PIVX does NOT have a max coin supply. Won’t this devalue my investment?
During the creation of PIVX, it had always been a a decision for PIVX to be a true currency with no hard cap coin supply, just as the Federal Reserve Banks. Unlike the government countries currencies, PIVX rewards it’s users instead of devaluing their savings through inflation.
1) For a currency to be a true currency (and not an asset, which is what a lot of these blockchain projects are), you need velocity and liquidity. So for example, what happens to a project when miners no longer are receiving block rewards? Fees go up? that doesn’t provide for liquidity in the marketplace.
2) So – in PIVX though we have something fairly unique: a “limitless” coin supply (meaning as it stands today, the block reward will continue, forever, 4.5 PIV every minute, which is around a 4% inflation (a fair number of academic studies have targeted that number as a sweet zone for providing new coins into circulation without hyper inflating the value).
The introduction of the response, we mentioned the term “Hard Cap” (a numbered limit on available coin supply). This is due to PIVX having a “Soft Cap” (a cap on the number of coins produced when a certain condition is met) on coin supply. The PIVX soft cap condition is when there are roughly 15 transactions occurring on the blockchain, the blockchain will start burning the same amount of coins as it is generating.
We BURN our transaction fees and THIS provides the “Cap” based on REAL world use. What that means, is that every transaction fee, PIV is destroyed / removed from circulation and at around 15 transactions per second (or less if folks are using SwiftTx) the coin supply burning will equal the same amount as it is generating, creating a neutral effecting and causing a “soft cap” on coin supply.
We also have to remember, the blockchain controls the coin supply. No developer / owner / miners or anyone can create new coin supply.
Now you’re asking, if the blockchain is creating 4.5 PIV per minute… whose getting these PIV? These 4.5 PIV are the reward for our contributors (50% Stakers / 50% to MN holders) for validating a block. So that’s anyone who is holding 1 PIV or more can be a staker for a chance to be chosen to verify a block.
In the image to the left, you can see the soft cap in a rough model. It shows, what would be the max coin supply should each monthly budget be 100% utilized and what the new soft cap would look like at different transaction rates.