Cryptocurrency governance basically boils down to one dollar one vote. That’s, um, not what you want if you are looking to empower the working class
With USD, the long-run target inflation rate as stated by the Federal Reserve is 2% per year. Seems small, some would argue - a small price to pay to avoid the dreaded risk of deflation. (Side note: why is deflation expected and approved of in computers and electronics but not healthcare or higher education?)
What if I told you that the average worker who works for wages for 40 years, will lose 40% of the value of their lifetime earnings if inflation was 'only' 2% per year? What if I told you that the current inflation rate according to official sources is over twice the target inflation rate and all signs indicate it will remain elevated for years to come?
What if I told you that the real problem with fiat currency is all the trust required? What if I told you that as a worker you now have an alternative to store a portion of your wages in a currency that is engineered using properties of digital scarcity, incredible security, and ingenious game theory to preserve, store, and even grow the purchasing power of your savings at a long-term rate of return that greatly exceed the rate of inflation or the performance of even the riskiest stocks.
Why is it bad for workers to have another option for storing their savings, an option that doesn't leak value due to manipulation by centralized actors? No one is forced to use Bitcoin. Bitcoin is a choice. IMO Bitcoin is the better choice. YMMV.
That's... not deflation? It's literally building wealth. Cheaper computers means more people can afford them/ people can afford more of them. This is a good thing! Cheaper healthcare (or higher ed) would also be a good thing. But for it to be a good thing, you would have to make it objectively easier for more people to access the same-or-better-quality healthcare or higher ed! If by "deflation" here you simply mean "there's the same overall quality and quantity of higher ed, but older people (who had time to hoard money) can access it a lot easier, to the detriment of young people"... that would clearly be a bad thing.
Money is not like that, though. There's no economic advantage to be gained from people hoarding money - they're supposed to be a medium of exchange. If money increases value, you're not spending or investing them, which means less economic activity, hence less wealth for everyone. Money is just a vehicle, never an end-goal.
Tl;dr: wealth is, largely speaking, "more and better stuff for everyone!". More and better computers, electronics, higher ed, healthcare. And money, too, I guess? Except that "more money" is typically associated with "inflation" - which shows you that money doesn't really count, it's just a vehicle.
Isn't inflation/deflation about purchasing power? I.e. how much housing you can buy for a month's salary (for example), how much computing power, how much food you can buy? If you hoard money you can buy more computing power down the line. Isn't that "deflationary"? While if you hoard money and buy food down the line you'd get less of it. So food would be "inflationary".
No, that is the exact opposite of inflation/deflation.
Inflation/deflation are about nominal prices of goods and services.
If you want to talk about the price of a good in terms of a real quantity, then that is not measured by inflation or deflation and you need to specify what your measuring stick is, whether ounces of gold, or gallons of gasoline, or a median hourly wage in a specific labor market. There is one special term, called "real" prices, where the measuring stick is a weighted consumption basket, but that too is not going to represent purchasing power, which suggests deflating by either household income, or wages, or wealth.
USD is managed by the federal government, which despite all its flaws, is still a democracy.
> What if I told you that the average worker who works for wages for 40 years, will lose 40% of the value of their lifetime earnings if inflation was 'only' 2% per year?
You'd be lying. The average worker spends the majority of their earnings immediately meaning that inflation doesn't cut into them, and puts most of the rest towards assets that track inflation (houses) or exceed inflation (stock market / retirement accounts).
> You'd be lying.
Nope, not lying - just calling out the truth that the government systematically steals the purchasing power of the common man by means of inflation, officially at the rate of 2% per year, but I believe the rate is actually much higher.
Currently the official rate is 6.4%, so over 3x the target rate. I’m curious how anyone could see this situation and not be concerned for the future. See 1971 Cost of Living for example https://imgur.com/3YApK5i
Bitcoin fixes this.
how did you come up with this number? rational people don't just accumulate a big pile of cash over forty years. to the extent they have a surplus that doesn't immediately go towards expenses, they purchase assets.
by the way, I don't think it's "bad" that crypto exists as an option. having options is great! but I do think you'd be a fool to park an amount of money that matters to you in crypto.
