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OK, come on. It's a deflationary asset. If you got in early you're sitting on a bunch of it you get to be insanely rich if it's the main means of exchange. W

OK, come on. It's a deflationary asset. If you got in early you're sitting on a bunch of it you get to be insanely rich if it's the main means of exchange. When people are being more honest about it they fantasize about that happening and getting to lord it over everyone else.

bpodgursky 5y ago
Of all the crypto-quadrillionaires out there, I trust Vitalik the most to not be just in it for the cash. He really does have a vision for Ethereum's place in the world, whether or not you agree with it. He's conspicuously burned or donated hundreds of millions of dollars (albeit not super liquid) in other crypto assets basically because they were a distraction. He's given away billions in Eth, and has approximately 0 conspicuous consumption.
- ashtonkem 5y ago
  He’s one of the very few ones I merely disagree with.
- gruez 5y ago
  > He's given away billions in Eth Source? Also, is it "billions" ...of ETH? ...of dollars? At present market value? Or market value at the time of transaction?
  - johnnyApplePRNG 5y ago
    There are less than 117 million ETH in existence.
    - hanniabu 5y ago
      Hilarious to see how some comments that are objectively and verifiably true, like this one, are being downvoted.
  - bogota 5y ago
    https://www.google.com/amp/s/www.forbes.com/sites/ninabambysheva/2021/05/12/ethereums-co-founder-vitalik-buterin-donates-over-1-billion-to-india-covid-relief-fund-and-other-charities/amp/ https://www.google.com/amp/s/www.forbes.com/sites/ninabambys... It was 1 billion at time of donation but sits at about 400MM now. Im not sure about his eth donations but he has shown he isn’t greedy for money. The above was talking in dollars not ETH.
    - gruez 5y ago
      >https://www.google.com/amp/s/www.forbes.com/sites/ninabambys https://www.google.com/amp/s/www.forbes.com/sites/ninabambys... >It was 1 billion at time of donation but sits at about 400MM now The source you provided says he donated $1B in various tokens/coins, not in ETH (as bpodgursky originally claimed). This is an important distinction, because a $1B donation in a very thinly traded coin/token is worth significantly less than a $1B donation in a popular cryptocurrency like eth/btc. The same source also says he only has about $1B in ETH, which makes me even more doubtful he actually donated $1B (in value after liquidation, not at market price).
      - dogecoinbase 5y ago
        This is exactly correct. Many people gave him various coins (typically in the hope that he would then promote them) -- he gave those away. I guess it worked, because you now have people saying "He's given away billions in Eth".
        kingleo23 5y ago
        He definitely should have checked and publicly acknowledged the market depth and been more cognizant of the local market top before giving away a mere 400mm of his private wealth to charity. He used coins dumped to his public address by scam projects attempting to co-opt his legitimacy to fool naïve investors and in one stroke stopped that practice and donated a 9 figure sum to Covid relief in India and other causes.
- coralreef 5y ago
  Vitalik has the intelligence to back it up. Waterloo dropout, Thiel fellowship, the guy is the smartest in the space.
DenseComet 5y ago
Its very clear too, looking at the cryptocurrencies with the highest market caps. Very few are inflationary because the goal is to make the founders wealthy. Take a look at any subreddits for these currencies too and you'll find the same sort of thing too. For example, I think the tech behind polkadot is a neat idea, but go to r/polkadot and all you'll find is discussion about prices and staking rewards. I have a lot of mixed feelings about the space. A lot of the tech is pretty interesting and is pushing distributed consensus forward. On the other hand, 99% of people involved are trying to make a quick buck.
- bogota 5y ago
  I think you will find in many places of life people are just trying to make a quick buck but in crypto this truth seems to cause a visceral reaction for people. One of the problems crypto has is that it would be really hard to make a currency that was inflationary and still have any adoption. Bitcoin and others have tried various economic incentives to bring early adopters in and reward them. Is this the best way? Im not sure other coins like NANO have tried to distribute coins early by captcha and this was actually very helpful to people in poorer countries. Ultimately though most of them sold it as soon as they got it and the distribution looks to be about the same as bitcoin and others. Other solutions exist I’m sure but bitcoins decreasing inflation seems to be the best so far if you are making a crypto you want to succeed. The same logic though could be applied to startups or any business. The first people in do a large amount of the work in helping it grow and are rewarded for that. Maybe too much but that’s hard to quantify. Also reddit has never been the place to talk about tech. Most of the people buying hardly understand it. If you want to have better conversation they normally have developer channels. And again you could say the same thing about people talking about stocks on reddit. Edit: a reminder not to downvote just because you disagree. This always happens in crypto threads and really just enforces that you always have the same discourse on them. Sad to see on HN i expect it on sites like reddid.
  - emodendroket 5y ago
    At the very least it makes me want to check my watch is still on when someone tries to convince me it's an "anti-elite" invention, despite appearances, as this article seeks to do.
bogota 5y ago
It’s not currently deflationary. It has less inflation over time yes but the two aren’t the same. I don’t see why you think anyone is lording this over someone. The blog just addresses that the gini coefficient doesn’t fit well here. You can agree or disagree with that but you just seem to be hurling insults for whatever reason.
- hanniabu 5y ago
  A lot of people have a knee jerk reaction to crypto for whatever reason.
- greiskul 5y ago
  Bitcoin reduces the number of coins mined overtime, and after a certain number of coins are mined they will stop being produced. That's almost the definition of deflationary.
  - SuchAnonMuchWow 5y ago
