Quote from: nanoprobe on February 26, 2015, 12:10:16 AM

Quote from: EPLDCC on February 25, 2015, 10:57:52 PM

There's no such thing as free money. Work is valuable. We always pay for opportunity. I would strongly oppose introducing POS for DGB. Unless you mean something like calculated on a year over year basis with a low (like 2%) stake reward. I watched the video you suggested. I was not surprised that the entire discussion was related to the how POS technology functions and not the economics of implementation. Frequently, digital currency developers understand writing code and developing tech; they focus on the technology and ignore the fact that they are essentially implementing monetary policy. They're interested in could more than should.

As a technology POS works like mining the block chain (your wallet balance becomes your hash rate). But, from an economic perspective, POS turns "investment in production" into "interest." The effects of high interest rates (and thus POS) are straightforward. High interest rates discourage investment and spending, they reward saving, decrease confidence (make risk less appealing), over long periods of time they reduce aggregate demand and raise taxes - and - most important - they put strong deflationary pressure (downward pressure) on the exchange price. None of those effects would be good for DGB.

When I first heard about POS I though it sounded really great. So, earlier this year I bought some coins in a POS alt-coin. Today, I have a far bigger balance of coins - and that larger amount is worth about half as much as when I traded for them. Nobody exchanges ... the exchange value averages down at relatively the same rate as the stake value. I figure it will take another 12 months of monthly staking (exponential growth) for me to get back to even and sell.

So, based on the economics and my own experience, I would say that we should encourage use, exchange, and production, rather than saving of DGB. As a thought experiment, it might be interesting to consider a separate company (using a POS sidechain) that acts like a bank - paying interest on deposits and loaning out, and trading, the deposits, to provide liquidity to the market. However, the marketplace for alt-coins isn't sophisticated enough for that sort of system - at least not yet.

One of the best posts I've ever read on this site.

i plus one this as well

mikejones1

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