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Web3 is here and it's glorious
(lemmy.world)
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this post was submitted on 20 Aug 2023
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Why do you need mining or artificial scarcity at all? Yes, CPU mining is more 'efficient', but what is the point? And why are all (as far as I can tell) crypto currencies deflationary? It encourages hoarding rather than spending and investment which can be economically devestating. Maybe that doesn't matter for black market usage, but there are many crypto supporters who see it as the future of actual currency.
BTW Monero is like the one crypto I find kinda interesting, due to the privacy aspects.
Because that's how the blockchain works. Without validation (which is what Mining does) anyone could just claim they have e.g. 1 million XMR when they have zero. Because you don't have a central authority in crypto currencies, you need some other mechanism which verifies that transactions are legitimate. That mechanism is a whole bunch of complex math, or in other terms, Mining (in the context of crypto currency). Glad you like XMR though.
Not all cryptocurrencies are deflationary. Yes the deflationary model encourages holding/discourages spending however for some projects this is a desired outcome based on the utility the coin/token is aiming to provide.
Additionally deflationary crypto can act as a hedge against inflation, hyperinflation, and stagflation. The decreasing supply can counteract inflationary pressure caused by externalities like government policies and economic shake ups.
I think any hedge against inflation is countered by the extreme volatility most of them suffer from.
Which cryptos are non-deflating BTW?