I would like to voice my opinion here, for the record, that I’m highly in favor of an unlimited, constant emission rate.
Not the easy choice, but the correct one at that. I firmly believe it will stand the test of time.
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0-X, I bring you my perspective on some points. I have read about economics by myself when reading Austrian Economists such as von Mises, and as I understand them, they would have some serious disagreement with some of your statements. (not necessarily yours, but also from more members, I suppose?)
(or this could be my personal view, if someone else with the same background would disagree with me)
Inflation makes price more stable
There is no good reason for prices to stay constant over time, since every thing is always changing. Not only “goods and services”, but also people and how they value, how they choose. It’s part of an entrepreneur job to predict future demands and the related prices, and then invest/work towards it in anticipation.
Now, sure, for a “money good” (dollar, bitcoin, etc), it’s not a benefit if it’s price changes drastically upon something considered “fixed valued” (although there is no such a thing) in short periods of time. I mean, it’s not a benefit for those who expected to use it in the short term, or overall, to use it to calculate anything.
But I suppose there is no good option around this.
Inflation feels, for hoarders, like a corrosion. It increases the “time preference” when compared to the lack of that inflation. Higher time preference means planning to a shorter (more certain) term. But a lot of important investments do require a long term. Nowadays, I suppose, multi-inter-generation currency savings are practically non-existent.
Maybe sooner rather than later, people will demand a way to save money for an extended period of time (if there is resurrection or some live-extending medicine or something), so a constant-percentage emission rate (exponentiation increase), for example, is a “no-way”.
Also, a hoarder is just someone who is preventing oneself from consuming. How is this possibly a bad thing? They are letting others consume on their place, facilitating the work of those with low time preference, which tends to increase productivity, wages and wealth - of workers, consumers and entrepreneurs.
If you take it to an extreme, a big hoarder happens to lose their coins, the world actually didn’t lose a single good. It’s just that that hoarder also won’t compete as a consumer in the future, and therefore, simply “donated” this consumption “power” to all other future consumers. They would certainly enjoy it.
(fun-fact conclusion, I guess: wanna donate to others? simply gather money and burn it)
In that assertion, you mentioned distribution. I do agree that those 100% genesis generation are obviously concentrated, but constant-inflation vs a falling one doesn’t necessarily means it will be “that much” more distributed. Sure people would feel appealed to spend it quicker than otherwise (corrosive / high preference), but they would also feel appealed to invest less on it in the first place, for the same reason - then lessening some of the “genuine” traction. Since some investors may position themselves according to this (by approaching the inflationary aspect… mining), and since miners can be hoarders as well, I re-affirm that I don’t think it’s necessarily that much more distributed.
Personally, I prefer the fixed emission because I imagine the code would be less bloated. And perhaps some algorithm for a future improvement may benefit from it, since constants (and also symmetries) are generally rewarded, mathematically.
There are already better store of values
I think this is as a spectrum of time preference. A coin may be unsuitable for short/long term thinking, but this doesn’t mean it can’t be both, on it’s own pacing. And I think Grin could, since inflation, over time, tends to zero% anyway. It doesn’t make a difference in the long run. But I do believe that the reasoning behind the decisions would be very meaningful. (I can only say this for myself)
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Great discussion.
There is no good reason for prices to stay constant over time, since every thing is always changing. Not only “goods and services”, but also people and how they value, how they choose.
I do not mean stable as in unchanging, I just mean stable as in less fluctuation due to speculation and manipulation. I expect grin price to rise and fall with demand for digital cash, rather than rising and falling at the whim of market-makers and gamblers. It is a much more transparent and natural ebb and flow, the ebb and flow of utility and necessity.
This has never been the job of currency, and yet generations of rich people manage to pass down their wealth just fine (to the shagrin of those with an eye on wealth inequality). Things with multi-generational value are things that cannot fall out of favor easily due to regime change or stock market fluctuations. Things like property and means of production. Currency is just a way to symbolically represent the really valuable stuff long enough to exchange it.
