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Author Topic: Ideas for more efficient distribution of money?  (Read 13040 times)
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AnonyMint
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November 22, 2013, 08:17:26 AM
 #1

How can we improve upon Bitcoin's highly concentrated coin distribution?

Only the top 3% should be power-law concentrated, the rest distributed with diffuse gas random concentrations:

"Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States" by A. A. Dragulescu and V. M. Yakovenko

We shouldn't give coins away to the lazy who do nothing to earn them, because Risto explained that in Russia the recipients just squandered the gifts.

Ideas thus far:

1. Decentralized CPU-only proof-of-work, but the threat are botnets

2. Centralized premine then distributed with a faucet first-come, first-served until depleted.

3. Centralized premine then distributed to merchants every month or quarter evaluated to be bonafide. So this really requires hiring staff, which should be paid either from premine or a foundation with membership fees.

Hit me with ideas please!

I will keep self-moderation to an absolute minimum but please try to stay on topic and no ego battles.


This is my fundamental insight.

http://www.coolpage.com/commentary/economic/shelby/Demise%20of%20Finance,%20Rise%20of%20Knowledge.html

http://www.coolpage.com/commentary/economic/shelby/Understand%20Everything%20Fundamentally.html

http://unheresy.com/Information%20Is%20Alive.html

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AnonyMint
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November 22, 2013, 08:51:15 AM
 #2

Watch out for emunie, it may just take the crypto crown.

Any cryptocurrency aiming to have low volatility will have low adoption. It seems the creator doesn't understand economics.

I have also devoted some thinking to the matter. Bitcoin's parameters are the most optimal that I have seen, if the objective is to get the currency off the ground and achieve the highest 'market cap' valuation:

- Initial creation is rather centralized, in opposed to distributed. (Nearly) Same amount of old world resources must be burned to create new currency.
- Most holders by number need to acquire their bitcoins from an exchange, giving them a fiat price.

If the value is measured in fiat price vs in # of transactions.

Short-term vs long-term valuation respectively.

- This leads to a power-law distribution in bitcoin balances from the beginning. This is the most natural distribution and minimum amount of trades need to be made in the aftermarket to achieve it.

Apparently most natural for an ponzi-bubble investor coin, not for a transaction coin.

- This leads to stiff but predictable supply inelasticity, which leads to high volatility mainly to the upside.

Agreed.

Compare this to the XRP distribution, which completely disregards all economic principles and thus was an utter failure, forever destining XRP to be a trading card game, and discrediting the (otherwise promising) Ripple network in the process.

Is it a strawman to state that the failure of a fractional reserve system predicts the failure of any system of gas diffusion distribution which is capitalistic-- the work done to attain the coin should roughly equal the value of the coin?

I think the answer is no.

It seems to me that the key distinction is that to distribute a coin widely and capitalistically, the economy-of-scale of aggregating a plurality of worker units must be very low.

In other words, the fungibility and divisibility of tasks should be very low and high respectively.

The reason money exists is because it increases the maximum divisibility of labor, because money is fungible but knowledge is not. Otherwise we would barter directly in knowledge.

Large capital can't buy diverse knowledge, the economy-of-scale is low because the divisibility and specialization is high.

This is my fundamental insight.

http://www.coolpage.com/commentary/economic/shelby/Demise%20of%20Finance,%20Rise%20of%20Knowledge.html

http://www.coolpage.com/commentary/economic/shelby/Understand%20Everything%20Fundamentally.html

http://unheresy.com/Information%20Is%20Alive.html

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November 22, 2013, 08:56:15 AM
 #3

The money that us early adopters are putting into Bitcoin is helping to build the infrastructure. Those who choose to ignore Bitcoin or wait till full adoption, don't deserve the gains that we do. We are doing the work and taking the risks of failure.

I feel that I am finally being rewarded now for my years of studying philosophy, economics, computer science, and mathematics. This knowledge is freely available to everyone in all the major 1st world countries at free libraries. Anyone who acquired an education and took the time to examine Bitcoin would have realized how world changing this techonology was going to be. For that matter they still can do so.

