Author: Peter Todd 2022-07-11 16:59:53
Published on: 2022-07-11T16:59:53+00:00
In an email exchange, Anthony Towns argued that the loss of coins is not necessarily independent but heavily correlated if they are caused by a common factor. For instance, losses could be due to a bug in a popular wallet software or natural disasters that damage key storage hardware. Furthermore, people tend to improve their key storage habits over time. However, people still make irrational decisions about coin security, putting their savings at risk for claimed 5% returns. Even if people were rational, coin loss rates would reach a floor because as the probability of coin loss goes down, bothering to spend extra effort to decrease that already small chance is pointless. Coin loss also includes intentional losses from proof-of-sacrifice protocols. Black swan events put a floor on how much coin loss could diminish. Peter Todd suggested that if the loss rate varies chaotically, it could lead to inflationary periods in between events and comparatively strong deflationary shocks when these events occur. However, it takes catastrophic black swan events to make insignificant inflation rate changes due to changes in lost coins.
Updated on: 2023-06-15T22:30:33.217756+00:00