One way to look at it is that 1% of say 100 ppc gives you 1 ppc a year which you can use for a bunch of transactions. Peercoin is never intented to be a coin to pay cups of coffee with, just the big stuff
Sure, I understand that and I like the idea. But still it’s just 1%, whereas blackcoin offers me 5%. Or a regular fiat bond might promise me somewhat around 10% (if I am willing to take the risk in a very risky one, or with higher interest rates in 20 yrs maybe ).
Peercoin was made for an investment, a backbone to the cryptocurrency market. Understood. But for a real investment, the return is pretty low and static at 1%. Not even considered the exchange rate volatility… thats not very appealing. I am thinking of ways to make the coin more attractive as such an investment.
1% inflation is more attractive than 5% inflation.
If the coin would be used as a currency, yes. But it is not used as a currency, nor is it suitable for that. Too expensive with the 0.01 depletion fee for every transactions, and too slow. Other coins such as blackcoin are better suited. Short block generation times, low transaction fees and a small inflation rate, that is great for a currency. And a lot of infrastructure of course, debit cards, web shops accepting it etc.
But peercoin started out as an asset for long term investments and imho it should aim to be competitive as such.
As for the inflation rate: I’ve seen a chart on the internet somewhere from 2014, which claims that peercoin would be more deflational than bitcoin in the long term…
If I own 1 coin out of 100 (1%), and everyone mints for a year, i will then have 1.01 coins out of 101 (still 1%). If we multiply the rate by 10, I would have 1.1 coins out of 110 at the end of the year (which is still 1%). If we make it 100%/year, i still will only have the same % of the total supply at the end of the year as I started with.
1% mint inflation with 0.01 min fee essentially means you get 1 free txn/year/ppc. If we increase it to 5%, you would get 5 free txn/year/ppc. Youve not made an argument for why we should be giving out more free txns than we currently are.
I think you’re misunderstanding the purpose of Peercoin. So many blockchain projects seem to be attempting to imitate payment processors with high speed transactions and low fees. Only Peercoin seems to recognize at a fundamental level that blockchain technology is not meant to perform functions like these.
The focus of the Peercoin blockchain is to be a decentralized store of wealth. This wealth can take many forms, from trading fiat to store in peercoin or owning PeerAssets that represent equity in real companies.
Regardless of the form it takes, the purpose of the blockchain is to store this wealth in a decentralized manner, which makes it resistant to censorship, interference and theft by governments and other parties. The blockchain is a safe haven that is exposed to fewer threats from the outside world, as long as you take proper security precautions.
The Peercoin blockchain is designed to be focused on fairness, security and sustainability rather than features like fast transaction speeds and low fees. Focusing on the former will result in a rugged and robust blockchain that retains its decentralization over the long-term. Focusing on the latter however (speed and low fees) will result in a centralized network that is controlled by fewer people as well as a massive blockchain size, in effect reducing both chain security and its ability to act as a store of value.
There is no reason why Peercoin can’t act as a currency though. The Peercoin philosophy is to build things on top of the chain, rather than into the chain itself. This means that the blockchain should forever continue acting as a secure base layer on top of which 2nd layer protocols are developed to handle everything else.
Keep the blockchain the way it is and let it do what it does best, (securing value) while secondary protocols take care of additional features such as tokens, smart contracts and high speed transaction processing. This way the core protocol remains secure and stable while additional infrastructure is built on top to support it in being used as a currency as well as plenty of other use cases.
In short, the blockchain itself should not be changed to make it usable as a currency, rather supporting 2nd layer technologies can be developed to interact with the blockchain to make wide scale currency use possible in the future. So I believe the argument for minimal amount of inflation stands.
it’s been done. For example Decred randomly picks minting stakes and only the on-line stakes get to mint blocks. This comes with a cost of increased network complexity, which i don’t know is worth it.
And what if the exchange rate grows into the 100/1000 €/ppc and wealth begins to start at very low amounts of ppc? Would you mind redoing your calculation with the case that I own 0.01ppc? (which could still be worth several 1000 €…)
But if I am a wealthy person, I have many thousand options to store my wealth. And ideally I’d choose a portfolio that maximises my gains while minimizing my risk of loss. That’s the entire point of storing wealth and the huge industry of financial services around that. If, additionally, my wealth is seen suspicious by certain parties, governments etc., I would additionally like to make sure that my portfolio and transactions are anonymous… but even if they are totally legal, I would gladly take this as a bonus.
