Consider including in the BitCoin protocol some network-wide self-correcting mechanisms. By this I mean that the BitCoin P2P network participants would have to be able to change some of the BitCoin protocol parameters, in their client application.

The only clear idea that I have right now is the maximum amount of BitCoin in circulation. Not necessarily the absolute amount, but as an annual inflation percentage. For example, the maximum amount for 2010 is 21 million, for the next year could be 1% more, and so on for each year (cumulated, so as to simulate system / population growth, but not as a percentage value, just as style).

This percentage can be either integrated in the protocol, or left as a BitCoin client editable parameter, in which case the final value can be settle upon through agreement among the vast majority of BitCoin clients.

Reasons for this type of inflation: to avoid deflation and creation of credit.

Some people suggest that there could be a credit market in the BitCoin market. But consider that mining gold (and fiat printing) has been replaced with individual BitCoin mining, and thusly eliminated the centralized and authoritarian injection of money in the economy (through gold fields claimed by states, gold mining corporations and central banks).

BitCoin should not aspire to replace money (what is money: gold, fiat?), but aspire to replace what works as money (= the money supply, which includes credit).

I mean, why would Bitcoin try to replace just a small part of the centralized and authoritarian injection of money in the economy, when the credit market accounts for far more things which work as money?


George Hara