A whole bunch of questions...

[SapphireSpire]

I was impressed with Bitcoin when I first heard about it. I was going to buy some until I realized that most of it's characteristics make it unsustainable. It has a limited supply, an unlimited blockchain size, a declining rate of production, and no means of recovering lost coins or preventing hoarding which is necessary when the supply is limited. It may be useful now but in the long run the scarcity will kill it.

Dash sound amazing but the current incarnation of Dash is also unsustainable. Doesn't anybody realize why fiat is inflationary? Because that is what's required to support savings. The mere act of saving money removes it from circulation and inflation is necessary to replace it in order to maintain the velocity and liquidity of the market. Inflation also increases the value of business inventory. Deflation reduces the value of business inventory which is one of the reasons merchants are reluctant to accept deflationary cryptos.

To be sustainable, a crypto needs to have the opposite set of characteristics of Bitcoin- an unlimited self-regulating supply, a limited blockchain size, a steady rate production, and a means for recovering lost coins.

It also needs a way to manage inflation and deflation without effecting the values of accounts. Inflation is what should happen when the supply becomes concentrated in a small percentage of accounts. Deflation is what should happen when the supply becomes evenly distributed among the majority of accounts. One way to do this is to introduce a new variant of the same coin with a different color association and exchange rate. This would not be a hard fork because it's the same coin. An exchange rate less than one to one, such as two to one, would decrease the supply thereby facilitating deflation while an exchange rate greater than one to one, such as one to two, would increase the supply thereby facilitating inflation. As long as merchants understand the color and exchange rate, the prices of goods should change accordingly and the value of accounts will be preserved.

 

[daf]

Interesting point of view. I wonder what others (like Toknormal) think about it.

 

[Sapereaude]

Some quick points:

What kind of scenario are you envisioning that scarcity will kill Dash? Since Scarcity is a function of supply/demand and I cant imagine why scarcity would cause less demand or a lower price.

As for inflation, yes controlled inflation is generally a good thing and we do have controlled inflation up to a certain cap, but reaching that cap will take years. When that happens perhaps we will revisit the issue.

In your last paragraph your essentially advocating that a cryptocurrency should act similar to that of central bank and it is not possible to inflate or deflate the value of a currency with out affecting its value relative to the real world. Sure the number in the account will remain the same, but those coins will be able to buy more or less lets say chicken nuggets.

It also seems a very arbitrary measure that we increase coin supply when the supply becomes evenly distributed among the majority of accounts? The coins could be spread equally among all accounts, but a small portion of people could own a majority of the accounts.

TBH you need to justify/clarify alot more of what you wrote.

 

[SnowHater]

Maybe better solution would be to create additional token based on DASH blockchain which is pegged to USD (or even some group of commodities) to be more stable for merchants. Take NuBits and NuShares for example. I use NuBits quite often actually.

 

[TaoOfSatoshi]

Ever tried to split a dollar 10,000,000 ways?

It will be a looong time before Dash has a liquidity problem based on what you said.

 

[Sapereaude]

Maybe better solution would be to create additional token based on DASH blockchain which is pegged to USD (or even some group of commodities) to be more stable for merchants. Take NuBits and NuShares for example. I use NuBits quite often actually.

A solution to what exactly?

 

[SnowHater]

A solution to what exactly?

To get real money which price in relation to goods is pretty stable. Why would someone you use Facebook shares to buy groceries?

SapphireSpire, you can read my doc from 2014 about IMHO ideal cryptocurrency: https://docs.google.com/document/d/1mLuPVjEHAW9AsS5BKZMuCfyfuyKdGFD6TUapTY7Qggg/edit

The main problem in it is a sybil attack though. Now my views changed. I think that future of mankind is not only in new money but in new organisations which use both new decentralized money and new decentralized reputation system.

 

[Sapereaude]

Economically I'm not sure why that is desirable or even possible. Historically speaking no "money" has ever remained stable in relation to goods over the long run, hell they had to devalue the sestertii and that was two thousand years ago.

