iamDaone

In about two months, Kaspa’s stock-to-flow (S2F) ratio will surpass that of silver. Stock-to-Flow measures the ratio of circulating supply (stock) to annual production (flow). Put simply, it shows how many years it would take, at the current production rate, to reproduce the existing stock. In proof-of-work cryptocurrencies, the S2F ratio offers another way to conceptualize an asset’s emission schedule. As emissions approach zero, the S2F ratio approaches infinity. While S2F ratios are informative because they reflect the scarcity of a commodity money, they do not necessarily provide reliable insight into price action, particularly because fiat-denominated price action is highly confounded by numerous other variables. The least confounded way to measure Kaspa’s monetary value is by analyzing its inactive supply metrics. Inactive supply reveals the extent to which an asset is being held as a store of value. Since storing value is a core function of money, inactive supply metrics provide us with insight into how well an asset is being used as money. In Kaspa’s case, the extremely high reliability in the growth of its inactive supply over time demonstrates the extremely reliable growth in its use as a store of value. Inactive supply provides the least confounded measure of Kaspa’s monetary value, since—unlike its fiat-denominated price—it is not distorted by currency devaluation or CEX-driven price manipulation. Some recent research I’ve been conducting examines whether the reliability with which the inactive supply of some monetary asset rises over time offers insight into the degree of centralization in a monetary system. My hypothesis is that the reason Kaspa’s inactive supply has exhibited extremely high R-squared values (on both its 2-year and 3-year regression models) is because it is so decentralized. I believe it is only because Kaspa is so highly resistant to centralization that it can possibly achieve such high R-squared values. If so, this value can serve as a proxy for objectively measuring the scope of decentralization or corruptibility within a monetary system. Moreover, the fact that the R-squared value increases as the period of inactivity lengthens is also telling: it suggests that the ability of any single actor to influence Kaspa’s role as a store of value diminishes with time. Conceptually, this may suggest that as time passes, the ability of any one actor to meaningfully disrupt Kaspa (from a monetary systems perspective) declines. While the same is true for Bitcoin, the effect is even greater for Kaspa. Finally, Kaspa’s inactive supply metrics not only allow us to infer that Kaspa is not a Ponzi scheme, but that it is the most potent antidote to Ponzi schemes in existence. A distributed ledger this resistant to manipulation will, from a game-theoretic perspective, drive all other ledgers into obsolescence, because they carry trade-offs Kaspa avoids. Kaspa is, in effect, the most perfect form of money humanity has ever created. It is the fullest realization of Satoshi’s vision.