Yes, value of money = total goods and services. However, in a totally fixed supply like bitcoin's, the value is pushed up the chain like no other. Those with a low time-preference earn for doing nothing productive. Who can generally afford to have a low time-preference? The wealthy. As the total goods and services expand but the supply of money doesn't, this is giving value to those with money. This value doesn't just magically appear from no where, it is taken from those with a high time-preference. Yes, Bitcoin may create wealth by lowering barriers to trade, however, this will be insignificant compared to the amount of value that is moved up the chain. "Monetary manipulation" doesn't have to have anything to do with what the government does (other than a lack of regulation, as will be rampant with bitcoin) as the recent mortgage crisis shows.
There is no wealth transfer caused by money. Everyone will be relatively exactly where they where before when the price of money changes. If I have 1 BTC and you have 99 the and one BTC can buy a goat I have 1% of the wealth in terms of goat purchasing power and you have 99%. If the price of BTC doubles it means I can buy 2 goats and you 198. 2/200 is still 1%. So my bargaining position in the market is not affected at all.
There is a transfer counted in market prices from low to high time-preferences but it is not because money changes in value it is because people with low time-preferences receive interest from the entrepreneurs that borrow there money. The entrepreneur gets the money to pay those interest rates from the consumers.
However in terms of value everyone is still better of, and most likely in terms of market prices this will not really concentrate wealth either. Since higher interest rates drives up consumer prices as well the motivation to save increases double and should keep interest rates fairly low as long as investing in safe. But if it is not there are other problems that have very little to do with the currency as long as it was freely adopted...
Also one does not "afford" to have high or low time-preferences. Generally it is the other way around too, people from very poor backgrounds tend to have extremely low time-preference and trust fund babies extremely high. It is true that the rich one might still save more in absolute terms because the marginal utility on there money is lower but in the long run the poor people will save a larger portion and it will balance wealth. Anyone with any job can save up a fortune in a lifetime in any western country even with our taxes. All my grandparents did. So the only healthy people that will remain poor for there entire life are those with very high timepreferences...
You are making gross assumptions that do not fit the historical divide of how those with wealth use it. Yes, the price of BTC would stabilize if it became more popular. This does not mean those with wealth will not attempt to manipulate the currency, and this does not mean that this won't cause more deflation than there should be. No matter what, deflation is a vehicle that gains more value for those with currency than those without. They will use this to gain even more. Human greed is at the source of every recession. Lack of productivity should not be encouraged by gaining real wealth. It is stupid.
The incentives to increase productivity are only higher with a "deflationary" currency. Consumption does not create any wealth and the incentives to save are higher or equal as I just tried to explained.
How would they manipulate the currency to create deflation? It makes no sense. The only thing early adopters of BTC can create is inflationary pressure when they finally decide to cash out.
Greed does not cause recessions, inflation does.
Status quo bias. You are willing to accept that bitcoin works, but not that another way could. In my design, there is no "loss in the creator's mind." It is all determined by the demand for new currency which is based on whether or not people produce new currency based on the market price. In my design, there is no algorithm that determines to increase the supply. People determine whether or not to increase the supply. And the supply is occasionally restricted (by the currency award, nothing more) to foster competition; what this competition does is help level off the cost to produce against factors that are unknowable to an algorithm. Price of electricity goes down or electrical consumption of GPUs go down--foster competition on a restricted supply to see who is willing to set the bar for what is profitable.
As I said people will just externalise there production cost and produce it anyway. Or they will produce it because they are speculating. I don't see how a fixed production cost will make anything different then bitcoin.
People can't hoard and expect that the value of their currency will increase by virtue of them restricting the supply. The supply will expand in response. The supply will expand in response to more goods and services being available in the economy. The value of each unit of currency will remain stable, or oscillate around a stable point. All of this requires separating the money supply from the security of the network. It can't be done with the gross simplicity of bitcoin's coin distribution scheme. That's why I had to propose a redesign for everything.
And it is still impossible for hoarding to be the most profitable option in a sound market. Even if you control so much of the money supply you could actually create a price increase in money that is higher then gain from savings for a short period all it will do is turn people away from the currency. It is a very risky move so there we are again it is impossible to get higher risk adjusted profit from it then from savings. That doesn't mean that no one will do it since peoples preference to risk are different, but it is extremely unlikely that someone will A. control enough currency and B. be that reckless...
