But why would even mass adoption of Peercoin lead to a static price?
As a transactional currency, NuBits is superior to Peercoin. I don’t think anyone on our project views Nu as an “intermediate step” between Bitcoin and Peercoin. Variable-supply digital currencies like NuBits are an evolution and improvement on fixed-supply digital assets like Peercoin.
Should the market decide that having a fixed supply is ideal, NuShareholders can simply vote to cease custodial grants to stabilize the supply of NuBits. If the market wants the supply to match demand expansion to maintain price stability, new NuBits could be introduced into circulation. Or, if for some reason a lower fixed supply is deemed desirable, mass amounts of NuBits could be burned for NuShares or destroyed through higher variable transaction fees.
In short, NuBits have the substantial benefit of either maintaining a constant supply (like Peercoin) or a dynamic supply (impossible for Peercoin) depending on what shareholders think would be most competitive in the marketplace.
In the event that shareholders decide to end the $1.00 US (fiat) peg, Nu can simply adjust to a new one. It could be adjusted to a concept like iGDP, the CPI, or any number of other concepts. From the white paper:
"In the edge case that USD hyperinflation does occur, shareholders may at that time pass a motion to peg NuBits to another currency, commodity or basket of goods."
Peercoin has very little real-world utility beyond hopeful speculation and NuShare dividends. There have been numerous project ideas - such as Counterpeer - suggested that would create demand for PPC, but nothing seems to have started. As I’ve mentioned before, nobody has stepped up to define what Peercoin’s value proposition is and where it will deliver meaningful value in the future. PPC is not a “final stage” cryptocurrency waiting to be discovered by the masses; at this point, it is a static community that is losing ground each day that it fails to address its competitive shortfalls.
@LeChatNoir - One of my favorite parts of the Nu white paper is this section, because it is difficult to argue with the logic:
"Many argue volatility will end with the high liquidity that will accompany widespread adoption. While volatility will decrease with greater adoption, it is unlikely volatility will ever be less than occurs with large cap stocks such as Google or Microsoft. This is still an unacceptable level of volatility for a currency. Let us suppose I am wrong and that volatility will be eliminated in these networks. In that case they would serve well as currencies but poorly as shares, because they would not appreciate, nor give dividends. This would likely cause a selloff of these "shares", thereby introducing volatility once again.The critical flaw is that Peercoin and Bitcoin use the same fungible unit for share and currency functions. Shares must have the capacity to appreciate and reflect changes in the perceived value of the network while currency must remain stable regardless to be effective. It is impossible to accommodate these diverse pricing needs in a single unit."
Tomjoad, what I said above is only what I think could happen if the price of Peercoin stabilized in the future. My first post in this thread pointed toward people thinking now that this might not be the case and that a new use for Peercoin should be discovered that doesn’t have to do with being a transactional currency. To be completely honest, I have no idea what will happen in the future, which is why I think the safest bet is to be in both Peercoin and NuShares and help build both communities.
I think NuShares will have a faster growth rate than regular cryptos and a higher potential, but it’s still new technology and rather unpredictable what will happen with the peg long-term. Peercoin is more predicatable since it’s more similar to Bitcoin, but its future is uncertain due to the volatility issue. I’d feel uncomfortable being in only one, so I choose to hedge my bets and help both succeed.
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medium of exchange, store of value, unit of account, if PPC fail in any of them, PPC is NOT currency at all. Any crypto asset must accomplish ALL OF THEM being a currency.
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Even PPC Cap. reaches 1 trillion USD, its volatility is still there, being volatile, the unit of account is impossible. Assume you are CEO of a company and wanna make decision on three projects, you need calculate the NPV and “internal rate of return” etc, if your currency unit is volatile, it’s impossible for you to make decision! The probability of a certain project’s success or failure mainly depends on currency’s price, a good profitable project may fail due to currency deflation and a bad project may succeed due to currency inflation. The economics activity will be distorted totally and social resource misleaded to wrong fields and eventually a crisis inevitable.
For Austrian Economist(Such as F A Hayek), the governments tends to manipulate currency circulation to inflation so that some bad operated projects will succeed because the debts in early stage can be easily repaid, they called it “economics stimulation”, however, nobody cares whether the ecomomics is “Over Stimulated” and the bitter fruit（financial crisis）will come 10 or 30 years later when the current government already retired(Hayek’s theory).
If BTC/PPC never stable, the companies never never dare to use it as unit of account, and BTC/PPC never never become a currency, they are just digital asset at all, and will be replaced by next generation stable cryptos.
