Daniel Mark Harrison spoke to a private gathering of United Kingdom government ministers Thursday in what was a pre-arranged think tank strategy session for how Britain could better adopt Blockchain. At the forefront of the discussion was how a Blockchain could serve “a very massive and very local community.”
DMH told the bi-partisan committee that this was a problem only his team had yet even begun to address. In fact he spoke about a number of interesting phenomenon with respect to the Blockchain generally. Here is a quick transcription:
Digital currencies have a lifespan of approximately 20 years, after which point they hold negligible utility or value. When assessing the lifespan of a digital currency, it is often forgotten that the asset is both a unit of financial payment value and at the same time an exponentially depreciating piece of software code. This status, as an organically-inflatable currency asset and as a rapidly-depreciating technology, is inherently a paradoxical one. Therefore, there is a conflict of progressive-regressive price behaviour occurring throughout the lifetime of a digital currency.
Logarithmically decreasing supply increases by reducing mining rewards over time helps to emphasize the price performance of the asset over the long term, but doing so in a linear fashion also reduces the growth in the number of potential participants on the digital asset’s network, thereby weakening the software’s network value proposition, and hence, its de facto utility as a currency. In this way, purely linear reductions in supply increases over time ultimately serve to rapidly enforce the asset’s decay and undermine the durability of its reflective value, especially toward the end of its lifespan. Consequently, such logarithmic mathematics may also overemphasize cost during the middle of the asset’s life, making for extremely volatile and unpredictable price moves.
There is another solution to the logarithmic decrease in supply increases that was first proposed by Satoshi Nakomoto in his 2009 White Paper, however. That alternative is one whereby supply increases are somehow graduated across the asset’s lifetime so that the digital software goes through a series of maturity processes whereby the supply output is differentiated across a hypothetical variable of half-decade periods. In such a scenario, it is not simply a case of gradually producing less of a particular digital asset as net supply is increased, but rather, increasing and then decreasing, and finally, re-increasing mining rewards so that throughout the mining period that the digital asset is exposed to there is always at all times a genuine alternative variable that keeps expanding the asset’s value network. So far, no one seems to have noticed the extremely detrimental way in which mining rewards are stacked against time, condemning the value network produced so rapidly in the asset’s early years to a premature and sudden death.
Evidence of this can be found everywhere however, from the sharp rise in 50%+1 attacks that have been occurring in Proof-of-Work (PoW) coins, to the rapid adoption and migration of entire communities pretty much en masse to splinter variations of Blockchains that offer superior mining rewards to the new adopter communities.
The situation has in fact gotten so out of hand that it is now estimated that up to 90% of all assets on cryptocurrency exchanges are not cryptocurrencies at all, but virtually-represented proxies with no underlying asset representing their real nature as Blockchain coins or utility tokens.
The false production of assets on crypto exchanges is a direct result of inadequate mining algorithms that are simply not producing enough continuous supply in the form of mining rewards to satisfy a growing trading climate. This has the effect of merely re-centralising all the previously decentralised growth that was directly responsible for making the cryptocurrency scene so appealing to so many all across the world.
What are the options, then? Well, one of course of is to adopt the X-Chain model proposed by Daniel Mark Harrison late last year, in which mining rewards progressively get harder and then once utility kicks in, significantly easier all of a sudden. This method, says DMH, is the surest of all.
But according to the entrepreneur there are other ways, too. For instance, Zurbank is building a Proof-of-Value and Proof-of-Stake linked innovation that counters exactly these problems, said DMH. It would be out later this year, he added.
Ministers gave DMH a standing ovation at the event for coming out winning against sleazy lawyers and corrupt local UK politicians which committee Chairman Peter Browshare described as “a strong and determined and decidedly British show of resilience in the remarkable region.”