Tell me why is it, in a functioning economy, that the only option for wage earners to stay ahead of inflation is by risking their savings on volatile stocks or real estate?
Why is it not possible to save conservatively in a bank while staying ahead of inflation? In my opinion it is by design because it is easier for governments to steal wealth by inflation than it is by taxation.
Inflationary monetary policy is a scam designed to steal generational wealth. Bitcoin fixes this.
I'd point out that this was true only of workers who stored all their earnings over those 40 years in cash, and approximately 0% of workers do this. The actual average worker spends a portion of their income pretty quickly on goods and sticks savings into some combination of pension, savings accounts and a house.
> Why is it bad for workers to have another option for storing their savings?
Because "workers" aren't the people with vast reserves of wealth, they're the people who are paid by people with vast reserves of wealth. Make the vast reserves of wealth a zero or negative sum game, and they'll store that wealth in deflationary currency instead of businesses that generate less revenue each year, and the workers will find that their ability to get paid goes down every year.
So, to be able to save, workers are forced to buy real estate that they don't need, making it less affordable for people who actually need to buy a house or get exposed to stock market risks.
All these problems caused by absence of hard money.
No, the average worker definitely isn't forced to buy more houses than they live in :D
I mean, it's always been obvious that the "lack of Gold Standard is the real reason workers are poor" is an astroturf movement by the ultra rich who have successfully lobbied for tax breaks for the rich and elimination of worker protections to blame something else [which removing would further benefit them] for the logical consequences of their actions, but the complete failure to understand what an average worker actually does with money is particularly amusing in this subthread. Strong people who don't work for a living cosplaying people who do energy here...
Since falling wage levels literally are deflation it's a bit hard to argue with a straight face that what the workers really need to be better off is a good old dose of deflationary currency.
And you can call "lack of Gold Standard is the real reason workers are poor" an astroturf, but it's something that actually makes sense to me when I look at the arguments.
If it "makes sense to you" that the lack of Gold Standard is the real reason workers are poor, it probably helps to consider that workers were much poorer for the vast majority of human history with a Gold Standard...
That doesn't tell much. Anyone was much poorer for the vast majority of human history.
How do you explain the wealth inequality trend change starting from 1971? https://wtfhappenedin1971.com/
But obviously the people who advocated the tax cuts for the rich in the 1980s are highly, highly motivated to pretend it was leaving Gold Standard several years earlier that did it. Not least because going back to a gold standard would allow them to make that gap even bigger - the 1% could HODL the 30% their wealth in risk free, liquid, appreciating coins instead of having to take actual risks and create actual jobs. But the deflation that preserves their wealth as they withdraw from funding productive activity is - quite literally - everyone else's wages and sales revenues going down.
However, I can still look at those charts and say that the gold standard does not harm the poor the way you imply it does.
The original discussion was concerning the insane fantasy that the US economy would be better off backed by a deflationary cryptocurrency than the US dollar.
And, the fact that an argument makes sense to you is a really poor response to an argument telling you why your position is wrong. (Of course, calling it an astroturf isn't much of an argument against it, either...)
Lack of a gold standard means inflation can happen. Is inflation why workers are poor? It's part of the reason, and it works this way: Inflation happens, then later workers' wages go up. The price increases come first. That makes workers poorer to some degree.
But workers are still pretty poor during periods of low inflation. Why? Because they aren't paid enough. And why is that? Lack of unions, lack of individual bargaining power, greedy owners, lack of ability to produce enough value to be worth more. (I think that all of the above are true at least to some degree.) Which of those does the gold standard fix? Does it create unions? Does it give individual employees more bargaining power with their employers? Does it make owners less greedy? Does it give workers the skills to do more valuable things? No, no, no, and no.
So the gold standard won't really fix worker poverty.
And of course I also don't think that once gold standard is established, there will be absolutely no poverty.
I would argue that it is less about the lack of a gold standard and more about the lack of a hard money standard that cannot be debased by centralized powers such as governments and central bankers.
Bitcoin is an excellent substitute for gold as hard money since it also cannot be debased (i.e. inflated) by central actors. Debasement (money printing) steals the value of the purchasing power of the worker and gives it to those closest to those in power via the Cantillon effect.
