Why was PPC designed to be inflationary?

[WhiteRabbit]

Hello, I'm new here and new to PPCoin. I like that SunnyKing designed a more efficient cryptocurrency in PPC. Can someone please explain to me why it was desined to be slightly inflationary? I'm sure it is meant to serve a purpose but I'm so new I don't know why. Comments?

[sahkan]

So the supply will mimic the fiat money and grow over time.

[Sunny King]

It has to be inflationary because there needs to be an incentive for proof-of-stake minting, so a cap in money supply does not work.

On the other hand, I also think bitcoin's cap scarcity model is unnecessarily strong, for example it is stronger than gold's scarcity. In PPC scarcity is design to be closer to gold, no cap, but inflation is regulated by Moore's Law.

It is designed to simulate gold, not fiat

[redlee]

It has to be inflationary because there needs to be an incentive for proof-of-stake minting, so a cap in money supply does not work.

On the other hand, I also think bitcoin's cap scarcity model is unnecessarily strong, for example it is stronger than gold's scarcity. In PPC scarcity is design to be closer to gold, no cap, but inflation is regulated by Moore's Law.

It is designed to simulate gold, not fiat

That's true. Gold may be scarce, but its supply is endless as long as there is demand that outweighs its production cost.

[Vitalik Buterin]

If you proof-of-stake mine you can earn interest on your coins, more than counteracting the debasement effect of the inflation. So you can't quite call it inflationary IMO.

[JonnyLatte]

It would be neat if a client could show your balance as a percentage of the total supply (say in units of 1000th of a percent) then you wouldn't have an inflationary currency at all but one that slowly counts down for everyone who does not mint and stays about the same for those that do (once inflation from Pow is insignificant)

[coolbeans94]

If you proof-of-stake mine you can earn interest on your coins, more than counteracting the debasement effect of the inflation. So you can't quite call it inflationary IMO.

Exactly ^^

An increasing money supply, does not equate to decreasing value. Once people finally understand this economic concept, the currency will take off like wildfire. People need to become educated about economics!

The system has been designed to have and increasing money supply, while simultaneously increasing in value (deflationary). You have to think outside the box of mainstream economics. This revolutionary cryptocurrency will change everything once people understand it better.

[coolbeans94]

So the supply will mimic the fiat money and grow over time.

Yes, but... ^^

Again this is an economic principle that must be understood. Like fiat, the money supply will grow over time, however this does not mean that the currency is inflationary. It is actually possible to have have a growing money supply that is also deflationary. Peercoin's "net effect" is deflationary even thought he money supply will increase. Increasing the money supply is useful and necessary. It is essentially to the effect of adding an unlimited number of 00000 after the decimal place. Take for instance Bitcoin's 8 decimal place limit. The Peercoin's system is the equivalent of allowing an unlimited number of decimals. (See above post too)

EDIT:
It may be "technically" inflationary, but it's different than fiat in a way, because the inflation or new money goes out to the people saving it in a distributed and decentralized way...inflation is especially bad when it is distributed in a "centralized" way, but this is "decentralized"...so if the value of your coins goes down because of PoS inflation, it doesn't actually matter because you just got more coins from it too.

TL;DR
Instead of the "government printing money, and the people suffer" it's more like the network is "printing money for the people, and nobody suffers"

[ivanlabrie]

Interesting ideas...I wasn't fully aware of the implications of this coin's concept.