Bitcoin will exacerbate wealth inequality

[BunnyWunny]

Wealth inequality rises by default as rich people are able to invest more of their income than the average working person who is forced to spend a greater percentage of their income on consumption just to survive and live. This is simple maths and unavoidable. One way governments have tried to cure this imbalance (and win elections) is through running fiscal deficits in order to fund massive social welfare programs, healthcare programs, education programs and infrastructure projects amongst other things. Due to the unavoidable nature of wealth inequality the money leaves the hands of the poor fairly quickly and ends up with the rich but at least the poor have been bought some time and the cycle can continue for quite a long time as we are seeing. The government debts that are racked up are, through necessity, paid off with freshly printed currency and here is where Bitcoin comes in as everyone knows. Nobody likes their money being debased, not poor people, not rich people.

But a world in which Bitcoin is the de facto currency is one in which governments will no longer have the option to print currency and attempt to distribute it to the less well off. It's a world in which governments will not be able to afford the maintenance of infrastructure and investment in hospitals, schools etc. Every major amenity and service will be privatised. Social programs will be a thing of the past as Governments will not be able to finance them. Governments will not be able to collect taxes in Bitcoin in the same way as they collect taxes in fiat currency as people will have their stashes sequestered away in offline wallets. In a very unequal society the last theoretical resort is to aggressively tax rich people or print money and give it exclusively to poor people but these options are taken away in a Bitcoin world. Besides that, in a globalised world rich people are exceptionally successful at dodging tax which is why governments prefer the much easier option of simply printing money.

As the world transitions to Bitcoin, demand for fiat currency will plummet and it will lose all of it's value much quicker than could realistically be caused by central bank printing. As regular people hold more of their net worth in cash compared to rich people, the collapse in the value of fiat currencies will hurt poor people the most, and will not hurt people with assets at all.

As for anyone who says working people will just work in exchange for Bitcoin and slowly build up their wealth over time the reality is that labour is less valuable than ever and rich corporations are expanding their profit margins. We will not be getting a bounty of Bitcoin from our employers every week or month. In fact rich people and businesses may decide to pay less on wages than ever and create less jobs than ever as the psychology of a scare resource takes hold of their psyche too.

As rich people continue to re-invest the greater share of their income and regular people continue to be compelled to spend the greater share of their income on necessities, it won't take long until the vast majority of the 21 million coins are in the wallets of the very rich and once that happens there is no possible way to redistribute the wealth. As corrupt and incompetent as governments around the world are, the current system protects the financial welfare of regular people more than a Bitcoin based free market will.

[Churchillvv]

I know where you're coming from but you must know that there is no equality anywhere. The class difference still exist on almost everything in life.

Bitcoin is not in any way or from it's white-paper pointing out that it will create wealth equality, maybe I skipped that part. Those who have beat the average level and are now in the highest class of the hierarchy will always with the capacity make the most out of everything so it's our responsibility to make it out too for us to maximise everything.

Additionally, there will exist no world where bitcoin only will be the currency, so why stressing yourself with all this? bitcoin works Vice Viz with fiat and it has no intention of being the only currency. so the imaginary world wouldn't exist, wealth distribution will always remain the same, 70% - 80% will be in the hands of the rich will the remaining will stay with the average man.

[pooya87]

Wealth inequality rises by default as rich people are able to invest more of their income than the average working person who is forced to spend a greater percentage of their income on consumption just to survive and live.

I disagree. Any inequality is the result of unfair laws. For example in countries with liberal economy and capitalism such as United States the ultra rich have the power to lobby behind the scenes and pass laws that help them not pay any taxes. This and a lot more unfair laws help them amass wealth while the lower classes are milked out of their last cent in form of taxes, interest rate, etc.

One way governments have tried to cure this imbalance (and win elections) is through running fiscal deficits in order to fund massive social welfare programs, healthcare programs, education programs and infrastructure projects amongst other things.

That's like trying to fix a broken leg by taking a pain killer!
These things are like pain killers, they "hide the pain" for a little while without fixing the actual problem at the root. The problem I explained above.

As the world transitions to Bitcoin,

That is not happening and is not supposed to happen.
Bitcoin is and will remain an extra payment option with unique features.
It will not replace anything and the world will not "transition to bitcoin".

