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Author Topic: The ultimate bitcoin taboo topic  (Read 9785 times)
xxjs
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September 04, 2013, 12:04:51 AM
 #81

ITT I see people confused wealth with money supply.  Nobody rich has any significant portion of their wealth in currency, they have their wealth in appreciating assets (companies, bonds, equities, commodities, royalty contracts, precious metals, etc).   Even if Bitcoin replaced all forms of currency on the planet it would still be a small % of the wealth in the world.  The Bitcoin "rich" would diversify into other assets and the distribution of the money supply would become more diverse.

The total global wealth is ~$233T.
The total global currency (M0) is ~$5T.

Say Bitcoin replaces all other forms of currency (a pipe dream) and the value of all Bitcoins is is someday worth ~$5T.  Lets also assume the richest Bitcoiner alive has 10% of that or ~$0.5T worth.  Yes $500B is a large amount, but it is <0.2% of the world's wealth.  That would also assume the "Bitcoin rich" never exchange Bitcoins for goods/service or other fiat currency along the way.   I think it is hillariously funny to imagine some fiat broke, Bitcoin rich guy living in his mom's basement refusing to liquidate 10% of his coins because they are "only" worth a million USD "but mom someday I could be a trillionaire, how stupid would it be to sell now for mere millions".




Good arithmetic here, but: There is a reason the welthy, and most other people for that part, have little money and lots of stuff. The reason is the inflation. What you call appreciating assets, is mostly inflation-safe assets. With sound money it is different, you don't have to panic buy these assets, therefore the demand for sound money might be higher than for fiat money, supporting a higher money value.
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September 04, 2013, 12:09:56 AM
 #82

And I agree on the main point, eventually the bitcoins disperse. In the end, the best producers, that is the successful part of the entrepreneurs, will be the ones with most wealth, as it should be.
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September 04, 2013, 01:07:41 AM
 #83

Good arithmetic here, but: There is a reason the welthy, and most other people for that part, have little money and lots of stuff. The reason is the inflation. What you call appreciating assets, is mostly inflation-safe assets. With sound money it is different, you don't have to panic buy these assets, therefore the demand for sound money might be higher than for fiat money, supporting a higher money value.

The point is that even if someday Bitcoin is worth more than all the currency in the world that is still a small fraction of all the wealth in the world.  Your house isn't made of currency, Google isn't made of currency, the patent for a new drug ins't made of currency.  They all contribute to the wealth of the world though.    

I still believe that Bitcoin becoming the single world currency is a dubious and highly unlikely pipe dream but lets say it happens.   Even those with massive Bitcoin holdings would still have a rounding error of the wealth of the world.  Unless they plant to eat Bitcoins, watch scrolling screens of private keys as entertainment, and sleep inside a Bitcoin they are going to liquidate some of the wealth (which is already a rounding error on total global wealth) to buy food, entertainment, housing, etc.
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September 04, 2013, 01:18:46 AM
 #84

ITT I see people confused wealth with money supply.  Nobody rich has any significant portion of their wealth in currency, they have their wealth in appreciating assets (companies, bonds, equities, commodities, royalty contracts, precious metals, etc).   Even if Bitcoin replaced all forms of currency on the planet it would still be a small % of the wealth in the world.  The Bitcoin "rich" would diversify into other assets and the distribution of the money supply would become more diverse.

The total global wealth is ~$233T.
The total global currency (M0) is ~$5T.

Say Bitcoin replaces all other forms of currency (a pipe dream) and the value of all Bitcoins is is someday worth ~$5T.  Lets also assume the richest Bitcoiner alive has 10% of that or ~$0.5T worth.  Yes $500B is a large amount, but it is <0.2% of the world's wealth.  That would also assume the "Bitcoin rich" never exchange Bitcoins for goods/service or other fiat currency along the way.   I think it is hillariously funny to imagine some fiat broke, Bitcoin rich guy living in his mom's basement refusing to liquidate 10% of his coins because they are "only" worth a million USD "but mom someday I could be a trillionaire, how stupid would it be to sell now for mere millions".


Good arithmetic here, but: There is a reason the welthy, and most other people for that part, have little money and lots of stuff. The reason is the inflation. What you call appreciating assets, is mostly inflation-safe assets. With sound money it is different, you don't have to panic buy these assets, therefore the demand for sound money might be higher than for fiat money, supporting a higher money value.

Yeah, maybe. But not only. Money doesn't do anything until you spend it. If you have companies and assets, you can do things with them. Very few people want to sit there on a big pile of wealth and watch television. People become wealthy and powerful because they like being wealthy and powerful, and exerting that power to arrange the world to their advantage. A big pile of bitcoins might help you do that, but it's not the end in itself. At least not for most people, I would guess.

