During the mining process, coins are created on a daily
basis inflating the coins and decreasing the value as the circulating supply
increases. Here is how to calculate the
inflation rate of a coin.
First you must find the following values:
1. Market price (MP)
2. Circulating supply (CS)
3. Blocks mined per day = 24 hours / block time = (BMD)
4. Reward per block(RPB)
5. Coins created per day (CCD)
6. 1,000,000 satoshis to a BTC, or move the decimal 8 places.
7. Sell pressure (SP) per day calculation
8. Circulating supply (CS) * Market Price (MP) = BTC per day (BPD)
For Example: Say I found an interesting coin called mud coin (mud) and I wanted to figure the inflation of this coin per day. This coin has a market price of 1000 satoshis or .00001 BTC. The circulating supply is 5 million tokens. You can find this number on Coinmarketcap. Blocks are mined every 2.5 minutes with a block reward of 75 mud per block.
1. Market price = 1000 Satoshis (MP)
2. Circulating supply = 5 million (CS)
3. Blocks mined per day: 2.5 minutes = 60/2.5*24 = 576(BMD)
4. Reward per block (RPB): 75 (mud)
5. Coins created per day: 576(BMD)*75(RPB) = 43,200 (CCD) new mud per day
6. There are 1,000,000 satoshis to a Bitcoin. So 1000 satoshis = .00001000
7. Sell Pressure per day(SP): (CCD)43,200*.00001(MP)= .432 BTC (SP)
8. Circulating supply 5,000,000 (CS) * market price 1000 satoshis or .00001(MP) = 50 Bitcoin (BPD)
9. (SP) / (BPD)*100=daily inflation .432/50*100= .864%
Less than 1% inflation is GREAT!
1. CCD = MBD*RPB
2. SP = CCD*MP
3. BPD = CS*MP
4. SP/BPD*100 = Inflation
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