of course the USD is inflationary: that’s been the explicit Fed policy for decades. It’s been the policy because small amounts of inflation have a measurable economic benefit. But again: this doesn’t change the fact that Bitcoin is deflationary. It’s a fixed supply of coins on a ledger that every current stakeholder has a strong deflationary interest in. The fact that there might be inflationary forces internal to Bitcoin’s economy doesn’t change that.
  - lottin 5y ago
    Even if we assume a fixed global supply of bitcoins (which is a big assumption because it assumes bitcoin deposits at institutions will always be backed by full reserves), that doesn't mean that the supply of bitcoins in a particular economic area will be fixed. It most certainly won't, unless international trade stops.
    - woodruffw 5y ago
      > which is a big assumption because it assumes bitcoin deposits at institutions will always be backed by full reserves Where is this assumption coming from? I have never heard this before. > that doesn't mean that the supply of bitcoins in a particular economic area will be fixed. It most certainly won't, unless international trade stops. Putting non-competing sectors of the economy in competition against each other for a slice of a fixed monetary supply is another basic and sufficient precondition for deflation. There’s a very good reason we don’t do that currently.
      - lottin 5y ago
        > Where is this assumption coming from? I have never heard this before. The global supply of bitcoins is fixed if and only if financial institutions are not allowed to hold fractional reserves against deposits.
        woodruffw 5y ago
        Maybe I’m missing something obvious here, but it’s not clear why (1) any bank would offer a Bitcoin denominated account, or (2) how it even makes sense to perform fractional banking against Bitcoin. You can’t change the underlying amount in the ledger and the ledger is the value source, unlike physical Federal Reserve Notes.
        lottin 5y ago
        Well, crypto-exchanges already offer deposit accounts backed with reserves. If at any point the reserve ratio falls below 1 (we don't know if this has already happened), the quantity of bitcoins in circulation will increase as a result of that.
  - Hjfrf 5y ago
    I only meant that coins are still being created for now, so the proportion of coins that a specific person owns vs the total is constantly falling, like in any inflationary currency. If you measure current ownership as a percentage of final issued coins rather than current issued coins, then you've already priced in the inflation.
    - woodruffw 5y ago
      That's an internal inflation effect, one that appears to have been amply priced into the current value of Bitcoin. Which is perfectly reasonable, since everybody can see that the future quantity of Bitcoin is fixed and/or diminishing, thanks to lossage. In other words: like the US economy, Bitcoin can have both inflationary and deflationary forces internally. But the overall economic picture of Bitcoin is intrinsically deflationary.
flooow 5y ago
Yes, sort-of, the supply grows by a fixed absolute quantity every year. I don't really consider it to be a serious attempt at a useful cryptocurrency though. I suspect any coin attempting price-stability (minimum requirement for a useful currency) would need some kind of central bank to control and guarantee the supply. (We have that already too! It's called Tether and it ain't great.)
- abacadaba 5y ago
  > I don't really consider it to be a serious attempt at a useful cryptocurrency though. was being widely used for tipping when the lightning network was just a twinkle in btc's eye seems to have declined for that purposed, but was the reason i have a small bag still. maybe missed my chance to sell at $0.70 but my original $70 bag i got to tip an openra server ended up doing quite nice ;) someday my doge will hit $1

majani 5y ago

New Ether gets issued every year

GDC7 5y ago

> In reality, non-deflationary cryptocurrencies have been tried on various occasions. Surprise! None of them have taken off because "number doesn't go up". I am curious to see what will happen when the everything bubble pops If people don’t react in an angry way that’s the clear signal from society that it wants a certain % of ponzi and scams to be allowed and tolerated Much like it tolerates gambling , lottery and games of chance which are all zero sum games

5e92cb50239222b 5y ago
> I am curious to see what will happen when the everything bubble pops … the market is flooded with cheap video cards and we finally have a feast. Unless I die waiting, which is what will probably happen. Please, God, Jesus, Allah, Rama, whoever; I've been waiting far too long already.
- p2p_astroturf 5y ago
  The video game industry is literally 10x more scummy than the cryptocoin industry. edit: keep downvoting me morons. what is microtransactions? literally the same bullshit you bitch about like NFTs and IPOs. and the video game industry is not just scum for that, but for the terrible code they write and how they drag down the entire computing industry with pervasive poor engineering what is steam? origin? epic store? literally webshit like a cryptocurrency wallet + vendor lock in + a bunch of mutually incompatible software deliberately made that way in the interests of the vendors instead of using open standards
pclmulqdq 5y ago
Monero is inflationary, but it has some other features (untraceability) that drive demand. It hasn't experienced the same swings that the gold-like cryptos have, though.

lottin 5y ago

Tokens are neither deflationary nor inflationary. The idea that an asset is deflationary or inflationary implies that the supply of the asset determines its price. This is incorrect from a theoretical standpoint, as well as from what empirical evidence tells us. It's a misapplication of the Quantity Theory of Money. QTM is a theory of money, it doesn't apply to stocks, tokens, assets in general, or in situations where there are competing currencies.