My only regret is that the 3rd world may only get a tiny sliver of the Bitcoin pie. The more I think about it though, the more that I suspect that 3rd world countries may benefit greatly too. Repaying loans will become easier due to high inflation as fiat money dies.

3rd world countries will also benefit greatly from the ease of foreigners spending money locally. Relatives working abroad will be able to send money to relatives much easier.

For the last 100 years, the world has been using currency that loses value over time. We are so use to it that we cannot even imagine a world that uses real money anymore. Bitcoin will change all that and I am excited to be living in this new dawning age of mankind.

The future looks bright.

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November 22, 2013, 09:01:38 AM
 #4

You are arguing that Bitcoin is the most efficient distribution of money?

And you are justifying it by saying society owes you something for studying (probably mostly all wrong) theories (if taught in school) instead of producing real goods&services and selling them into the marketplace as I did?

True the large capitalists should also be rewarded but only where we need them, which isn't much as far as I can see. They are perhaps needed on the periphery, investing in 3rd parties companies built around the coin, not in the coin itself much.

And if small capital brought into the coin early, e.g. mining, you should be rewarded but to reward you properly over the long-term, we need to spread some coins out to the world. Do you really need 10000000X gains, when you know damn well that you are never going to collect on that! It is completely unrealistic and insane. To build a good currency, you need to be sane and realistic. 10 or 100x or even 1000x gains is more than sufficient to motivate early adopters.

Hey there are many of you now. You are not rare. I can find 1000s of people to mine a coin. I don't need you, if you will be unrealistic.

Competition will take over now. As far as I can see, a small hangout monopoly ponzi-bubble isn't natural (except as a short-term mania which humans seem to periodically destroy themselves with).

It may be the case that money can't be decentralized. That may very well be true, then we should stop. The government will enslave us even more, given an electronic currency they control. I at least want to try to prove it isn't so. I am motivated to see that the norm is 97% are not power-law distributed. See the OP.

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AnonyMint
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November 22, 2013, 09:21:58 AM
 #5

3. Centralized premine then distributed to merchants every month or quarter evaluated to be bonafide. So this really requires hiring staff, which should be paid either from premine or a foundation with membership fees.

Don't we sort of have that now with Bitcoin but decentralized because you all are always telling merchants to accept Bitcoin, but do you follow up and spend money with them when they do?

How could we better scale this?

P.S. I have have used BTC only for spending to merchants, no investment holdings nor gains. I am the example of the perfect user.

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November 22, 2013, 09:50:32 AM
 #6

How can we improve upon Bitcoin's highly concentrated coin distribution?

Only the top 3% should be power-law concentrated, the rest distributed with diffuse gas random concentrations:

"Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States" by A. A. Dragulescu and V. M. Yakovenko

Bitcoin will spontaneously be distributed according to the same laws as other forms of wealth, ceteris paribus (ie. "given that the other parameters stay the same"). It takes some time to find the dynamic equilibrium, after which the situation looks static from a statistical point of view.

Quote
We shouldn't give coins away to the lazy who do nothing to earn them, because Risto explained that in Russia the recipients just squandered the gifts.

Value cannot be created by fiat. In a way or another, you have to sacrifice something to attain something valuable. The community that put 1000s of hours into Bitcoin software development, mining and forum in 2009-early 2010 did it in anticipation of a reward. Bitcoin was the most undervalued in its history in 6/2010, when it could still be purchased at $0.005 in OTC trade. Only then started they receive a reward for their investment. Mining coins was a useless waste of time and talent if the coins had no value.

In your proposed system, the coins would be distributed so widely that you would not attract the best and the brightest to participate in the beginning. Great expense of time would be invested, to get $20 per year in "free" coin rewards. Such a system attracts peasants, not kings. I have declined much greater offers of "free money" and so do most of my friends, all the time. We don't have the time to pick all free money that is available. I even waited for Bitcoin to prove itself by going up 100x and down -90% before investing.

