Bitcoin supports a Meritocracy

[Mageant]

IMHO a mature Bitcoin economy will encourage and create a meritocratic society.

Here is my reasoning:

In the fiat world you can get rich by just having capital which automatically increases through interest (above inflation rate). Interest, as you know, is basically a built-in feature of fiat money. Thus anybody, regardless of how good or bad they are, can get wealthy and influential just by having a large amount of money at some time (through inheritance for example).

In the Bitcoin world though it is very hard to increase your Bitcoin wealth just using Bitcoin. i.e. capital gains. It is very hard to actually get interest from Bitcoins. This is because of its deflationary nature only few people are willing to go into Bitcoin denominated debt.

The only way your capital can increase faster than just holding Bitcoins is to have a business which is growing faster than the Bitcoin economy in total. Obviously only very few businesses can acheive that kind of growth.

The only other way to actually increase your net worth in Bitcoins is therefore through your above average work or contributions. These are the people that will end up having the greatest Bitcoins holdings and therefore more influence.

For everybody else their Bitcoin net worth will either just stay or slowly decrease. Note that this does not mean less purchasing power, just a smaller percentage of the total number of Bitcoins.

As a final conclusion this means that over time Bitcoin holdings will be distributed more evenly. You will not have the automatic "rich get richer" effect you have in the fiat world.

What do you think?
 

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[CIYAM]

Unfortunately the problem of not having interest means that "ponzi schemes" (such as pirateat40) will be always an issue.

It will take some time for people to "believe" that they "don't need interest" (it is a habit that has been ingrained for a long time).

[Kungfucheez]

IMHO a mature Bitcoin economy will encourage and create a meritocratic society.

Here is my reasoning:

In the fiat world you can get rich by just having capital which automatically increases through interest (above inflation rate). Interest, as you know, is basically a built-in feature of fiat money. Thus anybody, regardless of how good or bad they are, can get wealthy and influential just by having a large amount of money at some time (through inheritance for example).

In the Bitcoin world though it is very hard to increase your Bitcoin wealth just using Bitcoin. i.e. capital gains. It is very hard to actually get interest from Bitcoins. This is because of its deflationary nature only few people are willing to go into Bitcoin denominated debt.

The only way your capital can increase faster than just holding Bitcoins is to have a business which is growing faster than the Bitcoin economy in total. Obviously only very few businesses can acheive that kind of growth.

The only other way to actually increase your net worth in Bitcoins is therefore through your above average work or contributions.

For everybody else their Bitcoin net worth will either just stay or slowly decrease.

As a final conclusion this means that over time Bitcoin holdings will be distributed more evenly. You will not have the automatic "rich get richer" effect you have in the fiat world.

What do you think?
 

Well what about retirees? Are you saying someone has to keep working into their 70's or 80's because they have to continually work to earn income?

[Mageant]

IMHO a mature Bitcoin economy will encourage and create a meritocratic society.

Here is my reasoning:

In the fiat world you can get rich by just having capital which automatically increases through interest (above inflation rate). Interest, as you know, is basically a built-in feature of fiat money. Thus anybody, regardless of how good or bad they are, can get wealthy and influential just by having a large amount of money at some time (through inheritance for example).

In the Bitcoin world though it is very hard to increase your Bitcoin wealth just using Bitcoin. i.e. capital gains. It is very hard to actually get interest from Bitcoins. This is because of its deflationary nature only few people are willing to go into Bitcoin denominated debt.

The only way your capital can increase faster than just holding Bitcoins is to have a business which is growing faster than the Bitcoin economy in total. Obviously only very few businesses can acheive that kind of growth.

The only other way to actually increase your net worth in Bitcoins is therefore through your above average work or contributions.

For everybody else their Bitcoin net worth will either just stay or slowly decrease.

As a final conclusion this means that over time Bitcoin holdings will be distributed more evenly. You will not have the automatic "rich get richer" effect you have in the fiat world.

What do you think?
 

