Deflationary structure does not provide incitation for use of money

I am sorry I didn’t understand that that was your point. I don’t think there is anything a decentralized cryptocurrency can do to avoid the volatility caused by the speculation of the market. This is why: Let us suppose we develop an inflationary altcoin, this could be accomplished in several ways (e.g. constant difficulty). What happens if the market suddenly have a lot of interest in this altcoin and start buying as much as they can? the supply will reduce and the price will increase, because even that in the long term more tokens will be minted, in the short term supply will be scarce, so whoever needs to use this altcoint will have to pay market price. What if we could just control the supply? how we could do that? for instance, we could let the network decide the reward based on the demand, but then the problem is how to quantify this demand. And then there is also the problem that some part of the network will probably have more interest in creating artificial scarcity than controlling the volatility.

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That’s the whole point of brainstorming, instead of saying no upfront.

Welcome to the discussion, we need more heads proposing solutions not more mouths saying it can’t be done.

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Continuing with the proposals, it’s a good idea to do some research on what has been done up to now and how they performed in the market, what were their good and bad points and why their failure.

I remember time ago there was a coin controlled by stakers that minted on demand and bought on supply to keep it pegged to the dollar, unfortunately don’t remember its name/symbol. Also right now we have USDT Tether which besides being in the eye of the storm it has accomplished that goal to perfection.

What else?

But, we could get some phd macro economics to join the debate… i mean, Cardano foundation is a group of phd and engineers wich makes every step they make a little more strong.

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Accomplished what goal exactly? Tether is 100% centralized, and people using USDT have to trust in iFinex Inc.

A crypto pegged 1:1 to the USD?

That’s the point. ADA-CASH would be semi-centralized (some replicator supernodes come to mind) and Cardano would be the gatekeeper (coordinator). Remember we are trying to introduce a non-volatile coin pegged to the USD to handle million of transactions in world commerce and need to propose different approaches. Cardano will keep ADA as store of value and Daedalus will easily handle both accounts.

Keep your savings in ADA and your daily expenses in ADA-CASH.

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First of all I am so happy to see this kind of questions. It shows the maturity of the people here. Keep it up!

Now on topic: This is a very good question. First we should ask ourselfs what gives the dollar, eu etc. its value? Why is Eu right now more valuble than dollar? When this question is answered, maybe we can apply the same model into cryptocurrencies?

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IMO, I prefer a currency that has greater purchasing power in the future vs a constant or inflationary one. I’m better-off if I can buy a meal for less money than I expected compared to going to the store and realizing my money that could purchase 3 full meals before can’t even buy a slice of bread. It just means my money will last longer than a constant value or inflationary one. If I can’t split the value in very small quantities; and transaction fees are proportionally constant to the value of a unit of the currency then this will be an issue. But it does not appear to be the case with ADA.

Oh… and why do we put our money in a bank on time deposit? So we can fight-off inflation (only a bit).

i dont think it will be deflationary forever. it’s still an early stage for all crypto, few investors are holding and prices are sensible to speculation. But even in a volatile market ada is more stable than other currencies due to the number of available coins. billions in pumps and dumps can move only a few cents of the price.

5 billions to move 0.111…

30 b/ 45b = 0.66
35 b/ 45b = 0.77

300 b /45b = 6.66
305b / 45b = 6.77

in the future if we save ada we could spend ada or convert to a fiat currency when needed.

the conversions may be easier and cheaper, some debit cards already can do this (with btc, dash, usd, euro) but the rates are still unfair… but more services like this will show up soon.

to do many payments we could convert some ada to iota to minimize fees, when these coins become widely accepted.

Like steem and steem dollar?

Hey everyone, thanks for the answers! Let’s review what is being said here. About the comments realtive to having a Phd in economics, I have myself a Ms in economics. I specialised in Microeconomics, but the cases we talk about are mainly relative to economics 101.

Via the governance system everyone can decide if it is better to have capped, constant inflation or variable inflation.

I did not found meaningful info about this governance system. However, if your voting rights are granted in PoS way, it means that the richest users will detain the power. The incitation then for these whales is to limit the supply of the money (in a HODL fashion), in order to make its value go up. However this will increase deflation and prevent a widespread use of the token. That’s why central banks are independent : to avoid capture of their power by private interests (state included).

An alternative allocation of voting rights could be to grant them to users depending on the volume of transactions done in the past: hence the monetary policy would be geared toward the users and not the hoarders.

GDP - compile it from Cardano - then I would know what GDP really is.

A simple way is to evaluate a use metric is to evaluate of goods and services exchanged using Cardano. If we kept a register of the companies accepting Cardano in exchange of tangible good and service (i.e not exchanges), we could monitor their transaction levels (either by automatic reporting on their part, or by analysing transaction data) and derivate an activity index. That’s what national statistics service do.

In other words, any economy where its participants can speculate and invest have the property of being implicitly deflationary.

