Three Years of Woodcoin

On this occasion, let's go through why the LOGarithmic bitcoin we know as woodcoin is still alive after three years, has increased in value steadily, and is set up for further increase in value:

1) Decentralized

There is no woodcoin company, no woodcoin premine, no woodcoin ICO.  Like bitcoin, there's no person or group of persons who can take a fall, get bought out, compromise, or tarnish this coin.  There's no system of checkpoints, no coordinator, no foundation, and no woodcoin.com login page.

2) Logarithmic Release

The logarithmic release is still the only crypto monetary policy with a long term plan that doesn't eventually either implode or explode.  Despite the existence of public coin, in which monetary policy is a real verifiable thing rather than a question of trusting some people with special titles and suits, there has been markedly little experimentation in monetary policy.  Lets look at the alternatives which have come up in public coin offerings:

Geometric

Many coins (litecoin, bitcoin, monero, ..) use a geometric curve to increase the supply.  This will quickly leave these coins in a state where their transaction confirmations (mining) will need to be supported by fees.  At that point, there will be a market force, namely the desire to make transactions without paying too much, which will force holders to make at least small investments in other coins.  While a geometric series coin looks great to the early adopters, we can say at that at the very least there will be negative market pressure on these coins as they asymptotically near their supply cap.

Linear

Many other coins (doge, eth, eth classic, ..) use a linear curve - simply paying a fixed amount to miners every block.  This has the advantage that it avoids the problem of the geometric series - there will always be payment for the miners, so the fees will be low.  However it introduces another problem - unlimited supply.  Without a supply cap to point to, it becomes difficult to convince an investor that this is a great store of value in the long term.

Exponential

Some coins, usually proof of stake coins, add a certain percentage of the total supply to the current supply every year.  This leads to an exponential growth in the money supply.  This is done to reward stakers.  While fees certainly will remain low in this scheme, and there is some early potential to benefit from price as people clamor to get some of the valuable initial capital, this scheme often implodes as a ponzi, or becomes centralized.

Delta function

Some coins (NEXT, ripple... ) simply issue all the currency up front in a 100% premine.  This leads to a centralized system, as the only people with the incentive to mine are those who wish to see the system continue, which are those who hold the coin.  Without a miner subsidy there is no other incentive to secure the network.  Such coins can indeed be public, but they are not so decentralized.  This leaves them vulnerable to issues of centralization.

Logarithmic

The logarithmic release schedule gives us a middle ground.  We have a capped supply (for the case of woodcoin, there will never be more than 28 million), so we don't lose the trust of those folks who are inflation averse.  However we also have a slowly decreasing reward schedule, which provides for non-vanishing coinbase rewards in the very long term future.  We also don't lose the folks who are high-fee averse.

3) Proof of Work

Woodcoin is the highest hashpower coin using solely the Skein hash function.  Proof of work is real value in a way that proof of stake cannot provide.  This is the original basis for decentralized consensus.  It represents an incentive to save energy, understand software algorithms, and build better hardware.

4) Public  

Woodcoin is a public coin like bitcoin.  Anyone can see how many coins are outstanding and every LOG creation event is auditable by all parties.  This means counterfeiting and other money supply fraud is not possible.

5) No Counterparty Risk

Like bitcoin and other decentralized coins, it is possible to make a long distance transfer with no counterparty risk.  While holding precious metals also can be done without counterparty risk, the transfer of value over large distances is more problematic.

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I'd love to say other benefits of woodcoin such as the ecologically aware community, their efforts to end financial colonialism and orcish patriarchy, and how they are good looking responsible and educated people.  However while this stuff is true, it isn't really part of the coin itself.

Comments please 🙂

 

 

 

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