This is exactly why a currency cannot be inflationary. Taking $10,000 and burning it is not more productive than giving $10,000 dollars to a hospital for them to spend on supplies.
Grin is not an investment and is designed not to be a speculative asset. This is not regulatory-safe doublespeak. Grin is a lightweight, immutable, fungible currency and is valuable in and of itself for those reasons alone. Grin is designed to be the best version of cash ever invented.
The code for a constant emission is simpler than one whose emission changes at some arbitrary date.
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There is actually consensus among economists (neo-classic, Keynessians, political economists, and sociologists) that low inflation is a good thing[1] and allows the market to reach an equilibrium. Also, historically, states that tried to apply deflationary monetary policies have only caused trouble[citation needed - can provide if you wish].
[1] see “The Political Economy of Low Inflation” by J Kirshner as an example
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I still believe there is a place for Austrian economics in a market and Bitcoin fills that gap.
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And I think Grin could, since inflation, over time, tends to zero% anyway. It doesn’t make a difference in the long run.
STOP
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I realize basically everyone here is from a computer science background and the O() habit of looking at the biggest term and ignoring the rest is common.
O() doesn’t necessarily apply to other sciences, and when we are talking about economics and the unit of time is a year that habit needs to be under control. Years take a year each; the lower order terms matter here we will live thru them slowly.
This is not into computer specifics, and yet you read and replied. I appreciate your response!
I don’t mean to be pedantic, but I will do large (for facebook standards) comments on your responses, if you (or others) feel like getting into this “economical” discussion.
I do not mean stable as in unchanging, I just mean stable as in less fluctuation due to speculation and manipulation. I expect grin price to rise and fall with demand for digital cash, rather than rising and falling at the whim of market-makers and gamblers. It is a much more transparent and natural ebb and flow, the ebb and flow of utility and necessity.
I understand now. Well, I think the effect of gamblers will still play an important role. The competition for goods to a money status always involves speculation anyway, I think. (in von Mises’ terms, all actions involves speculation since they are all about the future which is always speculative, even the immediate future).
But maybe Grin will get to a point where it won’t have a price. Since a price is just a proportion of quantity on a exchange between two goods, and saying a good has a price means the other good is the actual money, then if grin becomes the “actual/real money”, it won’t really have a price. For example, if that is to happen, it’s price in US Dollars would tend to infinite at some point, before the dollar collapse (by then, not only Grin, but other goods’ prices as well would be hyperinflated in dollar units… but Grin’s price would rise faster in such case).
Grin is not an investment and is designed not to be a speculative asset. This is not regulatory-safe doublespeak. Grin is a lightweight, immutable, fungible currency and is valuable in and of itself for those reasons alone. Grin is designed to be the best version of cash ever invented.
I understand the benefit of avoiding an initial big concentration. But assuming it won’t really be like that for the first 10 years, for example, then while buyers may “concentrate” (keep accumulating), they prevent prices from falling for extended periods, which is incentives for others to also participate in concentration, and then calculation becomes easier. All money need it’s “holders” in one way or another. Why Bitcoin won’t go back at 10$/unit? Because of it’s holders… (this is an extreme, but) if everyone were to suddenly keep spending their bitcoins non-stop, zero-holding, the price would tend to zero at some point.
In other words, I’m personally very pro-holders, and I consider a fixed-emission (the quantity itself doesn’t really matter, 50, 60, 1000’s… of units) quite good for holding. Very early holder-adoption would be harder because of the inflation% at that point, but I see it as a cool thing to do (for whoever does it).
This has never been the job of currency, and yet generations of rich people manage to pass down their wealth just fine (to the shagrin of those with an eye on wealth inequality). Things with multi-generational value are things that cannot fall out of favor easily due to regime change or stock market fluctuations. Things like property and means of production. Currency is just a way to symbolically represent the really valuable stuff long enough to exchange it.