That I think is a rarely expressed reason for why the argument against deflationary currency falls down, apart from the fact of "needing to spend". It assumes a "rational economic actor" that just wants to maximise. People are a bit more complicated than that. Yeah sure, maximisation of wealth is important to a lot of people, and especially for the type of people that claw their way to the top of the heap. But it is no way the only thing driving people. That's why a lot of people don't tend to stop at the point when they can do buy whatever they want. The exercise of power that huge wealth gives you is an end in itself.

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September 04, 2013, 02:03:21 AM
 #85

I find it amazing people here are so diligently looking for a way to destroy bitcoin.

Invalidate wallets?  Forced redistribution?  Wow.

That said entities that hold lots of coins are not powerful by means of the number of coins they hold.  Bitcoins in a wallet have no real value until they are traded for something tangible.

The economy will redistribute itself over time.  Think of the famous 10kBTC pizza.  We will need to see lots more pizzas bought with btc before we ever need to worry about who is rich and powerful.

A fair economic system is not one in which everyone has the same amount of money.  Think about why.
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September 04, 2013, 03:00:27 AM
 #86


Good arithmetic here, but: There is a reason the welthy, and most other people for that part, have little money and lots of stuff. The reason is the inflation. What you call appreciating assets, is mostly inflation-safe assets. With sound money it is different, you don't have to panic buy these assets, therefore the demand for sound money might be higher than for fiat money, supporting a higher money value.

+1

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That said entities that hold lots of coins are not powerful by means of the number of coins they hold.  Bitcoons in a wallet have no real value until they are traded for something tangible.

New word:  "Bitcoons"  A Bitcoin tycoon! Smiley

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September 04, 2013, 11:15:07 AM
 #87

Good arithmetic here, but: There is a reason the welthy, and most other people for that part, have little money and lots of stuff. The reason is the inflation. What you call appreciating assets, is mostly inflation-safe assets. With sound money it is different, you don't have to panic buy these assets, therefore the demand for sound money might be higher than for fiat money, supporting a higher money value.

The point is that even if someday Bitcoin is worth more than all the currency in the world that is still a small fraction of all the wealth in the world.  Your house isn't made of currency, Google isn't made of currency, the patent for a new drug ins't made of currency.  They all contribute to the wealth of the world though.    

[..]

That is correct, and the value of all currencies in the world will be the sum of what the people of the world wants to keep in liquids, either for saving or just for having handy.
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September 04, 2013, 11:20:54 AM
 #88

Good arithmetic here, but: There is a reason the welthy, and most other people for that part, have little money and lots of stuff. The reason is the inflation. What you call appreciating assets, is mostly inflation-safe assets. With sound money it is different, you don't have to panic buy these assets, therefore the demand for sound money might be higher than for fiat money, supporting a higher money value.

The point is that even if someday Bitcoin is worth more than all the currency in the world that is still a small fraction of all the wealth in the world.  Your house isn't made of currency, Google isn't made of currency, the patent for a new drug ins't made of currency.  They all contribute to the wealth of the world though.    

I still believe that Bitcoin becoming the single world currency is a dubious and highly unlikely pipe dream but lets say it happens.   Even those with massive Bitcoin holdings would still have a rounding error of the wealth of the world.  Unless they plant to eat Bitcoins, watch scrolling screens of private keys as entertainment, and sleep inside a Bitcoin they are going to liquidate some of the wealth (which is already a rounding error on total global wealth) to buy food, entertainment, housing, etc.

I tried to address this point a few posts above. I also have to say, it doesn't really become clear in my original post because, well, I didn't really think of it that way yet when I wrote it.

The point is not so much how big the share of the total wealth is, now with "traditional" billionaires or in the future with bitcoin "billionaires", but about the ratio between percentage of wealth owned now, and then.

Follow my assumptions in the original post for a second, okay? Then my point is, the current richest person holds at most 0.1% of money supply (yes, only money supply, not overall wealth). In the brightest of all bitcoin futures, someone might hold more than 2% of money supply. So the point isn't that 2% is too much, but that this would constitute a 20-fold increase in relative wealth. That's at least worth thinking about, IMO.







Not sure which Bitcoin wallet to use? I suggest to take a look at Electrum.
Electrum is an open-source lightweight client: user friendly, fast, and one of the safest ways to store, send or receive bitcoins.
For executables (Windows, OSX, Linux, Android), source code and documentation, see the Electrum homepage.
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September 04, 2013, 11:24:29 AM
 #89

I find it amazing people here are so diligently looking for a way to destroy bitcoin.

Invalidate wallets?  Forced redistribution?  Wow.

