What do these new people getting rich off crypto mean to the economy at large?

[Seansky]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

Nothing will happen to the world even if many new people get rich off cryptocurrency. The only effect I have seen is that these new millionaires because of cryptocurrency encourages others who still don't believe in cryptocurrency to try and invest in it just because there are many new rich people now because of it but the truth is the value right now is so high, they might not be rich by the time next halving comes and even in the next 5 years.

[dazbog835]

they might not be rich by the time next halving comes and even in the next 5 years.

What do you mean by the next halving? Has this happened before? I understand there are corrections, but a trend I see is an upwards one all the way with major or minor corrections along the way. Am I wrong?

[Amph]

they might not be rich by the time next halving comes and even in the next 5 years.

What do you mean by the next halving? Has this happened before? I understand there are corrections, but a trend I see is an upwards one all the way with major or minor corrections along the way. Am I wrong?

yes before or after the halving the value usually go high, and this last halving was not an exception, i remember the value went almost 2x after the halving, peak was around $800

so the next halving could help the value go even higher, but we are talking about 2020 here, still a long way to go

[Yanisumin]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

It depends whether the government of that country is open in legalizing and regulating cryptocurrencies. For example you hold your bitcoins and didn't sell it when your country doesn't recognized cryptocurrencies as money then it won't change the economy but when you sell it for cash then it might add up in the usage of fiat and it may benefit the economy. I think the economy will be benefited if btc provide less traffic in transactions and if it help the people everyday lives be much easier because of extra income and I think before that happens they will add some taxes on cryptocurrencies.

[iamTom123]

You seems to be worried what if all of us will get rich and no one can be poor...who might be working for us since all have the money to buy everything? Ok...it really sounds naive but I think can still be a valid question. Okay, maybe you assumed that Bitcoin and other altcoins are getting big maybe there would be no place for such growth. Actually, the current market capitalization of all the cryptocurrencies around is still peanuts compared to the global economy. In fact, we are just getting started in comparison to decades and centuries of existence of the current financial system.

In other words, there is nothing to be worried about. Just continue on "hoarding" some coins because am sure they can be growing fast and soon you can enjoy the fruits of your own labor. Time will see where this cryptocurrency revolution can be leading us as we can not predict the future in details.

[BrewMaster]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

It depends whether the government of that country is open in legalizing and regulating cryptocurrencies. For example you hold your bitcoins and didn't sell it when your country doesn't recognized cryptocurrencies as money then it won't change the economy but when you sell it for cash then it might add up in the usage of fiat and it may benefit the economy. I think the economy will be benefited if btc provide less traffic in transactions and if it help the people everyday lives be much easier because of extra income and I think before that happens they will add some taxes on cryptocurrencies.

but when you invest and make profit like this and get rich you are just taking the money out of someone else's pocket! someone else is taking the money out of circulation, hands it to you and takes bitcoin and you are now owner of that money.
so in the end nothing is changed, the money just changed hand. and that is true for every trade and profit earned that way.

[michnelli6]

There are not that many people who have become rich off Bitcoin. Many people were early investors, but instead of holding onto their coins, they sold them and that train kept on going so Bitcoin was spread out quite a lot. Because of this, there are not many people in the world right now who are rich because of Bitcoin. The ones that are rich, they don't really make much of an impact on the world's economy at all. Pretty much everyone who became rich off Bitcoin are just millionaires, they aren't even close to becoming billionaires. Millionaires aren't the ones who have an impact on the economy, only billionaires and above do.

Yeah the bitcoin in the world today has a great contribution towards making many people rich. The number of the people became rich with the Bitcoin may be not much high but still we cannot deny the fact that the bitcoin is playing its part in making the life of many people.

[avikz]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

Well, that's true that a lot of people become rich after investing in crypto currency and the list of going larger day by day. However, you should look at the brighter picture as well. A lot of people becoming wealthy means their purchasing powers are also increasing. They are spending more and more money is flowing in to the economy. Which is good for the economy as a whole.

I foresee no reason for depression because these currencies are regulated by any authority. Also crypto currency has paved way for the employment. People are living on their own through this crypto currency. So As of now, I don't see any bad things to happen in near future.

[deisik]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

I think I can explain it to you

The core point you should understand is that Bitcoin as such doesn't create wealth, it only redistributes it. For example, some very early Bitcoin adopter mined a few thousand bitcoins essentially at no cost. Let's assume that he recently sold his stash at 3,000 dollars per coin, so now he is a dollar millionaire. But does it mean that anything changed at a larger scale? He just collected dollars from a few (or many) people, but the total amount of dollars didn't change. Basically, nothing has changed and wouldn't change until Bitcoin manages to get into real economy and compete with dollars (or any other fiat currency) there as a genuine means of payment for goods and services

[d5000]

Bitcoin as such doesn't create wealth, it only redistributes it.

I put this into doubt. Bitcoin "as such" does create wealth, like every innovative service with new and useful characteristics. An example is the utility of cryptos for so different services like online gambling and international remittances, which is already visible (although gambling went mostly to altcoins). And in the future the biggest potential lies perhaps in "banking for the unbanked" / "banking without banks/middlemen".

That's also why the more pessimistic answers of this thread do not convince me. The cryptocurrency ecosystem as a whole does create genuine innovations and satisfies demands for some people. The effect may be still small because most of the "price growth" of Bitcoin is based exclusively on speculation, but it is already a fact. And with every potential new Bitcoin user, the ecosystem also potentially grows, opening room for new services and so the "genuine wealth".