    No, that's inflation slowing down. But its still inflation, because new coins are being created.
    - arcticbull 5y ago
      You are correct the parent is not referring to deflation - just slowing inflation. However Bitcoin is strongly strongly deflationary because any random walk down the timeline leads to 100% of coins lost. Due to human error, act of God and chance. In its first 12 years, give or take 20% of all Bitcoins were lost in spite of, what, 80% of all coins being generated. Thats an annualized deflation rate of 2%.
    - emodendroket 5y ago
      The real value of one Bitcoin today (I.e., the dollars or goods one could exchange it for) is absurdly higher than before, so it deflationary as the term is usually used.
cryptoquick 5y ago
Bitcoin is deflationary, Ethereum is not. Even with the changes in EIP 1559, that just introduces instability in supply. ETH 2 introduces inflation, which is what made wealth inequality so bad to begin with. People holding assets that outperformed the money made out better than those who didn't have the capability to do anything with their money as it depreciated in their bank accounts as they wait for the inevitable bills to come. Bitcoin will take care of fiat money, and Ethereum, too. It's solving for the $1 quadrillion dollar problem, and after a few decades or generations, wealth around the planet will begin to be a little more evenly distributed, since even the Bitcoin billionaires will eventually need to spend their Bitcoin.
JohnJamesRambo 5y ago
What happened to people that got in early on the USD?
- gruez 5y ago
  "got in early on the USD" would imply a time where USD was still on the gold standard. I'm not aware of any gold standard currencies where they increased the valuation (ie. previously they promised to pay you 1 oz of gold but now they'll pay you 2oz of gold), so at best they would have retained their original value and not made any gains. If we count the debasings and/or transition off the gold standard, they would have lost money due to inflation.
  - JohnJamesRambo 5y ago
    Getting in early means getting time to amass a lot of it. Rockefellers, Carnegie, the people that bought Manhattan Island for $1,143 in 2020 dollars. The artist that painted the Facebook murals for stock options that is a multi-millionaire now. My point is that people that get in early in crypto are no different, of course they are more wealthy than those that come after, as long as they don’t waste it. There are always monetary rewards for people that recognize good investments before the rest of the crowd.
    - arcticbull 5y ago
      > The artist that painted the Facebook murals for stock options that is a multi-millionaire now. That person did not "get in early" on USD. They got in early on Facebook stock. Currencies are designed to stay flat-ish, and ideally have a low, predictable rate of inflation to among other things incentivize investment. Your job is to allocate that currency towards getting in early on something productive. Like an upstart social network.
    - imtringued 5y ago
      It's funny how it's considered a "good investment". The point of "investing" in Bitcoin is to make it harder to access its utility and make it harder to further invest into Bitcoin. With stocks you aren't supposed to "overinvest". If the company is overvalued you'll lose your money one day.
hanniabu 5y ago
Are you using deflationary in the traditional finance sense or in terms of supply as it's used in the crypto space? If the former, am I understanding correctly that you're upset ETH is an appreciating asset? If the latter then you're incorrect. Right now it's inflationary and after the merge to PoS it'll still be inflationary but less so. EIP 1559 has a gas burning mechanism that can make ETH deflationary but it depends on usage. Even if that is the case, it will only be short term until an equilibrium with the price is met (as ETH price increases, less gas will be needed/burnt, reducing the effect on inflation).
- emodendroket 5y ago
  I think appreciating value is a bad quality in something that seeks to be a currency because it would naturally encourage runaway inequality and disinvestment if it were adopted for the purpose.
  - hanniabu 5y ago
    Just because it's called a crypto currency doesn't mean it's seeking to be a currency.
darawk 5y ago
What does this have to do with his post? You seem to be implying that this post is some kind of ham-fisted defense of wealth inequality in cryptocurrency, but that's not what it says at all.
onetimeusename 5y ago
I hadn't really thought of the legitimate cryptocurrencies that way. The early adopters would explain their large holdings as just being an unavoidable consequence or necessary for them to keep the project alive. But you're probably right that they deliberately set things up to be entrenched powers over everyone. When I think of it that way, the Proof-of-Stake looks like it benefits mostly the large, early holders. I could be wrong but the current 6.1% return Ethereum gets is a very nice mining profit available to large stake holders. It seems like staking would be most easily done by people who already have large holdings and want to generate income from it. In that sense it's almost kind of feudal and I am wondering if POS was at least partly set up for that purpose.
- chrisco255 5y ago
  I think when a blockchain network begins as POS, this is correct. It's almost impossible to distribute the funds in a way that doesn't benefit the early adopters, because they need to stake a large chunk of the available supply to secure the network against attacks. But Ethereum didn't begin as POS, it began as POW and has been POW for 6 years now. They allowed anyone to participate in the pre-sale in 2014 and got BTC deposits from thousands of people to bootstrap the network. As a result, no one has more than 1% of ETH supply. Vitalik himself has about 300K ETH or so (less than half a percent). BTC Proof-of-Work today requires large amounts of capital to earn new coins and already ~89% of the supply has been mined. To mine the last 11%, you need massive datacenters filled with ASIC miners, access to massive amounts of electricity, and you need to spend capex on upgrades the whole way. There's no perfect solution as each approach have trade-offs, but at least Ethereum is a platform. Anyone can launch a token on top of the platform, create a protocol like Uniswap and turn it into a multi-billion dollar DAO.

