Investors Want Higher Inflation!
This is extremely unpopular opinion at a time like this, which is exactly why it needs to be said again and again. Reducing token supply is not going to make our network have a higher market cap, end of story.
I'm getting very tired of seeing the same silly narratives flip-flopping around depending on Hive's arbitrary price action. Pick a lane and stay there. If you can't handle extremely volatile price action that's decoupled from the market... you're gonna have a hard time here, plain and simple.
If Hive were to x10 tomorrow all of a sudden no one would be talking about how we need to "fix the system". That's a problem. If the system is broken, then arbitrarily going x10 tomorrow hasn't fixed anything. What this is really coming down to is that most people on this network are greedy and afraid and have no idea how this economy works or is supposed to work.
Inflation leeches value from the users that don't control it.
Stake holders used to control 90% of Hive's inflation. Now they control 80% because of the dev fund, and we've had witnesses running around saying, "Oh, maybe it's a good idea if you control 0%". Fuck off already. Thanks.
Everyone thinks the value of Bitcoin comes from the deflationary model of logarithmic hard-capped supply. There will only ever be 21M coins! We've already heard these words a thousand times and we're sure to hear them a thousand more. Unfortunately, that's not what gives Bitcoin value.
The most valuable prospect of Bitcoin's inflation schedule is that the network doesn't have to worry about it because it doesn't exist. It's a wash, meaning that Bitcoin bets on the idea that having a high inflation is simply too big of a honeypot and those in charge would start to funnel that money into their own pockets.
Did you know that Bitcoin Cash recently forked again?
At press time, Bitcoin Cash ABC (BCH ABC) has received no hashpower, meaning that it is possible Bitcoin Cash Node (BCHN) will become the dominant software of the Bitcoin Cash network.
To recap, a group of Bitcoin Cash developers led by Amaury Sechet, known as BCH ABC, proposed an update on the Bitcoin Cash network, which has included a controversial new “Coinbase Rule,” which requires 8% of mined bitcoin cash to be redistributed to BCH ABC as a means of financing protocol development.
YUUUUUUUP!
The dev team on the much less popular fork funneled money into their own pockets and the miners said pass. What a surprise. I guess that means funding the dev team with inflation probably isn't the way to go hm? I mean, sure it's a valid strategy in theory. I've yet to see it work in reality.
Back to Bitcoin
If you control inflation, then inflation is great. It leeches value from those who do not control inflation. With the Bitcoin network, 100% of all inflation is channeled into securing the network, and every 4 years that supply gets cut in half. Amazingly enough, rather than this gutting the network this tends to send the price skyrocketing. Why pay more for security than you have to?
Hive
Why does everyone think we're gonna go like x10 if we cut inflation by 5% or whatever people are suggesting? Seriously no, that's not how this works. LEO has x3 more inflation than Hive, do we see anyone complaining about inflation there? Hm, nope, I wonder why that is.
Perhaps it's because when a token is arbitrarily doing well according to the market we're all riding high on FOMO but when volatility swings the other way we're grasping at straws as to why that is and we blame inflation and whatever else.
Extremely flawed central-bank comparison.
Everyone seems to think inflation bad because central-bank bad. Pay no attention to how fiat currency is actually inflated: by loaning out money to banks that is impossible to pay back. To compare fiat inflation to crypto inflation is a completely non-sensical fool's errand.
Inflation
Every economist knows that inflation creates growth. Inflation causes currency to have a high velocity. People want to spend money when it's being created out of thin air. High velocity and high inflation are good, and most people in the cryptosphere have no idea of this obvious fact because Bitcoin is absolutely killing it on this foundation of "inflation bad".
Stable coin?
In as little as 10 years, Bitcoin could easily have a market cap 2 Quadrillion dollars. That would put 1 Satoshi in parity with $1. When that day comes, it will be impossible to pump and dump Bitcoin. Instead of constantly being under attack by banks/corporations/governments they will all engage in if-you-can't-beat-them-join-them behavior. Who's going to use Bitcoin when transaction fees are $1000+? Probably the richest people in the world transferring millions of dollars between each other.
When Bitcoin has a higher market cap than the institutions trying to manipulate it, it will become THE stable asset; more stable than any other fiat currency. However, unlike fiat, Bitcoin will continue gaining value every year rather than being guaranteed to lose purchasing power like fiat. I imagine that will be quite the sight to behold. Bitcoin will usurp worldwide unit-of-account and everything will be priced in Satoshi instead of fiat, all around the globe.
The point here is that other networks that actually have inflation will vastly outperform Bitcoin in the long term. Bitcoin will have very low velocity and very low growth once it acquires those stable-coin powers. Instead of doubling in value on average every year it may 'only' gain 25% or less. It will be the projects with high inflation allocated correctly that have high velocity and continued exponential growth.
Example
Your favorite coin has 100% inflation per year. Wow, what a disaster! All your money is being inflated right from under you! Just kidding! You control the inflation, so even if the price dips 50% you still have 100% more coins... that's just how it works with crypto. Again equating fiat inflation with crypto inflation is nonsensical, and that will only become more obvious over time as high-inflation network begin to prove themselves.
Proof-of-burn
Hive and LEO need even higher inflation; as high as it can go while still giving day/swing-traders a reason to hold. Imagine that we had a few dapps around here that required users to destroy coins if they wanted to participate. If dapps like this became popular enough we'd clearly have to raise inflation to accommodate the demand. Because every stake holder controls inflation this is a win for everyone. The only people who lose are the ones who don't control inflation.
By adding deflationary mechanics to the network so we can justify increasing inflation, the velocity of money around here (volume) will hit absurd record-breaking numbers.
The gamblers
Think that day traders care about 10% inflation per year when they are looking to net 10x gains via risky gambling through technical analysis? Of course not! Ironically enough, the people around here complaining about inflation are the ones who are 100% powered up and trying to support the network as much as they can. It's pretty frustrating to see the people who benefit the most from inflation simultaneously complaining about it the most. Give it a rest, fellas.
Conclusion
The supply/demand tokenomics of crypto combined with exponential growth so massively outweigh token burns and lowered inflation that these supposed mechanics to increase value do absolutely nothing. A 5% reduction of inflation APR isn't going to do anything to raise the price when you're looking for gains of 1000% or more. The only thing that can create those gains we're looking for is legitimate development and adoption combined with massive bursts of speculation; something we see happen all the time. Focus on capitalizing on that instead.
I grow quite weary of the users around here scrambling every time we hit our 10 cent support range. Lowering inflation will do nothing. Lowering the powerdown period will do nothing. In fact, changes like this only serve to lower the value of the network by proving to the world that these decisions can happen on the whim of a few dozen users. That's not going to inspire any kind of confidence from outside the network, I guarantee it.
The obvious rule of thumb is simple. If we find ourselves trying to 'fix' Hive's problems when price is low but then totally forget about those 'problems' with the price is high, then we were wrong to ever mention it in the first place. Problems don't appear and disappear based on fickle price-action. That is a fact.