I can already buy anything I want from peasants with my bitcoins, gold, silver, euros, dollars, and (new!) rmb. You are creating a 3rd world currency with noble aims but I highly doubt that it will ever fly, since it does not have a skeleton, which is required to direct the energy to the wings. Bitcoin has its skeleton (a community, early adopters, power law) firmly in place. Ripple is an example of how not to do it.

By trying to annul power law, you mutilate your creation so that it cannot function.
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November 22, 2013, 10:14:14 AM
 #7

Can you present a cogent argument that they haven't been rewarded already for those 1000s of hours many times in excess of any normal return on investment for programmers?

Any way, no one is talking about ending gains for anyone, i.e. not the SocialistCoin. I believe we are talking about distributing some portion of the value more efficiently, so we can compete with the fiat masters who have the power to widely distribute nearly overnight by decree.

Open-source is not very forgiving on misers, it routes around them per Coase's Theorem.

Bitcoin will not spontaneously distribute. You can present no basis for that. The rich do not spend enough for that to happen.

The only way it happens is confiscate and redistribution by the government, which I am telling you is coming either because it goes to $trillions market cap and then government punishes those who cashed out before the crash, or because the government or the market destroys Bitcoin before that and the redistribution is accomplished.

This is what the global debt restructuring will be all about. Another Brenton-Woods.

Your link estimates 25% hold 95% of all BTC, 4% hold 75% of all BTC, and 1% hold 50% of all BTC. And this is only 1/25000 of the global population, so the concentration is astronomically off-the-charts if compared to rest of the masses.

Why do you assume you couldn't attract the best and brightest in my proposal? Can't investors buy the coin on exchange? Can't people still by mining equipment and mine? Did you assume I propose a higher rate of debasement than Bitcoin's currently very high 12.5% per year?

What did I write that proposed to destroy the power-law for the upper 3%? I can't see it.

Did I change my username to RobinHood?

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November 22, 2013, 10:18:55 AM
 #8

How can we improve upon Bitcoin's highly concentrated coin distribution?

Only the top 3% should be power-law concentrated, the rest distributed with diffuse gas random concentrations:

"Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States" by A. A. Dragulescu and V. M. Yakovenko

We shouldn't give coins away to the lazy who do nothing to earn them, because Risto explained that in Russia the recipients just squandered the gifts.

Ideas thus far:

1. Decentralized CPU-only proof-of-work, but the threat are botnets

2. Centralized premine then distributed with a faucet first-come, first-served until depleted.

3. Centralized premine then distributed to merchants every month or quarter evaluated to be bonafide. So this really requires hiring staff, which should be paid either from premine or a foundation with membership fees.

Hit me with ideas please!

I will keep self-moderation to an absolute minimum but please try to stay on topic and no ego battles.

Thoughts:

1. Decentralized CPU only proof of work will still result in what happened to Bitcoin. People with more resources can afford more CPU and so on.

2. Centralized premine presents itself as it is. Centralized. People need to trust this centralized source in that they (in good will) will eventually decentralize the seeds of labour.
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November 22, 2013, 10:26:57 AM
 #9

Can you present a cogent argument that they haven't been rewarded already for those 1000s of hours many times in excess of any normal return on investment for programmers?

Ever since Mt.Gox started, every early adopter had an actual chance to sell any % of their coins and receive dollars in return. So from that point on, they can be treated as investors, since the early adopter phase (in the strictest sense) was over. Every day that they decided to not sell their early-mined coins, they rejected the other investment/consumption opportunities in favor of holding the coins. This puts them at exactly the same level as me, who never mined or even installed the software.
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November 22, 2013, 10:38:50 AM
 #10

I don't get why you want "efficient distribution of money" ?  Are we talking distribution of wealth?