Well what about retirees? Are you saying someone has to keep working into their 70's or 80's because they have to continually work to earn income?

No, retirees will be just using up the Bicoins they saved from the time they were working.
They will not actually be able to increase their Bitcoin net worth.

I believe a Bitcoin economy will be so beneficial to everybody that people can probably retire earlier than they are usually doing now.

As an aside note, saving for your retirement in a Bitcoin economy is very simple. Just put some of your Bitcoins aside that you earn into long-term storage. Then use those Bitcoins after you retire.

[Kungfucheez]

But isn't that just the same thing as regular fiat? Also it seems sort of like your destroying peoples choice to make an investment because you don't want them to. That's their right to do as they choose with their capital.

[Mageant]

But isn't that just the same thing as regular fiat? Also it seems sort of like your destroying peoples choice to make an investment because you don't want them to. That's their right to do as they choose with their capital.

No it's not the same as regular fiat because you can't just save your money into your bank account and hope it will be enough when you retire. Inflation will eat away our purchasing power.

In the fiat world you therefore need to invest your savings for retirement in such a way that will exceed the inflation rate. This is not always so easy because you don't know how high the inflation rate will be and how your investments will fare. That's why it's so complex.

In the Bitcoin world saving for retirement can be very simple. People of course will have the choice of doing otherwise.

[coinrevo]

Interest has nothing to do with fiat money. While modern central banks set short term interest, they don't set long term interest, as interest roughly equals growth (return on capital for production, roughly similar to return on equity for stocks). Gaining interest on BTC currently is difficult that's true. This hopefully will change, but problem is really the volatility of the exchange rate and the inherent risk of pools. Hopefully these will be solved in the long term.

[Kungfucheez]

Interest has nothing to do with fiat money. While modern central banks set short term interest, they don't set long term interest, as interest roughly equals growth (return on capital for production, roughly similar to return on equity for stocks). Gaining interest on BTC currently is difficult that's true. This hopefully will change, but problem is really the volatility of the exchange rate and the inherent risk of pools. Hopefully these will be solved in the long term.

Well yeah I mean that's all I'm really saying. With the price of 1btc so incredibly high it just seems a bit ridiculous. I'm not necessarily disagreeing with you OP, but bitcoins have a long way to go before then

[Mageant]

Interest has nothing to do with fiat money. While modern central banks set short term interest, they don't set long term interest, as interest roughly equals growth (return on capital for production, roughly similar to return on equity for stocks). Gaining interest on BTC currently is difficult that's true. This hopefully will change, but problem is really the volatility of the exchange rate and the inherent risk of pools. Hopefully these will be solved in the long term.

Interest has a lot do with fiat money. All fiat money created is backed by debt, which carries interest. Also because of inflation people are encouraged to seek investments with a high enough return rate (i.e. interest).

In the Bitcoin world there is no such necessity or encouragement.

[Peter Lambert]

IMHO a mature Bitcoin economy will encourage and create a meritocratic society.

Here is my reasoning:

In the fiat world you can get rich by just having capital which automatically increases through interest (above inflation rate). Interest, as you know, is basically a built-in feature of fiat money. Thus anybody, regardless of how good or bad they are, can get wealthy and influential just by having a large amount of money at some time (through inheritance for example).

In the Bitcoin world though it is very hard to increase your Bitcoin wealth just using Bitcoin. i.e. capital gains. It is very hard to actually get interest from Bitcoins. This is because of its deflationary nature only few people are willing to go into Bitcoin denominated debt.

The only way your capital can increase faster than just holding Bitcoins is to have a business which is growing faster than the Bitcoin economy in total. Obviously only very few businesses can acheive that kind of growth.

The only other way to actually increase your net worth in Bitcoins is therefore through your above average work or contributions. These are the people that will end up having the greatest Bitcoins holdings and therefore more influence.

For everybody else their Bitcoin net worth will either just stay or slowly decrease. Note that this does not mean less purchasing power, just a smaller percentage of the total number of Bitcoins.