 

[stan.distortion]

Firstly, welcome to Dash Nice post and some points worth savouring so just one for now ;D

...
Dash sound amazing but the current incarnation of Dash is also unsustainable. Doesn't anybody realize why fiat is inflationary? Because that is what's required to support savings. The mere act of saving money removes it from circulation and inflation is necessary to replace it in order to maintain the velocity and liquidity of the market. Inflation also increases the value of business inventory. Deflation reduces the value of business inventory which is one of the reasons merchants are reluctant to accept deflationary cryptos.
...

Ok, what's the worlds longest standing currency? Probably animal furs or something but gold is the one we recognise so that's where crypto built it's foundations, might as well start off with something proven. But why is gold so resilient and long standing as a currency? Not for anything as simple as the goldbugs would have you believe, just say "we is goin' back to the gold standard" and after a few decades you'll have a class divide that makes today look like communism, easy to keep something like that going perpetually but it usually 'aint nice for the general population.

What does that have to do with the rate of inflation? Bare with me, I'm getting to it. Gold has worked extremely successfully as a currency but not in a general, anarchistic way, it's worked sustainably and relatively fairly when the rich are obliged to give a portion of their wealth to the poor, Zakat under Islam is the obvious example but most long standing examples needed something similar to avoid an ever widening gap between the rich and poor. Now, under capitalism we sneer at such heathen practices... ok, maybe that's a bit extreme but try to implement something as direct as that into economics and you 'aint gona' be popular so you have to be sneaky about it... inflation, the same number on the bottom line but worth less and less with every passing year.

However, there's a serious flaw in both of those but that'll have to wait, gtg but just a hint, the distinction between real and artificial value is likely to be a major talking point before too long if the economic shitstorm we're heading for can't be kicked a bit further down the road

 

[SnowHater]

Economically I'm not sure why that is desirable or even possible. Historically speaking no "money" has ever remained stable in relation to goods over the long run, hell they had to devalue the sestertii and that was two thousand years ago.

I think it is the more possible the more market capitalization this currency has. If DASH has market cap more than USD then it will be more convenient money with less volatility. Untill this moment some pegged token could be useful specially for merchants.

 

[raganius]

Ever tried to split a dollar 10,000,000 ways?

It will be a looong time before Dash has a liquidity problem based on what you said.

Yes, I believe OP might have not taken into consideration the huge divisibility property of the BTC based cryptocurrencies. Such divisibility allows that inflation be completely dispensed in order to create liquidity, which is naturally done by means of free market pricing. A much more sustainable solution, as it seems, if compared to the artificial market manipulation of the "managed inflation".

DASH's scarcity in no way harms its velocity. Actually, complemented by such high divisibility rate, money velocity will always be improved. In reality, velocity will necessarily increase with "utility". And utility, here, means more adoption, especially merchants adoption, because, if DASH's only use is hoarding it on Masternodes, it seems obvious that velocity will decrease. But if DASH really starts acting like CASH, if there are enought merchants, spending DASH will be encouraged more than hoarding it, thus increasing more and more velocity.

Inflation will improve velocity, because no one wants to hold an asset that is being corroded by inflation. But I don't think this is healthy, IMHO.

That's my point of view, anyway: DASH is still in the right path. We must only avoid losing this path with mirabolant immense steps... let's do it slow and steady.

 

[SnowHater]

Yes, I believe OP might have not taken into consideration the huge divisibility property of the BTC based cryptocurrencies. Such divisibility allows that inflation be completely dispensed in order to create liquidity, which is naturally done by means of free market pricing. A much more sustainable solution, as it seems, if compared to the artificial market manipulation of the "managed inflation".

DASH's scarcity in no way harms its velocity. Actually, complemented by such high divisibility rate, money velocity will always be improved. In reality, velocity will necessarily increase with "utility". And utility, here, means more adoption, especially merchants adoption, because, if DASH's only use is hoarding it on Masternodes, it seems obvious that velocity will decrease.

Agreed.

But if DASH really starts acting like CASH, if there are enough merchants, spending DASH will be encouraged more than hoarding it, thus increasing more and more velocity.

But merchants usually hate volatility. That's why some pegged to USD token could be useful. In case this is offtopic, a discussion about it took place here.

