# Potential Benefit of Peercoin - lower inflation rate that Bitcoin

Hello,

I was thinking about peercoin earlier and it occurred to me that given Bitcoin is currently in its fifth year, and block reward has halved once, the current inflation rate of Total supply of Bitcoins would be equal to 25/200 or 12.5 percent.

I came to this value seeing as

210,000 blocks per reward halving.

50 x first 210,000 blocks = approx current supply

25 x 210,000 = supply for past half year and next four years.

Which gives total supply of 50 x 4a (where 4a =210,000 blocks) or 200a

so increase in percent supply = 25a/200a x 100 = 12.5 percent CURRENT inflation.

I am unaware of peercoins current inflation rate, but I do know is that peercoins intention is of 1% annual inflation, and that we are rapidly approaching the point where proof of stake > proof of work coins due to ASIC Miners. So peercoin might have far lower an inflation rate than bitcoin for the next few years.

I calculated Bitcoins annual inflation rate to be (estimate)

over 9.09 percent until the end of it’s eighth year.(i.e. next 3.5 years)

Between 4.17 and 3.7 for the next four, until the end of it’s twelfth year in 2021

Over 1 percent until the end of its sixteenth year(next 11.5 years ending in 2025). It will end its sixteenth year with an interest rate of 1.695 percent.

So one possible other advantage we could give in threads asking why peercoin is that It will have steady low inflation for ever, while other currencies are currently facing very high increases in money supply.(There will be an additional 7-8 million Bitcoin mined in the next 12 years for example. Edit; This will occur so as 4/7 of these coins will be mined in the next four years, 2/7 in the following, and 1/7 in the next next next four years)

Please post whether you think this is a good argument or not.

I’ll need to read through it a few times to make sure I get it all, but one element that you aren’t factoring in, which acts as an accelerant to deflation is the fact that Peercoin transaction fees (at a rate of 0.01 PPC per transaction) are destroyed, rather than passed through to the miners.

As Peercoin transaction rates increase, monetary supply decreases — the primary question that I’m still not 100% sure about is how big of a deflationary effect this will be on the network.

Otherwise, I like where you are going with this. A talking point about deflation could be very useful to answering charges that Peercoin’s “effectively unlimited coin generation scheme, vs. a fixed 21M BTC, or 42M LTC, means that hyper-inflation is inevitable”. We know it’s not true, and the numbers support that we’d never even begin to approach the 2B PPC cap, within our lifetimes, but like anything, it’s a nuanced (and largely, unproven) assertion.