Bitcoin Forum

There are a few topics here (and there) which try to discuss why enormous Bitcoin wealth inequality is bad for it in the long haul, but I didn't see where it had been explained why it is this way precisely. This assumption is correct, the reason (concise version, omitting the gory details) being that the two major functions that a currency is sought to fulfill are mutually exclusive (well, to a significant degree)...

I mean currency as a means of exchange and currency as a store of value

It would be wrong to focus on Bitcoin wealth inequality, as opposed to overall wealth inequality.
If a person is wealthy, nothing would stop him from converting a portion of his wealth into bitcoins (even if his bitcoin wealth was low initially). So I don't see why the initial (unequal) distribution of Bitcoin is a problem.

Here's a tip. When you make polls, don't make a 'troll answer' option. It just attracts immature little boys who think they are doing mischief.

How are the functions of money being a store of value and means of exchange mutually exclusive?

What's inequal is the way this poll is written.'

You either agree with the OP's contention that wealth inequality is wrong. Or you don't know anything. Or you need to "Get The Fuck Out". Really fair, eh? Don't be an idiot!

If you had a Million Euro and I didn't, would you give me (a stranger) half just to be fair, fuck no you wouldn't! So don't act like you're against it!

If you want real results you should provide poll options that don't lead to bias answers, here...I'll show you how to do it. Pay close attention now, I don't want to do it twice and you NEED the education!

Why would it be wrong?

I was going to consider this issue exclusively in respect to Bitcoin. Why? Exactly to stay focused, and since my point was to analyze, i.e. to dissect and break down the issue from the top down, to move from a general premise to a more specific conclusion (deductive reasoning), as opposed to inductive reasoning (moving from specific premises to a general conclusion)...

I thought (and still think) that would prevent this topic (to a degree) from becoming dull and boring like other such threads eventually became. In other words, no diapers and panties...

Let'em crap in the woods like nature intended

I didn't intend the poll itself (or its results) to be of any relevance or importance (but not the contents of the topic, of course). So I agree, it is a little skewed, but that was on purpose...

Strictly speaking, GTFO is essentially just another way of admitting that "I don't understand a thing"

To be a good store of value money needs to be appreciating (the more the better). Conversely, to be a good means of exchange money should be depreciating at a slow (and low) but constant rate. The former contributes to hoarding while the latter to spending. Hoarding and spending don't live well together and are, in fact, mutually exclusive. In other words, you can't hoard and spend the same (amount of) money at the same time...

You can always move the opposite way in reasoning, i.e. since hoarding and spending are mutually exclusive, and the first is better served by an appreciating money while the second by a depreciating, the corresponding money functions should necessarily be antagonistic

I don't get your reasoning behind why it's a bad thing that Bitcoin isn't evenly distributed. What I can tell you is how to make a currency evenly distributed (whatever that means? you give every person a % of Bitcoin? based on what?) is that it requires artificial manipulation and ruins the economy.

Fiat is for sure unevenly distributed but the generation of money is a scam, Bitcoin is also unevenly distributed but the generation of money is legit.

I don't know how to start a currency and provide more or less even distribution at the same time. It may well be that giving an advantage to first adopters was the only way to bootstrap Bitcoin. But that doesn't in the least mean that it won't kill it in the end. The example of fiat money wealth inequality is not applicable for two reasons, namely, 1) you are forced to use it, and 2) its supply is neither firmly limited nor capped (the main reason)...

But that is not the point I'm trying to make here

Uneven distribution of the magnitude we see in Bitcoin (as well as a limited and capped supply of new coins) prevents it from becoming a (good) means of payment. Since a relatively small group of people holds over 90% of all coins, there is a competition for the remaining coins which spurs up the price, thereby turning Bitcoin into a seemingly good store of value (which is antagonistic to its function as a means of exchange), but actually into a (sort of) self-sustaining Ponzi scheme (as long as the Bitcoin user base doesn't diminish abruptly)...

Until one of those big whales decides to cash out

Wealth re-distribution is the wet-dream of the leftist loonies. We will be better off with the current system. Large holders of Bitcoin were rewarded for their early interest in the crypto-currency. IMO, even now we are in the "early adapter" stage. Less than a million, out of a total world population of 7 billion uses Bitcoins. That itself results in extreme inequality.

I'm afraid that we may not be able to get out from this "early adopter" stage. Bitcoin is not forced upon anyone (at least so far, lol), then why would anyone want to sell real stuff for it? Yes, early Bitcoin adopters may think they deserve to live off the fat of the land, but try to convince the rest of the populace of this (i.e. 7 billions minus 1 million)...