So you don't consider gold a commodity money? "Political class" is irrelevant, it is the "wealthy class" that controls politicians. The poor are never going to be able to invest under the same conditions--they don't have the capital! Bitcoin is a more ridiculous version of commodity money than gold because its supply is absolutely fixed. If it were to ever gain wide acceptance (which it won't because of early adopters), the wealthy class will again control the currency, and again they will do whatever is most beneficial to themselves. This *will* result in another deflationary spiral (and I mean spiral in the sense that deflation is happening far faster than it should), and they will be happy to fix it by spending a lot less currency for the same goods and services as before. And they get all of that value before the money gets back to circulation; it is almost the exact same measure by which banks and the wealthy gain from cheap lending from the central banks in an inflationary currency. The gap between the rich and the poor grows and eventually a recession will be the result. The poor will have had their wages deflated as a result of this restriction in the supply, and once prices rise again, realize that all of a sudden they no longer had the purchasing power they once had. Where did that value go? To the wealthy. A limited commodity currency does not solve anything.
I won't get into to which degree politicians take bribes but it is still the politicians holding all the power and implementing the policies like fiat currencies, other bank regulation and taxes that put small investors at a disadvantage.
I don't know what the distribution of bitcoin looks like but I don't think it is that bad and there are still plenty of bitcoin to be produced. Even with a lot of concentration it is still very difficult to manipulate a commodity money effectively, but there are other reasons why this would make a commodity unattractive as money too so it can be a problem. Bitcoin would however need to be very very concentrated when it is all done for this to be any problem of note and I don't think it will be because a free-market disperses wealth, it is politics that concentrate it and there won't be any of that in the bitcoin economy.
The rest of that are just fallacies I have already addressed.
Wait wait, so how many people made a profit that bought in from anywhere between $4->$30->$4? Somebody bought in. Do you think it was the early adopters buying in? Everyone is not making a profit. The later adopters are not making a profit. This is a zero sum game where wealth is transferred up the chain. It doesn't matter if there were early adopters, there will always be those who are wealthier, and the wealthy have proved on many different occasions that they, time and time again, will do whatever they can to increase that wealth. It was goldsmiths, after all, that created fractional reserve. Bitcoin is no solution, it is just the beginning of the same old bullshit.
Value is subjective and from there own point of view everyone made a profit. Except those people who made errors and didn't get what they expected but they only have themselves to blame.
The wealth going up the chain you speak of is no different then the transference between you and Apple if you and buy an iPad you really want. It gives you satisfaction for your high timepreferences and interest to Apples shareholders. The next poor guy that comes around could just as easily choose to buy Apples shares as that iPad, so it doesn't transfer anything from poor to rich just between people with different timepreference.
You will booth end up with more value, just as the people who bought Bitcoin later at a higher price ended up with a higher value because they needed it to do some transaction or just thought it was fun enough to mess with.
So you would just give up on a better currency then because you think it's impossible? What makes you think merchants would want to take currency when it was $30 but could be worth $4? When/if it hits $30 again and they have to charge 0.25 BTC for their widget, what guarantee do they have that that BTC won't essentially become worthless again? How can they be sure that the wealthy are not merely manipulating the supply?
Merchants and consumers would both love a currency with a stable value. The rich, not so much, but they might eventually be forced to use it because no one else wants their bullshit, manipulative currency. *I* say we come up with something that forces the rich to stop abusing us, and use money on the 99%'s terms. Bitcoin is the SOS with a new group of people in control. All it will ever amount to is a payment processor with fees every step of the way that make it no better than paypal or CCs. *I* want something that is actually a store of value. *I* want to actually change how the system of money works. Bitcoin has no hope of doing that. Stop thinking that it is impossible, focus your energy on what you could do to make it possible, if that's actually what you want, anyway. If you are a bitcoin elite, you might certainly not.
My point was that nobody is going to want to spend a currency with stable value while they have an inflationary one in there pocket. So no free currency of any kind will be able to out-compete fiat in the white market. (If the free currency is more inflationary then the fiat it still won't be circulated because no one will accept it them.)
It only works if booth buyer and seller have the option to refuse any method of payment and don't have any expenses in fiat like taxes that forces them to circulate it even if they could technically refuse it in payment. That is why it will never work outside back and grey markets.
99% of bitcoin is held by 1% of users or what are you trying to say? Do you have anything that supports that is even remotely the case?
The way the rich profit from the currency system today is by printing more money and make sure they are as close the new money in the chain as possible so they can use it before the increase in the money stock is noticed by the market and prices go up.
For them to manipulate a fixed supply currency would be just as difficult as it is for a majority shareholder to manipulate the stock price of his company. They really only have the power to dump the price and loose all they have. Manipulating it so they make a profit just by trading (and not distorting the flow of information relating to the company in other ways) is extremely difficult and that is even when controlling a majority of the supply. I doubt very much a single entity will end up controlling even close to the majority of the supply of bitcoin...