[davis196]

But a world in which Bitcoin is the de facto currency is one in which governments will no longer have the option to print currency and attempt to distribute it to the less well off. It's a world in which governments will not be able to afford the maintenance of infrastructure and investment in hospitals, schools etc. Every major amenity and service will be privatised. Social programs will be a thing of the past as Governments will not be able to finance them. Governments will not be able to collect taxes in Bitcoin in the same way as they collect taxes in fiat currency as people will have their stashes sequestered away in offline wallets. In a very unequal society the last theoretical resort is to aggressively tax rich people or print money and give it exclusively to poor people but these options are taken away in a Bitcoin world. Besides that, in a globalised world rich people are exceptionally successful at dodging tax which is why governments prefer the much easier option of simply printing money.

As the world transitions to Bitcoin, demand for fiat currency will plummet and it will lose all of it's value much quicker than could realistically be caused by central bank printing. As regular people hold more of their net worth in cash compared to rich people, the collapse in the value of fiat currencies will hurt poor people the most, and will not hurt people with assets at all.

You are talking about imaginary theoretical models, that will never happen in the real world.
The world clearly isn't "transitioning to Bitcoin". The governments could impose VAT taxes over all products and services, they don't gather all their revenue from income taxes. The biggest cause of wealth inequality is the money printing done by the central banks. Here's why:
1.It artificially boosts the prices of all financial assets, making the rich people wealthier.
2.It gives cheap loans to the rich people, helping them boost their companies and wealth even further.
3.It creates inflation and inflation is a "hidden tax upon the poor". The rich people aren't as damaged by the inflation as the working class and the poor people.
Having a stable currency and fair tax system would lead to less inequality, but "the powers that be" don't want less inequality.

[kryptqnick]

We live in a world where money is a fundamental resource, and where the more resources you have, the more resources you can get. That's why people who are already wealthier than others can of course afford to invest more in Bitcoin and can in turn get even wealthier. That being said, Bitcoin also allowed people who weren't wealthy but were nerdy and interested in it in the early days to significantly raise their financial status. So I think that Bitcoin offsets its own negative influence.
As for other things, I think fiat is here to stay, and so are social welfare programs. But I still don't think it would necessarily end up being the way it's portrayed by the op in that case. Paying taxes can become a matter of culture, and social welfare could be financed via profit from BTC's rising price.

[Dave1]

There will always be inequality sad to say, in any facets of life, and we really need to be open with it. Maybe there are others who are going to work hard in their lives became millionaire investing in Bitcoin, but can we have what Satoshi has invented? Absolutely not.

So in the beginning, the argument of the OP is flawed, I mean why he did put in to Bitcoin when global wealth inequality was here centuries ago, and that's why we have first rate nations. Maybe their government was really resilient to be one of the greatest, and it varies, historical, geographical, economic, social, and political factors. So it's not Bitcoin fault as it was just invented in the last 10 years or so.

[Odusko]

Class struggle is way to bigger than technology and bitcoin as a toll can not eradicate class struggle not in this world the inequality will always be there and bitcoin is only here to provides us with financial inclusion and alternative to traditional financial system, so bitcoin is not acting as means of financial stabilzer because class struggle is already part and parcel of human existence.

Although bitcoin may provide us with some means of financial freedom but that alone can not aquate to global wealth redistributions, and we shouldn't mistake alternative to becoming main economic tool, in with bitcoin, there is still class difference and at a point it becomes a matter of how much bitcoin you are able to starsh that equal your class in bitcoin and not just holding fractions. In some countries, we still have restrictions on bitcoin and that has made accessibility to bitcoin minimal or even none existence so I such a situation, there is no way bitcoin can then become a tool to eradicate eniquality as you stated in the title, let us try not to over estimate or over Borden bitcoin making it look as if bitcoin is here to redirect the old norm's which is as old as human history itself at some point.

[m2017]

Wealth inequality rises by default as rich people are able to invest more of their income than the average working person who is forced to spend a greater percentage of their income on consumption just to survive and live. This is simple maths and unavoidable.

No, this is not simple maths, but an unavoidable life.

Due to the unavoidable nature of wealth inequality the money leaves the hands of the poor fairly quickly and ends up with the rich but at least the poor have been bought some time and the cycle can continue for quite a long time as we are seeing.

Wealth inequality is not a cause, but a consequence. The reason is the social laws to which human societies are subject. Equality, like material equality in society, is impossible. There will always be rich and poor, even if all the money is distributed equally, over time an imbalance will arise when the minority will have the majority of the resources. There is no way to fix this and all that remains is to accept it as a rule of the game.

One way governments have tried to cure this imbalance (and win elections) is through running fiscal deficits in order to fund massive social welfare programs, healthcare programs, education programs and infrastructure projects amongst other things.

This is proof of this. External intervention is not able to radically improve the situation. Only for a short time.

The government debts that are racked up are, through necessity, paid off with freshly printed currency and here is where Bitcoin comes in as everyone knows. Nobody likes their money being debased, not poor people, not rich people.