bpodgursky 5y ago

Of all the crypto-quadrillionaires out there, I trust Vitalik the most to not be just in it for the cash. He really does have a vision for Ethereum's place in the world, whether or not you agree with it. He's conspicuously burned or donated hundreds of millions of dollars (albeit not super liquid) in other crypto assets basically because they were a distraction. He's given away billions in Eth, and has approximately 0 conspicuous consumption.

ashtonkem 5y ago
He’s one of the very few ones I merely disagree with.
gruez 5y ago
> He's given away billions in Eth Source? Also, is it "billions" ...of ETH? ...of dollars? At present market value? Or market value at the time of transaction?
- johnnyApplePRNG 5y ago
  There are less than 117 million ETH in existence.
  - hanniabu 5y ago
    Hilarious to see how some comments that are objectively and verifiably true, like this one, are being downvoted.
- bogota 5y ago
  https://www.google.com/amp/s/www.forbes.com/sites/ninabambysheva/2021/05/12/ethereums-co-founder-vitalik-buterin-donates-over-1-billion-to-india-covid-relief-fund-and-other-charities/amp/ https://www.google.com/amp/s/www.forbes.com/sites/ninabambys... It was 1 billion at time of donation but sits at about 400MM now. Im not sure about his eth donations but he has shown he isn’t greedy for money. The above was talking in dollars not ETH.
  - gruez 5y ago
    >https://www.google.com/amp/s/www.forbes.com/sites/ninabambys https://www.google.com/amp/s/www.forbes.com/sites/ninabambys... >It was 1 billion at time of donation but sits at about 400MM now The source you provided says he donated $1B in various tokens/coins, not in ETH (as bpodgursky originally claimed). This is an important distinction, because a $1B donation in a very thinly traded coin/token is worth significantly less than a $1B donation in a popular cryptocurrency like eth/btc. The same source also says he only has about $1B in ETH, which makes me even more doubtful he actually donated $1B (in value after liquidation, not at market price).
    - dogecoinbase 5y ago
      This is exactly correct. Many people gave him various coins (typically in the hope that he would then promote them) -- he gave those away. I guess it worked, because you now have people saying "He's given away billions in Eth".
      - kingleo23 5y ago
        He definitely should have checked and publicly acknowledged the market depth and been more cognizant of the local market top before giving away a mere 400mm of his private wealth to charity. He used coins dumped to his public address by scam projects attempting to co-opt his legitimacy to fool naïve investors and in one stroke stopped that practice and donated a 9 figure sum to Covid relief in India and other causes.
coralreef 5y ago
Vitalik has the intelligence to back it up. Waterloo dropout, Thiel fellowship, the guy is the smartest in the space.