As a final conclusion this means that over time Bitcoin holdings will be distributed more evenly. You will not have the automatic "rich get richer" effect you have in the fiat world.

What do you think?
 

No. You are wrong. There is no fundamental reason why bitcoins cannot be used for investing, just like fiat. I typically get a better return with my bitcoin stock portfolio (measure in bitcoins) than I do with my fiat stock portfolio (measured in USD).

Actually, it goes even further than that; your premise is flawed if you think holding fiat is a way to get richer. Holding fiat is such a horrible thing to do with your money (because of inflation) that just about nobody does it. Holding bitcoins is a perfectly good way to save money for the future, but holding fiat will just lose you money. Instead of saving their money, fiat users are forced to invest in something. Fiat users will flock to horrible investments, while bitcoin users can wait for good investments to come along.

Finance of the future will be done in bitcoins, see MPEx for the beginnings of this industry.

I predict that in the future the price of bitcoins will stabilize, and people will be much more comfortable denominating debt in bitcoins than they are now. When the price growth of bitcoins slows to a managable number (like 1% a year instead of 5000% a year), it will be much easier to have your business grow faster than bitcoins.

[Mageant]

IMHO a mature Bitcoin economy will encourage and create a meritocratic society.

Here is my reasoning:

In the fiat world you can get rich by just having capital which automatically increases through interest (above inflation rate). Interest, as you know, is basically a built-in feature of fiat money. Thus anybody, regardless of how good or bad they are, can get wealthy and influential just by having a large amount of money at some time (through inheritance for example).

In the Bitcoin world though it is very hard to increase your Bitcoin wealth just using Bitcoin. i.e. capital gains. It is very hard to actually get interest from Bitcoins. This is because of its deflationary nature only few people are willing to go into Bitcoin denominated debt.

The only way your capital can increase faster than just holding Bitcoins is to have a business which is growing faster than the Bitcoin economy in total. Obviously only very few businesses can acheive that kind of growth.

The only other way to actually increase your net worth in Bitcoins is therefore through your above average work or contributions. These are the people that will end up having the greatest Bitcoins holdings and therefore more influence.

For everybody else their Bitcoin net worth will either just stay or slowly decrease. Note that this does not mean less purchasing power, just a smaller percentage of the total number of Bitcoins.

As a final conclusion this means that over time Bitcoin holdings will be distributed more evenly. You will not have the automatic "rich get richer" effect you have in the fiat world.

What do you think?
 

No. You are wrong. There is no fundamental reason why bitcoins cannot be used for investing, just like fiat. I typically get a better return with my bitcoin stock portfolio (measure in bitcoins) than I do with my fiat stock portfolio (measured in USD).

Actually, it goes even further than that; your premise is flawed if you think holding fiat is a way to get richer. Holding fiat is such a horrible thing to do with your money (because of inflation) that just about nobody does it. Holding bitcoins is a perfectly good way to save money for the future, but holding fiat will just lose you money. Instead of saving their money, fiat users are forced to invest in something. Fiat users will flock to horrible investments, while bitcoin users can wait for good investments to come along.

Finance of the future will be done in bitcoins, see MPEx for the beginnings of this industry.

I predict that in the future the price of bitcoins will stabilize, and people will be much more comfortable denominating debt in bitcoins than they are now. When the price growth of bitcoins slows to a managable number (like 1% a year instead of 5000% a year), it will be much easier to have your business grow faster than bitcoins.

In a Bitcoin economy you can never have more than half of the companies or so grow faster in Bitcoin-denominated value. If they somehow did anyway the value of Bitcoin would go up accordingly and thus their valuation would go down.

Therefore it will actually be quite rare to have a Bitcoin-denominated stock actually grow in Bitcoin-denominated value. If a Bitcoin denominated stock actually generates a higher return than just holding Bitcoin then people will flock to that stock diluting it's rate of return down to the average for the entire Bitcoin economy.