That said entities that hold lots of coins are not powerful by means of the number of coins they hold.  Bitcoins in a wallet have no real value until they are traded for something tangible.

The economy will redistribute itself over time.  Think of the famous 10kBTC pizza.  We will need to see lots more pizzas bought with btc before we ever need to worry about who is rich and powerful.

A fair economic system is not one in which everyone has the same amount of money.  Think about why.

Your understanding of what you're reading is not significantly influenced by what is actually written, huh?

Not sure which Bitcoin wallet to use? I suggest to take a look at Electrum.
Electrum is an open-source lightweight client: user friendly, fast, and one of the safest ways to store, send or receive bitcoins.
For executables (Windows, OSX, Linux, Android), source code and documentation, see the Electrum homepage.
xxjs
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September 04, 2013, 11:24:41 AM
 #90

Good arithmetic here, but: There is a reason the welthy, and most other people for that part, have little money and lots of stuff. The reason is the inflation. What you call appreciating assets, is mostly inflation-safe assets. With sound money it is different, you don't have to panic buy these assets, therefore the demand for sound money might be higher than for fiat money, supporting a higher money value.

The point is that even if someday Bitcoin is worth more than all the currency in the world that is still a small fraction of all the wealth in the world.  Your house isn't made of currency, Google isn't made of currency, the patent for a new drug ins't made of currency.  They all contribute to the wealth of the world though.    

I still believe that Bitcoin becoming the single world currency is a dubious and highly unlikely pipe dream but lets say it happens.   Even those with massive Bitcoin holdings would still have a rounding error of the wealth of the world.  Unless they plant to eat Bitcoins, watch scrolling screens of private keys as entertainment, and sleep inside a Bitcoin they are going to liquidate some of the wealth (which is already a rounding error on total global wealth) to buy food, entertainment, housing, etc.

I tried to address this point a few posts above. I also have to say, it doesn't really become clear in my original post because, well, I didn't really think of it that way yet when I wrote it.

The point is not so much how big the share of the total wealth is, now with "traditional" billionaires or in the future with bitcoin "billionaires", but about the ratio between percentage of wealth owned now, and then.

Follow my assumptions in the original post for a second, okay? Then my point is, the current richest person holds at most 0.1% of money supply (yes, only money supply, not overall wealth). In the brightest of all bitcoin futures, someone might hold more than 2% of money supply. So the point isn't that 2% is too much, but that this would constitute a 20-fold increase in relative wealth. That's at least worth thinking about, IMO.


I get it and you are right.
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September 04, 2013, 11:55:59 AM
 #91

Good arithmetic here, but: There is a reason the welthy, and most other people for that part, have little money and lots of stuff. The reason is the inflation. What you call appreciating assets, is mostly inflation-safe assets. With sound money it is different, you don't have to panic buy these assets, therefore the demand for sound money might be higher than for fiat money, supporting a higher money value.

A good point! People usually say that money is not wealth, but that is simply contradict with the modern theory of value: Value is decided by supply and demand, as long as there is a demand for money, it has value

The demand for fiat money as a saving medium is very limited because of its inflative nature, but the demand for bitcoin can grow forever because of its deflative nature. Since this currency is the most liquid format, many physical assets will be converted into it, and those will also back the value of bitcoin

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September 04, 2013, 12:01:51 PM
 #92


Follow my assumptions in the original post for a second, okay? Then my point is, the current richest person holds at most 0.1% of money supply (yes, only money supply, not overall wealth). In the brightest of all bitcoin futures, someone might hold more than 2% of money supply. So the point isn't that 2% is too much, but that this would constitute a 20-fold increase in relative wealth. That's at least worth thinking about, IMO.

Again, the current richest person (central banks) holds 100% of money supply, and they could increase or decrease the value of money at will

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September 04, 2013, 12:06:26 PM
 #93

I think, though could be wrong, the wealth of a billionaire is usually reported in terms of the current value of their assets IF they were to sell them all and convert to cash.

Usually their wealth would be held in things like companies they own or have a stake in, properties like mansions that they own, fine art like picasso paintings, gold bullion, only a miniscule proportion of wealth would be held in fiat currency by most billionaires.

They could hold bitcoins as a speculative investment. But at the moment bitcoins are inflationary not deflationary, although their value is increasing this is not due to deflation and won't be for a long time yet.

If fiat currency was to suffer a catestrophic loss of value through hyperinflation or something like that, most billionaires will be mostly unaffected or in fact see their net wealth increase as hard assets become much more sought after. The wealth of the world, which is buildings, companies, precious metals and stuff would not change.