Any system you try be it CPU mining , centralized mining and then distribution by an "authority" or any other system you think of is doomed to fail.  Wealth goes to wealth and that's that.  Even if you annul all current wealth in the world and distribute equal amount of your new altcoin to each and every person on the earth within a very short period of time that coin and wealth will move to a top few percent once again.

"We are just fools. We insanely believe that we can replace one politician with another and something will really change. The ONLY possible way to achieve change is to change the very system of how government functions. Until we are prepared to do that, suck it up for your future belongs to the madness and corruption of politicians."
Martin Armstrong
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November 22, 2013, 10:43:36 AM
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I don't get why you want "efficient distribution of money" ?  Are we talking distribution of wealth?

Any system you try be it CPU mining , centralized mining and then distribution by an "authority" or any other system you think of is doomed to fail.  Wealth goes to wealth and that's that.  Even if you annul all current wealth in the world and distribute equal amount of your new altcoin to each and every person on the earth within a very short period of time that coin and wealth will move to a top few percent once again.

I believe OP idea of efficient distribution of money equates to a proper distribution of wealth as well as a good velocity of money being exchanged. It requires widespread usage.

As for bitcoin achieving good distribution of wealth as well as a good medium of exchange, we can already see how it is not going to achieve both
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November 22, 2013, 11:07:08 AM
 #12

Thoughts:

1. Decentralized CPU only proof of work will still result in what happened to Bitcoin. People with more resources can afford more CPU and so on.

2. Centralized premine presents itself as it is. Centralized. People need to trust this centralized source in that they (in good will) will eventually decentralize the seeds of labour.

Regarding #1, I had written the following:

You assume that Bitcoins are actually/ will be mined to be spent.

I can actually prove they will be spent if they were mined with CPU-only instead.

1. Masses will download and mine even when the coins returned are worth much less than the electricity consumed. Because it will be too small to notice on their electric bill.

2. Thus professional miners will be gone.

3. Masses spend because they don't have much. Even if they save it for a while, eventually the value is large enough they spend it. Middle class spend a much higher % of their income on personal needs than rich businessmen investors do.

Well if I try to eliminate botnets by increasing the memory requirement to 16GB, then I am not so sure the above applies because most will need to make a small investment to add memory to their PC, yet I think it does apply much more so than for Bitcoin.

Regarding #2, with every altcoin you are trusting the developer, just as you are trusting the core devs and Bitcoin foundation.

But they can't premine again, so the risk of misuse is declining over time.

The point is to jump-start the distribution and create a market where the rich have to seek out the coins by selling products and building exchange markets, not just doing low-knowledge activity of pressing a button on their computer.

Risto senses that I am attempting to reduce (the value of) speculation and he is somewhat justified, though not entirely of course because liquid markets are always better.

Perhaps he will need to go back to work again and build clearing houses for the little guys. Or he can wait for someone else to do it, then buy in-size later.

Small things grow faster. It is just a fact of nature.

Big capital becomes dumb. It can't do anything for the world any more because it is too large and the maximum divisibility-of-labor is no longer worth the effort of large capital.

That is why society is always at war with large capital.

I'd rather use technology to make the process more efficient than democracy implosions and megadeath, wars, French Revolutions off-with-their-heads, etc..

We are in a new era. Bottom-up knowledge and decentralization; the industrial age, high-fixed-capital investment is over.

We don't need your capital as much any more. We only need our PCs and our brains.

Top-down, large capital will become meaningless. It will die. [redacted]

Society is tired of this shit of capital dominating knowledge.

Is it a strawman to state that the failure of a fractional reserve system predicts the failure of any system of gas diffusion distribution which is capitalistic-- the work done to attain the coin should roughly equal the value of the coin?

I think the answer is no.

It seems to me that the key distinction is that to distribute a coin widely and capitalistically, the economy-of-scale of aggregating a plurality of worker units must be very low.

In other words, the fungibility and divisibility of tasks should be very low and high respectively.

The reason money exists is because it increases the maximum divisibility of labor, because money is fungible but knowledge is not. Otherwise we would barter directly in knowledge.