I don't understand what you mean here. To be a good store of value, money only needs to be a stable store of value. When you say it needs to be "appreciating," do you mean appreciating in value- as in a deflationary currency (less in circulation over time)? That wouldn't be a stable store of value. Appreciating value isn't stable, and a stable currency is superior to a deflationary currency because as you point out, deflationary currencies would incentivize hoarding and harm economic activity. On the flip side of your point, a currency doesn't need to depreciate in value (be inflationary) to be a good means of exchange. The only requirement to be a means of exchange is wide availability. A stable value, widely accepted currency would satisfy both the store of value function and the means of exchange function of money. These two aspects don't have to be, and most commonly are not, mutually exclusive at all.

Appreciating currency means a decrease in the general price level of goods and services. Deflationary currencies as you mean them (being less in circulation over time) don't necessarily appreciate over time. Personally, I avoid using terms inflationary and deflationary (since there is always someone ready to point a finger). I don't see how a currency that neither appreciates nor depreciates ("stable store of value" in your terms) can be better than an appreciating one as a store of value (though I agree that the term is misguiding). People would evidently choose an appreciating currency over the one which is not, as a means of saving their wealth (that is the idea behind the concept). You are further complicating issues by adding a factor ("wide availability") which should be excluded as being equal if we want to consider the superiority of one currency over another as a means of exchange by the change in their value over time. In this way, a depreciating currency (i.e. losing value at a low and constant rate) is better than a "stable" currency (as a means of exchange), since it discourages saving, thereby incentivizing spending...

In short, you will have to come up with stronger counterarguments

OP this is my opinion about the inequality. You might not agree with it, that's OK as well.

I posted it today in another thread so here is the message, this way I don't have to retype everything:

https://bitcointalk.org/index.php?topic=1199245.msg12588484#msg12588484

Cheers!

So you admit that your thread was a troll thread?! Why are you wasting our time if you didn't intend for the poll "to be of any relevance or importance"?

Readers - please go to the better example of a poll that I've created at this link: https://bitcointalk.org/index.php?topic=1199245.0

I think wealth inequality is a very expected result. Free Market Capitalism results in uneven wealth distribution.

Inequality is a natural phenomenon, it exists almost everywhere: A few land lords hold majority of the land, a few bankers hold majority of the gold. This is partly due to each people's different vision and most importantly because the effect of time: Even if every one start with the same resource in the beginning, over time, wealth will shift to those who are interested in accumulating more and more, kind of centralization

And there is also volatility, those who don't have the faith will be shake out by up and downs. I can see that top 100/1000 is reducing their bitcoin holding right now, but who is faithful enough to buy in when those whales are dumping? Many early adopters eventually lost money because they don't have a long term vision

But anyway bitcoin is always generated through work, by the time when block reward reduced to less than 6.25/3.125, the fee would have already approached the block reward, so you never need to worry about not being able to get bitcoin: You can always mine to get bitcoin. The biggest benefit of the bitcoin monetary system is that everyone can create money if they want, but they have to input equal amount of value, no shortcuts or debt financing like in fiat monetary system

I never said anything to the contrary

The problem is that the landlords don't mean to use their land as a means of payment. Since you (or someone else, for that matter) is sure to bring forth the example of fiat (and its alleged distribution unevenness), which I already addressed (to a degree), I explain that issue more fully here. Fiat money distribution unevenness is actually non-existent, since people apparently confuse it with the inequality in real wealth (e.g. land or gold) which is only specified in terms of money. Further, the very nature of fiat works against this unevenness. Fiat monies are depreciating (losing value) over time, which effectively prevents people from keeping their wealth as money (in the form of). Further, given the amount of money in circulation, the existing true money inequality is minuscule and massively irrelevant...

Fiat money distribution unevenness is the most clear: EVERY dollar belongs to central bank when they were created, a few bankers hold 100% of all the money in the beginning. Of course central banks immediately spent those money by loaning them out after they were created, bought large amount of land/bonds. So it seems that they don't hold large amount of money, but all the assets they are holding were bought with those money (The amount of assets in the world are still magnitudes larger than money supply)

Imagine that hundreds of years ago, Alice had all the land in a country and Bob had nothing. This is 100% vs 0% inequality

Then Bob started to work as a gold miner and traded between the producers. Soon he became a gold smith that actively manage the gold for merchants around the country, and eventually become a banker. Now he is owning about 10% of the wealth of the country, still 90% vs 10% inequality

