This would cause inflation, because miners would be able to print money by throwing hardware at the problem.
The ideal system/algorithm would exactly match the amount of Bitcoin in circulation to the growth of the economy, which would keep prices stable. Bitcoin pioneered most of what you'd need to create such an algorithm in a new system, but what does "growth of an economy" look like in terms of transactions between anonymous addresses? You'd need some concept of identity to determine the number of unique players, and the value flowing between them.
A system that solves this problem at scale is the economic holy grail.
The ideal system/algorithm would exactly match the amount of Bitcoin in circulation to the growth of the economy, which would keep prices stable. Bitcoin pioneered most of what you'd need to create such an algorithm in a new system, but what does "growth of an economy" look like in terms of transactions between anonymous addresses? You'd need some concept of identity to determine the number of unique players, and the value flowing between them.
A system that solves this problem at scale is the economic holy grail.