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The same problem exists, regardless if its a fiat central bank or open source decentralized software token system: how is the money distributed and created? ht

The same problem exists, regardless if its a fiat central bank or open source decentralized software token system: how is the money distributed and created? https://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Private_currency https://en.wikipedia.org/wiki/Private_currency https://en.wikipedia.org/wiki/Liberty_Reserve https://en.wikipedia.org/wiki/Liberty_Reserve Even given the Cryptocurrency ecosystem, there's threats of fraud like Tether (theory: https://hackernoon.com/the-curious-tale-of-tethers-6b0031eead87 https://hackernoon.com/the-curious-tale-of-tethers-6b0031eea...), or the inherent history and math behind Bitcoin and many proof of work cryptocurrencies distributing the supply to only a small group of users and cutting off the ease of producing more coins as easily to later users who use the software. Deflationary systems (or systems which skew how labor is rewarded, i.e. PoW with changing rewards for work) run the risk of creating a class of slaves from new generations, or users who simply arrive days too late: Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represent about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half- of-the-bitcoins-2013-12). The concentration of Litecoin ownership is similar (http://litecoin-rich-list.blogspot.com). Most of the big wallets have been in place from early on, so sitting back and watching your capital grow has been a very successful strategy.

CryptoPunk 9y ago
>>or the inherent history and math behind Bitcoin and many proof of work cryptocurrencies distributing the supply to only a small group of users and cutting off the ease of producing more coins as easily to later users who use the software. Keep in mind that the value of money derives from the net utility it provides in all of the trades it is used in throughout its lifetime. By implication, the only scenario where a new currency would displace old ones through market mechanisms like competition (as opposed to political ones like state mandates) is one where the value added by swapping out the old money with the new one in trades exceeds the cost for the economy to purchase the new money from those that minted it. In other words, it's a net gain for society for a new money to displace the old one through market competition, regardless of the initial distribution of the new money. The effect of the initial distribution on long-standing wealth distribution also diminishes over time, given a particular holding of currency can only be spent once. For long-run wealth distribution, what matters most is avenues to extract economic rent on a recurring basis, like regulatory capture, political privileges, etc, and new forms of money like cryptocurrency could alleviate these.
- nosuchthing 9y ago
  How do you foresee cryptocurrency alleviating those problems when existing capital can simply produce and acquire the majority of coins/tokens in existence? For all we know the executives at the Goldman Sachs spent a few million dollars slowly purchasing BTC any any of the other altcoins since day 1. Money only has value if someone is willing to accept it. Existing capital merely transfers into whatever other forex, seashell, or feather trading system there might be. For long-run wealth distribution, what matters most is avenues to extract economic rent on a recurring basis That's oddly simplistic. No mention of wages, education, and tax policy? regulatory capture, political privileges, etc, and new forms of money like cryptocurrency could alleviate these. How would new forms of money impact any of those? There's certainly the possibility it could make all of those issues 1000x's worse.
  - CryptoPunk 9y ago
    >>How do you foresee cryptocurrency alleviating those problems when existing capital can simply produce and acquire the majority of coins/tokens in existence? That is still a net gain for society. Look at it this way: cryptocurrency could potentially replace high rent-extracting institutions, and it would only be able to do so if it provided its owners with much lower levels of economic rent than the institutions it replaced (that's where it derives its efficiency advantage). Just to clarify: economic rent is defined as income that is not derived from productive activity. It is unearned, from a broader economic perspective. So now imagine the wealthy shareholders of Goldman Sachs sell their shares, and buy up all of the cryptocurrency. They're still very wealthy, but the assets they own don't hold the same unfair advantage that the GS shares that they once owned held. That is what it means to be in a fairer world. Eliminating opportunities for exploitation (which can roughly be mapped to rent seeking) is how you durably reduce income unequality. >>That's oddly simplistic. No mention of wages, education, and tax policy? It's simplistic because it's a very broad analysis that only distinguishes rent-seeking from none-rent-seeking activity. In this case I think it's appropriate given cryptocurrency has the potential to have a very fundamental impact on the macroeconomic picture. Moreover, speculating about the finer details of its impact might not be all that useful, given how hard it is to anticipate exactly what those more specific effects will be. The broader effects are easier to predict and thus a more appropriate object of speculation in my opinion.

CryptoPunk 9y ago

>>or the inherent history and math behind Bitcoin and many proof of work cryptocurrencies distributing the supply to only a small group of users and cutting off the ease of producing more coins as easily to later users who use the software. Keep in mind that the value of money derives from the net utility it provides in all of the trades it is used in throughout its lifetime. By implication, the only scenario where a new currency would displace old ones through market mechanisms like competition (as opposed to political ones like state mandates) is one where the value added by swapping out the old money with the new one in trades exceeds the cost for the economy to purchase the new money from those that minted it. In other words, it's a net gain for society for a new money to displace the old one through market competition, regardless of the initial distribution of the new money. The effect of the initial distribution on long-standing wealth distribution also diminishes over time, given a particular holding of currency can only be spent once. For long-run wealth distribution, what matters most is avenues to extract economic rent on a recurring basis, like regulatory capture, political privileges, etc, and new forms of money like cryptocurrency could alleviate these.

nosuchthing 9y ago
How do you foresee cryptocurrency alleviating those problems when existing capital can simply produce and acquire the majority of coins/tokens in existence? For all we know the executives at the Goldman Sachs spent a few million dollars slowly purchasing BTC any any of the other altcoins since day 1. Money only has value if someone is willing to accept it. Existing capital merely transfers into whatever other forex, seashell, or feather trading system there might be. For long-run wealth distribution, what matters most is avenues to extract economic rent on a recurring basis That's oddly simplistic. No mention of wages, education, and tax policy? regulatory capture, political privileges, etc, and new forms of money like cryptocurrency could alleviate these. How would new forms of money impact any of those? There's certainly the possibility it could make all of those issues 1000x's worse.
- CryptoPunk 9y ago
  >>How do you foresee cryptocurrency alleviating those problems when existing capital can simply produce and acquire the majority of coins/tokens in existence? That is still a net gain for society. Look at it this way: cryptocurrency could potentially replace high rent-extracting institutions, and it would only be able to do so if it provided its owners with much lower levels of economic rent than the institutions it replaced (that's where it derives its efficiency advantage). Just to clarify: economic rent is defined as income that is not derived from productive activity. It is unearned, from a broader economic perspective. So now imagine the wealthy shareholders of Goldman Sachs sell their shares, and buy up all of the cryptocurrency. They're still very wealthy, but the assets they own don't hold the same unfair advantage that the GS shares that they once owned held. That is what it means to be in a fairer world. Eliminating opportunities for exploitation (which can roughly be mapped to rent seeking) is how you durably reduce income unequality. >>That's oddly simplistic. No mention of wages, education, and tax policy? It's simplistic because it's a very broad analysis that only distinguishes rent-seeking from none-rent-seeking activity. In this case I think it's appropriate given cryptocurrency has the potential to have a very fundamental impact on the macroeconomic picture. Moreover, speculating about the finer details of its impact might not be all that useful, given how hard it is to anticipate exactly what those more specific effects will be. The broader effects are easier to predict and thus a more appropriate object of speculation in my opinion.