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0 pointsleereeves5y ago0 comments

Another way of saying "gold-like asset" or "store of value" is that Bitcoin codifies wealth inequality in an algorithm with a rigidity similar to physical assets, creating mathematical obstacles to block democratic attempts at redistribution away from an elite class of early adopters. Thus "protecting wealth" from the rest of humanity.

However profitable, useful, or entertaining one might find that as a fringe commodity, it's an atrocious basis for an economic system that would ultimately lead to depression, then war, just as money tied to the gold standard did a hundred years ago.

Money was detached from the gold standard almost everywhere in the world for excellent reasons. Recreating money with properties similar to gold would be a step backwards.

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samvher5y ago

This is one part that I feel doesn't get talked about enough. A future where people move to bitcoin does extremely weird things to wealth distribution, where wealth is basically a function of the point in time of a person's switching to bitcoin more than anything else. I don't see how such a dissociation between wealth and effort/value/productivity could ever do good things for a society.

I'm also confused about how people think and talk about the market cap. My sense is that the total economic value of bitcoin holders can't be much more than what they have collectively put in as dollars minus what was spent on mining, which is only a fraction of the market cap. If it's more you get a weird kind of inflation where it's not a central bank printing money, but where "value" seems to spring out of thin air just because the masses are attracted to bitcoin (with FOMO as the main reason).

I can't quite wrap my head around all of this. I've been interested in blockchain for quite a while and have been keeping up with what's going on, but many things about the cryptocurrency market just don't make fundamental sense to me. (Another example - Ether basically being the denomination for transaction prices on the Ethereum network, meaning the higher it's priced, the less useful the network is, which seems like a conflict.)

I'll keep paying attention and see if I can learn a thing or two about real world (irrational?) economics.

Sargos5y ago

>wealth is basically a function of the point in time of a person's switching to bitcoin more than anything else

This isn't any different from other periods of great change in the past. A good chunk of the wealthy in the world are made up of those early to the industrial revolution, computer revolution, and internet revolution. This is just another step.

Eventually people will stop being early to Bitcoin and things will just be "normal" again until the next big change comes along.

leereevesOP5y ago

The industrial revolution, computer revolution, and internet revolution brought real value to everyone's lives. Even people who didn't own Netscape or Google stock benefit from the Internet.

Who would benefit from a Bitcoin revolution, other than early adopters?

Ransomware authors, perhaps.

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jdmoreira5y ago

I don’t understand why you are being downvoted because in my opinion you are right. Fiat money is the real trick that removes people from poverty and increases everyone's standard of living.

This is really easy to understand from first principles. If the total value of the world increases and there is only a fixed amount of either gold or bitcoin, or any finite thing to represent it, it's obvious that whoever has that asset today has to do nothing for it to grow. Just sit on it indefinitely and people will give you more value for the same amount.

On the other hand if the value of the world is represented in USD and the feds keep print more money, you can’t just sit on the money you have today and expect it to be worth more. You have to put it back in the value creation system for it to grow in value.

Bitcoin and gold suck at representing value. Fiat currency is much better because you can print more money to keep up with the world's total value.

chordalkeyboard5y ago

> Fiat money is the real trick that removes people from poverty and increases everyone's standard of living.

This is actually completely backwards. Fiat money decreases standard of living by encouraging consumption and discouraging savings and investment.

> This is really easy to understand from first principles. If the total value of the world increases and there is only a fixed amount of either gold or bitcoin, or any finite thing to represent it, it's obvious that whoever has that asset today has to do nothing for it to grow. Just sit on it indefinitely and people will give you more value for the same amount.

Yes, as opposed to a depreciating currency where people continually give you less and less value for the same amount.

> On the other hand if the value of the world is represented in USD and the feds keep print more money, you can’t just sit on the money you have today and expect it to be worth more. You have to put it back in the value creation system for it to grow in value.

So people have to keep increasing their prices or they starve to death, how is this supposed to help the people with the least amount of money?

> Fiat currency is much better because you can print more money to keep up with the world's total value.

Thats why the poor stay poor and the rich keep getting richer. The rich own the assets, and the poor get these checks of decaying currency.

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