This is called a liquidity trap, and this is one of the worst scenario you can imagine for your economy.

if you thought that the $20 dollars in your pocket might be worth $20.02 tomorrow you might go ahead and spend on stuff you need and save more.
US dollars used to be deflationary as well, as we’ve turned to inflation policies and low interest rates people are enticed to spend, and now everyone is in major debt.

Indeed, a very slow deflation isn’t a big deal usually. However, it is a major drag for the adoption of currencies, as we explained before. It’s like saying to a sick person that once he will be healed, he will be able to drink a glass of wine a day, so why not drinking a bottle now?

US dollars used to be deflationary as well, as we’ve turned to inflation policies and low interest rates people are enticed to spend, and now everyone is in major debt.

I see often this argument about debt. Well, americans, you’re not the world and many countries can manage a modern capitalist system while saving their money. (link)

ADA and ADA-CASH

Interesting idea addressing the technical problems that @Ikarus addresses later. Maybe we could expand it in another thread. The way I understant It is that you’d have your Ada-cash wallet representing the $ value of your Ada wallet. Just like those bitcoin credit card, but with a fluctuating account balance and a payment in Ada-cash. Is that is?

The most important social pain points are: (etc…)

Clearly the best analysis. Devs read this!

I remember time ago there was a coin controlled by stakers that minted on demand and bought on supply to keep it pegged to the dollar, unfortunately don’t remember its name/symbol. Also right now we have USDT Tether which besides being in the eye of the storm it has accomplished that goal to perfection.

Indeed Tether is backed by the belief that Bitfinex has 1$ for every Tether out there, which allows it to totally control the price of the currency. Modulating money emission is an effective way to control the currency price : that’s effectively what central banks usually do, in addition of having massive monetary and securities reserves for emergency.

First we should ask ourselfs what gives the dollar, eu etc. its value?

Inside the USA, you are legally binded to accept it as a mean of payment. Besides, you can only pay your taxes with $, so that creates a supply and a demand. Also, there’s a massive payment infrastructure that makes it the easiest way to transact.

Outside the USA, you need dollars to buy oil, which is the main ressource of every modern economy. Thus it creates an artificial demand for the currency. A lot of international lending is done in $, so you have as well to get dollars in order to reimburse it => extra demand. This explains why the USA has had a negative account balance for so many years without a collapse of its money : everyone needs dollars to transact.

Some may say that this right is enforced by military power and violence of the american army : all of the recent wars in the gulf have a link with oil and switch from to another trading currency. Others may argue about the currency manipulation of some countries, such as China, who buy in order to devaluate the Yuan.

IMO, I prefer a currency that has greater purchasing power in the future vs a constant or inflationary one. I’m better-off if I can buy a meal for less money than I expected compared to going to the store and realizing my money that could purchase 3 full meals before can’t even buy a slice of bread.

Yeah good for you but then it will be like gold, and not be used for daily exchange. You could buy bitcoins, since the cardano improvements are not really useful in that case. Besides, unlike gold, your currency doesn’t have intrinsic value, so when the market crashes…

I dont think it will be deflationary forever.

Well if you have a limited supply and a growing use, it’s the case. Unless use is already at its peak and your economy experiences a recession. But then you may cry because you can’t pull the lever of monetary policy.

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So we need meters about the circulating of Ada outside exchanges to have a dinámic Ada Emission policies wich will generate enough Ada per year to have a debatible Deflation/Inflation?

Except this issue is hardly debatable. The US was on the gold standard until Nixon nixed it (pun intended :slight_smile:). It seems to me that what IOHK should do, in addition to hiring top academic and engineering talent, is to hire some top notch economists to explain to them why the gold standard was abandoned in the USA and pretty much everywhere in the world. If you’re really trying to integrate into the economy at scale, it behooves Charles, et al, to avoid reinventing the wheel and find out why we’re no longer on the gold standard but instead use fiat money and adjust the cost of borrowing money as a means of invigorating or slowing down the economy.

Even if ADA ends up being inflationary, it’s still a better deal than the way we go about business right now - by printing new money via minority consensus. If the consensus can be shared across a large/r majority, decisions/events such as “quantitative easing”, CDOs which precipitated the collapse, etc that happened, during the 2008 RE crisis will be much more difficult (or impossible) to arrive at. Perhaps if ADA was alive & inflationary prior to 2008, there would not have been anyone “too big to fail”, and all those that were the true culprits, would have failed.

Or perhaps there would’ve been “quantitative easing”, but it would have been arrived at by a much broader consensus. I don’t know how it would’ve turned out.

What I do know is that if ADA is going to become invisible/normal and integrated into the very fiber of world economies, is that it cannot be divorced from a power base which is elected by the will of the people.

It’s not like ADA is going to reinvent human behavior as Charles keenly observed, it will just provide us with better means to conduct decisions, at a rapid pace, with more transparency, and hopefully more accountability.