[KonstantinosM]

I agree with the title of the thread but let me add another reason.

Bitcoin is decentralized so you don't have people that can place themselves between you and the thing you want to invest in. Guidelines can be created but it is extremely hard to have any regulation that favors the rich.

The rich can't just get richer, they have to have a continually good service.

In fiat, there can be a company that offers good service, gets strong, buys of politicians and influences policy to the point it has a monopoly and then proceed to fuck everyone over unchallenged.

The same is more difficult to achieve with Bitcoins because they allow us, the users to avoid arbitrary power.


It would be difficult to disagree with the fact Bitcoin changes the default of holding money in a bank, to holding money on your own personal property. When you hold bitcoins with the default way, they are 100% under your control and gain no interest.

When a bank holds your cash, they are under the control of the government and the banks, each of which have a lot of points of failure.

The government may tax your bank account for a war by twisting the laws. Or simply fund it by printing more money.
Your bitcoin wallet won't do that as it is not a person.

[Peter Lambert]

No. You are wrong. There is no fundamental reason why bitcoins cannot be used for investing, just like fiat. I typically get a better return with my bitcoin stock portfolio (measure in bitcoins) than I do with my fiat stock portfolio (measured in USD).

Actually, it goes even further than that; your premise is flawed if you think holding fiat is a way to get richer. Holding fiat is such a horrible thing to do with your money (because of inflation) that just about nobody does it. Holding bitcoins is a perfectly good way to save money for the future, but holding fiat will just lose you money. Instead of saving their money, fiat users are forced to invest in something. Fiat users will flock to horrible investments, while bitcoin users can wait for good investments to come along.

In a Bitcoin economy you can never have more than half of the companies or so grow faster in Bitcoin-denominated value. If they somehow did anyway the value of Bitcoin would go up accordingly and thus their valuation would go down.

Therefore it will actually be quite rare to have a Bitcoin-denominated stock actually grow in Bitcoin-denominated value. If a Bitcoin denominated stock actually generates a higher return than just holding Bitcoin then people will flock to that stock diluting it's rate of return down to the average for the entire Bitcoin economy.

You seem to be making some very limiting statements on the possible growth of bitcoin companies, but you do not back up any of your arguments. Why do you think only half of the companies could grow?

[Mageant]

I agree with the title of the thread but let me add another reason.

Bitcoin is decentralized so you don't have people that can place themselves between you and the thing you want to invest in. Guidelines can be created but it is extremely hard to have any regulation that favors the rich.

The rich can't just get richer, they have to have a continually good service.

In fiat, there can be a company that offers good service, gets strong, buys of politicians and influences policy to the point it has a monopoly and then proceed to fuck everyone over unchallenged.

The same is more difficult to achieve with Bitcoins because they allow us, the users to avoid arbitrary power.


It would be difficult to disagree with the fact Bitcoin changes the default of holding money in a bank, to holding money on your own personal property. When you hold bitcoins with the default way, they are 100% under your control and gain no interest.

When a bank holds your cash, they are under the control of the government and the banks, each of which have a lot of points of failure.

The government may tax your bank account for a war by twisting the laws. Or simply fund it by printing more money.
Your bitcoin wallet won't do that as it is not a person.

Indeed, I agree with that being an additional feature that Bitcoin also provides.
It's the three main features of Bitcoin: its deflationary nature, its decentralization, and its (more or less) anonymity, that will all contribute to a meritocratic society.

[Mageant]

No. You are wrong. There is no fundamental reason why bitcoins cannot be used for investing, just like fiat. I typically get a better return with my bitcoin stock portfolio (measure in bitcoins) than I do with my fiat stock portfolio (measured in USD).

Actually, it goes even further than that; your premise is flawed if you think holding fiat is a way to get richer. Holding fiat is such a horrible thing to do with your money (because of inflation) that just about nobody does it. Holding bitcoins is a perfectly good way to save money for the future, but holding fiat will just lose you money. Instead of saving their money, fiat users are forced to invest in something. Fiat users will flock to horrible investments, while bitcoin users can wait for good investments to come along.

