Bitcoin's Dystopian Future

[Traktion]

If Bitcoin were to replace fiat currency, government would move from taxing incomes to taxing resources.  Think water rates, road tolls, etc.  The state system would tick along just fine.

Yes, agreed.

However, this would likely hit rent seekers the hardest. As rent seekers exploit violent monopolies in order to extract wealth from others, it would likely be a better situation than we have now.

In the UK for example, less than 1% own much of the land and charge rent upon it. As said people influence the state heavily (House of Lords etc) governments won't tax them until they absolutely have to.

That's not to say that you need a state in order to identify and respond to coercive monopolies (the state is one too, after all). It's just that they are more likely to tackle them when they have no alternative.

Ofc, at the other end of the spectrum, there is nothing stopping the state offering voluntary subscription services. They could then compete with any other service providers and if they do the best job, then good for them.

Ultimately, states will go after anything which can't be easily hidden or moved. However, expect their actions to come under close scrutiny when they can't print money and fund folly with other taxes. It's difficult to bury things in the figures when there are only a few sources of income.

[Traktion]

... it could tax land (owners or renters)...

This ^

Except that land taxation always taxes owners not renters.

except where it doesn't, like in the uk. i wish more people here would learn more about the actual world before coming up with grand political or economic theories (or at least before trying to correct me).

There is no land value tax in the UK.

Besides, why would a land lord charge less than he otherwise could? I'll answer that for you - he won't. Therefore, tenants are already paying the maximum they can afford. That's why land value taxation hits the landlord instead.

Land rent is just privately collected tax. It's exploiting a coercive monopoly on a location.

[QuantPlus]

A well presented and thought out thesis, and slightly terrifying to say the least.

Personally I feel your being overly pessimistic. Yes this is one set of possible futures. To me though, it has overlooked a key element or flood gate of the money flow into the crypto-currency world.

I don't believe bitcoin will destroy governments it will just change the way they work.

A young man living in freaking San Jose in 2013 thinks life is "bleak"...
Dude, you need to see your pastor or psychiatrist or witch doctor.

All government power flows from it's currency via taxation via Banking System...
Probably 80% of the population would chose this over anarchy.

Crypto-currencies will be co-opted by the Banking System, soon:

http://www.americanbanker.com/bankthink/governments-must-co-opt-bitcoin-to-avert-disaster-1058380-1.html

But I'm a BTC optimist solely due to it's global, international distribution...
It will be just one of many successful crypto-currencies.

[Adrian-x]

I know I shouldn't laugh at that, but I did.
Other than that, I'm kind of surprised at the high quality of thought and discussion going on here. Thanks everybody who chimed in. Some of you actually made me feel a tiny bit better

You are falling into a self fulfilling trap of despair; research Medieval Europe and the Enlightenment that came out of it, we are transitioning and yes there are problems - these problems are the result of malinvestment, and will be hard for some to deal with, but most people in the world live with some of the problems you describe daily, and that innocent grandmother who did nothing wrong, she is not so innocent, she drove a car, bought tiers for that car, the rubber for which came from the Congo in a time like the one you describe, only she indirectly funding an unjust global system she didn't take the time to research, had she, she would have seen Bitcoin as a way of elevating that extreme poverty and bought in now.  

You are projecting while maintaining the same base, the world will change community will become stronger, huge impersonal cities will be relics, but with an educated population with imperial knowledge readily available the transition to the new enlightenment (Eckhart Tolle: A New Earth) will unlikely resemble anything from the medieval dark ages.  We will have to adapt and that will look uncomfortable to some, but to about 3% of the population - not involved in Bitcoin this will be the opportunity of a lifetime.

There were some other authors I would recommend but I can't remember who they were (I just heard a book review / summary in a podcast interview), but they define generational evolution in society as seasons.  Great well researched (historically speaking) with very heart warming projections.

Try applying some of that insight to your thought experiments.  

[dacoinminster]

A young man living in freaking San Jose in 2013 thinks life is "bleak"...
Dude, you need to see your pastor or psychiatrist or witch doctor.

My life (in Seattle) is actually quite nice. It's the future of Grandma and everyone else that I'm worried about.

You are falling into a self fulfilling trap of despair; research Medieval Europe and the Enlightenment that came out of it, we are transitioning and yes there are problems - these problems are the result of malinvestment, and will be hard for some to deal with, but most people in the world live with some of the problems you describe daily, and that innocent grandmother who did nothing wrong, she is not so innocent, she drove a car, bought tiers for that car, the rubber for which came from the Congo in a time like the one you describe, only she indirectly funding an unjust global system she didn't take the time to research, had she, she would have seen Bitcoin as a way of elevating that extreme poverty and bought in now.  

