21 million of total supply which fixed and never inflation is one of the most distinctive features of Bitcoin.
Unlike Bitcoin, which has a fixed amount of totals, cryptocurrencies such as Ethereum and EOS retain a certain rate of inflation.The emergence of the fixed-issue model represented by GRIN and the pledge coin mode of Staking coin this year has declared that the “unlimited amount” model has become a major trend in cryptocurrency.
Recently, a new mode of automatic destruction and total deflation has attracted our attention. Except for the fixed amount and total inflation, is it possible that the token of “total deflation” may become a new trend?
A self-destructing cryptocurrency, Nuclear Bomb, is presented here as a social experiment and financial case study to explore the feasibility of measuring deflationary currencies. The main features of nuclear coin design are:
* 10 million initial supply
* 1% of the transaction volume will be destroyed each time the transfer is made
* There will never be new tokens added
Nuclear Bomb is automatically destroyed by smart contracts
Actually, token destroyed is common before Nuclear Bomb. In order to increase the value of the token, many exchanges and project parties will use the method of repurchasing token for the destruction to reduce the circulation so that increase the price of the token price.
The innovation of Nuclear Bomb is that it automatically destroys the token through the smart contract, and each transfer will automatically destroy 1% of the transaction volume. While the previous destruction modes are mostly based on human-active operation, with obvious human rule color, whether the transparency or trustworthiness is not high.
The team of Nuclear Bomb said that the intention of NB was not for daily transactions, but for a decentralized hedging scheme for traditional inflation instruments. It’s a decentralized value store and as a social experiment and financial case study to explore the feasibility of measuring deflationary currencies.
It is worth noting that each transfer of Nuclear Bomb at present will automatically destroy 1% of the transaction volume, but the minimum transfer and destruction unit is 1 without the decimal point. That is to say, 10 Nuclear Bomb transfer will result 1NB be destroyed and 9NB will be received by the other party, 5NB transfer will destroyed 1NB, 4NB will be received by the other party, 1 NB transfer will destroy 1NB and 0NB will be received by the other party.
In order to perform automatic destruction, all transactions of the nuclear coin must be carried out on the chain and therefore cannot be destroyed during the transaction process of the centralized exchange.
Forced destruction to suppress circulation speed
The Nuclear Bomb team believes that one of the important reasons for the existence of a bubble in the cryptocurrency industry is that the circulation speed of the cryptocurrency (handover rate) is too high, and the cryptocurrency assets will be difficult to maintain long-term appreciation when the total investment remains unchanged.
For example, the most classic Fisher's equation MV=PQ, which is commonly used to estimate, is as economically inferior to Einstein's physics equation E=MC^2. This equation is not only trusted in the traditional economic field, but also popular in the field of the pass economy. Vitalik Buterin , the founder of Ethereum, has repeatedly mentioned this method of valuation of blockchain projects on blogs and Twitter.
In MV=PQ, M indicates the total amount of money circulation (which can also be understood as the circulation market value of Token), V indicates the circulation speed of money (handover rate), P indicates the average price of goods (the average price of Token), and Q indicates the total amount of goods (flow amount).
Therefore, the circulation market value of the cryptocurrency is M=PQ/V. Here we can see the importance of circulation speed (hand turnover rate). If no one buys or sells assets within one year, the circulation speed is 0, and the project value can also be regarded as 0. Lack of liquidity can result in assets trading at discounts below their "intrinsic" value. However, if the liquidity is too high and the total investment (ie PQ) is unchanged, it will lead to a decline in the market value of the project.
On the issue of reducing the circulation speed, there have been many cryptocurrency experiments. The automatic destruction of 1% of the Nuclear Bomb design is an idea.
If the yield rate of NB holder is too high, the market participants who seeking the yield rate will purchase and hold the NB assets. While the transaction volume with 1% automatically destroyed will increase the transaction cost of participants.Thereby reducing the transaction speed and achieving the effect of stabilizing the entire project value.
One of the most important reasons for the Bitcoin be considered as a value storage is the same severability character with gold. Investors can buy gold by”gram” as it is so expensive, and can hold 0.1,0.01 or even less of bitcoin, as it is expensive too. Therefore, bitcoin prices will not affect investor holdings anyway.
It seems that the 1% automatic destruction system and the 1 minimum unit of NB will not result in the liquidity problems at present, but when NB is reduced to a certain extent, there will be insufficient liquidity, and it may be automatic destroyed in theory. As long as thinking if the minimum unit of Bitcoin and the minimum unit of transaction fee are both 1, what will happen? Perhaps, NB will become a digital gold-like existence!
Another problem is the 1% automatic destruction, which means high transaction costs.
The handing fee of Bitcoin is extremely low as it can be paid through the second layer of lightning network. But NB can only trading on the chain.
There are also community users who have proposed a solution where the user deposits the NB into a centralized exchange or maps another token, and then trades on the centralized exchange or only trades the maps token, which the final deposit and withdraw can be on chain. However, the significance of decentralization of NB is naturally gone.
The distribution of NB is very fair. 10% will be airdropped to the Bomb users, and 80% will be dropped to the blockchain community around the world. The team only left 10% for development. Nuclear Bomb Team has a long-term plan and may has the plan of online the main network as well as the application upgrade.“total deflation” is a brand new cryptocurrency model in the long run. NB may not be successful, but Bitcoin itself is also an experiment. NB will inevitably leave a strong stroke in the history of encrypted digital currency!
Nuclear Bomb inherit the advantages of Bitcoin and make deflation finance the ultimate!
Nuclear Bomb website: nuclearbomb.io