Author: Ryan Carboni 2013-12-09 22:01:07
Published on: 2013-12-09T22:01:07+00:00
Bitcoin Improvement Proposal has been proposed to create a monetary authority for Bitcoin that sets block reward to a new mathematical formula. The proposal aims to address the lack of price stability in Bitcoin, which generates menu costs and incentivizes speculation. The majority of coins being used are immediately being sold and repurchased in the exchanges for the sole purpose of buying goods. To make Bitcoin a viable currency, it needs to have a closed economic ecosystem where all transactions are done in Bitcoin. A closed ecosystem is stymied by the uncertainty of Bitcoin prices and speculation. The proposal suggests hard coding or letting miners choose to keep track of the exchanges. With every new block, the miner will compare the cumulative percentage change in the exchange price of Bitcoin over the previous 432 blocks. The standard deviation of the percentage change in exchange rates will be calculated, and outliers will be excluded. The minimum block reward will be one Bitcoin. In order for Bitcoin to have widespread acceptance, it needs price stability. The proposal won't peg the Bitcoin to any one currency, but it would reduce month to month variability in relation to a basket of currencies and discourage views that it's speculative. Bitcoin needs to not be a more complex version of a debit card to replace the US dollar.
Updated on: 2023-06-07T22:17:37.443297+00:00