 

[raganius]

I think it is the more possible the more market capitalization this currency has. If DASH has market cap more than USD then it will be more convenient money with less volatility. Untill this moment some pegged token could be useful specially for merchants.

It is certainly possible to create a "sidemarket" (similarly to what bitshares, nxt, or nem are doing) and, in this market, it may be possible to try to create functional tokens that are "pegged" to usd, eur, jpy, or maybe pegged to gold, silver, etc. But: how safe this pegging is? I wonder if, in the long term, under strong market forces, the token will truly maintain its parity.

Anyway, if there is a "stable token" pegged to no matter what other asset, it will no longer be DASH, but something else (maybe DASHusd token, but, still, that's not DASH circulating, but this alien token). It may be developed? Yes, if really needed, and if there's someone willing to work on it. But it wil not be DASH: it will be some USD pegged token convertible to DASH, in a sidechain, or in a completely independent altcoin... (actually, no need to create it, because with shapeshift Tether, for instance, is already convertible to DASH... so, yet another new token will solve nothing, IMO).

 

[TroyDASH]

I think the debate over what the appropriate inflation/deflation is, or governance of the total coin supply, is certainly a valid point of discussion. However, "scarcity" is not an issue for DASH or really any crypto currency due to the divisibility of the coins. Even if there were only 1000 total coins in circulation that is still a gazillion currency units to work with.

 

[Naruto]

I was impressed with Bitcoin when I first heard about it. I was going to buy some until I realized that most of it's characteristics make it unsustainable. It has a limited supply, an unlimited blockchain size, a declining rate of production, and no means of recovering lost coins or preventing hoarding which is necessary when the supply is limited. It may be useful now but in the long run the scarcity will kill it.

Dash sound amazing but the current incarnation of Dash is also unsustainable. Doesn't anybody realize why fiat is inflationary? Because that is what's required to support savings. The mere act of saving money removes it from circulation and inflation is necessary to replace it in order to maintain the velocity and liquidity of the market. Inflation also increases the value of business inventory. Deflation reduces the value of business inventory which is one of the reasons merchants are reluctant to accept deflationary cryptos.

To be sustainable, a crypto needs to have the opposite set of characteristics of Bitcoin- an unlimited self-regulating supply, a limited blockchain size, a steady rate production, and a means for recovering lost coins.

It also needs a way to manage inflation and deflation without effecting the values of accounts. Inflation is what should happen when the supply becomes concentrated in a small percentage of accounts. Deflation is what should happen when the supply becomes evenly distributed among the majority of accounts. One way to do this is to introduce a new variant of the same coin with a different color association and exchange rate. This would not be a hard fork because it's the same coin. An exchange rate less than one to one, such as two to one, would decrease the supply thereby facilitating deflation while an exchange rate greater than one to one, such as one to two, would increase the supply thereby facilitating inflation. As long as merchants understand the color and exchange rate, the prices of goods should change accordingly and the value of accounts will be preserved.

A very good post. And I think what you say is worth to discuss

1. Fiat is inflationary not because it used to support saving but it is a debt base money system. (This is what I think)
-For me I would say DASH is inflationary at the current state. During I write this post DASH money supply is 6,296,194 and it will keep inflate at a predictable rate. And if you think unlimited money supply is the right answer, there is many other alternative in the market you can find. So DASH user know what the inflation rate is and will be and they are OK with that.

2. It seems you think saving is bad for the economy as it reduce the velocity and inflation is the right things to do to correct it.
-I would have a different opinion about that. We are living in a world with limited resources. In order to have a better environment and living standard for long term, saving should be encourage. And people who save (whether money or resources) should get reward. This is the different ideology form yours. What fiat does is (by printing more and more currency every years) it promote people to consume energy and resources that is unnecessary and faster than the rate Earth can renew. It would have long term effect and our next generation have to bear the cost of that while we are currently enjoy all the benefit. It is basically unethical. So .. what is bad for the economy ?? If there is still economy in the next 20 years!

3.I don't think limit block size it a wise solution. We just need to keep the growth match the growth of technology.
-You cannot assume the internet speed will be just like it is today. Just see the video here and you will know why

Anyway your opinion and feedback is welcome

 

[TanteStefana]

..............
To be sustainable, a crypto needs to have the opposite set of characteristics of Bitcoin- an unlimited self-regulating supply, a limited blockchain size, a steady rate production, and a means for recovering lost coins.

