Inflation-Protected Asset vs. Anti-Inflation Parking

I agree with Tomjoad that 1 NuBit should equal 1 USD, and anything else would be negative for what NuBit is trying to achieve as a transactional currency that people intuitively know the value of.

However, I do think a seperate currency that is designed to have zero inflation is a good idea & could have a different role. It could use similar mechanisms to NuBit to track inflation adjusted USD, so for example NuBit-2014 (edit: like in option 1) could be created to constantly maintain the value of a 2014 USD.

Periodically the shareholders would set the inflation rate (cpi / rpi or whatever), and the buy/sell walls for the exchange bots would follow the trend & adjust their course to counter inflation, maintaining parity with 2014 USD.

I don’t believe that inflation is necessary in an economy once money supply creation is removed from the banking sector (with bank money creation, deflation only happens when money creation is too slow, which means insufficient lending, which means reduced investment & consumption. That is bad. Big inflation is also bad, so low & steady inflation is optimal).

In a non-inflationary crypto economy, people still have incentives to make productive investments, and have increased incentives to save. Increased savings should lead to more funds available for lending by individuals / full-reserve lending organisations.

While I don’t think NuBit-2014 or similar would replace NuBit as a transactional currency, it may grow more rapidly due to people seeing in real time their protection against inflation, which could be a powerful incentive for adoption amongst those not yet involved in crypto-currencies.

Is there any reason why NuBit-2014 (option 1) or similar couldn’t work?

I think you misunderstand the two options in the opening post. Even if the second option were applied, with the 1-month parking rates set to match inflation, 1 NBT would still be pegged to 1 USD. Parking increases your nominal NBT without affecting the target peg.

Tomjoad simply highlights that the “primary goal” of NBT is to peg to USD, not to provide the option to park and keep up with inflation.

What you call “NuBit-2014” is option 1 in the opening post. :smile:

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Thanks - edited my post to point out that NuBit-2014 is like ‘option 1’.

I don’t think option 2 would work; parking rewards need to be set to maintain a level of demand for, and reduce supply of NuBits. If they are instead set to counter inflation, there may be an overconsumption (or underconsumption) of parking, leading to an oversupply of NuBits, and the peg would fail. Basically, tying parking rewards to the level of inflation would break its ability to stabilise the price of NuBits.

So I see option 1 as superior. It could be an interesting experiment!

I think we already have an anti inflationary asset called Peercoin!
yes it is volatile and it will still volatile for ever, since controlling volatility needs an elastic supply and elastic supply can not be anti-inflationary with the current liquidity scheme of Nu !

we are not supposed to fix the monetary system, which we can’t, we are supposed to profit from investing in the intermediate solution facilitating the transition from the centralized fiat currencies to the decentralized crypto-assets and whatever crypto-currencies that are pegged to them then, wish it will be also a Nusomething :smile:

I agree with Raythma. If you’re concerned about weakness in USD buy Peercoin. If you think the dollar is strong (for now) park your money in NBT. There are already plenty of vehicles for inflation protection in the traditional markets if that is your primary financial goal. Attempting to adjust NBT to inflation works directly against the peg!

Currency should not be inflated at all. People are being stolen by government for ridiculious economics growth excuse. It’s unfair for an honest labor who keeps his hard-earned money for ten years and finally losing buying power in the end. Even a mild inflation still harmful for economics, is small dose of heroin healthy? Would you take a little bit of it to keep your body stronger?

Governments have been cheating in this monetary game for thousands of years . At first the kings mixed cheaper metal into golden coins and nowadays governments issue paper from thin air with monetary monopolization. Only between 1720-1920 these two hundreds years, gold standard prevented inflation “cheating”/“bug” while induced another bad thing–deflation.

Good money, which is neither inflation or deflation, still a dream for humen being.
Bonds is bonds, asset is asset, money is money, there is no anti-inflation money which people can put into their pocket and spend it freely in this world. When you deposit it in a bank, you cann’t use it to buy a bottle of water at all.

However, we have the very chance to launch the first good money in history.

In future we should provide a currency unit which is anti-inflation/deflation while people can use it in any time without needing to deposite/park(losing liquidity).

But now, we need focus on NBT first.

Agree that anti-inflationary NuBits is more a marketing vehicle than something of real value to the holders. That means that there may be demand for it, but I think the pegging shouldn’t be against USD but a basket of currencies and goods to be really valuable.

If someone wants to bring this to the market I think we should just fork NuBits ourselves, rebrand it, have it’s own website, shares and community etc. and have it competing against NuBits. That way you take any traction away from any competition and still be in charge of the marketing and network to reduce the confusion of two similar coins. Shares in the new fork could just be provided on a 1:1 bases to the current NuBits shareholders to keep things in control, but should be made free floating on launch.

There are probably a few flaws in my line of thinking, so keen to hear what others think.

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NBT is Judas, according to some other crypto fans, because we betray satoshi’s dream: to release the world from inflation.

When you stick to USD, you are just fan of FED.

Here’s what I’ve seen so far:

@willy Option 2.
@Yurizhai Why do either?
@tomjoad Neither. (Focus on core purpose of NuBits.)
@DavidMc0 Option 1.
@Raythma Neither. (Use Peercoin to fight inflation.)
@learnmore Neither. (Weakens the peg.)
@Sabreiib Option 1, but not right away.
@Cybnate Option 1, but via a fork.

