@tomjoad answered you above…
The security model in proof-of-stake cryptos like Peercoin requires the rewarding of interest to minters for securing the network. Because of these continuous rewards, the currency supply will never stop expanding. A lot of hardcore crypto people don’t like this about proof-of-stake coins. They don’t like the constant inflation and they believe it causes the rich to get richer. Those who care deeply about a fixed supply would rather stick with Bitcoin and proof-of-work with all its problems.
We can cater to these people by creating a fixed supply version of Bitcoin that runs on Nu’s blockchain. Security would be taken care of by NuShareholders through proof-of-stake. Because PoS interest is rewarded in the form of NuShares, the supply of BTC-NBT wouldn’t need to be inflated for security and could remain fixed at 21 million coins, just like Bitcoin.
Any BTC-NBT sold would be profit for Nu. Since the price would be free floating, no money would need to be spent on providing liquidity. We could follow along with Bitcoin’s current supply, which is already over 15 million coins. Maybe we could somehow mirror Bitcoin’s blockchain and give out the initial 15+ million BTC-NBT in equivalent amounts to the people who already own Bitcoin. So for example, person A owns 1 Bitcoin person B owns 100 Bitcoin. Mirroring the Bitcoin blockchain onto Nu would allow the same people to own 1 and 100 BTC-NBT for free.
As the supply of Bitcoin increased through PoW block rewards, we would create and sell equivalent amounts on the open market, so the supply of Bitcoin and BTC-NBT continue to match each other. One thing people won’t like is the manual distribution of new coins to keep up with Bitcoin inflation. I would suggest a multisig group like FLOT being granted a new batch of coins to sell every 2-3 months. This prevents the entire 21 million coin supply from being held by too few people and puts more control into the hands of shareholders to keep distribution going, since regular grants will be required.
Unlike Bitcoin, transaction fees in Nu are destroyed. This creates profit for Nu. Let’s say all 21 million coins were distributed over time. Once Bitcoin hits that target, no more coins will be created, but if Nu hits that target, transaction fees will slowly eat away at the 21 million supply. We would need to keep creating grants of new BTC-NBT in order to replace all the coins destroyed through transaction fees. Grants could only be created up to 21 million though. If the currency supply is still expanding and hasn’t yet hit 21 million, the same would be true. Any part of the supply destroyed through transaction fees would be replaced by selling more BTC-NBT on the market. This would make it so the supply of Bitcoin and BTC-NBT both match each other.
Another major benefit is that BTC-NBT holders would have a say in the overall network (through motions) and share in any profits if they bought NuShares. The same can’t be said for Bitcoin, where huge miners control everything and the majority of users have no say at all. At Nu they’ll be able to make money by selling currency and make their voices heard by using Nu’s model of decentralized governance.
It remains to be seen whether there would be any interest in a fixed supply proof-of-stake coin. Since no liquidity provision is involved, the cost of implementing and supporting such a coin would be low, so I think there’s no reason why we shouldn’t at least try it. There’s always the possibility it could be a hit and provide the network with some income from sold BTC-NBT, which could be used for liquidity operations, development, marketing, share buybacks, dividends, etc…
I have a question though. How would selling coins to keep up with Bitcoin inflation work? Wouldn’t we be constantly putting downward pressure on the price? Also, what price would we start selling BTC-NBT at and why?