Quote from: molecular on May 02, 2013, 02:53:58 PM

I don't get it... bitcon network hashrate could just increase forever. what's the problem with that?

Of course anything can happen. But that isn't a rational argument in favor of a deflationary cryptocurrency. The whole point of this thread is to argue in favor of an inflationary cryptocurrency.

The less inflationary the cryptocurrency becomes, the more it depends on tx fees for revenue rather than block reward. Why do you remove a stream of revenue from the the profits of miners when it is their job to create a secure network?

I'm not sure you even read anything in this thread.

As I explained above:

The network must increase hash at a rate of total cost of network hash / 2 every 2 years.

If the network must double in present size of hashrate, then the cost of doubling the hashrate in 2 years will be the value of half the network hashrate in the present.

For example.

If the network is valued at 30b in the future (30b is a minor barrier to entry, which i don't think will be enough, perhaps 300b), but let us use 30. In 2 years the cost of that hash will be 15b. Thus every two years, for the network to grow at the rate of Moore's rate, the network must invest 15b for the cost to replicate network hash not to decrease. Otherwise, if the network does not invest half of its cost every two years, the barrier to replicate the original hash will decrease to 0 over time.

As I explained previously.

Given 1% inflation, the value of the cryptocurrency must be at least 25x the cost of network hash for miners to profit + electricity costs.
Given 2% inflation, the value of the cryptocurrency must be at least 12.5x the cost of network hash for miners to profit + electricity costs.
Given 3% inflation, the value of the cryptocurrency must be at least 8.3x the cost of network hash for miners to profit + electricity costs.

Given 0% inflation, for us to mimic 2% inflation:
If tx fees is 1%, then velocity of bitcoins has 2.
If tx fees is .5%, then the velocity of bitcoins has be to 4. That the total bitcoins sent every year must be equivalent to 4 times the amount of bitcoins in circulation.
if tx fees is 0%, then there is no mining profit and we have a problem where it's possible that mining cartels are actively undermining the system. This is not possible with an inflationary cryptocurrency.

But transaction fees cannot mimic inflation for revenue because inflation will naturally also have the same revenue stream of tx fees.

There really is absolutely no benefit for this type of a cryptocurrency not to be inflationary.

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