This idea is so simple, i almost wonder if its even possible that I'm the first to have thought about it
Warning: I'm NOT saying we should do this to Bitcoin Cash, I'm just brainstorming an economic model. Maybe we can build a token on BCH like this?
Short summary: If we made it impossible for a cryptocurrency to increase in price, then nobody would speculate on it, which means only genuine adopters would be using the currency, removing the primary reasons for price dumps from existence.
How to do this: Base it on mining. As mining hash increases, more cryptocurrency would be printed, and distributed among PAST miner addresses based on the totality of past hash, where such addresses have a balance greater than the current valuation of a transaction fee. This would (should) not result in expanding profit margins for new miners to jump on temporarily to steal value from the network, as it would not really benefit the new miners. But consistent miners will be benefitted.
I don't think this will hurt a preselected block reward, as the lower valued block reward will be subsidized by additional coins with price growth. Correct me on this point if I'm wrong.
So basically price increase incentivises more mining hashpower to hop on, the hash will create more coins and distribute it proportionally among past mining hash totality, creating more sell orders, forcing the price down, disincentivising speculation, removing threat of price dumps.
But not all is lost with investing and speculating. The true investor of a coin like this is the miner, who usually isn't a speculator, but could be. But this would, or should, create an even more competitive mining force, creating a stronger network strength. This is superior because you're rewarded by your work, instead of just luck and buying in at the right time, or in general. And of course your speculation is only a true investment if you continue to do the work, if not, then with hashpower increase it will inflate your speculative holdings without adding a proportionally greater amount to you.
The volatility that will exist: Miners don't just magically perfectly and perfectly rationally respond to price fluctuations, due to the variables of time, future price uncertainty, and the limitations of hardware. So there will be a small amount of variance. I don't know for sure what this variance would be, but if it were like 5% with relatively high predictability that it will swing back and forth in fairly interval time, then even as much as 5% wouldn't matter on the business level, only on the day-trader level.
This is better than maker Dai: No stability fees. Not pegged to any commodities that can be corrupted like te USD. Theoretically noninflationary by any significant valuation level, with possibly just temporary inflationary hiccups in the initial road to adoption (would be caused if miners started to overwork and forced the price down, followed by those speculative miners leaving. Luckily, past hash totality absolutely minimizes the incentive for miners to do this).
What about prices on the market? Of course, this coin should never change significantly in valuation. There will just be more of them with time. So if starts out at 10 cents a coin, that's about where it should stay. Prices should remain stable and predictable.
If valuations are forced to be equal, than why would people invest in the coin? To use, obviously. Unless people drop adoption-level support for the coin, the coin should not lose value, and losing its value would mean relative instability until it returns to its normal level of adoption. This would be a small problem though if the floor was really close to the ground, so to speak.
An idea of complimentary adoption- One needs to be able to change one coin for the other easily for adoption to be complimentary. I think an easy solution to that would be cross chain atomic swaps, with some sort of a trailing liquidity fee, that eventually subsides, but meanwhile it increases on the networks' ability to make larger atomic swaps.
I want your thoughts on this idea.
[link] [comments]
source https://www.reddit.com/r/btc/comments/aklvpg/a_strange_idea_to_solve_crypto_volatility/
No comments:
Post a Comment