[quote=“Sentinelrv, post:23, topic:3273”]Tomjoad, what I said above is only what I think could happen if the price of Peercoin stabilized in the future. My first post in this thread pointed toward people thinking now that this might not be the case and that a new use for Peercoin should be discovered that doesn’t have to do with being a transactional currency. To be completely honest, I have no idea what will happen in the future, which is why I think the safest bet is to be in both Peercoin and NuShares and help build both communities.
I think NuShares will have a faster growth rate than regular cryptos and a higher potential, but it’s still new technology and rather unpredictable what will happen with the peg long-term. Peercoin is more predicatable since it’s more similar to Bitcoin, but its future is uncertain due to the volatility issue. I’d feel uncomfortable being in only one, so I choose to hedge my bets and help both succeed.[/quote]
Theoretically, the price of PPC never become stable because its supply mechanism cannot response rapidly to real world demands, TO KEEP PRICE STABLE, IT IS IMPOSSIBLE TO PREDEFINE A SUPPLY CURVE IN ADVANCE IN SOURCE CODE RATHER THAN INTERACT WITH REAL WORLD, the basic supply/demand law has sentenced BTC/PPC to death.
Crypto"currency"(in fact crypto-asset), is a product from IT industry and lack of basic economics theory backing, the only so called backing theory is Hayek’s(1974 Nobel winner) “Denationalization of Money”, however, what F A Hayek said in that book is directly opposite to fixed supply, his advocated flexible currency supply to cope with real world demand fluctuation, and he even gave out his advices about how to adjust currency circulation:
1)buy/sell currency with other wealth(this is implemented by Nubits, Custodians’ sell/buy wall)
2)short term lending (this is not implemented by Nubits and I believe this is far better than parking interest mechanism)
The cryptos way out is DAC+Hayek Model, any attempt apart from this will fail, IMHO. Because success comes only when you combine masters’ theory from IT and economics. Any amateur even stupid mechanism such as halving every 4 years is just JOKE.
kevin kelly (The swarm theory,1994), Satoshi (implement of swarm theory via block chain tech. 2009), Hayek (monetary theory 1976).
Kevin predict digital/crypto currency on internet in 1994, and Satoshi implemented it in 2009(anonymity＋decentralized) with a very bad supply mechanism, while Hayek gave out every details about how to adjust supply and make price stable in 1976 with traditional company(autonomy＋centralized).
The next step is just implement Hayek model in a DAC style, and then we can see a real revolution.
What’s a backbone currency?
Has anybody a rigorous definition?
[quote=“emeth, post:20, topic:3273”]Also, interesting historical thread from bitcointalk on a similar topic, with responses from satoshi:
https://bitcointalk.org/index.php?topic=57.0[/quote]
Thanks for the link, a long post, I’ll browser to find which school of economics Satoshi belongs to.
[quote=“pillow, post:15, topic:3273”]todo: replace then with than
If Peercoin was super inflationary and offered no protection against the inflation, it would be a very bad place to store purchasing power. While the inflation rate now is very high (in 10 years half of your purchasing power in peercoins should go away, all else being equal) compared to some other cryptos (say those that were 100% pre-mined, which is a major bad thing in itself - think of the ripples tanking on the mere news of a big hodler thinking about dumping), the inflation rate is likely to go down in the future and right now the peercoins are so cheap, that it compensates for the inflation (my personal opinion).[/quote]
That does not sound very attractive short and mid term , as an investment - does it corroborate Chronos last video on Peercoin inflation?
Satoshi said in February 21, 2010
In the absence of a market to establish the price, NewLibertyStandard's estimate based on production cost is a good guess and a helpful service (thanks). The price of any commodity tends to gravitate toward the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more. At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price.
Satoshi believed the BTC price will around its production cost. After 4 years, although the speculation noise make BTC price very volatile, the BTC price is not far away from its production cost. However, the production cost is variable not constant, it depends on the reward(25 now) and difficulty(miner quantity)and semiconductor industry (28-16-14nm tech), and power price.
So Can I draw the conclusion that Satoshi was NOT intent to invent a stable crypto asset from the very beginning? Wow, what would F A Hayek say to Satoshi? I bet Hayek will say “Joke”. ;D
But if peercoin is worthless, Nu’s dividends are quantified with a worthless store of value, making themselves worthless, making Nu’s business worthless?
Or as peercoin gets hypothetically closer and closer to 0, dividends require more and more peercoins and in the mean time, Nu can think of another dividend transfer instrument?
In other words, do you think Nu is dependent on peercoin just because of the dividends?