It also needs a way to manage inflation and deflation without effecting the values of accounts. Inflation is what should happen when the supply becomes concentrated in a small percentage of accounts. Deflation is what should happen when the supply becomes evenly distributed among the majority of accounts...

"an unlimited self-regulating supply" This implies one needs to manage market foces: IE manipulate market forces, which also means manage who earns and who pays. I think maybe not. In my opinion, Crypto Currencies provide a service, if the service is good, the demand is high, and those who support the currency see a value increase in their coins due to natural market forces.

"a steady rate production" This is only one way to bring coins into the system. However, lowering the rate over time creates more scarcity which incentivizes early adoption and continued growing valuation (assuming the product remains desirable due to being functional and useful). This is how crypto currencies hold a store of value. Some do it better than others. Some will die because they don't offer anything else, even if they taper off production. Without a store of value, people will not want to accept the currency due to risk.

"a limited blockchain size" Well, yes, I think there is an issue with Blockchain size, but must it be limited? There is something to be said about having a clear, verifiable blockchain since inception. With Moore's Law pretty much keeping steady since the dawn of computers, we can assume the blocksize will not grow larger than capacity to store it, however it will be a bit much to expect casual users to store big clunky files like this. That's why we have the Masternode Network. Masternodes are paid (as well as miners) to hold the blockchain as well as perform other work. With the rise in value of Dash due to that limited emissions and hopefully growing user base, we can require minimum computing power and storage capacity of our Masternodes so size isn't an issue. However, if it should become a physical limitation, there are many ways to handle this, such as sharding the blockchain or truncating it, etc...

"a means for recovering lost coins" Even banks can't recover stolen coins (and they're the absolute worst at keeping funds from being stolen!" What you have with banks is insurance. Crypto-currency gives you the choice to manage that risk yourself (which a person can do very well on their own if they wanted to) Crypto currency allows a person to protect their privacy, and personal information (ID theft isn't possible if your ID isn't in someone's system). I'm sure there will be companies that spring up that will manage your coins for you, for a fee, and insure your holdings some day. I'm also sure I won't be using them.

"needs a way to manage inflation and deflation without effecting the values of accounts." Why? That just means you want someone to control the marketplace. It's not like there will not be enough to spread around. The market place will determine which cryptos are worth anything, and those that provide needed/wanted services will be used the most, and will gain value because of that. All together, they will become an ecosystem that will be self regulating (in terms of number and value). That's why it almost doesn't matter which set of rules a crypto is established with when it's created, it's the fact that the rules of emissions will always be the same that matters. No manipulation is possible, thus the market establishes value. This is highly volatile now, but I'll bet it will be far more steady over time - because the market will determine value, not a government or bank pulling strings, and thus these bubble and crashes to the economy will become a thing of the past.

"Inflation is what should happen when the supply becomes concentrated in a small percentage of accounts. Deflation is what should happen when the supply becomes evenly distributed among the majority of accounts." I don't know where you got those definitions. Inflation is when the issuing "authority" starts printing more bank notes, thus watering down the real buying power value of the bank note. It's a time tested (talking thousands of years) way of taxing the people. Rome did it several times by removing the precious metal in their currency thus they could produce more currency. Check out what the Wiemar Republic did in the early 1920's to pay for the treaty of Versailles. That was nuts. My grandmother told me about how they would get their money from their husband's work place at the end of the week in a wheelbarrow, then run to the store to buy food before it devaluated even more.

Deflation, on the other hand, is when the supply of funds is limited. The biggest fear in modern economics is that deflation means nobody will spend their money because if they just hold on to it, they will have more money. In actuality, people will do this, up until the things they want are more valuable to them than the currency. So maybe they'll hold off on buying a new car for a while but they'll keep buying food and pay for electricity, etc... because they need these items. With the right balance, mass consumerism will undoubtedly fall, but certainly the energy that goes into that can once again be put into quality consumerism.

