Burning ADA - Paint Chip Brigade to the rescue!

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I for one had to laugh watching Charles rely on users’ misfortune such as “losing your keys” to state that Cardano is deflationary, lets’s get serious, Cardano is NOT deflationary, but we know Charles has a difficulty in responding to the Paint Chip Brigade and resorts to being condescending to anyone who asks for the Burning of ADA to make ADA truly deflationary and promote scarcity thereby increasing the Value of ADA…

Is anyone keen to discuss EIP1559 I know it’s ETH but why not add a % burning mechanism of the Transaction Fees?

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ADA Supply is fixed and transaction fees are very small. ETH supply is not fixed, it increases with every mined block. and the transaction fees are huge.

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Fee burns punish usres of a token and reward hodlers. I couldn’t imagine a more fundamental design flaw for a currency, one goal of which should be minimal barriers to the velocity of money, than a fee burn needed to curb runaway currency inflation.

Kudos to Ethereum for their ability to market this jerry-rigged abomination as a feature. They know how to work their fanbase.

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I see the points and they are valid however why state that Cardano is deflationary when it has no such Feature, but relies on the misfortune of its fan base

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There are two major groups of crypto:

  1. Inflationary crypto means unlimited supply.

  2. Deflationary crypto means it has maximum supply.

ADA has maximum supply (same as Bitcoin), there fore it’s deflationary. It is just a category it is placed in and has nothing to do with any features or burning.

As a side note it has already been proven that burning tokens doesn’t increase the value in long term. It just bumps the price up for a month or so and then it drops even lower.

Long term value is increased trough use and adaption. there are no short cuts. Just build, educate and compete.

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It is deflationary in the sense of increasing value of the currency even without people losing their keys, as long as more people start using it, because of the limited supply.

I’d also question why crypto world tends to think that deflation is a good thing and inflation a bad thing. And why they even want heavy deflation.

Traditional economics might get a lot of things wrong, but the case for (mild) inflation seems quite reasonable.

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Ah, ok thank you for the clarification.

I would say Crypto thinks deflation is necessary only with unbridled inflation protocols, which then leads to the reason Crypto wants deflation because it affects the PRICE (scarcity improvement), and we know Charles does not give a duck about influencing price.

So would you not want your investment to go higher in value?

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Thanks for the education, this completes my appreciation for Cardano!

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We have been living with a debt based system for generations so this is at the core of our belief system and colours our vision.

Is there any real evidence for this?

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7.4d4

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We have been living with a debt based system for generations so this is at the core of our belief system and colours our vision.

So why can we not design an abundant system from the beginning ie Give everyone a Basic Start say 1 Billion, you get that when you are born and you access it as per a coming of Age and wisdom time (reflection on past and future) Set Life Agreements (Smart Contract) Kind.

I cant can you?

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for a good adoption a suply if 45 billion is not that much just imagine every person on this planet wants to have 10 ada in their pocket to have a burger @ mcdonalds.a coin with a very low suply can be much more in value but the holder are also much much less so only the rich,not for the average person🤔

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Yes, but just holding a cryptocurrency is not an investment. I did not give anything of value to someone who is now working with it. It is supposed to be a currency, something that circulates and is not just hoarded. It is the means that is used to invest into projects, not an investment in itself (or it shouldn’t be if it is meant to be a currency).

Unfortunately, economics is not really an exact science. The historical examples in Deflation - Wikipedia all seem like situations one would want to avoid, but you could, of course, always argue that the deflation was not the central cause for that.

It seems very plausible that deflation tends to let people just hold the currency and not stimulate any economic activity.

It might be manageable, but I also think it would be somehow strange to have an annual negotiation with my employer on how much he will cut my salary due to deflation.

Also: The current increase in prices is not due to monetary policy, but due to supply shortages because of the multitude of simultaneous crises. Would a deflationary currency system have been able to avoid this? I’d doubt that.

And there are alternatives to compensate the loss in value due to inflation – invest in stocks and ETFs, government-run pay-as-you-go pensions that are adjusted for inflation and paid by the currently working for the currently retired, basic income schemes financed by taxes and duties, …

Charming idea. I don’t know if it has to be a billion. If everybody gets a billion for the 18th birthday, a billion will be worth much less in no time. And I’d rather do a regular social transfer through basic income than only one sum once in a lifetime.

But, anyway, that idea is either quite inflationary (if everybody gets that as newly minted currency) or it requires a huge amount of taxes. Both a bit antithetical to the usual ideas in cryptocurrency.

And we would need some way to ensure that all people get that, but all people only once. That would most definitely require some form of centralised identity authority (as is also needed for things like elections).

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Your statement illustrates my previous point:

I don’t assume that inflation is a necessary pre-condition for a proper functioning financial system. It may be quite workable to have a deflationary asset at the core. Maybe just different thinking is required.

Deflation does not necessarily imply hoarding. We still buy computers, cars, furniture etc. These all lose value, yet we still buy them because we want or need them. We just make a value judgement that our lives will be better by spending some savings to purchase these things. This is despite the fact that we know we will be able to purchase more for less in the future.

Jeff Booth uses a first principles approach to argue for a deflationary system. I think he has some good points.

Russell Napier points out that we are likely to see governments implement forms of what he calls “financial repression” in order to deal with overwhelming debt in the current system. The whole notion of this implies the ability to coerce.

Our current system, based on debt, and requiring inflation, doesn’t seem to be working out very well.

I wonder if the current system is fundamentally incompatible with increasing technology. I say this because the current system requires coercion and information asymmetry at its core. I see cryptocurrency as just another technology that enables a shift in the power dynamics.

Dictators will need to increase their coercive forces as technology increases. Imagine what will be necessary to maintain that firewall when we have satellites enabling free internet to hand-held devices. Are they going to shoot all the satellites down so nobody can bypass the firewall? They might.

Imagine when an information sharing platform is invented with proper incentives that facilitates community curation and validation of information. Imagine when people can learn faster. This will make it even harder to justify shooting down those satellites. The invention of AI would make things unfathomable.

As the power of technology continues to increase exponentially, eventually it forces this one way or the other. I am not sure that an inflationary system is ultimately workable.

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The Crypto market in general is in its infancy, as Snoop said in Space with Charles, everything is digitized, money will be too, so what do you do? you build utility and the number of services that can be provided is unlimited. Burning ADA is like burning future. When the adoption of this universe is complete, we are going to fall short of ADA and use the lovelaces.

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This is not true. That fee is how much spo charges its own delegators, not the system itself. The total released amount would not change.

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That would be great and I am sure the SPO would choose the lower amount if it meant a reduction in Supply but that’s not the case RIGHT fixed supply IS just THAT, sOOOO The % tx fee burning mechanism to address deflation no matter how minute is a positive for scarcity and value of the coin?

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OH yes you’re right. I don’t know what or where I got that thinking from.

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Eye guess I like that EIP, what do you think now?

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I think that now we have undeniable proof that burn mechanics like EIP1559 are useless when it comes to price stability or increasing the value of a token compared to tokens with no burn mechanics.

Tokens with NO burn mechanics:

adaprice
adaprice1077×70 8.27 KB

btcprice
btcprice1070×69 8.05 KB

VS.

Tokens with burn mechanics:

ethprice
ethprice1075×68 8.18 KB

solprice
solprice1068×66 7.95 KB

Long term value is increased trough use and adaption. Use and adaption is increased trough innovation and development. There are no tricks or short cuts.

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Listen here Neo wanabe, what are you going on about,
EIP 1559 was never about the price! Rethink your perspective!