Would love to have a conversation about the points in this article. If anyone agrees or disagrees
Great read. I’m saving it. Thanks!
Tweeted! Great stuff!
Inflation is calculated per period, e.g. per year. It is not enough when ‘some day’ inflation is coming down. As Keynes said, “In the long run we are all dead”. What does that mean for PIVX? Coin creation must be just enough to pay for infrastructure cost, in every period. That means, coin creation must be coupled to an asset price index, like a a basket of fiat currencies, real estate, energy and natural resources.
You got 2 “musts” in there. Can you please explicate on them?
Yes! What I did not say it that I think that people really wand to move their financial assets into a ‘stable’ currency, and that currencies who don not respect this will have a short life and big volatility in their exchange rate. High coin emission is only then not harmful, when the inflow of money is at least as fast as coin generation.
This is fiat money monetary policy 101. Monetary base must grow with real economy growth.
PIVX could have a unique selling point vs. other cryptocurrencies, if it declared that monetary stability or even increasing value is a policy goal.
Etherum otoh even doesn’t aim at low inflation, they are using that ‘gas’ metaphor. Etherum thus encurages spending, not saving. But PoS in itself is ideal to encourage saving. But the current payout is much to high if PIVX is $10 or even $100. So, people with an economic or investing background will not take PIVX seriously as a store of value.
Ok. I would say that for me stable prices would be the goal eventually. I believe inflation is needed to help redistribute the coins to some degree and it is not bad if it helps the economy grow without increasing prices.
We are a community and only as a community can we declare something like that. It will take time and be dependent on the type of people that join our community. Hard to say how many people that joined in the last week or two will stick around and help shape things
Good to have this conversation
I think this redistribution argument is not valid. It sounds to me like a cheap spin for dilution of my (or any owner’s) coins. It’s not the number of coins one has, it’s the $ value that was invested.
It is not necessary for distribution of the coins, to dilute the value of the coins, on the contrary, it’s counterproductive, because everyone knows the flipside of mining or staking payouts is that these coins will be sold against fiat currence. You do not want the early adopters to pay for distribution literally.
Coin distribution will work if we can demonstrate that going into PIVX is not destroying one’s wealth. New people will come in, regardless of what the price for one unit is. The higher, the better if you will, because a high price is sign of trust.
Many poeple are looking for a coin they can just ‘buy and hold’ for five years and profit. It would be good, if PIVX would add preservation or growth of value to it’s top pitch points, next to privacy.
Yes, thanks for this discussion!
If the only people that will ever hold PIVX are the people now holding, it is useless as a currency. So some redistribution is needed. The main idea is that some (small) inflation will encourage people to spend, while none will not, again defeating the purpose of being a currency.
Also, right now early adopters are not paying for redistribution. They are actually profiting from it because the network effect is compensating for any potential loss
As I said above, I think this argument is not valid, because the coins divisibility is unlimited anyway. People will want to buy, hold and spend coins when the value is stable. Think e.g. of merchants - when they receive PIVX we don’t want then to quickly exchange them into other currencies, which they will do if PIVX is a risky or high inflation asset. OTOH, if PIVX is a good store value, then they’ll keep their balance, use it in price lists, contracts and they will want to pay other companies in PIVX directly. Really, inflation for ‘distribution’ is simply wrong, even if you can read it all over the place at other coins too.
with paying I meant they are getting punished b/c of inflation
I’d put it like this: Coin creation should only pay for infrastructure cost, i.e. the stability of the network. Otherwise it is harmful and unnecessary.
That’s why a mechanism should be created to couple node/staking payouts to the real value of the PIVX coin in terms of some globals asset indexes.
OK, I think we can be a community based coin that can later decide if some inflation is useful - to the community at large. Fixed coin supplies don’t work in practice in past history. The world used to basically be on the Gold standard but couldn’t hold on to it. That is why I don’t think that necessarily pegging PIVX to other global assets will not work either, since pegging in general never works. While fixed coin supplies don’t work, neither do highly inflationary ones. I’m hoping that ones with a very minimal inflation can work.
Ohh, please, don’t misunderstand me!
I am not suggesting to tie the PIVX price to an asset like gold or an index at all! How can PIVX surpass the index in value then?
I’m saying inflation per period should be ‘just right’. But what would ‘just right’ be? I think that point is the cost of the infrastructure, so that people are willing to run nodes.
But therefore, if PIVX is $10 instead of $0.5, the payout in PIVX must be reduced, otherwise we are overpaying and running an overcapacity in infrastructure.
Keep in mind, if we are creating 10 million coins next year and if PIVX is $50 next year, we need $500.000.000 inflow just to keep PIVX value constant! It will not happen and PIVX will tank and be destroyed.
I’m out of replies the system says for today!
OK, I agree that in the long term for the case of masternodes the reward should not be overpayments for overcapacity. We do have inflation now, but by May it will drop to 4.8% per year and then decrease slowly
This assumption is not correct. As of today, 28MAR17, between now and the end of calendar year 2017, approximately 2,529,000 PIV will be created based on the Block Phase 8 (15 PIV) until 18APR17, Block Phase 9 (10 PIV) until 18MAY17 and Block Phase X (5 PIV) - indefinitely. That is not 10 million. It is just over 2.5 million from right now. Our current coin count is 52,634,551. From 2018 and beyond, the creation of about 2,629,440 coins will happen naturally due to the inflationary nature of the code. This is an ever decreasing rate of inflation as the supply of coin increases. So while the numeric number of coins being created is constant, the annual inflationary rate decreases. This may be a problem in 50-100 years due to the inflation rate being too low, but at that point, if PIVX is a success, then the currency should be quite distributed already.