Large capital can't buy diverse knowledge, the economy-of-scale is low because the divisibility and specialization is high.

This is my fundamental insight.

http://www.coolpage.com/commentary/economic/shelby/Demise%20of%20Finance,%20Rise%20of%20Knowledge.html

http://www.coolpage.com/commentary/economic/shelby/Understand%20Everything%20Fundamentally.html

http://unheresy.com/Information%20Is%20Alive.html

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November 22, 2013, 11:22:39 AM
 #13

Can you present a cogent argument that they haven't been rewarded already for those 1000s of hours many times in excess of any normal return on investment for programmers?

Ever since Mt.Gox started, every early adopter had an actual chance to sell any % of their coins and receive dollars in return. So from that point on, they can be treated as investors, since the early adopter phase (in the strictest sense) was over. Every day that they decided to not sell their early-mined coins, they rejected the other investment/consumption opportunities in favor of holding the coins. This puts them at exactly the same level as me, who never mined or even installed the software.

And that is the day innovation decelerated, when the vested interests of slow, monolithic, top-down capital took control.

And so Coase's theorem will just route around you and sprout up something new.

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November 22, 2013, 11:26:55 AM
 #14

I don't get why you want "efficient distribution of money" ?  Are we talking distribution of wealth?

Any system you try be it CPU mining , centralized mining and then distribution by an "authority" or any other system you think of is doomed to fail.  Wealth goes to wealth and that's that.  Even if you annul all current wealth in the world and distribute equal amount of your new altcoin to each and every person on the earth within a very short period of time that coin and wealth will move to a top few percent once again.

If you read my prior two replies, I hope it is becoming clear that I view capital as knowledge. Money is just a claim on future human labor. But unlike menial labor, knowledge work is not fungible. Read the linked papers in my OP to understand why I believe this changes everything.

Money will now be almost entirely useless as a store-of-value and only as an exchange-of-value.

We will store our knowledge in the code.

We will use money only to exchange the value in our code.

The non-code economy will shrink relative to the code-economy.

Everything will change.

The Bitcoin ponzi is the last big bang of capital, as capital is running around like a chicken with head cutoff and can't find a safe haven. Because there is no more safe haven for capital. Capital is dying. A knowledge phoenix will follow.

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November 22, 2013, 11:34:07 AM
 #15

2. Centralized premine then distributed with a faucet first-come, first-served until depleted.

I am thinking the faucets are for people in the developing countries. They don't have a computer to mine with, but they have a cell phone. If we can leverage the cell phone somehow to make sure the faucets are not being gamed by the large capitalists, then I would be very happy if we could distribute say 10% of the coins to the developing world, then 90% to mining.

That would create unfathomable network effects.

I think we should distribute them daily or weekly, so the recipients can spend them (or save them) on everyday things. This should or may drive transactions and merchants through the roof and make our coin so much better than Bitcoin.

We can begin the process of destroying Bitcoin and the plans of the elite (large, dumb capital) for their electronic NWO currency outcome.

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November 22, 2013, 11:41:20 AM
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I am thinking the faucets are for people in the developing countries. They don't have a computer to mine with, but they have a cell phone. If we can leverage the cell phone somehow to make sure the faucets are not being gamed by the large capitalists, then I would be very happy if we could distribute say 10% of the coins to the developing world, then 90% to mining.

That would create unfathomable network effects.

I think we should distribute them daily or weekly, so the recipients can spend them (or save them) on everyday things. This should or may drive transactions and merchants through the roof and make our coin so much better than Bitcoin.

What you need to do is to make them destroy the same value when they gain the coins. Digging holes, taking pictures of them and filling them? Slaying WoW monsters? Turning electricity to heat? Extract minerals from the ground?

This makes it equitable, and the rich will just buy it from the exchanges.

Even waiting in the line will qualify for opportunity cost..

Damn the fart of Keynes is suffocating me...
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November 22, 2013, 12:01:38 PM
 #17

Also you can't buy my knowledge with any capital. We know that but it still makes only capital, not knowledge, money.