It is hard to define the job of a currency. It’s used to lessen the unpredictability of the future, to economize time, coordinate in an easier way with others, (etc, i guess). I think it’s very honorable to save currency for future generations, because this saver would allow the [market’s real] interest rate (backed by actual savings) to fall and facilitate for those with longer term investments. Some important investments are simply not possible in the short term (Bohm Bawerk wrote on this), and those are benefited from the savers lack of spending. This is how poverty is fought in the medium/long run… (first, a higher goods savings due to holders not spending their money). There is a video that relates to this “savers=good” idea. And two other - a and b - videos that relates to the functions of money.
This is exactly why a currency cannot be inflationary. Taking $10,000 and burning it is not more productive than giving $10,000 dollars to a hospital for them to spend on supplies.
Well… It’s true that burning money doesn’t mean the world “as a whole” got any wealthier (nor poorer), I thought you were in favor of the [fixed-ammount] inflation of Grin. I think it’s conservative, but it is still technically inflation…
But this is a %inflation, not a fixed-ammount emission like Grin/Bitcoin (in a sense). And yet, I have never seen an Austrian economist who would agree with such political decision. For an example, you could see Rothbard (html/pdf/audio) take on this. It should not be up to the states to interfere with the money…
I am not arguing for state control. I think one of the reasons most of us are here is the exact opposite. I brought up modern economists’ consensus on low inflation and the fact that there has never been a successful economy based on deflation as a counter-argument to have fixed supply in Grin which would turn it into a deflationary coin much faster vs its current emission rate. I have enjoyed Mises’s writtings but I don’t subscribe to any particular economic theory.
I see… I’m sorry that I misunderstood your stance, which I saw as based on an implicit validation over what state-sponsored economists think.
But what those “economists” like to call inflation is not like a Bitcoin/Grin inflation, which is a fixed emission (amount which decreases in the case of Bitcoin). They use it as a percent-inflation, an exponential-increasing emission.
What they discuss is the exponential factor, and they even call the “lowering of the exponential factor” (even if there’s actual/positive emission) a “tightening”.
They’re constantly drunk for so long that the hangover ceased to exist.
It doesn’t make a difference in the long run.
I didn’t mean it like a “we are all dead in the long run” keynesian-ish.
Please spend some time doing your own research that does not involve reading about Austrian economics (eg. read the paper I quoted above), you will realize some of those groups of economists are not “state-sponsored” and are in favor of Central Bank Independence (banking is its own can of worms). Also, in the sociologists camp, you can find folks like David Graeber who has hit the nail in the head with his work on money and identifies himself as an anarchist.
Correct, that’s because of the way the current credit-based economy works but that’s not necessarily a bad thing because more or less you know the rate beforehand. The problem with inflation as it stands is two-fold: 1. unexpected increases in the rate of inflation (so you cannot estimate what’s the present value of your money in the future), 2. the distribution of the inflated money is unfair whcih also makes non-unitary increases in the price level. I think both issues are handled by Grin (maybe the second is not that simple but probably a different discussion).
The other point I am trying to make with inflation (either exponential or not) is that it incentivizes transactions, thus you have an economy with high money velocity thus liquidity whereas an economy based solely on store of value money cannot work because nobody is incentivized to give their precious money away. Or it could work until somebody created a cheaper alternative that would drive the precious money out of the market. Example of such an economy was Ancient Rome where gold was used as a store of value and silver, copper, and other metals were used as mediums of exchange.
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Having more transactions improves privacy through obfuscation, correct? Thus, an economic design encouraging as many transactions as possible would also have the extra benefit of improving utility (and thus also price).
I’m greatly in favor of a 1 grin/sec emission rate. It’s dirt simple and makes it easy to explain to others how costs of the network are paid for. Besides, over time this static rate will make less and less of an impact, creating it’s own sort of halving effect.
It also doesn’t prioritize when you decided to use grin, it’s always been and will be 1 grin/sec. No preference to early adopters.
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I am not sure about improved privacy. Transactions don’t have any metadata that can tie them back to spenders and receivers. The only problem is relaying the transaction in the network where Dandelion helps hide the original node that transmitted the tx. So if you scale up the number of transactions in a network with a constant number of nodes then privacy is probably weakened?