DenseComet 5y ago

Its very clear too, looking at the cryptocurrencies with the highest market caps. Very few are inflationary because the goal is to make the founders wealthy. Take a look at any subreddits for these currencies too and you'll find the same sort of thing too. For example, I think the tech behind polkadot is a neat idea, but go to r/polkadot and all you'll find is discussion about prices and staking rewards. I have a lot of mixed feelings about the space. A lot of the tech is pretty interesting and is pushing distributed consensus forward. On the other hand, 99% of people involved are trying to make a quick buck.

bogota 5y ago
I think you will find in many places of life people are just trying to make a quick buck but in crypto this truth seems to cause a visceral reaction for people. One of the problems crypto has is that it would be really hard to make a currency that was inflationary and still have any adoption. Bitcoin and others have tried various economic incentives to bring early adopters in and reward them. Is this the best way? Im not sure other coins like NANO have tried to distribute coins early by captcha and this was actually very helpful to people in poorer countries. Ultimately though most of them sold it as soon as they got it and the distribution looks to be about the same as bitcoin and others. Other solutions exist I’m sure but bitcoins decreasing inflation seems to be the best so far if you are making a crypto you want to succeed. The same logic though could be applied to startups or any business. The first people in do a large amount of the work in helping it grow and are rewarded for that. Maybe too much but that’s hard to quantify. Also reddit has never been the place to talk about tech. Most of the people buying hardly understand it. If you want to have better conversation they normally have developer channels. And again you could say the same thing about people talking about stocks on reddit. Edit: a reminder not to downvote just because you disagree. This always happens in crypto threads and really just enforces that you always have the same discourse on them. Sad to see on HN i expect it on sites like reddid.
- emodendroket 5y ago
  At the very least it makes me want to check my watch is still on when someone tries to convince me it's an "anti-elite" invention, despite appearances, as this article seeks to do.

bogota 5y ago

It’s not currently deflationary. It has less inflation over time yes but the two aren’t the same. I don’t see why you think anyone is lording this over someone. The blog just addresses that the gini coefficient doesn’t fit well here. You can agree or disagree with that but you just seem to be hurling insults for whatever reason.

hanniabu 5y ago
A lot of people have a knee jerk reaction to crypto for whatever reason.
greiskul 5y ago
Bitcoin reduces the number of coins mined overtime, and after a certain number of coins are mined they will stop being produced. That's almost the definition of deflationary.
- SuchAnonMuchWow 5y ago
  No, that's inflation slowing down. But its still inflation, because new coins are being created.
  - arcticbull 5y ago
    You are correct the parent is not referring to deflation - just slowing inflation. However Bitcoin is strongly strongly deflationary because any random walk down the timeline leads to 100% of coins lost. Due to human error, act of God and chance. In its first 12 years, give or take 20% of all Bitcoins were lost in spite of, what, 80% of all coins being generated. Thats an annualized deflation rate of 2%.
  - emodendroket 5y ago
    The real value of one Bitcoin today (I.e., the dollars or goods one could exchange it for) is absurdly higher than before, so it deflationary as the term is usually used.

cryptoquick 5y ago

Bitcoin is deflationary, Ethereum is not. Even with the changes in EIP 1559, that just introduces instability in supply. ETH 2 introduces inflation, which is what made wealth inequality so bad to begin with. People holding assets that outperformed the money made out better than those who didn't have the capability to do anything with their money as it depreciated in their bank accounts as they wait for the inevitable bills to come. Bitcoin will take care of fiat money, and Ethereum, too. It's solving for the $1 quadrillion dollar problem, and after a few decades or generations, wealth around the planet will begin to be a little more evenly distributed, since even the Bitcoin billionaires will eventually need to spend their Bitcoin.