chewbacha 5y ago
How would I rectify that against the model of supply and demand, where increasing supply without increasing demand would result in its price deflating?
- lottin 5y ago
  I don't understand the question.
fivea 5y ago
> The idea that an asset is deflationary or inflationary implies that the supply of the asset determines its price. Isn't this one of the most basic properties of supply and demand, though? I mean,what do you expect to happen if your supply is artificially capped and early adopters start to pump up demand for the stuff they own? In fact, isn't that the whole point of these schemes? I mean,do you know anyone who decided to waste their own money subsidizing anything related to crypto? Each and every single evangelist and proponent of crypto is invested in getting in cheap and pumping it up to get out with the maximum possible markup.
- notahacker 5y ago
  > Isn't that one of the most basic properties of supply and demand though. The most basic property of supply and demand is that price is determined by the interaction of supply and demand, so a fixing the supply alone determines nothing at all about its value, which is why the incessant pumping is necessary. The cryptoproponent's argument that cryptocurrencies must increase in value because there are hard limits on their growth rate is a cargo cult version of the law of supply and demand made to serve the pump

anchpop 5y ago

there are a ton of cryptocurrencies where the supply grows every year. dogecoin, tezos, ethereum (this may have changed recently), etc

bko 5y ago

Isn't Ether (on ethereum), the second most valuable token after bitcoin, non-deflationary? There's no cap and the monetary policy changes regularly. I don't think anyone believes that there is a hard cap. Same is true for BNB, Tether and SOL the third, fourth and fifth most popular coins. What are you talking about? Random shit-coins that have deflationary economics?

abacadaba 5y ago
after EIP-1559 eth is now deflationary, part of/related to the switch to proof of stake. https://btcpro.com/2021/09/05/eth-becomes-deflationary-burn/ https://btcpro.com/2021/09/05/eth-becomes-deflationary-burn/

JohnJamesRambo 5y ago

Show me a stock anyone is interested in that isn’t expected to go up and reward early adopters. “If the stock community wants to demonstrate that it isn't a giant Ponzi scheme, why not come up with a non-deflationary stock, which will not massively reward 'early adopters' at the expense of everyone else, in perpetuity?”

ethanbond 5y ago
Then stop acting like it’s a currency and/or infrastructure. If it just spirals indefinitely in value then it can’t be used as either. Pretty straightforward.
- pas 5y ago
  It's value is exactly determined by supply-and-demand. It's just as much a "foreign currency" as let's say Vatican Angelbucks. (We know that only a fixed amount of angelbucks will ever exist. So it's deflatory, and it has no earthly uses. But you can send it to your pals via PrayWire, so you can buy coffee with, and so on.) And if you look at the price graphs it's not always going up. It's a synthetic currency with no real backing economy (and the transaction costs are insane). Pretty straightforward.
  - ethanbond 5y ago
    Sorry, let me clarify. Stop acting like it’s a viable currency/infrastructure. I get that you can arbitrarily label anything as these.
    - tata71 5y ago
      Right, because I should wait days for banking wire transfers to get rescued out of the slush pile underneath a fax machine somewhere if I want to pay someone with a different bank. Literal tens of billions of dollars are using these systems to great success. The numbers are refuting your arguments, and will continue to. When we are all carrying counterfactual wallets, able to hold any number of cryptocurrency, or NFT ownership tokens (of the deed or lease to your house, social club entry etc), with social recovery from your closest family/friends when you smash your iPhone, then what will your argument against technology be, I wonder?

pas 5y ago

It's digital gold. Is gold a Ponzi scheme? No. It's the same as putting money into NASDAQ100 or SP500 and waiting for it to go up only. Is that a Ponzi scheme? No. It's a volatile synthetic hedge against assets with real fundamentals.

rtpg 5y ago
Are speculative gold markets good though?
- pas 5y ago
  Not really. But the markets are not bad either. The bad things are all in the context. For these chains it's the insane energy inefficiency. (Storing the same thing over and over by itself makes little sense.) And the whole "cryptobro culture" (which is the r/wallstreetbet culture, which is a nice essence of how fundamentally small markets are more about the humans who gamble/participate than about the economic properties of the products/stocks/currencies) is not simply bad/good either. Modern monetary systems are not zero-sum. The central banks (and to a lesser degree the legislatures) can very effectively interact with the financial markets to achieve almost any desired outcome. Furthermore legislatures can and do tax whoever they want thanks to people with money having bank accounts. The fact that now a lot of money is/was dumped into various blockchains doesn't mean much. It's just sitting here instead of sitting in a money market fund and doing nothing. Or instead of sitting in the central bank as required reserve.

bokluk 5y ago

>If the crypto community wants to demonstrate that it isn't a giant Ponzi scheme, why not come up with a product that does anything at all?

BenoitEssiambre 5y ago

Exactly. I would consider a token that follows something like Friedman's k-percent rule ( https://en.wikipedia.org/wiki/Friedman's_k-percent_rule https://en.wikipedia.org/wiki/Friedman's_k-percent_rule ), a legitimate token. A token like this would jettison its pyramidal character. If it took off, it might convince me that there is value beyond scamming late adopters. I haven't seen any gaining much traction however.

deleted 5y ago
[deleted]

vaxintar 5y ago

I'm currently contributing at Alchemist (https://alchemist.wtf https://alchemist.wtf) which has an inflationary token: 1% of current total supply is minted every 14 days. Half of this inflation is redistributed to crucible holders (wallets) that participate in the ecosystem reward program and the other half is used to pay developers to work on several projects brought to life from within the community that the project gathered. In my opinion the current challenge of the project as a whole is being able to monetize our products and return value to token/crucible holders but it has been less than a year of the project inception and we've done a lot of cool stuff.