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Comment by girvo | Hacker News Reader

Man, I really feel like those who are upset about this truly wanted it to be "their Bitcoin" -- the cryptocurrency they got on the ground floor for and were hoping would turn out like BTC has. And to be fair, it sorted started looking that way. But now, as it's been decided to be "inflationary" (like the USD currently), they feel that the party is over.

And I get it. That sucks. Personally, I think it's a great thing for Doge. It'll keep up the current "tipping culture", discourage hoarding, and encourage us doge to trade and share, til we get to the moon. Such wow. Amaze. :D

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The thing is its actually less inflation then Bitcoin or Litecoin at least for the next few years anyway. See the following (taken from reddit thread) which shows the inflation amount over the next 5 year period.

        Dogecoin Bitcoin Litecoin
  2015	5.26%	 10%	 33.33%
  2016	5% 	 9.09%	 12.5%
  2017	4.76%	 4.1%	 11.11%
  2018	4.54%	 4%	 10%
  2019	4.35%	 3.85%	 9.09%
  2020	4.2%	 3.7%	 4.1%

People need to keep in mind that dogecoin's inflation is set at 10,000 coins per block forever once mined out. As such the inflation amount will reduce each year as more coins exist, unless of course people manage to loose about 5 billion coins a year. The other thing to remember is dogecoin currently has about 5% inflation a week, so anyone dumping it over this news is a bad speculator.

EDIT before someone jumps down my throat I am checking the numbers now and the bitcoin one looks to be slightly off, please take this as close, but not exact please. If you have the exact numbers pass them on and I will update.

> anyone dumping it over this news is a bad speculator.

Especially considering that XDG is barely a few months old, that this decision won't impact anything before the whole 100 billion are mined (which is years from now) and that due to the open source nature of the software the decision can be trivially reversed should the community decide otherwise.

Does "to the moon" mean $1 per coin?

If so, how is dogecoin going to create five billion USD per year via coin buyers to pay for its inflation?

Unless it means something else and I am missing the point?

Who cares! That's the point ;)

Also, "to the moon" is a dogecoin reddit joke, it doesn't mean anything in particular

Much like dogecoin and its relation to bitcoin, "to the moon" is a long-running thing that transcends any single Internet event.

To the moon is simultaneously the moon and the path to the moon.

A dogecoin joke? Are you serious? Bitcoiners have been screaming to the moon for years. But now it's doge's joke? Is there anything else you want to copy without improvement?

Such wow. So animosity. Doge let Bitcoin have moon too. Many room.

Genuinely made me laugh. "Many room".

Yeah, the thing is that plenty of bitcoiners were screaming "to the moon" without any sense of irony.

In the dogecoin community it's a statement that carries an element of self-parody.

Not from what I've seen lately. There are a lot of true believers in /r/dogecoin, and they're taking it very seriously.

yes my friend, you are misunderstanding the exchange rate. There are currently ~40 million "dogecoins" floating around the internet. All the dogecoins combined are presently worth $55 million USD. Therefore each dogecoin is worth $.0014 USD.

Before this announcement, there were only ever going to be 100 billion dogecoin in existence. Now they just decided that they want a 5 billion doge inflation rate per annum, Thereby decreasing the the value of each dogecoin.

Its somewhat similar to the way that the federal reserve pumps money into the market to increase the flow of capital, the dogecoin foundation wants to increase the flow of dogecoin by increasing the supply and access and decreasing the incentive to hoard.

edit the code was already written to be inflationary. The plan was to implement a 100 billion cap in some future version. They scrapped that plan.

It's not so bad in theory, at least it counters the deflationary-currencies-are-evil-and-stupid argument. The real worry is that now some entity has been entrusted with the ability to manipulate the value of the currency, and that the entity may violate that trust by later deciding to further inflate the currency.

Everything about DOGE seems like some bizarre social experiment.

The Jamaican bobsled team are going to the Olympics based on donations from a cryptocurrency based on a set of jokes centered around a picture of a dog from a blog.

There is a reason William Gibson stopped doing straight sci-fi.

My question is who spent $30,000 to buy all those DOGEcoins?

Many people. I personally threw $100 in because why not? Its a small amount of cash to lose. I am willing to bet more then 300 people have spent more then $100.

You would need a ~50% consensus (measured in compute power) to push through these manipulations though.

Never thought I'd find myself calling a distributed cryptocurrency surprisingly democractic...

Does anyone have a good explanation as to why this is supposed to be hard to achieve? What incentive do miners in the distant future have against inflating a cryptocurrency?

For example, take Bitcoin after the cap has been reached and mining bitcoins only gives fees. If 50% of miners cooperate to make blocks worth real bitcoins again, they will suddenly start raking in more profit. They will be devaluing everyone's stores of bitcoins to do it, but people who hold bitcoins have no say in it, only computing power does. If we assume that miners will be the main owners of bitcoins for all eternity then they will probably never agree to this, but if there are a lot of miners with very little in reserve then why wouldn't they accept devaluing bitcoins a little bit to get more per block mined?

Exchanges and other prominent users would probably also have to agree to the change. Things might get bad if there was a split between miners and everyone else because the miners could perform 51% attacks on the other fork, though.

now some entity has been entrusted with the ability to manipulate the value of the currency

Not really; inflation is built into the code and getting everyone to "upgrade" would be difficult.

The inflation rate over time will actually tend to zero, since each additional 5bn coins represents a smaller proportion of the total amount. A constant quantity over time translates into a decreasing rate of inflation.

