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Imagine this hypothetic scenario just to demonstrate the point: Bitcoin becomes mass adopted, but not after 30 institutions end up hoarding ~60% of bitcoin in e
by Rury 6y ago
Imagine this hypothetic scenario just to demonstrate the point: Bitcoin becomes mass adopted, but not after 30 institutions end up hoarding ~60% of bitcoin in existence by some time in the next decade or two. Then by the year 2147, bitcoin is mined out, with the majority of those 30 institutions still holding the majority of their bitcoin stashes. The population is 17 billion with more being born into the world without any bitcoin to inherit...
Economically speaking, goods and assets will HAVE to become cheaper if no more bitcoin is to be made. Why? Well, if all the bitcoin has come into existence and is already owned by members of society, how will new born people who come to exist in the world - come to acquire bitcoin to do trade with? Especially considering that those 30 people/institutions had hoarded so much of it, and as the number of goods and people in society grows, there are fewer and fewer bitcoins available for everyone else to do trade with as time goes on?
Thus, in order to prevent liquidity crises - the price of wages, goods, and assets (even stocks) MUST become cheaper relative to bitcoin as more people and goods enter the world. Eventually, the price of things will eventually no longer be measured in bitcoins, but fractions of a bitcoin (satoshis).
One day a house may cost 700,000 satoshis. Decades later, as more houses and people come to in existence, a house may cost 70,000 satoshis. Those who held onto their bitcoin in their digital wallet, over the that timeframe, would be able to buy 10x more house simply because of the deflationary nature of the currency. Those who bought a house decades earlier would not be able to buy 9x more house just as easily...
Again, the numbers and scenario here I made up, but hopefully demonstrates the point. The hoarders and early adopters of the currency will be the rich who get relatively richer as time goes on, as more goods and people come to in existence forcing the cost of goods, assets, and wages to become cheaper. Those who don't own the currency (such as those yet to be born into the world) or those who have fewer amounts of it, would be at a relative wealth disadvantage as time goes on.
Mind you, I'm not arguing that bitcoin couldn't work. Just that it's inherently no better/less problematic than the inflationary currencies we already have (economically speaking), despite many proponents claiming otherwise.