[quote=“crypto_coiner, post:28, topic:3273”][quote=“pillow, post:15, topic:3273”]todo: replace then with than
If Peercoin was super inflationary and offered no protection against the inflation, it would be a very bad place to store purchasing power. While the inflation rate now is very high (in 10 years half of your purchasing power in peercoins should go away, all else being equal) compared to some other cryptos (say those that were 100% pre-mined, which is a major bad thing in itself - think of the ripples tanking on the mere news of a big hodler thinking about dumping), the inflation rate is likely to go down in the future and right now the peercoins are so cheap, that it compensates for the inflation (my personal opinion).[/quote]
That does not sound very attractive short and mid term , as an investment - does it corroborate Chronos last video on Peercoin inflation?[/quote]
First we need to clarify the definition of “inflation”. Assume PPC quantity increase from 20 million (Dec. 2014) to 22 millions (Dec 2015), is the inflation rate 10% or so? (Assume 1$ buy power is constant)
No! It depends on what price in Dec. 2014 and Dec 2015, if price is 0.5$ and 5$ respectively, the inflation is -90%, which means a very high deflation at all.
The inflation or deflation is typically relative to buy power not currency supply, so we can say how crypto industry is lack of basic economics background.
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.
Without powerful economics theory backing, the crypto"currency" is just digital toy from IT industry. 
But if peercoin is worthless, Nu’s dividends are quantified with a worthless store of value, making themselves worthless, making Nu’s business worthless?
Or as peercoin gets hypothetically closer and closer to 0, dividends require more and more peercoins and in the mean time, Nu can think of another dividend transfer instrument?
In other words, do you think Nu is dependent on peercoin just because of the dividends?[/quote]
Peercoin is asset, not currency, so is bitcoin. Asset is much more generic than currency, for example my books, bikes, cigarette are all asset, but not currency. A currency is very special asset which can play roles of “medium of exchange, store of value and unit of account”, however, general asset can NOT meet these three requirements at the same time.
BTC/PPC/XPM are successful becoming crypto asset, thanks for them! But the evolution is going on, next step, a Fiat pegged cryptocurrency(NBT), and finally, the ultimate Hayek good money(crypto) will emerge.
"Many argue volatility will end with the high liquidity that will accompany widespread adoption. While volatility will decrease with greater adoption, it is unlikely volatility will ever be less than occurs with large cap stocks such as Google or Microsoft. This is still an unacceptable level of volatility for a currency. Let us suppose I am wrong and that volatility will be eliminated in these networks. In that case they would serve well as currencies but poorly as shares, because they would not appreciate, nor give dividends. This would likely cause a selloff of these "shares", thereby introducing volatility once again.The critical flaw is that Peercoin and Bitcoin use the same fungible unit for share and currency functions. Shares must have the capacity to appreciate and reflect changes in the perceived value of the network while currency must remain stable regardless to be effective. It is impossible to accommodate these diverse pricing needs in a single unit."
I’m sure one day PPC volatility will be lower then Google if PPC market cap = Google market cap.
Google is a stock, its valuation depends on how much it earns and how much it earns depends on management, competition, cost of raw materials etc. etc.
Google valuation and price depend on a very wide range of variables and that is not good for price stability, that’s why stocks can’t be money.
Peercoin is a protocol, it cannot be drastically changed by definition, it’s purpose is not to convert raw materials into something valuable and earn money for the shareholders, it is just a set of fixed rules, all it’ s doing is giving incentives to mantain a ledger of numbers without cheats.
It is actually so simple, so strong, so unchangable and appearently so useless that for exactly these reasons it can be an almost perfect form of money, sunnyking knows this very well because he has studied Austrian economics.
Peercoin VALUE is intrinsically a lot less volatile then VALUE of any other stock out there.
Peercoin PRICE instead is actually very volatile for many different reasons:
- Its market cap is very low.
- There are not enough market makers and speculators to price this thing properly, i’m a PPC speculator my income is proportional to PPC volatility and my job is to stabilize PPC price and provide liquidity to PPC, that’s what i do for a living, if more people start to do the same PPC price will eventually become a lot more stable. For example i’m actually hoarding PPC and preventing it to fall further against BTC because i think it’s very very undervalued.
- This is a new thing, it’s difficult to understand and it’s a very powerful idea. There is no scientific method to price it, the market is trying to discover its fair price and you can’t pretend this phase to be rational, slow and orderly.
I seriously think a lot of people have been brainwashed by the bankers propaganda that it is important that money buys exactly the same things (-2% LOL) it was buying the previous year, so that the bankers’ role of thieves is justified in the eyes of the people. What humanity really needs is a fair, strong monetary system with no central planner in charge of providing some kind of “price stability”, PPC is the best candidate in my opinion.