So then, when I look into investing into crypto currencies, I have a vast amount of alternatives which do look more promising than ppc. I like ppc, but I must frankly admit that, e.g. Blackcoin offers anonymous transactions, 5% PoS reward, a low built in inflation of 0.95% (which is but more than compensated with the PoS returns), and even enough infrastructure to spend the coins directly, without exchanging them again (at least it is said so). Monero and dash offer anonymous transactions and huge exchange rate grows. Bitcoin/Cash offers at least the latter and start to be trusted in like gold.
A growing PoS Reward with time would be a new outstanding feature for peercoin and make it more attractive as an investment asset. Imo
Here’s some details on cold minting https://medium.com/peercoin/a-path-to-cold-minting-252acd310e82 written by @Nagalim
The mission statement on the Peercoin website says:
“Peercoin seeks to be the most secure cryptocoin at the lowest cost, rewarding all users for strengthening the network by giving them a 1% annual PPC return when minting.”
The mission statement was put together by myself and Chronos about two years ago, when the website was being updated.
The first half (“Peercoin seeks to be the most secure cryptocoin at the lowest cost”) still holds good.
But I now believe the second half (“rewarding all users for strengthening the network by giving them a 1% annual PPC return when minting”) is problematic. Although accurate, it gives the impression that the investment benefit of Peercoin is that 1% interest. This is a misunderstanding - the benefit of the 1% is to remind people to mint, and to inject a little inflation, both of which are designed to support the Peercoin eco-system.
When the website is redesigned, I hope is the second half of the mission statement is re-thought.
The calculations are the same. Assume a fixed marketcap, then no matter what the mint rate is (even 1000000%/year) you still have 1000 € year after year.
If the rate is 1000,-€/ppc, then 0.01 ppc equals 10,-€. That means, every transaction costs 10€, no matter if the transaction amount is 100ppc (100T€), 10ppc (10T€), 0.01ppc (10€) or 0.001ppc (1€), or less.
And then, if I have say 100€ in ppc, that is 0.1 ppc. My minting gain would be 0.001 ppc p.a., while the transaction fee is still 0.01ppc. Then the transaction fee outweighs the minting gain and I am better off to never transfer any money, not even for liquidation .
If the gain is 1% for minting and it is said to cover 1 transaction per year, why is the transaction fee not 1% as well?
where is it said that 1% should cover 1 transaction a year?
I mean 1% of 1ppc covers 1 transaction. Per year. My point is entirely, that 1ppc can be much more worth than 1 unit of, say, fiat, and then the fixed fee of 0.01 gets very expensive. Up to the point where the whole system is simply unusable for transactions.
And my other point is that for a real investment, the yield of 1% is comparatively low.
it is an interesting idea, but I think it does not prevent spam attack
The txn fee is 1% of 1 peercoin. I dont understand how the price in fiat matters. The statement is that you get 1 KB/ppc/year. So if you own 1000 ppc, you can make approx 1000 free txns per year. The price in fiat is irrelevant. So yes, if you own less than 1 peercoin then you don’t get a free txn within one year. I fail to see how thats an issue.
Aside from being an implementation nightmare, doing volume-dependent fees on a backbone network is a bad idea, because then you can easily spam the chain with tiny txns. The idea behind blockchain fees is that you pay per data, not per volume. This will always be the case, and it makes perfect sense, especially when you consider data txns like PeerAssets that transact literally 0 PPC. It does not make any sense to remove the fee on those txns just because they move no volume.
No, the price in fiat (or any other cryptocurrency) is certainly not irrelevant. It’s easy to see that 0.01ppc has more value if the exchange rate grows. You can easily calculate that as 1% of the other currency in the pair… and 1% of a large number is also a larger number.
‘Value’ is an ill defined concept. For me, it’s easy to see that 0.01 PPC today should have the same value as 0.01 PPC tomorrow, no matter what the exchange rate is.
The question is not ‘how many eggs can you buy with 1 PPC’. The internally consistent question is ‘how much blockchain space can you consume for 1 PPC’ which is 100 KB, both today and tomorrow. Whether 1 PPC is worth 100 million eggs or 0.01 eggs, it has an internally consistent value of 100 KB of blockchain space on the peercoin blockchain.
The ‘yield’ of minting is theoretically 0%, even if there is a 10000% mint rate. The supply grows at the same time as your holdings, so the yield is 0% because the price goes down as you introduce new supply. So bitcoin, blackcoin, and peercoin all have the same theoretical yield: 0%.