Bitcoin is also much more easily verifiable than gold. There is no such thing as counterfeit Bitcoin. Either you receive valid Bitcoin on an address that you access through a wallet that supports the Bitcoin protocol or you don’t. No need to worry about an assay to ensure that your gold isn’t actually Tungsten.
The fact that there is no option to save an enjoy positive inflation-adjusted returns without taking on market risk is an indication of what a scam the current system of fractional reserve banking and artificially manipulated interest rates is.
> Because "workers" aren't the people with vast reserves of wealth, they're the people who are paid by people with vast reserves of wealth.
Really? Workers have less wealth than rich people so it’s okay to steal their wages via inflation? /s
Please explain your reasoning further.
No, workers have less wealth than rich people (no wealth, in the case of a sizeable fraction of the population)so it's not OK for rich people to steal their wages by getting "positive inflation adjusted returns without taking on market risk". I mean, where do you think "risk adjusted returns without taking on market risk" come from? They come from other people doing more work for the same cash payment.
It still isn't clear to me why you would try to justify a system that doesn't allow an average wage earner or pensioner the mere possibility of earning a positive inflation adjusted (not risk-adjusted) return on savings?
Why are risk-free inflation-adjusted savings options for the working class a negative thing? That's all Bitcoin really is, on a long-term basis for most people.
Well maybe they should? I mean it is a real measurable cumulative effect of 2% inflation compounded over 40 years. It may not be convenient to mention this negative impact of a cheap money inflationary policy, but it is important for us to understand the reality of the situation.
Those who claim that ‘deflation bad’ have only marketing materials from the FED or thought experiments by traditional economists to rely on. Bitcoin is giving us a real-world experiment that allows us to understand what time-preference means in a deflationary currency.
Will it really be the catastrophe that the central bankers tell us or will life go on? Or will offering the public a new option - a money designed to preserve and even grow purchasing power over time?
What if it allows wage earners a new option to consume now or save and consume later, while enjoying the benefits of compounding and the time value of money, one that isn’t manipulated by central bankers to ensure that there isn’t a bank in the world that will pay interest on a savings account sufficient to keep place with inflation?
What if this new option provided a disruptive new option that shifted us from a mass consumer economy - destined to destroy the planet - into a saver economy, where consumption is deferred until it is required.
Instead of shopping till we drop, we as society could save for a more affluent future, build epic projects that span generations instead of always thinking so short term.
Again, Bitcoin fixes this.
Once you gain the power to debase the currency on demand, it lights a fire under people's behinds-- I've got to turn those dollars into goods and services now!
There are definitely real-world examples of currency with an explicit expiration date or that required maintenance fees (i.e. Alberta's Prosperity Certificates) to boost the circulation rate.
I suspect the problem is that we're stuck with the current economic machine on a high level. We don't have facilities to keep the population fed and housed without the side effects of a lot of consumer spending churn.
If you had a partially planned economy to deliver those basics, then you could switch to a harder currency, because an economic slowdown wouldn't head to avoidable mass starvation or homelessness.
> If you had a partially planned economy to deliver those basics, then you could switch to a harder currency, because an economic slowdown wouldn't head to avoidable mass starvation or homelessness.
This is pure speculation. Luckily we will see the experiment play out with Bitcoin over the next few years. I hardly believe it will lead to mass starvation or homelessness, though the Fiat standard we are currently on already has led to both.
Users running bitcoin nodes doing transactions validations, not miners creating transactions.
Unless you're talking about blocks/hashing power. But that's consensus, not governance of protocol.
If people haven't read it, I highly recommend reading The Tyranny of Structurelessness, even if the political context of its writing is uninteresting to you, because the lessons are deep:
https://en.m.wikipedia.org/wiki/The_Tyranny_of_Structureless...
And if course, there's value in the critiques of it too. Libertarians can learn a lot from anarchists attempts at building social structures that don't have rulers.
Vitalik wrote about some alternatives[2] on his blog, such as proof of humanity, proof or participation or staking based solutions primarily but most significant projects are still using coin-voting.