Bitcoin - doesn't create wealth, but only the equivalent (like a money) of wealth.

Printing money creates a decrease in solvency, because the emission of money is almost endless. For the circulation of money is growing and it is natural that its value is falling.

With bitcoin the opposite happens. Emission is limited and therefore the value of each individual bitcoin increases. It grows due to investment (demand is higher than supply).

But bitcoin is unable to eliminate government debt. If there is a debt, it will not go away until the debt is paid. Money doesn't come out of thin air and disappear into nowhere.

[MeGold666]

Wealth equality = communism (but even in this system it's not fully equal) and equality is unfair to the people.
Why would someone who never read a book be equal to someone who studied most of his life ?

Life is unfair ? we all play the same game with the same rules (unless you were born in North Korea or similar hell hole).
People I grew up with had the same opportunity as me, some of them are in jail, some of them are broke, and some of them are rich.

This people who didn't make it will now say game is unfair... what a surprise 

[OcTradism]

Wealth inequality rises by default as rich people are able to invest more of their income than the average working person who is forced to spend a greater percentage of their income on consumption just to survive and live. This is simple maths and unavoidable.

In any society, there are always the rich and the poor. The Pareto principle says that 80% wealth belongs to 20% richest people. It is true in all countries and you can say it with their wealth in fiat currency, gold or in bitcoin.

The causes for this difference between the rich and the poor is not because of fiat currency or bitcoin. It is because the rich is more educative, more clever in manage their capital and can invest better than the poor. Knowing these facts, the poor can change their wealth by focus on education first, then invest their money wisely through which they can change their lives and individual, family financial status.

As rich people continue to re-invest the greater share of their income and regular people continue to be compelled to spend the greater share of their income on necessities, it won't take long until the vast majority of the 21 million coins are in the wallets of the very rich and once that happens there is no possible way to redistribute the wealth.

See Bitcoin rich list. There are distributions of bitcoin and either you are Bitcoin whales or small fishes, you can accumulate more bitcoins. It depends on your thinking on Bitcoin, its future and your belief in potential of life change with Bitcoin investment.

If you believe in this asset, you can accumulate bitcoins with time. After some years, you will have good bitcoins in your portfolio that will change your individual financial status.

[MeGold666]

If you believe in this asset, you can accumulate bitcoins with time. After some years, you will have good bitcoins in your portfolio that will change your individual financial status.

Buy "this" and it will change your life... it doesn't work that way and as you said, it all comes down to education.

So instead of looking for magic beans, try reading some books and educating yourself because otherwise you will always be poor.
Even if you listen to smarter people and invest in X asset - you will still lose all your money because you didn't change a thing in the way you are.

[Reatim]

Although bitcoin may provide us with some means of financial freedom but that alone can not aquate to global wealth redistributions, and we shouldn't mistake alternative to becoming main economic tool, in with bitcoin, there is still class difference and at a point it becomes a matter of how much bitcoin you are able to starsh that equal your class in bitcoin and not just holding fractions.

I don’t think the world will ever be equal. Of course those born in privileged families already have an advantage. First of all they are most likely to have access to higher education and learn about the economy, finance, and technology which would give them an edge regarding bitcoin.

They would have better devices. Better softwares. Better tools. Above all they would have the capital needed to invest in bitcoin.

In some countries, we still have restrictions on bitcoin and that has made accessibility to bitcoin minimal or even none existence so I such a situation, there is no way bitcoin can then become a tool to eradicate eniquality as you stated in the title, let us try not to over estimate or over Borden bitcoin making it look as if bitcoin is here to redirect the old norm's which is as old as human history itself at some point.

By overestimating bitcoin, you are giving false hope to people which could be then used against bitcoin later on. Promising that inequality would be solved and wealth distribution would be fair and square just for it to not happen would create many misconceptions about bitcoin.

[MeGold666]

I don’t think the world will ever be equal. Of course those born in privileged families already have an advantage.

Everyone has Internet and knowledge is free, you don't have to finish any school to be good in something if you really want to.

World is already equal fair, smart people are rich and dumb people are poor while working like ants and thinking they deserve more.

People who want equality basically want everyone to be equally stupid as them.
They hate rich people but in the same time want to be one, idiotic.

You can call me an a-hole, I don't care - everything is fair. Fair != Equal.

[Dunamisx]

We can never have a harmonized wealth equality because this is hoe everything will always be by having the rich and the poor, what i expect from here is how everyone can take advantage in the opportunity on what they have to achieve the kind of future they want, just as we already have bitcoin and some are not adopting it till now while we still have a number of those that have been into bitcoin and are making their desired expectations happens with bitcoin, which also means that its only those that realizes for this opportunity and go for it will exacerbate wealth inequality on their own.