If Charles, ADA, et al are truly shooting for this kind of absorption into society, then ignoring history, digging your heels in, suffering from conspiracy theory delusions, or refusing to change to inflationary from a deflationary type of currency or at least providing mechanisms to change monetary paradigms within the software itself if need be, is at his, ADA’s and Cardano’s peril.

Sure, what IOHK/Cardano’s doing is revolutionary, but only in the technological aspect. Cardano/ADA’s ultimate destiny, if they truly aspire to greatness, will be to serve what Charles calls “the legacy”, i.e. the 7 billion inhabitants on earth - including the 3 billion served and underserved.

Can his be pulled off? Yeah. But it’s much, much, much, galaxy size bigger than Charles, IOHK, ADA and Cardano alone.

Wasn’t there a saying in America? Those who fail to learn from history, are doomed to repeat it. Kind of like UNIX, those who fail to understand it, end up reinventing it :slight_smile:.

Good luck.

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I hope that one day, we don’t have to convert to FIAT.

By the way, how do people get to spend their dollar prior to Aug 13, 1971? Or was it December 23, 1913? Were people HODLing their USD because it was backed by gold? The USD was deflationary prior to this point in time right?

Agree with your thoughts on this as a coin for monetary transactions. Cornell economics graduate here. Cardano is much more than a crypto currency though. It incorporates smart contracts, fast and secure transactions that offers interoperability with legacy systems (think etherium and ripple).

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This is a bit of a longer read, but I found myself nodding in agreement with most of the points made:

Why Bitcoin is stupid

Let’s not be stupid in Ada land.

Yes, they spent it even when we were on the gold standard. I’ll let you read up on what led to the removal of the gold standard, but before you do that, here’s a couple of questions you need to ponder on as you are reading and researching through data, stats, opinions, facts, etc - Bitcoin, according to the founders vision, was supposed to be used as currency for micro transactions that will put visa and mastercard out of business by drastically reducing their standard 3% transaction fee - how is that working out for Bitcoin and Mr Nakamoto (or rather, the original founders hiding behind the pseudonym)?

And knowing yourself and other humans’ nature - is it not painfully obvious that we are uber selfish creatures at our core? In other words, what exactly do you think drove up Ada’s price from 50-60 cents to a dollar in a matter of days? Some notion of altruism, or a desire to see the coin used as currency? Hell to the hell to the NO! People are SLAVES to their desire for gold, money, and wealth.

Deflationary currencies only reinforce rather than weaken this desire. Someone will subsist by sleeping in his car, eating in public food kitchens, piss and defecate on the street, mooch public wifi and avoid incurring any extra costs of living just so he can feed this desire in perpetuity. The problem is his nature - even when he saves up enough money, he could up his standard of living a tad without breaking his back, but he won’t only because his end goal is “more”, rather than enjoying life.

If you’re betting on most people who are investing in crypto right now on being generous at heart, or motivated by something other than greed, you are in for a rude awakening.

Inflationary currencies were “invented” to help moderate this inborn human desire for money and hoarding by slowly devaluing the value of the currency across the arc of time, so that HODL-ing :slight_smile: ad nauseum does not pay off, hoarding, laziness and risk averseness do not get rewarded but instead punished.

Even Charles himself doesn’t strike me as 100% pragmatic on this issue because he and the team started Ada off as a deflationary currency, which may work for the time being… But in the final analysis,.the perpetual survival and mass, worldwide adoption (G20 + the rest) of this coin can only be assured under a PoS/consensus driven, inflationary monetary paradigm, if hopes of infinite scalability, a preferred means for micro transactions, stability are to ever materialize

If you want Ada to succeed where literally all others have failed, then it inevitably will become PoS/consensus based, inflationary in nature, such that it can be controlled by an elected power base representing the will of the people. The control of the monetary policy aspects of Ada, if it hopes to become de facto currency for major economies will reside in the hands of the people and its duly elected power base, i. e. its stakeholders. All ada and cardano is doing is lifting up the current system into one that is more transparent and a lot harder to manipulate - you’re still going to have whale stakeholders, like investment institutions, large corporations, etc, representing a sizeable chunk of the block chain, but the little guy, me and thee, also get to sway the vote/consensus too, provided the math Charles et all is creating works as expected.

If you want Ada to stay a fringe currency, with lambo type investors, then hope for it to stay deflationary, or your preferred term, non-fiat. :slight_smile:

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Hi guys,

my first view of a topic and straight into deep water, nice ! :slight_smile:

My take from the only economist @Mustrum_Ridcully
is that in the end both inflationary and deflationary are spend as long ass YOU can spend them. That is, adoption is the prime factor!

Also a quick check on the claim that prize does not follow mining difficulty and is 100% speculative :
https://bitcointalk.org/index.php?topic=2473778.0
That is, it does in fact.

Finally, @MartinMKD the Satoshi vision is still alive. BCH transact with speed and the lowest fees of the top ‘money’ tokens. It is truly the core devs screw up IMHO.

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