Roadmap

This paper will discuss the invention of public blockchains and how they:

Provide higher information quality than legacy systems

Welcomed in a new era of data driven, economic analysis

Distill information to the public via User-Based and Network-Based indicators

Can provide very high signal information through Network-Based indicators, in particular the issuance of new coins

Upon establishing these points, the focus will turn to Decred, covering:

Decred’s coin issuance design

Why Decred’s coin issuance design is unique

The difference between % of total supply issued vs % of total block subsidy issued

The needs and incentives of the Decred network, along with those of its 3 different stakeholder groups

How to appropriately evaluate the Decred market cap performance over time using the Decred block subsidy

In the final section, we will apply our knowledge of how the Decred market cap performs vs the Decred block subsidy to evaluate:

Litecoin’s market cap performance vs its block subsidy over time

Bitcoin’s market cap performance vs its block subsidy over time

Compare Decred’s performance to Bitcoin’s performance up to the same % of total subsidy issuance

System Design Differences = Differing Information Quality

COMPARISON OF LEGACY SYSTEMS VS PUBLIC BLOCKCHAINS

As we just established, legacy systems and public blockchains operate differently. These differences in system design provide us with varying quality of information when trying to determine the current state of affairs within these economies. The legacy system on one hand offers opacity and interference, which quite naturally leads to incredibly noisy data. This data is more difficult to retrieve, and constant interference within the system messes with data consistency / reliability. As a simple example: people are always wondering what the Federal Reserve is going to do next with rates (opacity), and the fact that the rates are subject to change at the Fed’s discretion kills any sort of consistency to plan around (interference). Thus, the parameters that legacy systems are built around result in noisier data.

Public blockchains, on the other hand, are designed to be high-signal datasets with the combinations of transparency and resistance to interference. Predictability and upfront establishment of parameters such as monetary policy make the system transparent, along with the obvious transparency provided by the public blockchain itself, which shows the movement of coins between network participants in real time. Furthermore, the distributed nature of systems such as Bitcoin and Decred allow for something incredibly important — resistance to interference in transacting. With predictable and public parameters for monetary policy, publicly available and real time transactional data from users, and a system that provides very little interference on the money-movement front, we can give a much higher degree of reliability to the data we find within these crypto-economies.