It’s amazing that the popular narrative is that the average person will somehow benefit if we switch to a currency that is majority owned by a small handful of early adopters.
I’m not a fan of the current inflationary economic policy, but in no way would a Bitcoin economy be a win for the average person. Early adopters and Bitcoin whales would love it because they hold the vast majority of Bitcoin. They want nothing more than to see everyone else forced to buy it from them at ever increasing prices if they want to join the Bitcoin economy.
The average person loses in this scenario, though.
A lot of the early adopters have either permanently lost their coins or sold it local maximums, very few people would have hold on to it that long. And you can argue that if they had that kind of strong belief, they should receive some rewards for it.
It's like saying by the time a company IPOs, early VCs have benefited the most, while that is true, you could also argue they deserve it because of the risk they took.
> A lot of the early adopters have either permanently lost their coins or sold it
If the balance of a Bitcoin economy relies on the assumption that certain people have lost their money, something is seriously wrong.
Regardless, a hypothetical Bitcoin economy would require much further buy-in from here, making current holders the early adopters.
> It's like saying by the time a company IPOs, early VCs have benefited the most, while that is true, you could also argue they deserve it because of the risk they took.
The VC analogy isn’t good at all. VCs invest to fund the creation of something. What did early Bitcoin investors fund? More mining and more hype?
From another angle: Imagine if PayPal created a new payment system that used shares of PayPal as the currency. Anyone who wants to use the tool must buy some shares of PayPal, because that’s the currency. And oh by the way, most of those shares are owned by PayPal founders and early adopters, who will gladly sell them at a massive gain.
Is Bitcoin supposed to be a speculative investment? Or a stable currency for a new economy? We can’t just pick and choose from either definition as convenient for the argument.
There is no alternative for the monetization of an asset. Gold was the same. Some people believed in it, many didn't, and as it monetized over time those that believed in it early benefited most.
The same is the case with anything valuable that might become money, including the USD, if you consider that it was originally distributed in a manner that was pegged to gold and that gold was monetized in the same way as described above. The idea that you could materialize a money in any other way is unsupported by history.
It was considered worthless at the time so many weren't careful with it. People are going to be a lot more careful when their coins are priced at 44k+.
If the underpinnings of an economy accrue value purely to speculators while devaluing (in BTC-relative terms) actual assets and value creation, it has a major incentive problem.
What’s the one and only thing Bitcoiners want you to do with Bitcoin? Buy. That’s it. Any other use, including spending, is actively discouraged.
That is not a "risk" in the sense of adverse outcomes. Anyone can throw bitcoins in a wallet and forget about them for 10 years. There is no risk of adverse outcome involved in doing so, and people should not be rewarded it.
Just get in at the ground floor and then promote it to everyone you know. They’ll invest, which makes money for you, and they’ll tell friends, who will invest...
I'm not convinced that your average tax paying American will benefit from this - if anything the difficulty in taxing wealth and loss of ability to print/control money granted to Americans by American guns could lead to a noticeable decrease in quality of life for them.
That being said, there is a tremendous demand from people in many countries to defend their wealth from less stable environments that seek to control their ability to freely transact/store wealth.
No idea how it ends, or even if these cryptos deliver on their potential. Any idiot can see there are many roadblocks, and I personally think that Bitcoin's price is wildly manipulated (and most likely a ponzi).
However, as someone who has 2nd hand experience with poorly run govs stripping peoples' wealth for political reasons, I'm very excited by these possibilities in spite of some of the negatives.
For the record I have no Bitcoin, but I do run a node for another crypto I find interesting.
> I’m not a fan of the current inflationary economic policy, but in no way would a Bitcoin economy be a win for the average person.
Don't confuse the cause and effect. If there's massive inflation and bitcoin becomes highly relevant, you're losing if you hold USD, no matter what! The arrogant central bankers are the cause. Nobody is cheering for that. Bitcoin is just a hedge.
If you're afraid of stagflation and you want to park your money in something that holds value, what should you buy? Precious metals, which have been manipulated for decades? Property, in the context of yet another housing bubble?
the early adopters don't control the network. they are just actors on it. Even the richest btc holder can't freeze your wallet or prohibit you from spending/trading/sharing it.
I have come to believe that this part of the value is absolutely enormous. It takes control of the money supply out of government's hands - which on balance, I believe is probably a bad thing in a democratic country.
On the other hand, it's incredibly powerful / valuable if it's allowed to exist, and I think the cat is already out of that bag.
That is a popular narrative partially owing to some very ugly zombie tropes and the archaic understanding of wealth as shinies to be grabbed - but it simply isn't true. We had it already with various (bi)metallic standards and they had documented worse problems.
