Calculated as:
sup: current moneysupply
sup30: moneysupply 30 days ago
chart: (sup - sup30) * 365 / (30 * sup30)
As someone who isn’t as clued up as others on these topics, could you explain its significance?
Thanks
In a simplified picture:
The amount of Peercoins which is newly generated by mining/minting decreases every day . This should have a positive effect on the value of Peercoin itself, since it’s becoming a quite scarce resource (compare with BTC for example).
Thanks for sharing, just tweeted this on @PeercoinPPC
Very interesting.
So we are not that far off with the current 7.5% inflation to the ~1% inflation when only PoS still exists. less than 1% inflation as transactions fees are destructed.
Might happen before the end of this year if you extrapolate the trend.
I suspect there will be a more gradual decrease when getting below a certain threshold though.
Some people might still continue mining even if it’s not very profitable, also a larger increase in the value of PPC could slow it down.
Interesting times ahead.
Edit: inflation on PoS only less than 1%
Unfortunately, I’m not a coder so I can’t read the code and I’m just trying to learn how the system works from what I read. So, are we saying here that Peercoin blockchain creation will go to pure PoS minting?
I thought that the system was such that PoW mining would exist indefinitely into the future but at a minimal level. Is this not true?
My understanding is that the more PoW mining power is applied the more the Difficulty factor goes up and the ppc mining block reward goes down. Consequently, this will become eventually, economically unattractive for miners and they start dropping out, then the Difficulty factor goes down and the PoW block rewards increase, thus keeping at least some miners going. If this is the case then PoW mining would never totally cease.
I imagine the overall PPC inflation rate to be (mostly? or completely?) determined by PoW mining rewards because the coin-age rewards for PoS minting of 1% are (mostly? or completely?) offset by the 1% destruction of PPC in the transaction fees.
Is my understanding of these relationships not correct?
Can someone set me straight here if I am thinking of these dynamics incorrectly.
Thanks much in advance.
I’m not a coder either, but I’m just applying logic based on what I hear, see and experience myself.
It appears that currently over 80% of the blocks in the blockchain are created by PoS mining and this is rising. This is different from the number of coins created by PoS which is way lower than PoW.
PoS blocks have a difficulty which always wins from a PoW block when both compete, but there seems to be a mechanism that PoW miners still get a block, but the percentage seems to be slowly reducing somehow.
The other part is as you say, difficulty factor goes up and PPC mining reward goes down when more mining power is applied. So there should be a bit of balance disregarding the mining power applied. However over time the block rewards reduce further. Combining this with less PoW versus PoS blocks the inflation is likely to continue to decrease. However it’s likely that the PoS awards per block will go up on average when people save their coins for 30d+ consistently. Having said this I’m still puzzled by the precise relation between the PoS and PoW generation as I also don’t understand the code behind it.
My previous statement in this thread regarding remaining inflation is indeed not necessarily true. Most or all of the 1% interest would be offset by destructed transactions fees. Only the PoW mining could still create some inflation on top of that.
I’m still hoping that someone can present the Peercoin economic model of the PoS/PoW generation including the reference to the code on how this works when you play with variables like increasing difficulty for PoS and/or PoW, increasing coindays at stake (online), number of transactions etc. Would be a good one for a graduate or a coder with good understanding of economics.
I am not a fan of deflation. Slight inflation means new coin and possibly new blood. There’s also many economic reasons to like inflation.
I picked Peercoin because it has built-in 1% inflation. I also knew that in reality it had deflation compared to bitcoin but long term there would be small but steady inflation (perhaps when the switch to pure POS happens). If inflation doesn’t happen I’ll have to reconsider investing more into peercoin.
All of the models I see indicate that there will always be a certain amount of inflation in the currency, it’s going to be a while before PoW reaches a point where it’s not contributing a number of new coins per day. Peercoin only turns deflationary if it comes a transactional currency for both small and large purchases, which I don’t envision it will.
That being said, the Future may surprise us.
[quote=“Ben, post:10, topic:1418”]All of the models I see indicate that there will always be a certain amount of inflation in the currency, it’s going to be a while before PoW reaches a point where it’s not contributing a number of new coins per day. Peercoin only turns deflationary if it comes a transactional currency for both small and large purchases, which I don’t envision it will.
That being said, the Future may surprise us.[/quote]
Agree, but that’s also the part I don’t fully understand regarding Peercoins economic model. When PoW coin creation comes down and there will be a lot of transactions then it doesn’t make sense to increase the fees as this would create further deflation, which is not considered great by most people and popular economics. So how should Peercoin react to an increase of transactions? Double the fee and the interest to 2%? I think this model should become part of the code, so the inflation and coin destruction are automatically adjusted based on the number of transactions (assuming new POW coins are negligible at some point in time). That way the inflation/deflation rate can be kept under control which I consider very important for a backbone commodity like Peercoin is/wishes to be.