EDIT: Since I assumed a constant number of nodes then the number of dishonest nodes should also be assumed as constant so I don’t think the level of privacy should change.
At 20 years, the inflation rate of Grin would be 5%… Still significantly higher than fiat after 2 decades!
I appreciate the value that a linear emission has on a privacy coin (namely rewarding those securing the network without reliance on transactions), but in my opinion, 20 years+ is too long to be getting to a somewhat reasonable level of inflation.
Rather than looking at a higher initial rate as a way to enrich early adopters, I see it as a way to reduce inflation more quickly to a reasonable level. The faster inflation gets below 1% the better in my opinion.
Even a block reward falling over a ten year period would help to achieve this:
Year 1 - 600 (= 10 per second)
Year 2 - 540 (=9 per second)
Year 3 - 480
Year 4 - 420
Year 5 - 360
Year 6 - 300
Year 7 - 240
Year 8 - 180
Year 9 - 120
Year 10 - 60 (= 1 per second) ad infinitum
This would put Grin at an inflation rate of 1.81% after 10 years.
Far more palatable (while still maintaining an eventual 1 Grin per second emission, and a somewhat clean emission schedule to get there).
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The beauty of 1 grin per second lies as much in its ultimate simplicity
as in its welcoming nature to late adopters,
who don’t need to look back with envy to early ones getting 10x more.
Think of GRIN as an acronym for GReedy It’s Not…
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Acronyms hey…
Greatly Reduce Inflation Now 
Late adoption is another way of saying your willing to fund the asic race.
And that envy will be there with any level of success, currency is a ponzi scheme that doesn’t end, early adopters will always be envied.
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Asics are good at securing the network. And with inflation having $1,000,000 a hundred years ago and not spending it is not better than having $1,000,000 now at all. Early adopters of cash are only envied if they spent it all.
If two coins have the same price now, but one increased a million times since launch, while the other increased only ten times, then which is more successful? The latter seems more late adopter friendly, which should count towards success.
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First, on the previous answer I started sarcastically. Sorry about that.
I can’t find/download this one.
The real point is not that if central banks should be “dependent” or “independent”, but it’s if they should “be” in the first place.
State+Central Bank (inhuman, violent) interventionism, that’s the current “economy”. Knowing the monetary inflation index beforehand (as you put it) won’t change the means which they use which cause people to end up using state/fiat currencies, which is force initiation (aggression).
“Future money value estimation” is a complicated construct. Money is used too coordinate savers, investors and consumers (present and future ones), so that everyone may be wealthier by specialized division of labor. For what I can see, that’s it.
In this framework, I can’t define “future money value estimation”. I think you mean interest rate, where people like to call it “how expansive it is to borrow money”. If we think money like water in the desert, it’s easy to see why shortage makes it expansive to borrow, since everyone wants it. But it’s not just because money inflation rate is predictable that you will be able to predict the interest rate (how easily/willingly people will be to lend money at the expense of “consuming” it in the present). This depends on each individual, their mindset, their plans… depends on what everyone is doing, every little choice they made at every instant. This has the “final word”, this is what dictates interest rates.
Sure, if money inflation is high, this will result in affecting people in the reality. It’s not like everyone is affected in the same way and at the same time (as if money were possibly “neutral”), but just some individuals will be affected, and in specific ways. Those individuals will change their decisions (they may consume what they could not (or would not), for example) and so forth (they will impact other individuals and so on). Waves of individuals get affected in ways we can’t really measure, and what the media usually does is to throw some “general prices inflation index”, a clumsy measure.
This hides what (monetary) inflation really is: wealth transfer. Those individuals (person A) who got the “newly created money” get richer (A’s consumption of apples increase by +X, let’s say), and other individuals (person B) will be poorer (B, who also wanted to consume apples won’t be able to buy it because there are no more apples left) - and let’s say that B apple pies business go broke. This is just an example, but it shows wealth transfer from B to A, where B got broke not because of a free market, but a state intervention. (Again, I am assuming state fiat money here).
