I figured I’d give the collective Algebraix opinion on this because someone recently asked me: “How did you decide the specific number of ALX coin to mint?”
The truth is that we had to come up with some figure for the white paper. And we didn’t decide in a cursory manner, we debated the question.
If you sort through the top 100 cryptocurrencies, you discover that some of them have a “thin coin population.” At the moment, for example, Byteball has 583,896 (GBYTE) coins in circulation and Melon has 599,400 (MLN). The obese coin populations are the likes of Bytecoin with 183,253,534,612 (BCN) in circulation and Dogecoin with 110,977,964,374 (DOGE). When we choose to mint 100,000,000,000 ALX, we chose fat over thin.
Of course, it’s not that simple: cryptocurrencies have different policies as regards the minting of new coins – or mining as it is called. Most coins have an inflation rate. Currently the inflation rate of Bitcoin is about 4% – it tapers off, reducing to zero as soon as 21,000,000 coins have been mined. Ethereum’s inflation is higher, at 6%, although it is supposed to reduce to zero in 2018 – which will send the price of the coin upwards no doubt. The currently popular Dash inflates at 13% these days but will reduce to 11% next year and eventually to zero.
We decided on zero inflation from the get go. We will manage the business with an unvarying supply of ALX. We see no virtue in inflation – in fact we think it’s icky.
So, our thinking was this. If what Algebraix is doing is successful, there could be an active user population at the level of, say, Facebook – which is about a billion right now. So by issuing 100 bn ALX, if the user population rose to that number, the average user would end up with about 100 ALX.
We were thinking: “cash in your wallet.” Most people’s wallets or purses carry up to $200 in cash (the amount ATM’s tend to offer you) to cover daily purchases. So we thought, well people are not going to use ALX as a store of value. It is a utility coin to enable honest advertising, pure and simple. Hence it resembles cash, like the fiat cash in your wallet and the supply needs to enable that kind of value. So we guessed that the eventual value of ALX will be in the region of $1 or more and that the supply might need to spread over a billion people.
It was a considered guess, which, as regards supply, makes ALX no different to any other cryptocurrency.