The variety of opinions is fascinating. I think I am currently against option 1, because it would undermine both pegs to have shareholder resources split between them. I think option 1 would increase the risk of peg failure.

Good discussion.

NBT is transitional model to increase acceptance rates of alternative digital money till we are relieved from the money printers. That may still be a while.

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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2425270

Our competitors have emerged. Sooner or later, the blockchain equipped Hayek moneies will come.

Ferdinando M. Ametrano , a finance expert working in an italian bank, are planing to apply blockchain on good money dream, his solution is provide two units in one wallet(just like us) but with two blockchains(unlike us) , and ditribute more money (stable) to another money(unstable) holders, so called fairness distribution.

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Creating a “Good money, which is neither inflation or deflation” is possible, but it will be volatile as the money is just another good subjected to the supply and demand volatility, this also sounds like Peercoin!

And solving the price volatility by wallet value volatility is just … No, i will handle the peercoin’s price volatility happily.

From economics view, NBT is not stable at all because it decays 2-3% every year.

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The italian professor wrote this in his whitepaper.

You see, he is ready to utilize TWO methods to regulate currency criculation.

  1. sell/buy currency with others, that’s exactly what our LPCs do.

2)contract/expand its lending activities. That’s what I suggest so frequently.

Hayek theory is not secret at all, if we don’t start lending business, our competitor will, they are smart.

I guess his solution is below:

basecoin (like NSR)
stablecoin (like NBT)

Both stored in one wallet, your “NBT” balance value is always equal to “NSR” value.

If “NSR” price go up, the protocol will give you some “NBT” to keep value equal. when you send NBT out, your NSR also sent.

“NBT” is stable and “NSR” volatile.

Am I right?

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Oh I wasn’t saying why do either. I was showcasing my ignorance on the issue, wondering what such a currency would be used for.

I see that I’m lonely with my decision so far… After some thought, I think parking is not the best available choice. I like the idea, but I don’t think “classic NBT” would be suitable for such an implementation.

The NuBits white paper mentions adoption of pegs other than USD like NuEuro etc.
Best advantage: NuShareholders are supposed to control all those pegs on the same NSR chain.
At least this is, how I understood it.
I don’t think that one would need to fork NBT to protect the “classic 1 USD peg” in some way, as other pegs are possible and imaginable with the current white paper.

The idea of an additional inflation-protected USD peg, under a different name, might be worth refining.

That is what I had in mind to say. Parking reward is artificially printed, with no backing unless there is external revenue generated for the rewards. Using parking to reward hoarders is taking away values from all NuBits owners. Per unit value of Nubits (denominated in USD) will drop as a result of such reward, eventually. (Parking is still a valuable monetary tactic tool. But it’s a different issue)

Think this way: if USD is losing value against goods and services, how can you compensate such inflation by giving people something that is losing value against USD?

Without revenue, Nu is at best zero-sum no matter how you cut it.
Nothing is inflation resistent unless being backed by an inflation resistant commodity (goods and serives) or hedging.

I agree, a fork is maybe too radical. But I think a strong separation between the two regarding marketing, community and policies need to be in place. Users barely know what NuBits are, let alone if you introduce something else from the same community also pegged to USD. It will be hard to explain and sell. It is different with a peg to a Euro or Yuan, those are distinct pegs and different markets.

The only mechanism discussed in the italian banker Whitepaper was Actively increasing and decreasing the amount of the stablecoins in every body’s wallet to stabilize the price !

I invite every one to read this Whitepaper to realize that there is only two possible ways to create an anti-inflationary currency :

  1. By holding a total/fraction reserves of commodities to pack the currency, which can’t be done since we are already worrying about the fiat reserve security so imagine holding commodities, and if it can be done it will be a centralized currency which means it is not a trust free system, and even this cannot insure a long term stability since these commodities can lose their demand or scarcity in any moment due to some technological breakthrough.

  2. Stabilizing the prices by pegging it to a scarce CPI “consuming power index” which can be a set of commodities, but since there is no decentralized automated way to provide this index, every miner will suggest this index in the block he mines, and all miner have the incentive to provide a legit index, When the CPI of stable coin decreases the protocol will ACTIVELY decreases your wallet holdings and vice versa !, so this Anti-inflationary currency is not stable at all in the regard of the value you hold.

But again there is no way to make a real stable currency without this manipulations since money are just another good and its value depends only on the supply and demand.

The Stable coin is indeed interesting and worth experimenting, but its bazaar characteristics/trade off, must be clear to the community members before deciding investing in and risking with it.

what confuses me, that we are discussing issuing an anti-inflation currency with either pegging a new coin to basket of goods (goods which we can’t reserve nor trade !) or by destroying the peg with even more unpacked liquidity from parking interests !

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I also invite you to read this white paper on the very same topic, which presents several interesting ideas. Among them, we should now focus on his idea stabilisation, while we can open other threads to discuss different ideas.

A Note on Cryptocurrency Stabilisation: Seigniorage Shares

I invited both authors on this forum to discuss, but the fact that they are still not here excited about NuBits, imho, is an indication that NuBits is somehow getting in the way of their own projects.

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