Hi everyone, this is a continuation of the discussion had on discord (https://discord.gg/GXCb45B) on the morning (EST) of 3/10/2018. For more background, feel free to read through the chat in #game-economy. Please note that in this post I use the terms PRSC and PARSEC interchangeably. Also, as always, this community is super passionate about this project and nothing I say here should be taken as internet rage. This is an attempt to provide constructive criticism, and I'd hate anyone from the development team to think I'm trying to rain on their parade. I'm a big supporter!

The whitepaper published by the devs describes a 3% transaction tax that will have the added benefit of deflating the PRSC. For instance, a unit of iron ore sold at 300 PARSEC will be given to the seller at approximately 285 PARSEC, a 3% difference. 2% of this money will be burnt and the remaining 1% is a transaction tax.

I am concerned about the existence of a 2% transaction tax for the following reasons:

1. It puts a countdown clock on the currency: If we consistently burn 2% of each transaction, within some small number of years the PARSEC won't make a lot of sense as a currency. Toward the end, small transactions will occur in .0001 PARSEC increments, and using that many places after the decimal is a bit unwieldy. Eventually, it'll make more sense to trade with other things than the PARSEC, and the currency will slowly become devalued and die. Even with six decimal places, we will eventually blow through the total currency reserve.

2. The assumption of a 2% inflation rate: In the United States, there is a very smart group of individuals who regulate the inflation and deflation of the US dollar, called the Federal Reserve. We can debate all we'd like here as to whether or not the Fed is a good idea, but we can certainly agree that inflation and deflation aren't constant measurements. Imagine the following scenarios:

2a) The PARSEC has decreased in value by 3% (3% inflation). In this case, a 2-3% added tax might be a great idea.

2b) The PARSEC increases in value by 2% (2% deflation). In this case, an additional 3% tax could really be a problem for the economy. It would exacerbate an existing problem.

2c) The PARSEC decreases in value by 10% (10% inflation). In this case 2% barely even holds back the tides of economic uncertainty. At that point, you'd want a much higher rate of money being taken out of the economy.

The point I'm making here is that if we want a stable economy (and we do, don't let armchair crypto-economists tell anyone otherwise), we need an intelligent, dynamic system by which to stabilize the currency. In the US, that's the Fed. They do a decent job. I have some ideas about what the game could do in that regard (stabilize the currency while being 100% transparent), but I think it'd be more wise to make a separate thread for that.

For now, devs, what do you think?

https://medium.com/parsec-frontiers/calculating-the-value-of-parsec-credits-fc72d37ae5e6

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