Bitcoin wealth inequality and why it is bad

[deisik]

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

[1714929804]

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[pitham1]

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.

[Enjorlas]

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.

[virtfund]

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

[Possum577]

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!

[deisik]

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.

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)...

[deisik]

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.

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

[deisik]

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!

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"

[deisik]

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

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

[pereira4]

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.

[deisik]

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

[deisik]

I don't get your reasoning behind why it's a bad thing that Bitcoin isn't evenly distributed

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

[bryant.coleman]

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.

[deisik]

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)...

[jaysabi]

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

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...

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.

[deisik]

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

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...

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

[Mickeyb]

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!

[Possum577]

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!

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"

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

[Preen]

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

[johnyj]

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