I've seen people express the opinion that the base layer inflation should be cut down from the current roughly 8 percent to about 5 percent, which is what the average rate of inflation of most other coins is said to be (by someone who supported that idea). I think it is a very bad idea to lower it so that it would get there any faster than it will according to the current issuance schedule in effect since the early days.
I'm against that idea for the following reasons:
A) Token price is not a relevant measure of a project in terms of success at getting funding
Market cap is, which is the product of the total supply and token price. Stop fixating on the token price.
B) Hive has a Delegated-Proof-of-Stake consensus model which is particularly prone to centralization and corruption
Why? Because of the high witness rewards and their ability to be staked instead of having to be sold to cover operating costs. 10% of the total inflation pool is reserved for witness rewards out of which 20 consensus witnesses get about 95% (1/21 blocks is confirmed by a non-consensus witness). That's twenty individuals out of thousands. And now there's the DAO that gets 10% of the pool. Guess who effectively controls the DAO at least in absence of a concerted effort to attain a particular outcome by smaller stakeholders? A small group of large stakeholders, most of whom are consensus witnesses. When have you seen significant changes in the witness rankings? Despite there being several well-known and competent people currently outside the top 20?
Hive is very cheap to run compared to most other blockchains. That is by design. The price to pay for the high throughput gained through cheap transactions is the tendency towards of centralization inherent in the protocol. That is why there must remain a diverse range of sources of inflation being allocated to multiple groups of interested parties.
Just because you have a second layer token that is about to get off ground and you feel that cutting down the content rewards (what other source of inflation would be cut) would be likely to increase interest in your token and possibly increase the value of your own Hive Power is no reason to throw out the baby with the bathwater by lowering the total inflation rate from eight to five percent per year.
C) Speculators are attracted to HIVE because of its volatility
If you dream about HIVE becoming a store-of-value type of asset and you think the way to do it is to lower the inflation, it is time for you to stop dreaming. I'm pretty sure it wouldn't even do much to raise the token price. That's because speculators are attracted to HIVE mostly because of its great volatility. They don't care about some pesky percentage point or a few of difference in annual inflation when the token (its predecessor) is proven to be capable of moving up more than 100x under the right market conditions.
The true store of value in crypto, Bitcoin, is a store of value because it is expensive to mine. Secondly, and most importantly, its inflation schedule is extremely resistant to change because it has no governance. Remember how difficult it was for SegWit to find acceptance back in 2017? That is a feature, not a bug. Bitcoin will fork if a sufficiently large minority of node operators and miners decide they're not happy with Bitcoin Core. There is a very high level of confidence among investors that the Bitcoin inflation rate will never be touched.
In contrast, the rules of Hive can and have been frequently altered. It has a relatively fast base layer inflation rate because the HIVE token is meant to fuel activity and not sit in wallets passively appreciating. The main design goal of all Graphene blockchains was high throughput at the expense of security - and thus capacity to store value.
I would also like to comment on the idea that blogging no good as a use case of Hive. Traffic on the blogging front ends still make up a very large proportion of the total along with Splinterlands. Over 18,000 posts were made on Friday 28 August. How is that insignificant? Alienate the bloggers and you will alienate a very large chunk of the user base. Do you really think that's something this platform can afford to do right now?
A dig your reasons and hopefully those will be considered if to modify the inflation percentage. HIVE still has some problems with the "oligarchs" owning the power so maybe in the future there will be a better system for rewarding the users equitably.
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If by any means this refers to me :), I'm not a 100% to cut the inflation.
I was just exploring the topic and pointed out how things stand.
Just yesterday I published the post about Hive demand, and that the inflation would means nothing if we have a large growth.
I agree that the inflation as it is, is basically making the chain more decentralized over time. Also agreed on the point that blogging is the core activity here, and the glue that holds everything together.
Anyways in 10 years time we should be around 1% :), with a 1B supply.
Growth is not required. All it takes is a crypto bull run during the late stages of which speculators will throw money at any coin that hasn't rallied, yet.
Well, it's one of the main activities. It could be outpaced by gaming. I'm fine with either of them dwarfing the other. But the reality we're living in now is that blogging is a huge chunk of all activity on Hive.
Yes, if the inflation schedule remains in place. One way to fight centralization is to keep consensus witness spots something that witnesses compete against one another to attain. Another is not turning a blind eye to inefficient or wasteful use of the DHF.
I agree completely. There is no reason to reduce the inflation supply. It is mean to provide incentive to attract more people here. There is no way the price of the token is where it is as opposed to being higher because the inflation rate is 8% as opposed to 5%. To believe so is absurd.
Most do not truly understand inflation. In fact, Ethereum us now $400 a token and they really have no idea what the true distribution is, thus no clue as to the inflation rate. Is that stopping anything? Not with the DeFi boom going nuts.
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Many apply conventional economic wisdom without fully appreciating what goes on in the crypto space. All the projects including Bitcoin are crazy volatile. Small differences in inflation pale in comparison to the long-term price swings.
What I'd also like to emphasize is how decentralization and lack of governance inspire trust in BTC as a store of value. Hive inflation is much more subject to human whims like fiat currency whose monetary policy is up to a roomful of people.
That is very true. That is why leaving it and having it basically untouchable will inspire more confidence.
As for its place in the overall picture, it is minimal. One good run and things will take off. Did people really care about the rate in 2017 when Steem hit $7?
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