JohnJamesRambo 5y ago

What happened to people that got in early on the USD?

gruez 5y ago
"got in early on the USD" would imply a time where USD was still on the gold standard. I'm not aware of any gold standard currencies where they increased the valuation (ie. previously they promised to pay you 1 oz of gold but now they'll pay you 2oz of gold), so at best they would have retained their original value and not made any gains. If we count the debasings and/or transition off the gold standard, they would have lost money due to inflation.
- JohnJamesRambo 5y ago
  Getting in early means getting time to amass a lot of it. Rockefellers, Carnegie, the people that bought Manhattan Island for $1,143 in 2020 dollars. The artist that painted the Facebook murals for stock options that is a multi-millionaire now. My point is that people that get in early in crypto are no different, of course they are more wealthy than those that come after, as long as they don’t waste it. There are always monetary rewards for people that recognize good investments before the rest of the crowd.
  - arcticbull 5y ago
    > The artist that painted the Facebook murals for stock options that is a multi-millionaire now. That person did not "get in early" on USD. They got in early on Facebook stock. Currencies are designed to stay flat-ish, and ideally have a low, predictable rate of inflation to among other things incentivize investment. Your job is to allocate that currency towards getting in early on something productive. Like an upstart social network.
  - imtringued 5y ago
    It's funny how it's considered a "good investment". The point of "investing" in Bitcoin is to make it harder to access its utility and make it harder to further invest into Bitcoin. With stocks you aren't supposed to "overinvest". If the company is overvalued you'll lose your money one day.

hanniabu 5y ago

Are you using deflationary in the traditional finance sense or in terms of supply as it's used in the crypto space? If the former, am I understanding correctly that you're upset ETH is an appreciating asset? If the latter then you're incorrect. Right now it's inflationary and after the merge to PoS it'll still be inflationary but less so. EIP 1559 has a gas burning mechanism that can make ETH deflationary but it depends on usage. Even if that is the case, it will only be short term until an equilibrium with the price is met (as ETH price increases, less gas will be needed/burnt, reducing the effect on inflation).

emodendroket 5y ago
I think appreciating value is a bad quality in something that seeks to be a currency because it would naturally encourage runaway inequality and disinvestment if it were adopted for the purpose.
- hanniabu 5y ago
  Just because it's called a crypto currency doesn't mean it's seeking to be a currency.

darawk 5y ago

What does this have to do with his post? You seem to be implying that this post is some kind of ham-fisted defense of wealth inequality in cryptocurrency, but that's not what it says at all.

onetimeusename 5y ago

I hadn't really thought of the legitimate cryptocurrencies that way. The early adopters would explain their large holdings as just being an unavoidable consequence or necessary for them to keep the project alive. But you're probably right that they deliberately set things up to be entrenched powers over everyone. When I think of it that way, the Proof-of-Stake looks like it benefits mostly the large, early holders. I could be wrong but the current 6.1% return Ethereum gets is a very nice mining profit available to large stake holders. It seems like staking would be most easily done by people who already have large holdings and want to generate income from it. In that sense it's almost kind of feudal and I am wondering if POS was at least partly set up for that purpose.

chrisco255 5y ago
I think when a blockchain network begins as POS, this is correct. It's almost impossible to distribute the funds in a way that doesn't benefit the early adopters, because they need to stake a large chunk of the available supply to secure the network against attacks. But Ethereum didn't begin as POS, it began as POW and has been POW for 6 years now. They allowed anyone to participate in the pre-sale in 2014 and got BTC deposits from thousands of people to bootstrap the network. As a result, no one has more than 1% of ETH supply. Vitalik himself has about 300K ETH or so (less than half a percent). BTC Proof-of-Work today requires large amounts of capital to earn new coins and already ~89% of the supply has been mined. To mine the last 11%, you need massive datacenters filled with ASIC miners, access to massive amounts of electricity, and you need to spend capex on upgrades the whole way. There's no perfect solution as each approach have trade-offs, but at least Ethereum is a platform. Anyone can launch a token on top of the platform, create a protocol like Uniswap and turn it into a multi-billion dollar DAO.