> "Wealth is built through control"
Centralised wealth is built through centralized control.
Distributed wealth is built through distributed control.
Centralised wealth is built through centralized control.
Distributed wealth is built through distributed control.
Produced how? by work?
Bitcoin distributed the vast majority of its wealth to aprox less than ~1000 individuals.
Best estimates are that there are about one million
holders of Bitcoin; 47 individuals hold about 30 percent,
another 900 hold a further 20 percent, the next 10,000
about 25% and another million about 20%, with 5% being
lost. So 1/10th of one percent represent about half the
holdings of Bitcoin and 1 percent close to 80 percent
(http://www.businessinsider.com/927-people-own-half-
of-the-bitcoins-2013-12). The concentration of Litecoin
ownership is similar
(http://litecoin-rich-list.blogspot.com).
Most of the big wallets have been in place from early on,
so sitting back and watching your capital grow has been a
very successful strategy.
The distribution of Bitcoin holdings looks much like the
distribution of wealth in North Korea and makes the
China’s and even the US’ wealth distribution look like
that of a workers’ paradise
http://www.businessinsider.com/bitcoin-inequality-2014-1
More to the point, assuming a currency medium has a finite supply - once produced and distributed, all future generations are at a catastrophic disadvantage simply for arriving at the wrong time.
It should also be noted the term deflationary is often used to represent Bitcoin or other cryptocurrencies when in fact the supply continually inflates every 10 minutes.
What many advocates conveniently omit from disclosing is the algorithm produced the supply very rapidly for very low effort to the early adopters. Not only does the production supply require more work for later adopters, but more users compete for the limited block rewards which decrease as time goes on.
It's not exactly Ponzi scheme, or a Pyramid scheme.
It's a Satoshi Scheme
... or a "Nakamoto Scheme" https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/
A central bank can extract 2-10% of the money supply's worth of economic rent every year in perpetuity, and the beneficiaries of regulatory barriers to entry can extract similarly enormous amounts of economic rent on a recurring basis (e.g. the Big Three auditing firms have profit margins of up to 50%, thanks in large part to regulatory barriers to competing with them) and public choice theory tells us that this economic rent will be disproportionately distributed to the political and professional elite who control government budgets, manage banks, navigate the regulatory process, and most importantly of all, know the right people to pull the right strings.
Validators also charge rent for their services, which especially in the case of miners, is a staggeringly inefficient use of electricity.
Mining and staking algorithms have so far been measurably distributed disproportionately to a tiny minority of users. PoS is ironically manipulative in its own way, where an exchange or early adopter who controls a large sum will simply exponentially accumulate the newly minted coins.
For a algorithmic solution in software to persist beyond a fad like beanie babies or baseball cards, it necessitates a model which puts all users on equal footing for access, work, and production.
In any case I'm not saying they are perfect or that they permit zero rent seeking. What I'm arguing is that for reasons I've articulated, the current crop of cryptoeconomic platforms are much less rent-seeking than traditional financial platforms and systems.
Therefore, all other things being held equal, meaning that if we're only comparing on the grounds of how much rent-seeking they permit, I believe it is likely that it would improve public welfare if they supplanted the current monetary and financial system.
Fortunately there are many other blockchain projects out there. Bitcoin will have its position in history as the first and most influential, not as the most useful.
I have never understood why people dismiss the issue as unimportant. Any new coin that uses a scarcity model similar to Bitcoin's (which is almost all of them) should be immediately criticized and forced to prove its suitability as a currency sufficient to meet the demands of the market it's hypothetically supposed to serve someday.
Consider Monopoly. The entire game is based around the the dynamics of an economy that grows faster than the money supply[0]. As the economy grows (via house and hotel upgrades), it becomes harder and harder for players to maintain a usable amount of money due to the higher rent charges on upgraded properties. When they're unable to pay a charge, they are declared bankrupt and must leave the game. As players leave the game, the economy slows and shrinks again, but the deflation is still sufficient to bankrupt all but one player.
You can run a simple experiment to test this dynamic. Play the game with "house rules" that give $500 to anyone who lands on "free parking." When I was a kid, we played this way. The resulting inflation causes the game to never end. Another, more interesting option would be to allow players to borrow money from the bank, and see how long that would extend the game. Maybe even tune the lending terms to see what works best.
Any "currency" with a fixed supply will encounter this problem. Divisibility does not help, as the problem is what payments wealth-creators will accept for their goods and services. If none of their target audience can afford to pay using crypto, but CAN afford to pay using local currency... they're going to use the local currency every single time.
[0] https://boardgamegeek.com/thread/426022/inflation-game-monop...