Comparing BSoV’s Potential Inflation Rate to Bitcoins Inflation Rate and Distinguishing the Tokenomical Differences
BSoV has a lot in common with the cryptocurrency 99% of its existence is based on. Bitcoin has become a financial powerhouse that is finally being taken as a threat to modern day monetary policy and financial standards, with the U.S. government even creating “War Games” to mimick what a potential BTC uprising in the mainstream world might look like. Like its predecessor, BSoV is also growing and holding its own, albeit on a much smaller scale. Decentralization, PoW, cryptography, and its grass roots movement have played a huge role in BSoV becoming a serious player in the game of cryptocurrency. While these digital currencies share many of the same qualities, there are still a few glaring differences between them. One being the fact that BSoV is an immutable smart contract on the Ethereum Blockchain, and the other being that while BSoV is still inflationary until a certain period in the future, it has a deflationary mechanism that is built in its code which lessens the inflation rate over the same timeframe in comparison to Bitcoin.
Inflation is one of the hottest topics in the financial sector. With the Federal Reserve using Quantitive Easing (QE) to readjust the books after the economic collapse which followed the beginning of the Covid-19 pandemic, many bankers, billionaires, investors and even the average joe are concerned what the after affects may be for such careless consideration of what the overflow of the USD will do to the economy and how it will further decrease its purchasing power. One thing that cryptocurrency has that fiat currencies does not is protection from infinite inflation. I call it infinite inflation because the power the Federal Reserve yields does indeed subject the USD, which is widely considered the world currency, to infinite inflation. Just in the last 3 months alone, over 4 Trillion USD have been pumped into circulation from the Federal Resererve. While cryptocurrencies are subject to inflation (our focus today will be PoW consensus coins like Bitcoin and BSoV), it is generally a finite inflation period, with the exception of Ethereum and other cryptocurrencies that are mined indefinitely. There are various differences between BSoV and BTC , but one of the most important and glaring differences is that BSoV is deflationary, and Bitcoin is disinflationary.
Being that BSoV’s birthday is right around the corner on the 17th of June, 2020, I wanted to show how BSoV’s inflationary period will differ from Bitcoins because of the deflationary mechanism built into the BSoV smart contract. The first year mining period is almost complete, with at the time of this writing 3,725,300 BSoV mined. I cannot calculate the actual second year inflation rate, so I will attempt to estimate it by comparing it to the inflation rate Bitcoin was subject to in order to keep the comparison between the two assets alive. In order to do this, we will use the calculated inflation rate taken from this chart.
BSoV’s inflation rate will be calculated by subjecting year 1's mined total to Bitcoins year 2 inflation rate, BSoV’s year 2 estimated mined total to BTC’s year 3 inflation rate, and so on and so forth. Subjecting BTC’s inflation rate to BSoV creates the following mining totals (Disclaimer: These totals are completely inaccurate and are subject to major change. They are just to provide a visual as to what the mining totals/inflation rate may look like):
I’ve only compared the first 5+ years of BSoV Inflation minus its 1% deflation mechanism, because it’s hard to present accurate and reasonable information. These numbers are subject to a lot of variables and this is only an example of what the future would look like. Nonetheless, its clearly visible that the deflationary mechanism makes a large difference in the amount of BSoV available, and this is not even taking into account the number of BSoV destroyed from trading/other transactions.
Bitcoin mining power is a very large factor in its price consideration along with transaction space, block size, circulating supply, utility, and lastly, speculation. What all of these factors it creates an interesting economical landscape unlike anything the financial world has seen before. It is this collective that makes Bitcoin a viable asset to own, trade, and build upon. BSoV has built on this entire collective and has added a small but important factor which changes and manipulates the expectations for it’s own economical climate.
While largely experimental at year one, we have found this project to be a true store of value with evidence available to support this even this early in its infancy. The community has made it its focus to encourage the development of supporting factors around the token which have also continued to shape its tokenomics rather than directly influence its price. One way we have done this is the SoV Cube Time-Lock contract which allows holders to utilize a so called “Proof-of-Commitment" concept which allows users to take their tokens out of the circulating supply for a year. Version one of the contract ended in January 2020, but many holders such as myself have kept the tokens locked away. As of this writing, over 1 million BSoV are locked in the Time-Lock contract (27% of total circulating supply). To say this also affects the tokenomics of BSoV is an understatement.
It will be interesting to see what the future holds for BSoV and the economical environment being created as we speak. What remains to be true through all of this is the fact that this token has been built literally from the ground up. Nothing exists that is similar to this project, and I don’t think we will see another reiteration of it for sometime. As long as we have miners and holders, the experiment continues. But it will be only a matter of time before the experiment is declared a successful innovation.