You are projecting while maintaining the same base, the world will change community will become stronger, huge impersonal cities will be relics, but with an educated population with imperial knowledge readily available the transition to the new enlightenment (Eckhart Tolle: A New Earth) will unlikely resemble anything from the medieval dark ages.  We will have to adapt and that will look uncomfortable to some, but to about 3% of the population - not involved in Bitcoin this will be the opportunity of a lifetime.

There were some other authors I would recommend but I can't remember who they were (I just heard a book review / summary in a podcast interview), but they define generational evolution in society as seasons.  Great well researched (historically speaking) with very heart worming projections.

Try applying some of that insight to your thought experiments.  

Sounds interesting, but . . . heart worming projections?!

[Adrian-x]

Sounds interesting, but . . . heart worming projections?!

Sorry I love the phonetics guide to the English language but that must have been a Freudian slip.

[jubalix]

we already live in the dystopian future, grandma's super/pension is being taxed and devalued out of existence already

some rumor has it, it's been that way since...*cough*.....well, it's not polite to say....but you know when what's his name and co tried.....and we would be on Mars by now....but hey you can't be blamed (well maybe a little) you only have had one side of the story all your lives....and its just to awful to find out maybe that's just what it was. One side of a story. Believe what you will

[AnonyMint]

I posted some detailed discussion on this topic recently in several threads linked below.

https://bitcointalk.org/index.php?topic=322058.msg3578196#msg3578196

https://bitcointalk.org/index.php?topic=323988.msg3582544#msg3582544

https://bitcointalk.org/index.php?topic=318001.msg3581429#msg3581429

https://bitcointalk.org/index.php?topic=322058.msg3580502#msg3580502

https://bitcointalk.org/index.php?topic=331325.msg3571527#msg3571527

[Realpra]

So you're saying we will have a bleak "future" were the pensions fall apart, some are super wealthy while the governments fail to take proper care of the middle class?

Why that would be horrendous.

Honestly though; good post, but I think the positives will far outweigh the negatives - consider this for one: The defunding of the US government will decrease their ability to wage wars for no reason and suppress the world and their population.

[Mike Christ]

Honestly though; good post, but I think the positives will far outweigh the negatives - consider this for one: The defunding of the US government will decrease their ability to wage wars for no reason and suppress the world and their population.

Not just that, it becomes impossible for any nation to build an empire, ever.  You absolutely need a centralized currency to move huge amounts of wealth from citizens and future citizens to the state in order to build an empire, otherwise no tax-payer would ever spring for such a goal.

[AnonyMint]

I detailed in the links of my prior post how Bitcoiners are going to jail.

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

You overestimate the dedication the government has to their own organization. They are in it for the money, mostly. When it is no longer profitable to keep the structure in place they abandon it.

That's exactly what happened in the USSR. Everybody in the government could see that the system was headed for collapse due to unavoidable mathematical realities, and when that knowledge spread they looted what they could and abandoned ship. The number of true believers who were addicted to power for its own sake weren't great enough in number to hold things together.

The Russian oligarchs didn't abandon anything, and are richer now than they were.

The game theory of socialism never changes, see the links in my prior post.

The same thing will happen to the western governments when socialism collapses here. As Bitcoin grows large enough to represent a real threat governments might make noise about regulating it or shutting it down, but the entire time politicians are spewing hot air insiders throughout the bureaucracy are going to be quietly stashing whatever money they can get control over in Bitcoins. All the scare stories that pop up between then and now are designed solely for the purpose of scaring early adopters into letting go of their bitcoins so those who don't have them yet can buy in cheaply.

Pure fantasy to propose the masses (the 99%) are going to tolerate a 100000X devaluation of the western financial system handing half of society's net worth to the bitcoins minted in the first 4 years.

To be a viable currency, Bitcoin would have to be distributed to the masses, because the 97% only gain their wealth from money spent as currency. The wealthy Bitcoin early adopters aren't going to spend, rather they will invest their coins to gain more coins than they had.

Thus the masses would be forever impoverished in Bitcoin's coin supply model.

Sorry Buttcoin is a Trojan horse. See the links my prior post for details.

[AnonyMint]

I see a paradox. For BTC to become successful, it's adoption must rise but on the other hand, you see enormous wealth disparity. Somewhere down the line, these two will cross. Moreover, those that got in later are probably the people who are the producers in this world. Gradually, their position will be better because they provide stuff people want/need. Granny could be taken care of by her kids who have more time and means to support her.

