A Thought on Linear Emission

Grin’s linear monetary inflation is severely underappreciated and will continue to be so. Common knowledge will change once concerns about Bitcoin’s decreasing emission begin to materialize in reality, which may be years away.
I’m fine with that.

Discuss. Or move on, whatever.

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The detriment of the centralization of Bitcoin’s supply will definitely be apparent once banks start issuing unlimited Bitcoin-backed digital IOUs with free and instant transactions.

“Bitcoin fixes this” is truly a meme. Bitcoin fixes nothing.

The introduction of ‘absolute scarcity’ might not fix anything, but it does upgrade things quite a bit. So yeah it might not fix any particular problem, but it upgraded money. It set the ‘absolute scarcity’ and ‘trustless’ end of the spectrum. Fiat currency, on the other hand, is the ‘retardedly common’ and ‘subject to arbitration’ end of the spectrum.

I see a lot of news about bitcoin adding some features that will improve privacy, but what i also see in interviews is a lot devs using that key word there ‘improve’. I haven’t really seen any of the smart folks in the space explicitly state, bitcoin will have absolute privacy.

I actually had a deep thought about this earlier. Should privacy be free? I think it should, but can privacy be free? That I don’t know. Perhaps freedom isn’t free, it costs folks like you and me.

Edit: added a word.

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While I support the inflation wholeheartedly, I’m starting to think 1 second per Grin emission is set a bit too high. Wonder if there is a ad-hoc mechanism for minting new grin based on demand, mining, scheduled forks, or any other external measures (But I know this method can cause further complication since it is extremely difficult to mitigate once implemented).

Also on a grander scale, we as a community have to define what Grin is trying to achieve and how MW protocol can be the ‘missing puzzle’ in the ecosystem. Unless proven otherwise to the mass, I think ‘privacy by default’ has now become a challenging phrase to proselytize. So, besides the SoV and anonymous properties of crypto, it is best for Grin focus on the properties of MoE. All that makes up as successful cash- Decentralized, fungible, sustainable, scalable, fairly distributed, is something we as a community and developers need to align with.

As an investor/minor of grin who have skin in the game, Grin has all the right intentions as PoW crypto and I am really excited to be a part of it. But let’s bear in mind - there are already so many hardforked MW coins that tries to play the scarcity, resource constraint narrative. On top of that there are even centralized coins like xrp that are trying to implement privacy on top of their layer. If we don’t take actionable steps and instill a strong vision on what we are trying to achieve, we may allow ourselves to lose the adoption game.

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It just looks like Grin isn’t the right coin for you.

Grin won’t change its coin emission for some greedy investors.

Grin constant emission is a long term game changer in the crypto world, this won’t change anytime soon.

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I agree. The very nature of inflation keeps greedy rent seekers at bay but also secure the protocol long term.

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Freedom isn’t free. It costs folks like you and me. And if we don’t all chip in. We’ll never pay that bill. Freedom isn’t free. Now there’s a hefty in’ fee. And if you don’t throw in your buck 'o five. Who will?

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Bitcoin doesn’t replace fiat. Bitcoin-backed fiat is just as viable as gold-backed fiat, and is in fact practically not any different from unbacked fiat. The issue—contrary to popular Austrian belief—isn’t fiat, but fractional reserves.

@mably You misunderstood me; I was always in favor of the linear emission of grins. I’m stating that the properties it brings to the table may be under-appreciated for quite a while.
There have been a few lengthy discussions about those properties, and in my opinion the two strongest are:

  1. Years down the line, Grin will be more inviting to new acquirers of the coin. Pleasant to join in contrast to Bitcoin, which feels more and more discouraging to join as time passes.
    The emission will conjure a sense of perceived equality of opportunity.
  2. No future concerns about ability of the network to secure itself using tx-fees as the major incentive. The network thus becomes more predictable, which is obviously a positive.
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Nope. Fractional reserve banking sucks, but it’s made far worse by the perpetual printing of “money” and safety nets like the FDIC. FDIC isn’t really possible with bitcoin, so bank runs would be a much greater threat. This keeps banks in check.

The act of fractional lending is precisely “printing of money”, just renamed to seem more innocent: credit expansion. Central bank printing is small fraction of all the “printing” that goes on.

FDIC exists to disincentivize bank runs; it is not a necessity to run this scheme. Bank runs are far less of a threat to the banks in the globalized and digital world.

A limited supply makes it easier for a small group of entities to accumulate the whole circulating supply, at which point they can ensure the market dominance of their IOUs (just like they did with gold, which is far less limited than Bitcoin). As long as there is initial faith in the credit of the bank, people will take loans—as they can easily be financially incentivized to do so—and it spirals from there. People who refuse to take loans will suffer from rising prices caused by others taking cheap loans. Imagine buying a house today while refusing to take a mortgage loan: fucking impossible due to the massive inflation in house prices due to decades of cheap mortgage loans.

If fractional reserves are allowed this will happen with Bitcoin just as it has happened numerous times with gold. Inflation caused by steady emission isn’t a problem, and history proves this. The issue is private entities with the power to create a medium of exchange out of unlimited and ever-increasing debt: banks with fractional reserves.

Of course inflation can be abused into hyperinflation. Drinking too much water will kill you as well.

You’re preaching to the choir.

But as you know, any printing of the base money supply compounds due to fractional reserve.

Having an explicit monopoly on printing money makes it even easier to attain market dominance.

Yes, but unlike the bank of the past, it’s much easier these days to determine who is issuing more IOUs than they have deposits for. Auditable digital currencies makes this even easier.

Massive long-term loans would be less common due to a much stricter limit on the bank’s ability to lend (for reasons listed above).

Which is why I stick with gatorade and red bull. You never can be too careful.

@MerlinsBeard @david In our days, credit expansion isn’t very much related to the amount of reserves.
I honestly recommend reading, I’ve only recently began to uncover the real mechanisms myself. 95% of people have it wrong, even actual economists.

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Thanks! I’m aware of the many issues with the Money Multiplier View in modern days, but this is an excellent write-up that I’m going to keep handy.

Historically though, I don’t buy the premise that MMV has never been accurate. It had once been a much more useful tool for understanding the monetary supply before banking and loans became near-completely detached from reserves (and reality). This only became the case though precisely because money could be printed at will, and the FDIC and govt bailouts have made bank runs nearly impossible.

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@Paouky Yes. I use “fractional reserve banking” synonymously with “printing credit out of thin air”. Perhaps that is a mistake.

The connection between central bank printing money and private banks printing credit really isn’t there. Private banks automatically create new credit with every new loan someone takes: the money pops into existence there and then, and importantly as an interest-bearing debt. Remember my Rule of Three story? There was no central bank there: it is not necessary.

With practically all of the money supply consisting of private interest-bearing debts (as is the case today), the banks have two options at any given point in time:

  1. inflate the pyramid (increased debt and/or lowered interest; postponing recession or bull market)
  2. deflate the pyramid (contracting money supply; recession or depression)

Regardless of the two options, there is a constant interest burden on the whole circulating money supply that the citizens are paying to the private banks. That’s where all the economic growth is funneled.

This practice has existed for millennia; long before banks, let alone central banks.

Exactly, and that’s what the commercial banks have today. A monopoly on creating IOUs of central bank dollars. The amount of IOUs (digital numbers in bank accounts) dwarf that of the actual central bank dollars. Dollars and IOUs of dollars are both what we call “money”, included in M3. In fact, if the amount of dollars were limited, the IOUs would achieve domination far more easily: the limit achieves absolutely nothing.

There are numerous historical examples to demonstrate precisely this. I’ll gladly share if you’re interested.