If bitcoins was to replace central bank issued currency as the popular choice of money, billionaires could easily sell their assets in exchange for bitcoins whenever they need a medium of exchange. If bitcoins ever becomes solid enough it may proove to also be a worthy asset to hold as a store of value, but it probably isnt that yet.
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September 04, 2013, 12:07:41 PM
 #94


Follow my assumptions in the original post for a second, okay? Then my point is, the current richest person holds at most 0.1% of money supply (yes, only money supply, not overall wealth). In the brightest of all bitcoin futures, someone might hold more than 2% of money supply. So the point isn't that 2% is too much, but that this would constitute a 20-fold increase in relative wealth. That's at least worth thinking about, IMO.

Again, the current richest person (central banks) holds 100% of money supply, and they could increase or decrease the value of money at will

Rothschilds reputedly own the central banks (no i don't have a source for that)
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September 04, 2013, 11:35:29 PM
 #95

I find it amazing people here are so diligently looking for a way to destroy bitcoin.

Invalidate wallets?  Forced redistribution?  Wow.

That said entities that hold lots of coins are not powerful by means of the number of coins they hold.  Bitcoins in a wallet have no real value until they are traded for something tangible.

The economy will redistribute itself over time.  Think of the famous 10kBTC pizza.  We will need to see lots more pizzas bought with btc before we ever need to worry about who is rich and powerful.

A fair economic system is not one in which everyone has the same amount of money.  Think about why.

Your understanding of what you're reading is not significantly influenced by what is actually written, huh?

Quite the opposite. I understood your op and in my opinion your ideas destroy the essence of what is right about bitcoin.

It does not mean I misunderstand you because I disagree with you.
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September 04, 2013, 11:39:48 PM
 #96

Quite the opposite. I understood your op and in my opinion your ideas destroy the essence of what is right about bitcoin.
It does not mean I misunderstand you because I disagree with you.
Moreover, the ideas in OP are justified by a nonexistent problem.

They're there, in their room.
Your mining rig is on fire, yet you're very calm.
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September 04, 2013, 11:42:47 PM
 #97

Extrapolation of the GINI curves for global wealth reveal that there are most likely undisclosed trillionaires. You can make assumptions based on reported wealth for individuals, but assumptions based on statistical distribution are actually based on more information.

while i cannot corroborate this, I am aware of families who have hidden their fortunes for over 200+ years

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September 04, 2013, 11:46:31 PM
 #98

There are an infinite number of possible crypto currencies.   Bitcoin's share of the market is already shrinking.  With an infinite supply, I'm not sure why people expect crypto currencies to be deflationary for the long run.

economies of scale produce oligopoly in markets

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September 05, 2013, 03:33:24 AM
 #99

How would you design a cryptocurrency to solve the initial distribution problem? Imagine you are in 2009, when nobody knew that it could succeed as money at all.

Like I wrote in a comment before, I don't know of the solution. I'm just pointing out that bitcoin, by virtue of being attrative for early adopters (deflationary, big rewards for early miners), will also suffer from extreme concentration of wealth. Which ultimately might cause its downfall.

The solution is probably not popular with this group. Bitcoin will pave the way and show everyone what a truly global cryptocurrency can do. Once world awareness/acceptance is obtained create a new coin with a different proof of work that can be mined on a global scale by everyone all at once. Introduce the coin with simultanious sales of the new ASIC type device worldwide that mines this new coin.

In a way this is inevitable. In 3 years 75% in 7 years almost 90% will have been mined. Bitcoin will not replace fiat in that time frame. Cryptocurrency is superior to fiat but do you really expect the powers that be to sit back and adopt it as a world currency. They will try to crush it they will fail but probably will slow widespread adoption. When it is realized that cryptocurrency cannot be stopped attention will focus on replacing bitcoin with something new. If you missed the bitcoin wagon it is far better to reset the playing field then to give 90% of all the worlds wealth to those that happened to mine the first cryptocurrency.

Bitcoin will never die and will always have value probably significant value but I doubt it will be the dominant cryptocurrency of the future. Think about it if you first learn about bitcoin 7 years from now would you support a cryptocurrency that had been nearly 90% premined by a select elite for a world currency or a new coin that everyone had a chance to mine.  
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September 05, 2013, 08:47:16 AM
 #100

I find the whole basis for this discussion is moot.

Yes, if bitcoin really takes off, then some people will get very, VERY rich from it. It doesn't matter if you "like" it or whether or not we all think it's a "good idea". It will just happen, and there's nothing you can or should do about it. Personally I'm happy for them.

Besides: Money only has power when you SPEND IT. If you spend it, it goes into circulation. If you don't spend it, being rich is useless. The only way to both spend the money AND stay rich, is to invest it in businesses and projects that produce products and jobs. But most newly rich people have poor money management skills and will probably piss away the money anyway, so the point is kinda moot.
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