Another thought: the more people put into BTC, the more their debts can be paid of by rising BTC value compared to fiat. Less burdened by debt, their situation will improve and improve as a function of time, taking along more and more new people. Once people learn of this phenomenon, it's game over for the system. Much more intriguing than very dark scenarios.

Not even 1% will be in Bitcoin before it reaches astronomical price and market cap that already devalued western civilization. We are handing the world's wealth to a few speculators. Sorry the world will never allow this to stand. This is a declaration of war against sanity. Bitcoin's supply model is typical goldbug insanity. See my links in my first post, to get more details on this.

And the producers can never work their way out this hole if Bitcoin was allowed to stand, because they will be forever in debt to just survive. Additionally a recent Oxford study says 45% of all existing jobs will be automated and lost within 20 years.

Bitcoin is a dystopian slavery system masquerading as a Utopian ideal.

My expectation is the last laugh will be on the Bitcoin millionaires who will find themselves in tax debtors prison.

[AnonyMint]

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

Already happening, mostly due to the drug war and 9-11 security theater crap.  Bitcoin does not accelerate this either. 

Incorrect.

If Bitcoin's market cap stays on the exponential trend, it will consume the global wealth in a few years.

[AnonyMint]

A government is a company like any other company. Its business model might be challenged by crypto currencies just like Western Union's business model will be challenged but it will have to adapt.

If a government is a company, what is its core service? Security!

In an anarcho capitalistic world (no govenments), there would still exist a demand for security as you point out. This demand will be filled by some entity and the best way to provide security is to control a geographical area, like in a gate community - and what, if any, are the fundamental differences between a gated community and a government? None! We are already living in a world of "privately" owned security companies competing with each other. We just happen to call these kind of companies "governments". We are living in an anarcho capitalistic world already. We who call ourselves libertarians are just not too happy with the quality and price that these companies provide.

Governments will not die since there is a huge demand for their service - security. Governments will adapt and figure out new ways to get a revenue either through property taxes or through head taxes but many people will be hurt in this process as you correctly point out.

Government exists because it has a monopoly on the use of force, taxation, and issuance of the currency.

They will not give up any of those.

Bitcon has been designed to be taken over by cartel (and thus the government). See the links in my first post for the undeniable details.

[AnonyMint]

2. you seem to be assuming that the value of an individual bitcoin will reach $1 million. (that is probably what would be necessary for satoshi to be a 'trillionaire'.) why would anyone without bitcoins throw so much money into bitcoins, however? they might be useful, and they might be enough to attract both speculation and real use, but a century before your fanciful claims would materialise, those with present wealth would find it far easier to set up an alternative cryptocurrency.

2a. bitcoin would not actually be a robust way to store the amount of wealth that would be necessary for your story to materialise. it could still probably be disrupted by $5 million's worth of asic chips. it presently stores, also, nowhere near as much as the widely reported 'market capitalisation' figure.

Agreed. An altcoin is the solution to both of those problems.

[AnonyMint]

If this is ever going to happen, I don't wanna be a rich-ass jerk.
I would try to use the gained influence to make the world a better place, not one far worse.
After all, we would be the ones with the new wealth, so we would be the ones that could change things.

on a side note: let's hope Satoshi is one of those idealistic good types, he could change the whole earth with the wealth he would gain.

Large wealth is much less helpful than very small wealth.

When you've never thought this out, you imagine you could, but the reality is you can't.

Read the links in my first post (on the prior page 4 of this thread) to understand the math of why you can't.

[AnonyMint]

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

Nah, everyone else will just mine Bytecoin, Trytecoin, Crumbcoin, or Hexcoin or whatever name they come up with next.   Bitcoin's current value is based mostly on the fact that most people don't know how it works. Once the other iterations of bitcoins start getting attention, the value will probably even out between them.

Ever heard about the network effect?

We debated the network effect advantage for Bitcoin here:

https://bitcointalk.org/index.php?topic=279650.msg3495695#msg3495695

[AnonyMint]

So I submit that bitcoin's influence on our future is one of many 'decentralizers.' -And not the largest one by far.

That is a possibility which I tend to agree with, but it won't be Bitcoin, because Bitcoin is designed to become centralized. See the links in my first post on page 4 for details.

[BldSwtTrs]

I detailed in the links of my prior post how Bitcoiners are going to jail.

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

You overestimate the dedication the government has to their own organization. They are in it for the money, mostly. When it is no longer profitable to keep the structure in place they abandon it.

