Is Fixed Supply in Peercoin worth considering?
Vitalik Buterin has just asked the same question for Ethereum, and he makes some interesting points:
- With ASICs, PoW issuance fails at making coin distribution more egalitarian
- With PoS, PoW issuance not needed for security
- With rewards coming from rent+other burned fees, can have rewards without issuance
The current inflation rate YTD for Peercoin is relatively high at 2.91 %. Because the inflation rate is so high, with no fixed cap, Peercoin doesn’t function very well as a digital store of value. Unfortunately Peercoin also doesn’t function well as a transactional currency as the fees are relatively high.
As peercoin is unlikely to be used much as a transactional currency, the inflation rate will remain high into the distant future - for this reason it is likely that Peercoin will continue to underperform other crypto assets, despite it being the pioneer of proof of stake.
Is the current inflation rate formula in Peercoin optimal for the success of the network in the long-term?