I also believe nxt, bitsharesx or ethereum cannot be a good form of money because they are more similar to decentralized internet stocks and their price can’t potentially become as stable as the price of peercoin. Money must be money and nothing else.
forget hayek, he got pretty much very confused about money in his latest years. mises and rothbard are the true advocates of sound currency and sunnyking knows this pretty well. a sound currency doesn’t have to be flexible at all as Mises wrote: any fixed amount of money is enough to serve the economy. I believe that ppc is the best designed cryptocurrency so far and has the biggest potential. it only needs adoption.
What’s Hayek good money?
LeChatNoir, the block chain tech is new and it’s the replacement of paper money print/watermark tech and swift protocol between banks, that’s all.
The supply & demand behind BTC/PPC, is OLD SHIT, a very very old issue which defferent schools of economists quarreled for hundred years. And Satoshi contributes nothing at all in this field.
Don’t puzzle me with flashy package of blockchain\DAC bla bla with an amateur/stupid old fashion predefined supply hardcore in it. At least one of the best Austrian economist F A Hayek will never buy it.
from that link: “He explains why money is not “neutral,” and why price stabilization is a chimera. After reading this short work, you will have a firm understanding of Austrian monetary theory, and will be in prime condition to tackle Mises’s own writings on the subject”.
once again, forget price stabilization, flexibility of the currency. all bullshit. sound money is rigid. no need to be expanded by the will of a central planner or by fractional reserve banking (which is always fraudolent, no matter what the free banking advocates say). and forget hayek when talking about money. hayek went astray on the subject in his latest years, obfuscated by the glory of his nobel prize. Mises said it all, and Rothbard elaborated even further.
so if we have to look for a the winner in the crypto market, we should find the simplest protocol that aims at creating a rigid amount of coins and can provide the highest level of security at the lowest cost. most of the cryptocurrencies converge to a fixed amount of coins, which is good (satoshi got that point very clearly). bitcoin is providing the highest level of security right now, but at a huge cost (10% of its market cap right now). that’s the problem of any PoW. when inflation subdues converging towards 3-4%, the real problem will arise.
If PoS like ppc could be secured at much lower costs, this is what really matters and what makes Pos a long term winner (as figured by sunnyking). 1% inflation on PPC is designed to secure the network, and I believe it is a fair good price to pay, also this amount of new coins goes to the holders and not to external players which have no interest whatsoever in the currency (like most of the bitcoin miners) or to the players which are nearest to the central issuer of new currency (the central bank) and as first takers benefit at the expenses of the late receivers.
[quote=“arbitrageur, post:38, topic:3273”]from that link: “He explains why money is not “neutral,” and why price stabilization is a chimera. After reading this short work, you will have a firm understanding of Austrian monetary theory, and will be in prime condition to tackle Mises’s own writings on the subject”.
once again, forget price stabilization, flexibility of the currency. all bullshit. sound money is rigid. no need to be expanded by the will of a central planner or by fractional reserve banking (which is always fraudolent, no matter what the free banking advocates say). and forget hayek when talking about money. hayek went astray on the subject in his latest years, obfuscated by the glory of his nobel prize. Mises said it all, and Rothbard elaborated even further.
so if we have to look for a the winner in the crypto market, we should find the simplest protocol that aims at creating a rigid amount of coins and can provide the highest level of security at the lowest cost. most of the cryptocurrencies converge to a fixed amount of coins, which is good (satoshi got that point very clearly). bitcoin is providing the highest level of security right now, but at a huge cost (10% of its market cap right now). that’s the problem of any PoW. when inflation subdues converging towards 3-4%, the real problem will arise.
If PoS like ppc could be secured at much lower costs, this is what really matters and what makes Pos a long term winner (as figured by sunnyking). 1% inflation on PPC is designed to secure the network, and I believe it is a fair good price to pay, also this amount of new coins goes to the holders and not to external players which have no interest whatsoever in the currency (like most of the bitcoin miners) or to the players which are nearest to the central issuer of new currency (the central bank).[/quote]
Mises and Hayek have different opinions on money stability and supply mechanism, that’s very interesting.
Let’s the free market decide which side is correct. :))
[quote=“cryptog1, post:30, topic:3273”]But if peercoin is worthless, Nu’s dividends are quantified with a worthless store of value, making themselves worthless, making Nu’s business worthless?
Or as peercoin gets hypothetically closer and closer to 0, dividends require more and more peercoins and in the mean time, Nu can think of another dividend transfer instrument?[/quote]
That’s a good question: what if demand for PPC goes to zero, causing the value to go to zero, meaning people could not convert PPC dividends to fiat - what happens then?