# Questioning Core Assumptions on Our Emissions Model **URL:** \ **Category:** Market\ **Created:** [December 13, 2018, 11:21pm UTC](https://forum.grin.mw/t/questioning-core-assumptions-on-our-emissions-model/1414 "2018-12-13T23:21:27Z")\ **Posts on this page:** 1\ **Showing post:** 20
**Author:** ![thi](https://yyz2.discourse-cdn.com/flex036/user_avatar/forum.grin.mw/thi/32/249_2.png) [@thi](https://forum.grin.mw/u/thi)\ **Post date:** [December 16, 2018, 2:25pm UTC](https://forum.grin.mw/t/questioning-core-assumptions-on-our-emissions-model/1414/20 "2018-12-16T14:25:44Z")
> [@AdamSC1](#): > > **A) Interest Rate Balancing:** > > While I appreciate the philosophical nature of 1 G/s forever, and while in the first few decades it looks like a feasible model we actually run into two problems with a non-adjusted rate: > > 1. The rate of new Grin produced will eventually be so minuscule that it will be insignificant against our market capitalization and therefore not worth mining ruining the reward mechanism of securing a network. 1. Why is this called _interest_ rate? shouldn’t this be addressed as _emission_ rate? 2. Bitcoin will eventually encounter itself in the same situation, and it’s users suppose that the transaction fee will be enough pay for the miners. > [@AdamSC1](#): > > 1. In any monetary system, you need “reprints”. For paper money that is replacing bills that are old, damaged, torn or lost. For crypto that is replacing coins that leave the system through corrupt harddrives, lost keys, sent to wrong wallets etc. The goal would be to eventually have your inflation rate in perfect balance with this loss/reprint rate. While it is impossible to know the exact number, we can know that it is some estimated percent of currently existing circulation. If we have 1 G/s, then eventually you run into the issue where because of the sheer size of circulation, the loss rate is far larger than the interest rate and so the free float supply ends up going down. Eventually this makes the currency more valuable as an investment/store of value than a monetary unit. I disagree. There is actually no need for “reprints”. Just putting some loss of precision aside, any amount of money is enough for a monetary system. This is a concluding quote from von Mises: > [@https://mises.org/library/human-action-0/html/pp/780 p.421](#): > > As the operation of the market tends to determine the final state of money’s purchasing power at a height at which the supply of and the demand for money coincide, there can never be an excess or a deficiency of money. Each individual and all individuals together always enjoy fully the advantages which they can derive from indirect exchange and the use of money, no matter whether the total quantity of money is great or small. […] The quantity of money available in the whole economy is always sufficient to secure for everybody all that money does and can do. Whoever got their grin “burned” or lost simply kind of donated purchasing power to other grin holders. There may be, relatively, less grin on the sell-side and therefore it’s price may be higher than otherwise. This is very natural to happen, and there are no disadvantages on such situation. But considering a 50% yearly burning rate, for the sake of the argument, then I agree the situation is different because the precision is severely reduced (cannot be put aside anymore). The solution is very simple, and I actually have talked about it in another topic. > [@Emission rate of Grin](https://forum.grin.mw/t/emission-rate-of-grin/171/83): > > fiat monetary inflation is non-uniformly distributed to whoever got some of that money. This is why there is wealth transfer. […] Cryptocurrencies actually can be uniformly distributed, and therefore have a true neutral monetary inflation. Simply duplicate the whole grin blockchain data (_Ctrl+C Ctrl+V_) and do a split which avoids replay attacks. This way you double the quantity, and that precision loss from the 50% burning rate is gone (for that year). I don’t know if it would be feasible, but a forking increase in the data length for quantities could also deal with the precision loss. Any way, both of those inflation methods would be relatively “neutral” (without wealth transfer). > [@AdamSC1](#): > > Why do people not use Bitcoin to buy things? Beyond being a bulky payment method and complicated interface, why would I buy a coffee for 0.0000X BTC today if I thought that same amout of BTC could buy me two coffees tomorrow? > > To that same end, why would a merchant accept 0.0000X BTC if they thought there was a chance that tomorrow that BTC could be worth only half of a coffee. No good, including a money-good, is free from that risk. But sure, merchants and consumers will look for some money-good which actually helps with their savings and calculation, their life/daily planning overall. But this is a task we all must do on all of the decisions we make. This is not a given for any money-good. We all take the risks, and those who correctly predicted the future will get some profits. Holding US Dollars and US bonds may seem like a common and reasonable thing to do. But as I said, one is taking the risks, whether they notice it or not. > [@AdamSC1](#): > > 1. We want adopters to get onboard because the early rewards are lucrative enough. Sure all else equal, earlier adoption is preferable. But it’s not like the currency will have an expiration date - it has time. But I agree that a lower early adoption means lower “hashrate” power, which relatively lowers early security. So idk if there would be a “practical minimum adoption” level for a given time. > [@AdamSC1](#): > > 1. We want the price of a Grin to not deflate too much, otherwise it becomes useless to accept it as payment because it declines too rapidly and is too high risk. I noticed that you used [grin’s] “deflation” as [grin’s] “price decrease”. I use deflation as [grin’s] “quantity decrease”, so I’ll comment in the meaning that I use (I’m assuming that you are referring to Grin’s inflation increase, which would tend to make it’s price be reduced). I agree, inflation is bad but there must be some of it in some for, at least for some time. > [@AdamSC1](#): > > 1. We want the price or value of Grin to not inflate too much, otherwise it becomes too strong of an investment and it doesn’t make sense to spend it today if it will be worth more tomorrow. Do we? Deflation is _love_, deflation is _life_. (kidding aside, again, I use inflation differently, so I’ll comment in the meaning that I use (I’m assuming that you are referring to Grin’s [practical] _lack of_ inflation (practical _lack of_ quantity increase), which would _not_ tend to make it’s price be _relatively_ reduced than otherwise). Sure everyone would accept something that relentlessly tends to be more valuable in the future. If Grin price won’t stop increasing for a long period, then let it be, let it keep increasing before spending it. It would be making US Dollars circle around the world faster and faster, like a hyperinflated, desperated cash trying to look for some holders in order to not die, to avoid it’s _crack-up boom_. So holding it helps with the US Dollar implosion, so it’s fair (in my opinion) to profit for doing it (holding a Grin). --- _[View the full topic](https://forum.grin.mw/t/questioning-core-assumptions-on-our-emissions-model/1414)._