Then Bob managed to become a central bank after several centuries, and successfully removed gold standard. Now Bob can print as much money as he want to buy whatever he want, just keep inflation low, if he is too hurry, inflation will pick up quickly

However, at the same time, Alice discovered Bob's trick, she start to raise the price of her land following Bob's money printing, so after a while Bob's money printing will just raise the price of Alice's land, and no matter how much money Bob print, he will never be able to buy enough land to change the inequality landscape, he will just make Alice richer and richer

So, if the ownership is protected by law, then inequality once established, is almost impossible to change, especially it is something that is scarce and have good utility like land

In a communism model you would remove the private ownership for every thing, replace it with collective ownership and centralized planning, that is maybe a way to permanently eliminate inequality, but it is also very inefficient and unproductive

This is a weak argument. What you consider as money is not yet money if 100% of it is in the central bank. In other words, it is not so much important what money is as what money does (and how it goes, wtf). Regarding the amount of assets vs money supply, this is just meaningless since money has no value of its own (save for transactional and exchange utility, of course). It is essentially an abstraction for measuring the value of things against each other...

I'm not talking about real wealth inequality. I'm not even talking about fiat/Bitcoin distribution unevenness taken in isolation, without its effects on the utility of money (Bitcoin and fiat) as a means of payment vs its utility as a store of value. In fact, the former is of interest to me only as long as it affects the latter, since this influence determines the future (or fate) of Bitcoin and is the topic of this thread...

Fiat money, in this aspect, can be considered as a model, or a yardstick for gauging Bitcoin performance

Wealth inequality is a fact of life. Nuff said.

Meritocracy does not drive our society, nepotism does.

For the very few people who work super hard and meet the right people, success knocks at their door.

For everyone else, it's just eternal enslavement to governments, corporations et al.

It is not an argument but a fact. Look at those thousands of alt-coins, they all have great transaction capability and can do a lot, but they worth nothing and almost no one cares. This tells that what money does is least important if the money does not have value of its own. Trying to downplay the importance of money's value and replace it with transaction demand is bank's scheme to mask the fact and print themselves some more money at mean time

If merchants have enough knowledge of money, then the moment central banks start to print money, they will raise the price of their goods/services at same rate, in order to protect them from being robbed by the banks. Currently only a few merchants understand this (those who only accept honest money) but I guess the number of them will rise over time once more and more people have gained such insight

You can think this way: If in future the transaction fee income raised to 50 bitcoins per block while the block reward almost decreased to zero, then every miner would become the early adopter: They can mine coin exactly like early CPU miners at 50 coins per block, and if they want to accumulate coins, after 4 years they would have 50% of the total coin supply

Technically, that goal is not unrealistic: Given average transaction size is about 0.5 bitcoin and a transaction fee of 0.005 bitcoin (1%) is acceptable, you only need to process 10000 such transaction in each block to reach 50 bitcoins, which is doable with 8MB blocks, quite manageable

However, in fiat money system this is impossible, the faster you make money, the faster the fiat money will be printed at magnitudes higher speed, so you always end up with a very small percentage of the total money supply

Sorry, I can't vote. I'd like to choose "I fully support Bitcoin wealth inequality" but I can't.
Hey, I live in the real world. Inequality is a fact of life, it's everywhere in nature, and it's only normal that the best and brightest are more successful than those who are not. I don't like D. Trump, though.

Wealth inequality is actually everywhere but not here I dont think it is possible in here.

I dont think its bad, its just bad for the people who did not believe in it today and will regret in the future.

Wealth inequality will exist as long as humanity is dependent of matter.
As long as we need food, water, goods, property, there will always be inequality.

Yes, I feel the same. You can't create perfect world where everyone will be equal, equally rich. Inequality is part of the nature.
Communists tried to test that in practice and it did not go that well. I am quite poor myself and I envy rich people but I know that this situation is part of the system.

We have to face the fact that wherever we go there is always inequality because it is nature of life.
Bitcoins may come out unequally for most people but to some wise investors it will be fair.

Hey guys, please, stop posting that (wealth) inequality is natural, part of nature, nature of life, whatever. This is not what this thread is about. This thread is about why Bitcoin wealth inequality is bad, on economic grounds before all, for its long-term fate. That has nothing to do with what nature intended...

And it intended us to die at twenty (epidemics, predators, etc), I don't see how anyone could be quite happy with that

I don't quite understand how is that related to the issue in question. You mean to say that Bitcoin facilitates further accumulation of wealth (i.e. making wealth inequality steeper)? I'm inclined to think so (though for other reasons), but I don't see how this can possibly make it fare better (long term)...

Do you have any reasons how it could?