Post
Topic
Board Economics
Re: A less volatile cryptocurency, what would it take to regulate its own market?
by
maxxoccupancy
on 17/02/2014, 08:06:13 UTC
To stop inflation, just stop--or greatly slow--the printing presses.  When there's a price drop below the lowest 24 hour high, you reduce the block reward as long as necessary until buy orders catch up with sell orders.  In an extreme selloff, the low reward rate would continue for while.  Mining difficulty would not increase again for the time because the ASIC miners would use that downtime to mine altcoins on SHA256.

For an altcoin, you build a small reserve of bitcoins encrypted within your own blockchain.  Allow miners to accept either newly generated coins or receive 90% of that value in bitcoins. 

ScamLock, similar to multi-sig's 2-of-2 system, would allow scammed buyers to take recently spent coins out of speculation by leaving them locked (unspendable) permanently.  Scammers and disreputable companies would have less incentive to target buyers because a scorned buyer could always destroy their coins within 24 hours.

A mechanism that is designed to take coins out of circulation does not necessarily reduce its total market capitalization.  Just the opposite.  A coin that is much less likely to lose its value suddenly draws in far more investment from those who have more risk averse savings--which, in my mind, is the whole point of having a cryptocoin.