Recently, Jordan Lee proposed the following motion draft.
In there, he proposes the idea of burning NuBits to control its supply on the one hand, and the idea of burning NuShares to control its supply on the other.
After thinking about it again, i think the control of supply of nubits via burning of nbt and nsr is brilliant for several reasons.
- simplicity: when nbt is oversupplied, shareholders decide a nsr custodian that will get some nsrs to sell in the open market. With the proceeds, the custodian buys back nbts in the open market and burn them. When nbt is undersupplied, shareholders decide a nbt custodian that will get some nbts to sel in the open market. With the proceeds, the custodian buys back nsrs in the open market and burn them.
- decentralization: that way, the proceeds of nsr/nbt sales are never at a single point of failure caused by the fact that they would be held by a handful of people; instead they are immediately burnt by custodians and any shareholder can become a custodian.
- double increase factor: not only the increase in value of nbts/nsrs is contributed to by the buy back process, it is also amplified by the very act of burning them.
You can see that such process is enabled by the burning mechanism, which is very straightforward in cryptography.
It is as if Humanity had to wait up until a point where blockchain and all the cryptographic enforcing mechanisms become possible before becoming able to burn “things” in a trustless manner that everyone can verify.
I was wondering why national central banks do not use any burning mechanism…
Instead they use interest rates.
It is because not only they do not want to give away shares of the central bank itself (the shareholders are actually hidden; it is taboo) but also because there is no way to verify the actual burning as stated above. You would want to burn by actually asking someone to actually burn the bills?—no guaranteed way to verify that it actually happened, right?
It is as if “interest rates” that lead to debt enslavement and that are inherent to FIAT-printing central banks are getting obsolete.
Now we have trustless burning of currency/shares of the issuing company as a much better mechanism.
I believe this very burning mechanism is at the very core of what makes Nu potentially revolutionary for Humanity and planet Earth.
Also, such burning mechanism implies the voting mechanism of choosing custodians…this is where Nu’ s genius lays on.
The proof of stake as in proof of holding shares.
Now when open sourced will Nu keep that huge advantage?
If Nu cultivates the culture of voting, electing custodians, it will get a huge momentum.
Nu is building it up right now.
You can see that Jordan Lee introduced this idea after shareholders money was hacked at exco.in and later at bter.com
Crisis leads to innovation because crisis implies huge constraints and creativity loves constraints.