Fiat currency has yet to cause wars of conquest to prevent deflationary lock up that proceeded to crash the economy through inflation after causing untold personal suffering /on success/. The maligned federal reserve already takes care of the "try to hyperinflate our ways directly out of problems to get reelected".
If anything it could have the more "neutral" role of financial network independence but it still suffers the flaw of interchange chokepoint control putting them back to square one.
> It takes control of the money supply out of government's hands - which on balance, I believe is probably a bad thing in a democratic country.
Of course, no country, democratic or otherwise, will allow this to happen. The idea that you can have monetary policy exist outside of government control is a bit ludicrous. Government does still control the guns after all, and they can make anything they want illegal, as the US has done with gold in the past.
Taking neither side, but just thinking of my parents - neither of who are anything 'tech' or anything 'finance'. Completely normal in most regards.
For them, someone actively controlling the supply of money is probably a good thing. Anything they have is pretty safe in a bank and somewhat covered by the government. Their taxes pay for police, sewage, the bins to be taken away, their roads to be repaired.
I love the idea that people are seeking to do incredible things in the crypto space, but all too often it seems to be lumped in with people's desire to transfer money across borders (again, useless for the everyperson) or avoid taxes - which if we all did would probably be a big negative. Assuming the government didn't step in pretty quickly, because what government wants to lose control?
As soon as you start talking about cryptocurrency with oversight to protect my mum and dad, where people aren't just trying to get rich quickly and make sure taxes are paid - people seem to dial out pretty quickly.
> As soon as you start talking about cryptocurrency with oversight to protect my mum and dad, where people aren't just trying to get rich quickly and make sure taxes are paid - people seem to dial out pretty quickly.
There is literally no role for the key feature of blockchain - decentralised ledger, proof of work-backed transactions - in this case. You might as well use a trusted, regulated party with a database. You know, like Visa do.
The "incredible things" are also pointless things. That also burn energy like there's no tomorrow. Double meaning intended.
I believe the value of cryptocurrency is to neuter governments' abilities to inflate or devalue currency with the push of a button, and to improve our ability to transact freely with one another.
I absolutely agree with you that money needs limitations, such as hard rules on supply increases. A money supply that is uncontrolled in such a way that you can make more or less whenever you personally feel like it regardless of the other users' intentions won't be useful for very long.
I personally think of cryptocurrency like a constitution but for money - whereas before whoever had the biggest guns could decree How It Is Now, the guns will be powerless to what is written down. In this way, it removes power of a select few to control the supply of money for their benefit.
I don't know how this ends. Is it a net negative to the human experience? Anarchy? The select few who got into bitcoin early wielding all the power now? Taxation falling to the wayside and a deterioration of quality of life? Each of these is somewhat possible, but as someone who has 2nd hand experience of what a country can do when it has free reign to issue whole new currencies and remove old ones or devalue the existing one into oblivion, I don't really care.
I think that's a great goal to have (I'm pro anarchy and for the dismantlement of all governments) but I don't like spending all this energy just for it.
Besides, government will stop all of this before we get to anarchy, if we want anarchy (or even moving in that direction, instead of the opposite as we're doing now) we need to get there politically.
Any government can say at any time: "Everyone holding cryptocurrency is a terrorist and will be persecuted" and use their monopoly on violence to enforce it.
Incidentally, that's the reason I never invested in BTC (and missed out on this generation inequality wealth transfer).
> I believe the value of cryptocurrency is to neuter governments' abilities to inflate or devalue currency with the push of a button
Central banking is necessary function of government. If government saw their ability to do it being actually "neutered" then it would get shut right down.
I am not saying that it can't be mismanaged by a state, but you do not have anything better than state fiat money.
> personally think of cryptocurrency like a constitution but for money
>I am not saying that it can't be mismanaged by a state, but you do not have anything better than state fiat money.
I agree with this! At the moment I don't see many things that are better yet. I hope to see an obvious winner someday.
EDIT: For the record, I hold no Bitcoin. While it has a lot of potential value in creating Freedom To Transact, I'm not convinced the current price per unit is anything but a Pump and Dump. If Bitcoin is a Constitution of Money, it's a pretty fucked up one.
I’m not a fan of the current inflationary economic policy, but in no way would a Bitcoin economy be a win for the average person. Early adopters and Bitcoin whales would love it because they hold the vast majority of Bitcoin. They want nothing more than to see everyone else forced to buy it from them at ever increasing prices if they want to join the Bitcoin economy.
The average person loses in this scenario, though.