[DooMAD]

But a world in which Bitcoin is the de facto currency is one in which governments will no longer have the option to print currency and attempt to distribute it to the less well off.

I don't think many governments have done anything like that lately.  All the new money tends to flow straight to the top of the pyramid because governments are still pushing that abhorrent 'trickle down' lie.

Whether Bitcoin causes greater wealth inequality or not is immaterial.  Governments have proven they can't be trusted to run economies and this is the direct response to that failure.  It was never Bitcoin's goal to eradicate poverty.  It's just there to negate the need for trust.

[Zoomic]

As the world transitions to Bitcoin, demand for fiat currency will plummet and it will lose all of it's value much quicker than could realistically be caused by central bank printing. As regular people hold more of their net worth in cash compared to rich people, the collapse in the value of fiat currencies will hurt poor people the most, and will not hurt people with assets at all.

Do you think the government will succumb to pressure and allow bitcoin replace FIAT? Bitcoin is not going to replace FIAT, it will only serve as a complimentary currency that will be used alongside FIAT by specific people or industries for some kinds of transactions and this will be followed by some regulations imposed by the government to ensure that bitcoin doesn't become a "threat" to them. What this means is that, not everyone will adopt Bitcoin, people will still have the option to use FIAT and the government will not stop printing currencies. The government is already aware of what would happen if they allow bitcoin take over. For that reason,  they would do everything possible to make sure FIAT stays so revenue can still be accruing to the government. Bitcoin has very little impact on wealth inequality which will neither reduce or make inequality worse.

[DeathAngel]

I know where you're coming from but you must know that there is no equality anywhere. The class difference still exist on almost everything in life.

This is true, we can either complain about how unfair life is or we can get up off our ass, work hard to buy Bitcoin & watch our money work for us. The more time spent moaning means less time to do something constructive & change our lives. I know which side of the wealth divide I want to be on.

[Obim34]

I know where you're coming from but you must know that there is no equality anywhere. The class difference still exist on almost everything in life.

This is true, we can either complain about how unfair life is or we can get up off our ass, work hard to buy Bitcoin & watch our money work for us. The more time spent moaning means less time to do something constructive & change our lives. I know which side of the wealth divide I want to be on.

Yes, it's an advantage to those who already have good finance over those who are still on the run of building their wealth but nevertheless it should be there to stair anyone into becoming same like wealthy. For someone who grew his/ her wealth will understand that it is far difficult falling from being wealthy and going back to being poor than the fight from starting as poor to becoming wealthy, it takes time to build and lay the foundation. What is keeping the wealthy still wealthy till today are their various investment involvement and settling for Bitcoin as one is aswell a better course to sustain their level of wealthiness.

[Bananington]

As rich people continue to re-invest the greater share of their income and regular people continue to be compelled to spend the greater share of their income on necessities, it won't take long until the vast majority of the 21 million coins are in the wallets of the very rich and once that happens there is no possible way to redistribute the wealth. As corrupt and incompetent as governments around the world are, the current system protects the financial welfare of regular people more than a Bitcoin based free market will.

This can't be true because Bitcoin made it possible for financial opportunities to be made available to everyone without considering our class and wealth. Bitcoin market is free therefore anybody that want to invest can buy Bitcoin from the market freely but if it was the corrupt government system.

You will have to be rich before you can get opportunity that can make you more momey. Banks are only giving loans to big businesses and rich people that do not need it but the poor man isn't giving the chance to use the money to invest in his business to make income. Bitcoin came and distributed wealth evenly, everybody can buy Bitcoin and if you hodl you are going to make profits.
Both the poor and the rich all have the same opportunity to reinvest into Bitcoin and they'll keep making money together. Bitcoin doesn't discriminate as it is opened to everybody that has an interest to invest in them.. without Bitcoin some of the rich people that have made money from Bitcoin, would not be able to make money and there isn't any hope from anywhere.

[oktana]

Bitcoin is not the solution to wealthy inequality. The solution is nothing because people can never be equal.  First let’s talk about work. Assuming that I put in more work than you do and get paid better because of the effort and stress, you can be equal with me in terms of wealth because I have something that gives me more money. If I take that money and put it in bitcoin, I kind of understand what you say about redistribution but the wealthy will only get wealthier because I’m putting more money than you are and that means that if there was any profit, it would still make me stand above you.

There are people like us whose daily cryptocurrency gain is more than our total investment; The rich will always get richer.