Post
Topic
Board Economics
Re: the end of hypervolatility?
by
coinft
on 18/07/2013, 20:30:03 UTC
Possibly never.  Even if all coins were redistributed evenly among all current users, if the userbase expands 10x, then we will be the Early Adopters With An Unfair Advantage.  Then the next 10x growth causes those users to be the Early Adopters.  If it ever becomes a major world currency it might put an end to it, but I'm afraid this problem will prevent BC from ever achieving that kind of widespread success.

The solution I'm considering is dynamic inflation: adjust mining rewards to pin the price to a currency basket, at least until it's an established and stable currency.  That doesn't prevent devaluation so you'd have to be conservative with the adjustments, but it would prevent the "early adopters" problem.

This probably won't happen with Bitcoin since everyone wants to get rich quick, but an alternate cryptocurrency might do it and succeed because of it.

Being an early adopter is a major driving force, and such an alternative currency will fail if it doesn't promise to reward early adopters well enough.

By the way there is no need to redistribute. Just buy some bitcoins now, and to the people in the next 10x increase you'll be an early adopter too.