JustaBitofTime is posting the questions to Sunny and his answers one at a time on BitcoinTalk to start a dialog. This will help us understand why some people take the positions they do against Peercoin. We should attempt to dissect the answers given by our critics. This will only increase our understanding of ppc and make it easier to respond to critics.
The first question was from me about what Sunny thought about the claim that POS is a system designed to allow the rich to get richer and the poor to get poorer. Please dissect the critics and refute them if you can.
[quote=“artiface”]I agree and disagree. It’s not black and white really. In a PoS system it is not really “the rich get richer and the poor get poorer” or “the rich get richer and the poor get richer”.
When new coins are generated by PoS the money supply is increased so the value of each coin (in theory land) goes down proportionally. If everyone lets their coins earn PoS at the same rate the rich and poor stay the same amount of rich or poor. If you don’t let your coins generate PoS then you get poorer because you will very slowly have less percentage of the coin. If you are too poor to allow your coins to generate PoS because you need to spend them, while a rich person has enough to hoard away, well then yes the rich will get richer and the poor will get poorer, so in some cases the criticism is true, but not always.[/quote]
Critic 3: [quote=“wigglyuk”]I’m not sure how Proof-of-stake works but here is what I can add if it hasnt be added:
I agree with Sunny but I think there needs to be a reassessment of the phrase “same rate” and “Proportional”. Sure they have the same figure of interest but the richer get richer faster than the poor get richer, although they will always be the same ratio between their incomes and therefore proportional, the amount of total income gained between the rich and poor is not proportional.
I am fine with this solution, but I do think there should be another coin to counteract this coin.
A coin where the rate of interest is significantly less for the rich as it is for the poor. Such that the poor have a larger rate of interest than the rich but as the poor become rich the rate is thereby decreased. Thereby to bridge the gap and make the total income gained proportional rather than the rate of interest.[/quote]
Now I’m not an expert by any means, but I think I agree with critic #2. I believe what he’s saying is that both the rich and the poor that are holding their ppc and generating stake with it will become richer. At the same time, both the rich and the poor that are transacting with their ppc and NOT generating stake are becoming poorer. They’re becoming poorer because they’re not using their ppc to generate stake and are losing value through the 1% inflation.
So to sum it up, whether you’re rich or poor, if you generate stake you will become richer. At the same time, whether you’re rich or poor, if you don’t generate stake you will very slowly lose value through 1% inflation and become poorer.
And if this is correct, I don’t see any problem with it. As Sunny said in the last sentence of his response…
“Meanwhile, those who transact in the network with high velocity pay the security cost via low inflation.” - Sunny King
…The people who are not generating stake and transacting with their money pay this fee to those who are generating stake because they’re providing the service of securing the network. It’s only fair that those who are guaranteeing security get paid by those taking advantage of their service. Do I have this correct or did I go horribly wrong somewhere?
I disagree with the “all get poorer if they don’t generate PoS” hypothesis. The world population growth is over 1 %, so in a “world economy” with a steady GDP per capita a currency with an 1 % increase of the money supply with a stable market share would be deflationary. In the actual world both GDP per capita and world population are growing, so it would be even more deflationary.
The only 2 ways it would be inflationary are:
when the market share of the “1%-inflation-currency” is shrinking
in a worldwide steady-state economy with 0% population and economic growth (which perhaps is desirable for ecological reasons, but is very far away)