In a Bitcoin economy you can never have more than half of the companies or so grow faster in Bitcoin-denominated value. If they somehow did anyway the value of Bitcoin would go up accordingly and thus their valuation would go down.

Therefore it will actually be quite rare to have a Bitcoin-denominated stock actually grow in Bitcoin-denominated value. If a Bitcoin denominated stock actually generates a higher return than just holding Bitcoin then people will flock to that stock diluting it's rate of return down to the average for the entire Bitcoin economy.

You seem to be making some very limiting statements on the possible growth of bitcoin companies, but you do not back up any of your arguments. Why do you think only half of the companies could grow?

I'm talking about growth rates in Bitcoin-denominations, not purchasing power (or "real value"). The value Bitcoin in real terms will grow (usually) with the growth of the Bitcoin economy. Therefore if a company does not grow at a faster rate than the entire Bitcoin economy (i.e. under average growth) its valuation in numbers of Bitcoin will stay the same or drop.

Not all companies can have above average growth rates, because otherwise the growth rate average would be higher. You therefore (usually) have about half the companies below the average and the other half above the average. It's just mathematics.

[Peter Lambert]

In a Bitcoin economy you can never have more than half of the companies or so grow faster in Bitcoin-denominated value. If they somehow did anyway the value of Bitcoin would go up accordingly and thus their valuation would go down.

Therefore it will actually be quite rare to have a Bitcoin-denominated stock actually grow in Bitcoin-denominated value. If a Bitcoin denominated stock actually generates a higher return than just holding Bitcoin then people will flock to that stock diluting it's rate of return down to the average for the entire Bitcoin economy.

You seem to be making some very limiting statements on the possible growth of bitcoin companies, but you do not back up any of your arguments. Why do you think only half of the companies could grow?

Not all companies can have above average growth rates, because then the growth rate average would be higher. You therefore (usually) have about half the companies below the average and the other half above the average. It's just mathematics.

I'm talking about growth rates in Bitcoin-denominations, not purchasing power. The value Bitcoin in real terms will grow (on average) with the growth of the Bitcoin economy. Therefore if a company does not grow faster than the entire Bitcoin economy (i.e. under average growth) its valuation in Bitcoin will stay the same or drop.

Obviously not all companies can have above average growth rates, because then the average would be higher. It's just mathematics.

But there is more to the economy than just companies, just like there is more to the US economy than what is listed on the NYSE. Is there a direct link between the average growth of bitcoin companies and the price of a bitcoin?

[Mageant]

In a Bitcoin economy you can never have more than half of the companies or so grow faster in Bitcoin-denominated value. If they somehow did anyway the value of Bitcoin would go up accordingly and thus their valuation would go down.

Therefore it will actually be quite rare to have a Bitcoin-denominated stock actually grow in Bitcoin-denominated value. If a Bitcoin denominated stock actually generates a higher return than just holding Bitcoin then people will flock to that stock diluting it's rate of return down to the average for the entire Bitcoin economy.

You seem to be making some very limiting statements on the possible growth of bitcoin companies, but you do not back up any of your arguments. Why do you think only half of the companies could grow?

Not all companies can have above average growth rates, because then the growth rate average would be higher. You therefore (usually) have about half the companies below the average and the other half above the average. It's just mathematics.

I'm talking about growth rates in Bitcoin-denominations, not purchasing power. The value Bitcoin in real terms will grow (on average) with the growth of the Bitcoin economy. Therefore if a company does not grow faster than the entire Bitcoin economy (i.e. under average growth) its valuation in Bitcoin will stay the same or drop.

Obviously not all companies can have above average growth rates, because then the average would be higher. It's just mathematics.

But there is more to the economy than just companies, just like there is more to the US economy than what is listed on the NYSE.

This applies to everything that is part of the economy. I'm just making my point with companies because it is easier to understand that way.