This is an effect that could happen in a monetary inflation, and that’s what it is. There is nothing beyond that.
If general goods prices increases by some metrics, lot’s of people surely feel they got poorer (since goods got more expensive), but how the monetary inflation effects spread around individuals interactions is unback-tracktable (we can’t backtrack it).
Forced wealth transfer is a form of stealing (like robbery or theft), but people see those “inflation indexes” as something “normal” or “sane”, since unfortunately no one really knows what is going on.
So, getting back to the “predict the interest rate” thing, sure, if given more money, people tend to consume what they would otherwise not be able to consume. But their time-preference may be so low (such as germany consumers during the war), that monetary inflation doesn’t actually implies in increase in overall consumption (and therefore price increase). For some period, even with monetary inflation, people were so uncertain for their future (according to Mike Maloney) that they tried to save everything they could. After this uncertainty lowered, their time preference went up, and they started consuming, and price inflation appeared. The state went with more monetary inflation, and then price hyperinflation followed. You can see he reading that part here. It’s good even if he is not an austrian, as far as I know (he also uses “money velocity” variable in the full episode, like you).
To sum it up, state fiat monetary inflation is a form of stealing, and predictable monetary inflation does not implies interest rate predictability.
It’s is unfair for a state fiat, because it’s imposed for people to use such currency. Otherwise, its always fair.
On the other point, I don’t know what you mean by “non-unitary increases in the price level”.
If you mean something like “non-uniform increases in the price level”, then I agree, fiat monetary inflation is non-uniformly distributed to whoever got some of that money. This is why there is wealth transfer. Even austrians agree with that.
But I don’t. Cryptocurrencies actually can be uniformly distributed, and therefore have a true neutral monetary inflation. I’m not assuming some Deus Ex Machina (see Human Action by von Mises, p. 417 and p. 440), but pretty much any currency which has public amounts can do it (Bitcoin could, Grin couldn’t). A rule that states “after block A, inputs before A may output 2x as much in the outputs” doubles everyone’s currency amounts. We can pretty safely assumes that everyone knows of this rule (let’s say, this rule was clear from genesis), and that everyone will simply charge 2x as much for everything in such currency. It’s an inflation that obviously doesn’t change the time preference of anyone, and no one became richer nor poorer. No one will start spending more (sure, they will nominally), but it’s meaningless. “Money velocity” term users would probably say that the velocity increased, but this is useless information, because money, in the end, matters for coordination.
(What got actually affected are data size and calculation precision, which I’m just ignoring)
But this is still monetary inflation, so I thought this should be pointed out.
I don’t really agree with this distinction of “store of value” vs “high velocity” money. Even on Bitcoin itself, if you classify outputs by their “lifetimes” (how long until they are spent), I’m pretty sure (I heard about it, but I don’t hold the data and I won’t really look for it), there are clear distinctions of short-lived and long-lived. I heard that about 20% are short-lived (keep changing owners) and 80% sit still. So you could even classify it as 80% held as store of value, 20% as high velocity, and this within the same currency. But one random individual may use it 100% for store of value, or 100% for high velocity trade.
(but to be clear, I’m totally against the usage of “money velocity” term)
But as I said in the previous quote, people would likely to spend more in the present if they feel they will lose wealth if they don’t, but this excludes holders. Everyone needs to hold wealth for the future, even a lone man in a deserted island. A theoretical 100% high velocity money would exclude everyone who would actually need to hold wealth for even a day. To spend the money, you need money-buyers, and those would be scarce in such situation. Therefore, more time would need to be spent to find those buyers (who need to be immediate money-sellers, in a recursive requirement) and other good would be more appropriate for intermediary exchange. Thus, the currency would implode.
So on the contrary, money without “store of value” is impossible.
In Rome and stuff, sure copper could be more commonly used (and have the “high velocity” status). But this doesn’t mean it’s inflation were higher (percentage-wise), as you would likely like to imply (but I don’t actually know if it is, I’m just assuming). It’s simply a matter of individuals pursuing a better calculation precision on daily activities.
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