You could imagine Bitcoin like a share of a company that comprises the whole Bitcoin ecosystem. It's true that the "new Bitcoin rich" often do not apport much to the ecosystem but the minority that invests their profits in well thought-out Bitcoin/crypto services moves the train forward.

[xypos]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

Not really, at least for now.

Right now the players in bitcoin is very limited. I think the true bitcoin whales, ones that hold more than 1000 BTC which equates to quite a nice chunk of money individually is probably less than 200.

Speculation of bitcoin simply means that some people lose, some people win. So whales are basically playing each other, in a pvp game, if you like.

Honestly, bitcoin price does not matter that much. The most important thing is who and how many people are using it? If bitcoin can help the unbanked in third world countries with instant, safe and costless transactions, but is only worth $100, that would be fine.

[omonuyak]

It is poverty that Couse economic depression and not wealth and prosperity. We should be grateful for what crypto currencies has made us intend of seeing it as economic sabotage and repression. May the God of crypto currencies be with us all.

[grermezter]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

We should remember that the rich are taxed very heavily,some pay as much as 50% tax so its good news for the economy of the world, there will be more for the country and the cycle of life will just continue.

[emezh10]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

We should remember that the rich are taxed very heavily,some pay as much as 50% tax so its good news for the economy of the world, there will be more for the country and the cycle of life will just continue.

Rich people are taxed by government so by investing in cryptocurrency they can save they money by just putting it in crypto because the bitcoin is decentralized so that I think many big people now are investing in cryptocurrency because they are free from the tax. I think I will do that too.

[Xavofat]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

We should remember that the rich are taxed very heavily,some pay as much as 50% tax so its good news for the economy of the world, there will be more for the country and the cycle of life will just continue.

Rich people are taxed by government so by investing in cryptocurrency they can save they money by just putting it in crypto because the bitcoin is decentralized so that I think many big people now are investing in cryptocurrency because they are free from the tax. I think I will do that too.

Bollocks.  You shouldn't trust governments not to tax the air you're breathing.  In the countries I can think of off the to of my head, crypto profits are subject to capital gains tax.

Besides, it's not like rich people love shovelling their cash into crypto to watch it fly up and down by ten percent in a day.

[Oralmat]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

You need a real understanding of the economy and how it works to be around the trading world and there are very few that have that here and it appears we now have a new one.  Making money in any form makes more money for the economy, it is a base and core element of the economy and taught in high school.

Moving money is good money, crime is fine, war is fine and all these aspects are just fine, anything that causes a movement in the system makes the system stronger, those without any understanding will find that they are going to be eaten alive and will not survive, which, again, is a movement in the system and that small amount of $10,000 or more that is wasted by them trying to become something other than what society has chosen for them only provides greater support for the underlying low income labor force and that helps support the system above it all.

[squatz1]

Well to the economy at large it probably isn't going to be much in the least, this probably due to the amount of people who are already becoming richer and poorer on the daily so it's not going to show too much of a change in the overall economy. Also, a lot of the people that are becoming rich are becoming rich on paper, they haven't come to the point where they've REALIZED (sold) their profits and have put that gain right back into their banks or wallets. So it's unknown if all of these people are going to stay rich once everyone goes to sell their shitcoins, shitICO's, and so on and so forth.

It's going to do nothing to the economy at large, our economies have seen crazier things before.

[beerlover]

I apologize if this question is in any way naive.. I'm not really any kind of economics expert. I was just wondering what might happen to the world economy since there are so many new people getting rich off these cryptocurrencies... Just based off speculation or holding the right coins a lot of people have gained in wealth in the past years. And it doesn't seem to be slowing down.

So, you have a lot of 'new money' propagating even 'newer money'... and so on and so on, until a lot of people are pretty rich. Does this mean that there is a huge depression ahead of us? Surely just making more and more money can't go on forever, can it?

I'm sure I'm not seeing the big picture here so please, could someone explain it to me?

Not sure what you meant by 'people getting rich off crypto' - no they aren't in the first place because of crypto; they are becoming rich, if so, for their efforts and strategies. The only difference a crypto currency can contribute is a decentralized mode of payments.

If we say that the people the initial investors of the bitcoin were rich and the other users who at first provided services for the bitcoin are now becoming rich with it. It can be defended as the people earned bitcoin and invested them into alts gaining more of it and even holding Bitcoin and selling it for a higher price.

[deisik]

Bitcoin as such doesn't create wealth, it only redistributes it.

I put this into doubt. Bitcoin "as such" does create wealth, like every innovative service with new and useful characteristics. An example is the utility of cryptos for so different services like online gambling and international remittances, which is already visible (although gambling went mostly to altcoins). And in the future the biggest potential lies perhaps in "banking for the unbanked" / "banking without banks/middlemen"

I basically agree with that

But the question was not about that. It was about having "a lot of 'new money' propagating even 'newer money'". It is certainly not about creating "innovative service with new and useful characteristics". Further, this effect, while undeniable, in minuscule at best, and right now Bitcoin is no more than a speculative asset which helps move wealth from one hands into other hands (i.e. redistribute already existing wealth)

[dazbog835]

Thanks everyone for your answers. I can now see how naive my original line of thinking was. Seems pretty obvious now