Again, Deflation won't be a problem because 1. the world will require time to convert to crypto-currency and may never entirely convert because some people like to have a big brother watch over them. This is fine, it's a choice. And 2. There are many crypto currencies to choose from, so they are all absorbing the influx and change to this new ecosystem. Some more so than others, and again, that's the marketplace.

The weirdest part about this whole thing will be loans. Why would anyone make a loan to another for crypto that is already gaining value at a high interest rate? The payback would be too difficult. And of course, without loans, people can't start businesses and produce (the real value of anything in this world). This is only an issue if crypto-currencies never find their balance, and real value never settles down but continues to grow. But we can assume that will mostly be the case for the successful currencies for now, so what can be done? This is an extremely exciting section of crypto that people have been working on. Bitshares has a system where they can issue tokens pegged to the USD, as well as Nushares/Nubits and there is currently a proposal in the Dash budget system for a whole other way of doing this (encouraging funding for businesses) People are amazing with thinking outside the box, and I'm especially excited about the experiment project proposal "Proof of labor" and sincerely hope they can get the votes to work on it. I think it could be an amazing experiment but also bring a ton of media interest to Dash as it would be a very interesting story - hey, I should write that as an incentive to work on it

Anyway, when businesses build something, they produce value, that value at that level is what will create the economy, and there does indeed need to be a level of crypto that feeds producers and increases value at this level

 

[SnowHater]

I think the debate over what the appropriate inflation/deflation is, or governance of the total coin supply, is certainly a valid point of discussion. However, "scarcity" is not an issue for DASH or really any crypto currency due to the divisibility of the coins. Even if there were only 1000 total coins in circulation that is still a gazillion currency units to work with.

IMHO, It is not about scarcity rather then about possibility to manipulate the prices while you have 6 million of DASH, and the rest have 1000 DASH. When you control most of the coins you control supply and demand easily. What is difference from a central bank then?

 

[SnowHater]

Anyway, if there is a "stable token" pegged to no matter what other asset, it will no longer be DASH, but something else (maybe DASHusd token, but, still, that's not DASH circulating, but this alien token).

It depends on what blockchain will be host this token, and in what currency fees will be forfeited. If DashUSD is hosted on DASH blockchain and transaction fees is paid in DASH then the circulation is going inside our blockchain (like tokens on Ethereum blockchain). For merchants this is useful because there is no need for them to transfer DashUSD in fiat as soon as possible after each bargain (being in fear of volatility). Only when they need to cash in or cash out. Economy on fees can be huge.

 

[raganius]

IMHO, It is not about scarcity rather then about possibility to manipulate the prices while you have 6 million of DASH, and the rest have 1000 DASH. When you control most of the coins you control supply and demand easily. What is difference from a central bank then?

No matter what one does, there is never such thing as an equally distributed asset/resource. Even if a powerful person forces equal distribution of money to each person in a kingdom, still, with time some people will waste money, and some people will earn money, and the concentration will reign.

Infinite issuing of money does not solve it... and to be honest, there is nothing to be solved here, because that is not a real problem.

edit:

It depends on what blockchain will be host this token, and in what currency fees will be forfeited. If DashUSD is hosted on DASH blockchain and transaction fees is paid in DASH then the circulation is going inside our blockchain (like tokens on Ethereum blockchain). For merchants this is useful because there is no need for them to transfer DashUSD in fiat as soon as possible after each bargain (being in fear of volatility). Only when they need to cash in or cash out. Economy on fees can be huge.

As I said above, my personal opinion is that I don't think this is viable.

 

[TanteStefana]

SnowHater I think the difference is that there will be a point where a holder's grip will loosen. Eventually, they will want to spend those funds. There is always a price where it can't be resisted. Still, if someone had bought more than otoh, I think we would have seen it. In fact we were watching otoh accumulate before we knew who it was. He eventually outted himself. But my point is, he was the biggest accumulator, and he had at the top, around 600,000 Dash, 1/10 of tooday's supply. He has since sold them to people, and manages a lot of their funds for them (I think these are his friends) so he doesn't own them anymore. And I think it's closer to 400,000 now. So even he let them go. A free market will naturally spread the wealth.