[snip]

I think the code will be worth orders-of-magnitude more than the money as we move into 3D printing, etc..

So it is what you can design and code that will determine your wealth in the new economy. Your capital will be less useful than it has been.

So generating money as a store-of-value won't be the only goal. Generating code that is most used and downloaded will be.

I could be wrong, but I think all the signs of a huge paradigm-shift are in place.

To expound on this, imagine nothing will be shipped. You download a code, and a 3D printer in your house creates the objects for you.

The code will be almost like money, except it won't be fungible.

Thus your store-of-value will be the code, and you will use money only to exchange the codes between each other.

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November 22, 2013, 12:23:57 PM
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I am thinking the faucets are for people in the developing countries. They don't have a computer to mine with, but they have a cell phone. If we can leverage the cell phone somehow to make sure the faucets are not being gamed by the large capitalists, then I would be very happy if we could distribute say 10% of the coins to the developing world, then 90% to mining.

That would create unfathomable network effects.

I think we should distribute them daily or weekly, so the recipients can spend them (or save them) on everyday things. This should or may drive transactions and merchants through the roof and make our coin so much better than Bitcoin.

What you need to do is to make them destroy the same value when they gain the coins. Digging holes, taking pictures of them and filling them? Slaying WoW monsters? Turning electricity to heat? Extract minerals from the ground?

This makes it equitable, and the rich will just buy it from the exchanges.

Even waiting in the line will qualify for opportunity cost..

Damn the fart of Keynes is suffocating me...

How can you mop up 0.001 BTC at the exchanges? I think they are much more like to spend or save them.

You are missing my key point, I make it too small for you. You will buy from the miners instead.

I would love to see you refute this.

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November 22, 2013, 12:49:30 PM
 #19

I am thinking the faucets are for people in the developing countries. They don't have a computer to mine with, but they have a cell phone. If we can leverage the cell phone somehow to make sure the faucets are not being gamed by the large capitalists, then I would be very happy if we could distribute say 10% of the coins to the developing world, then 90% to mining.

That would create unfathomable network effects.

I think we should distribute them daily or weekly, so the recipients can spend them (or save them) on everyday things. This should or may drive transactions and merchants through the roof and make our coin so much better than Bitcoin.

What you need to do is to make them destroy the same value when they gain the coins. Digging holes, taking pictures of them and filling them? Slaying WoW monsters? Turning electricity to heat? Extract minerals from the ground?

This makes it equitable, and the rich will just buy it from the exchanges.

Even waiting in the line will qualify for opportunity cost..

Damn the fart of Keynes is suffocating me...

It is mathematically impossible for large capital to always accumulate. Eventually you would own everything and there would be nobody to transact with.

This is why periodically there are debt-writedowns and the millionaires are fleeced by the $trillionaires who control this world. The $trillionaires then make sure they issue debt to the masses so the masses can transact so the $millionaires can rise again.

This is a hamster wheel, and you will not win Risto. They will fleece you.

Society will not tolerate the system you imagine is true, because it can't exist. It doesn't.

So how do we best distribute capital such that the real productivity in the economy is most incentivized?

That is what is really boils down to.

I am not a socialist. I don't believe we can motivate people by giving them something for nothing.

But how do you make a decentralized currency work, so that the knowledge creators can leverage it?

You've got to distribute it widely and create network effects.

Otherwise the $trillionaires will do it. They will issue debt to the masses on our behalf. Then we lose decentralization and they maintain control.

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November 22, 2013, 01:32:55 PM
 #20

This is a hamster wheel, and you will not win Risto. They will fleece you.

I am doing what feels good to me, you are doing what feels good to you. We are both winning. Every day.

"1984" ends with the notion that you will love big brother after enough brainwash (and torture). So the masses will also feel good. I don't know how to interact with you because you think everyone desires your lifestyle, which honestly is quite extreme, and unsuitable for most.
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