That's exactly what happened in the USSR. Everybody in the government could see that the system was headed for collapse due to unavoidable mathematical realities, and when that knowledge spread they looted what they could and abandoned ship. The number of true believers who were addicted to power for its own sake weren't great enough in number to hold things together.

The Russian oligarchs didn't abandon anything, and are richer now than they were.

The game theory of socialism never changes, see the links in my prior post.

The same thing will happen to the western governments when socialism collapses here. As Bitcoin grows large enough to represent a real threat governments might make noise about regulating it or shutting it down, but the entire time politicians are spewing hot air insiders throughout the bureaucracy are going to be quietly stashing whatever money they can get control over in Bitcoins. All the scare stories that pop up between then and now are designed solely for the purpose of scaring early adopters into letting go of their bitcoins so those who don't have them yet can buy in cheaply.

Pure fantasy to propose the masses (the 99%) are going to tolerate a 100000X devaluation of the western financial system handing half of society's net worth to the bitcoins minted in the first 4 years.

To be a viable currency, Bitcoin would have to be distributed to the masses, because the 97% only gain their wealth from money spent as currency. The wealthy Bitcoin early adopters aren't going to spend, rather they will invest their coins to gain more coins than they had.

Thus the masses would be forever impoverished in Bitcoin's coin supply model.

Sorry Buttcoin is a Trojan horse. See the links my prior post for details.

You seem to think that Bitcoin is going to destroy fiat. It's probably not gonna happen. The existence of gold doesn't destroy fiat for example.
 
Think about the fact that to reach 100 000$ per BTC, Bitcoin needs only to capture 15% of the value of the gold market, without the need to capture any value of the fiat market.

[blablahblah]

Thanks, OP!

For the most part I agree. A word you were probably looking for (or trying to avoid in order to stick to plain English) is seigniorage, which I've mentioned a few times before. Just like the issuers of governmental cash make profit from money supply inflation, the 'issuers' (early adopters) of bitcoins profit immensely from Bitcoin's growth. We steal other people's slices of the "global value pie".

However, I have confidence that most people can adapt, so I'll put an alternative spin on your points:

Re: The Bleak Future of Fiat Currencies
I think it's only as bleak as governments are untrustworthy and unstable. I guess we'll have to wait and see how they'll cope, and how people will adapt their governments.

Re: Wealth Disparities
You seem to assume people will continue to rally behind Bitcoin's brand-name chain, and that the spin-offs will continue to be small-time wannabes. Maybe, but I hope that Ripple (or something similar) takes off, enabling easier exchange between various esoteric "coin ideas". I doubt they made it Open Source just so everyone would religiously rally behind the real Bitcoin. The way I see it, the free knowledge is supposed to help redress the unfairness of seigniorage. Everyone is welcome to create their own crypto flight miles, crypto discount coupons, crypto shares,... whatever their imagination comes up with.

Re: Law enforcement
I suspect many law enforcement agencies are well aware (or at least have some awareness) of the economics of crime. The harder they fight against drugs or child porn etc., the more scarce and therefore more lucrative it becomes. But how would society react if politicians said "actually, we shouldn't take child pornography off the Internet. If we just leave it there and ignore it, it'll be freely available for all the sickos and the makers of new stuff will go out of business." Maybe there would be an uproar and it would be the end of that person's political career. Maybe not. Drug reform is probably a safer bet because it's less contentious. It will take time.

Re: What should we do?
Never stop learning.

Government don't just want to stop criminals(non-government) from illegal lucrative activity, the government themselves profit from such activities. Drugs are a great example, as long as they can control it, they can profit from scarcity and the handling of supply. Then you have prisons, war and all that good stuff that the government loves to collect your money for. Government only care about reform when they have no financial stake in said reform, if they have nothing to gain from you then you can rest assured that they only care if they can instead divert you while pick pocketing you elsewhere.  

Old post, I know, but still deserving of a reply.
There seem to be 2 popular alternatives when comes to governments and money:
1) government has full control over things like M0 supply and interest rates.
2) there's a separation of powers and central bank restricts access.

There seem to be lots of historical examples where #1 resulted in lots of problems, such as a change in leadership followed by theft and hyperinflation. However, #2 also seems to have been gamed, whereby a hierarchy of banks form a shadow government and attempt to starve the real government of funds. Come to think of it, I wonder how long the banks have been trying to crash the US government? Maybe they're not all so bad after all, just misguided.

Those dirty tactics like drug trafficking, wars, and prison slave camps all suggest that the US government may have been been short of funds for a long time, and therefore they had to develop alternative income streams.