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Is 16 million AUR too small?

Umræður og vangaveltur varðandi markaðinn og verðið á Auroracoin
- Discussion and speculation about Auroracoins price and market growth

by Polarbear » 13 Feb 2016 00:00

I have been doing some amateur calculations and am wondering about the potential drawbacks on AUR supply limits of 16 million coins. (21 million - 5 millions burned from the drop).
The reason I am thinking this is the size of the icelandic economy and the transactions that are used in the system.

Lets say that one day that we reach the milestone where one uAUR (micro-AUR, 1/1.000.000 AUR) equals one krona. Even at this rate, a monthly salary of 500.000 icelandic Krona (isk) would be 0.5 aur. My apartment would be worth 40 AUR. The national primary treasury revenues for 2016 would be 696.000 AUR.

This is of course based on the fiction that 1 AUR equals one million Icelandic Kronas...

That is why I am wondering if the initial amount was too low. While 1 AUR equals 10 ISK, a market cap of 7 million AUR is a very low volume. I would need 4 million AUR today to buy my apartment! (remember, my bank cannot lend me AUR they do not have... no FIAT!)

Even when (not if :) ) we get to the situation where 1 aur equals 10.000 ISK, the volume would not allow for the state to use AUR for the national Treasury Revenues (fjárlög) even though I know that it is a rolling ation..

But... can we go lower? does the system scale downwards? would that need a code change? Can we go to Pico? Femmto? even Atto? That could solve some problems, but only when we get the exchange rate down to that level. Until then, serious monetary trading amounts are quite limited.

Or am I completely on the wrong track? please chip in, educate me :)
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by Soltantgris » 13 Feb 2016 01:00

Well, your starting point is ISK - and ISK worth little (what can we buy with 0.10 ISK?)

Let's pull out ISK from the equation.

Let's say you can buy a coffee with 0.00000001 Aur. You can buy a car with 0.005. You can buy a house with 0.01. You can buy a medium sized company with 1 AUR... is it changing your viewpoint ?
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by Dinobotta » 13 Feb 2016 01:57

Total amount of Auroracoin is 21 million. 5,3 million were burned so the final amount of Auroracoin will be 15,7 million Aur when the coin is fully mined.

Given that 1 AUR has 8 decimal places, which gives us 1570 trillion units of available Auroracoin units. The broadest perspective of ISK money supply is the M3 measurement, which is ~1.600.000.000.000 ISK. 1570 trillion units are 1570. or about 1000 x larger than current M3 money supply.

If you take into account that you can't buy anything under 100 ISK, that makes it about 100.000 x larger than the current ISK M3 money supply.

If the population of Iceland suddenly goes from 330.000 people to Auroracoin can supply all the coins needed for the economy without a problem.

NB. we can always do a hard fork to change Auroracoin from 8 decimal places to 10 og 100 decimal places.

Therefore I conclude that we will not be limited by the 15,7 million coins for a long time, the system scales downward.

Regarding the Icelandic treasury. In the future when Auroracoin price has stabilized the Icelandic government can collect taxes in ISK and Auroracoin and issue debt, government bonds, denominated in Auroracoin, given that they collect taxes in Auroracoin to repay the bonds.

NB. this will probably not happen in the near future!
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by BioMike » 13 Feb 2016 15:37

I also made clear in the Proof-of-Transaction thread, that there will be options to increase the supply if needed, but like Dinobotta said, not in the near future.
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