This topic quite naturally brings out lots of comment from the libertarian/anarcho-capitalist perspective but as I don't fall into those categories myself just thought I'd chime in.
I have no particular philosophical investment in the deflationary model, but I think it would be very difficult to get traction for a digital currency system with no clear upper limit. Yes, in a mathematical sense the percentage of bitcoins being issued becomes smaller and smaller; however in practice the presence of an infinite progression makes the value of something much more difficult to intuitively quantify. As the system currently stands the total quantity of bitcoins is a simple to understand amount, being distributed predictably over a decent period of time.
Regarding the "fairness of distribution" issue there seems to be a lot of misunderstanding on this point which we would do well to address internally as a community so that we don't keep presenting a confusing perspective to newcomers. I'm not personally much of a capitalist in perspective so I'm not overly concerned with a profit incentive for early adoption: for me the real incentive is the possibility of what Bitcoin might become in regards to enabling a microtransaction economy and democratizing access to financial services around the world. But what people have to understand is that in a successful currency initial distribution
is virtually irrelevant in comparison to the overall activity of the economy
For example, a typical US one dollar bill changes hands 15-20 times or more a year and lasts 4 years in circulation. Thus the total amount of economic activity it's involved in ($60-$80) dwarfs the economic activity of its actual production (a few cents) and even the impact of its introduction into the money supply ($1). Digital currencies are likely to have even higher velocity
and bitcoin in particular is much more efficient at the ratio of investment in production (electricity, hardware, and time for mining) to the face value of the currency. So there is a much higher ratio of economic activity to the actual gain that someone receives for being an early adopter. It is this economic activity as a whole
that adds value to the early adopter's coins--the amount "paid" by any future user of bitcoin to the early miners and purchasers is tiny
even if the currency becomes wildly successful.
As another way to understand this, consider the scenario of an early Google investor. Because of the increase in the company's value that person has made a massive amount of money (for an individual) off their initial investment. But look at the overall impact of the company. Millions or even billions of people have used Google's search engine, webmail, advertising, and other services. Because of the scale of digital computing and the internet there is a very tiny margin on any given transaction with the company--be it in time spent looking at or clicking on ads, or fees paid for Google AdWords--compared to the benefits people have received from being able to search the web, use email online, advertise cheaply to a wider range of customers, etc. This is why the company was so successful
--because the value proposition was fantastic! Yet that tiny margin has funded all the activities of the company, and after subtracting out the considerable expense of actually running an internet giant, paying its staff, etc. it is only a portion thereof that ends up as company profit; and it is only a portion of that
value (and the market valuation of being able to hold shares in it) which is ultimately returned to that investor as a gain in value. The percentage return is indeed impressive when we see what they had then vs what they have now. But those gains are distributed across the whole range of Google's activities and economic impact. The result? We all wish
that we were early Google investors, but we don't grumble about the unfairness of not being one every time we click 'search
'. The truth is, that at the time we had a chance to get in it took a lot of foresight to see what Google would become. There was risk, and uncertainty, and no guarantees. So your average Google user doesn't rant about the "unfairness" of initial stock distribution leaving them out.
Bitcoin is the same story. Yes, early adopters (especially very
early adopters) stand to gain significant amounts if bitcoin ultimately becomes successful. But the whole reason for this is that a year ago, or even now
no one had any real idea whether it would be successful or not. If success was always such a sure thing the value would have been very high for bitcoins right from the get-go, mining competition would have been intense
, and no particular individual would have gained massive percentages on their original return between then and now except possibly the miners of the very first blocks.
If bitcoin is even moderately
successful its overall benefit to mankind will dwarf any gains people make by being in it earlier than others. Joe Schmoe User won't care a twit how the coins were initially distributed. They'll wish and dream that they
had put a thousand dollars into Bitcoins when they were worth .05 cents US each, but they won't rant and abandon the system any more than we would stop using Google because we didn't buy shares at the IPO.tl;dr: Stop confusing new adopters of bitcoin with all these silly bickerings and particulars over distribution schemes and how mining should be done and generally transmitting the mistaken belief that distribution/mining has anything to do with the ways or reasons that people should actually use Bitcoin.Bitcoin is cash
. You get it the way get cash--by exchanging other cash, working or selling something. It's secure, easy-to-use and moves with the speed and reach of the internet. And that's awesome, because nothing like it has ever existed before. Get on board. That is all.