Every Cardano supporter knows that there will only be 45,000,000,000 ADA coins. ADA is a scarce resource. For many, it is a store of value or the money of the future. The immutability of monetary policy is a fundamental principle for any blockchain. If it were to be violated, it would have fatal consequences on people’s trust in the project. There is a direct link between scarcity and blockchain security. The market value of coins determines the quality of blockchain security. If security starts to decline, a change in monetary policy may be necessary as one possible solution. The choice between security or scarcity is a dilemma that would be very uncomfortable for the community. Is it possible to have a long-term economically sustainable blockchain without having to change scarcity? What mechanisms prevent a change in the monetary system and why is governance important?
TLDR
- Monetary rules can exist forever, no matter what technology is used to enforce and maintain them.
- In order of importance, rules come first, community second, and technology third.
- Maintaining scarcity essentially means making a key decision in times of crisis and changing the protocol in time.
- Scarcity can only be sustained economically in the long run through a sufficient security budget.
- Those who are able to manage resources more efficiently have a better chance of survival.
- The choice between scarcity and security is a choice that the community does not want to have, as they may not agree on a solution.
- All ADA holders together are responsible for both security and scarcity.
This article was prepared by Cardanians with support from Cexplorer.
Read the article: https://cexplorer.io/article/how-does-ada-scarcity-relate-to-cardano-security-and-governance