ARK Inflation Mechanics

Summary

ARK is a cryptocurrency that has been running on a public network for nearly three years (March 21 will be the third birthday for the ARK Public Network). ARK’s network is lean and fast compared to Bitcoin, with 8 second block times instead of Bitcoin’s ten minute block times. ARK’s transaction fees are also very low compared to bitcoin, with most fees running well under a penny. The network also allows for more transactions per second many times over compared to Bitcoin.

Newly Minted ARK

On March 21, 2017, the ARK Public Network went live and 125 million ARK were created in the Genesis Block, or the first block of the blockchain. After that, the network began generating ARK in every block at a rate of 2 ARK every 8 seconds. This is not accomplished through Proof of Work like Bitcoin, but through Delegated Proof of Stake (More on ARK DPoS in this video).

This means that each year approximately 7,884,000 ARK enter the system. While Bitcoin supply increases each year until the year ~2140, ARK will continue to inflate indefinitely. However, the ARK inflation rate as a percentage is always in decline, approaching 0%. The key difference there is while Bitcoin will eventually reach 0%, ARK will continue inflating at ever reducing fractions ad infinitum.

For those deeply immersed in the crypto community, it stands to reason that inflation is frowned upon as Bitcoin stands as a hedge against fiat currency inflation (in the same vein as gold). With that in mind, how could ARK inflation be seen positively? To begin answering this, let’s compare it to fiat inflation.

ARK vs. Fiat Inflation

ARK inflation is system-controlled, which means it is locked to a max of 7,884,000 new ARK created each year. However, fiat inflation has a wildly varied quantity that is created annually. The amount of fiat currency created each year is determined by the few who operate the currency. They can decide to create any amount they wish. ARK however is bound by the code, which means more ARK cannot be created on a whim.

The creation of ARK and fiat currency results in percentages for a given year. While ARK’s inflation percentage is always declining towards zero, this cannot be said for fiat inflation percentages. They too will differ from year to year. Because of this, the future inflation of fiat is unknown, while the future inflation rate of ARK is known. This means that as people decide to use ARK, they know when and how often new ARK will be created. They know what they’re ‘signing up for.’