That's not accounting for lost coins (either because the wallet is lost or the owner is prevented from spending them).

The idea in the github thread seems to be that the 5% inflation should approximately cancel out the unknown loss of coins that would be going on.

That's also insufficient over the long term since coins are lost as a proportion of the total per unit of time.

This is important - anything that a majority of a cryptocurrencies userbase doesn't like won't get implemented because they wouldn't upgrade the protocol, they would fork it.

> There are currently ~40 million "dogecoins" floating around the internet.

I'm assuming you meant to say 40 billion.

You'll never get to the moon on millions of things.

Not with that attitude.

Or from that altitude.

Much like Bitcoin, the rate of inflation of Dogecoin converges to zero. So maybe it's not a big deal :)

I'm not bothered. I got 'in on the ground floor', and I don't care that it isn't valuable (although yes, I would have been happier if it did become valuable, of course...). I'll probably stop mining at some point soon, but I have the coins, and having a big number is a nice feeling. Plus, it's funny.

It agree that might turn out very well, but people have a right to be upset when the rules are changed mid-game.

It's an important blockchain lesson, that there are no rules, only a combination of concentrated technical leadership and majority sentiment.

If the blockchain this happened on was serious business you would probably see mass abandonment.

>It's an important blockchain lesson, that there are no rules, only a combination of concentrated technical leadership and majority sentiment.

Yeah.

>If the blockchain this happened on was serious business you would probably see mass abandonment.

The hard-currency fanatics would run. But where would they go?

They would just fork the code base and take their existing doge stash down a different path.

Those were the original rules. The title is misleading, people are disappointed because they expected the devs to eliminate the perpetual generation of coins in the original software. The decision was simply to do nothing.

Those weren't the original rules. Their development team made a mistake and the inflation problem was introduced. Bitcoiners warned them about this, they didn't listen.

> discourage hoarding

Is there compelling evidence that inflation discourages hoarding? I don't think anyone would agree that USD-centric societies discourage hoarding, unless you think something like investing in mutual funds doesn't fit the term.

Absolutely, mutual funds and all investments assume some level of risk because to keep it in cash means losing money to inflation. There would be way smaller and more risk averse pool of investment capital if the dollar were deflationary. For example many portfolios whose goal is wealth preservation buy municipal bonds which fund public works projects(and certainly have a non-zero risk of default).

Traditional economic theory says that inflation discourages hoarding. Inflation forces those with large amounts of capital to put that capital to work through investments to overcome the rate of inflation, or see their wealth decline.

Whether this will hold with dogecoin remains to be seen but is somewhat logical.

Investing in _anything_ productive is the opposite of hoarding. Hardly anyone in an advanced economy hoards large amounts of physical paper money; banks keep it to satisfy customer demand, but would much rather have the money in their central bank deposit account. A couple of central banks in Europe are experimenting with tiny negative rates on these deposit accounts precisely to encourage them to lend it out.

If you _invest_, you're either buying a productive asset, or storing something valuable for a period of time, or giving money to some other business to spend on equipment, employees etc. in the hope of future return.

I don't think anyone would agree that USD-centric societies discourage hoarding.

No offense, but I think it would be wise to familiarize yourself with the basics of a subject before forming high-confidence blanket opinions about it like that. (The same applies to your other comment about why anyone would think an inflationary economic policy would be desirable at all.)

Sorry if I sound patronizing, but as it happens the link between inflation and hoarding is one of the few well-established empirical facts in economics [1,2,3] with ample historical evidence both from the well-documented shortage effects of price controls [4], to the well-understood effect of changes in bond yields on the money demand [5], which is the cornerstone mechanism of basic monetary policy.

[1] http://en.wikipedia.org/wiki/Hoarding_(economics)

[2] http://en.wikipedia.org/wiki/Inflation

[3] Milton Friedman once said: "We economists don't know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can't sell tomatoes for more than two cents per pound. Instantly you'll have a tomato shortage. It's the same with oil or gas." From http://en.wikipedia.org/wiki/Price_controls.

[4] http://en.wikipedia.org/wiki/Price_controls

[5] http://en.wikipedia.org/wiki/Monetary_policy#Policy_tools

> No offense, but I think it would be wise to familiarize yourself with the basics of a subject before forming high-confidence blanket opinions about it like that.

High-confidence blanket statement? I was asking a question. The opinion in question was poorly worded-- I understand that inflation means money either loses value or must be reinvested in the economy. I just don't think that inflation prevents a wealth incumbency (which I inappropriately referred to as "hoarding").

> (The same applies to your other comment about why anyone would think an inflationary economic policy would be desirable at all.)

I was referring to how the protocols have an identical economic policy (majority rules), not to inflation vs. deflation as economic policy (which I stated explicitly).

I was mainly curious about whether or not inflation vs. deflation matters in terms of preventing a rich-get-richer society. My admittedly poorly worded question seems to have given many HNers an opportunity to feel good about letting me know they understand a classical economic concept.

Mutual funds are an investment. Hoarding is savings.

One is productive, one isn't. That's the key difference.

The difference is even more glaringly obvious if you think about the difference between equity in a productive company, loans to productive organizations, and simply doing nothing.

Savings accounts have interest rates. The money in savings accounts is used by banks to leverage and invest. It's not really hoarding like holding on to bitcoins is.

Obviously not - Apple is hoarding USD like crazy.

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