I really enjoy investing in cryptocurrencies. However, I have a lot of doubt this is going to make the world a more fair or better place. It's going to create a wealth gap like has never been seen in first world countries.
Untraceable money means that corruption and tax evasion would be easier than ever. Democratic governments would be worse off in dealing with that, because unlike totaliatrian regimes they won't be able to round up BTC-rich people and break their fingers until they give their secret keys.
Deflation means that the rich will get richer doing nothing while the poor won't be able to get a loan to bootstrap their businesses. Forget about trickle down economics, this is downright "trickle up".
I have yet to hear a reasonable rebuttal to these claims. Every time I see these points brought up in the bitcoin community it's met with a bunch of hand waiving and claims that they're "FUD" and that the poster doesn't know what they're talking about. So please, BTC enthusiasts, educate me so that I can stop spreading this "FUD", where's the flaw in my reasoning?
Bitcoin is not untraceable money, it can be even more traceable than normal currency. It could be stablished as a law that public money when being spent in the blockchain needs to be auditable by the people (identities of sender and recipient known), and this way you would end up with even less corruption than the current system.
> Deflation means that the rich will get richer
Wrong. Rich people don't have money, they have holdings. Most of the holdings that rich people nowadays have are not money. Deflation just benefits the savers, as opposed to the spenders. Some savers might be rich but not all. Incentivising saving instead of consumption may make the planet a bit greener. Plus, if one day we stop measuring cryptocurrency value with a fiat-unit of measure, maybe we find out that the cryptocurrency value is actually the stable value. The asset that is not stable is the fiat currency because it's being depreciated all the time. The day all stores in the planet denominate prices in cryptocurrency, the bad consequences of deflation (hoarding for the sake of profit) will be almost imperceptible.
>Wrong. Rich people don't have money, they have holdings. Most of the holdings that rich people nowadays have are not money.
Isn't one reason for not hoarding cash (and instead investing it in various holdings, stock market, etc...) is that money loses value? If I was a millionaire in dollars I definitely wouldn't keep that on my bank account, slowly having it lose its value. If I was a millionaire in BTC I'd have a hardware wallet with my secret keys in a safe and that's about it.
>Deflation just benefits the savers, as opposed to the spenders. Some savers might be rich but not all.
Sure, but conversely I can tell you that the people who don't save money are overwhelmingly poor. For a big chunk of humanity saving money is a luxury.
>Incentivising saving instead of consumption may make the planet a bit greener.
Coin mining will take care of filling that gap, don't worry.
If rich people reduce their investments because of deflation how do you redistribute wealth?
>Plus, if one day we stop measuring cryptocurrency value with a fiat-unit of measure, maybe we find out that the cryptocurrency value is actually the stable value.
Well yeah, 1BTC == 1BTC, that's stable I guess. If BTC replaces fiat it'll stabilize eventually but it will still be deflationary. My arguments were about that, not the current instability.
>The asset that is not stable is the fiat currency because it's being depreciated all the time. The day all stores in the planet denominate prices in cryptocurrency, the bad consequences of deflation (hoarding for the sake of profit) will be almost imperceptible.
That's kind of the hand waving I was talking about in my previous comment. I don't see how you can justify you jumping to that conclusion.
How can you assume that switching from an inflationary to a deflationary economy "will be almost imperceptible"?
Lending or investing your BTC would always make you net more than just hoarding it (at least when all prices are denominated in BTC already).
> Sure, but conversely I can tell you that the people who don't save money are overwhelmingly poor. For a big chunk of humanity saving money is a luxury.
True, I didn't say that low-class can save. But most savers are middle class IMO.
> Coin mining will take care of filling that gap, don't worry.
Wrong, 2 links:
https://www.bloomberg.com/view/articles/2017-12-07/bitcoin-i...
https://blog.bitcoin.org.hk/bitcoin-mining-and-energy-consum...
> How can you assume that switching from an inflationary to a deflationary economy "will be almost imperceptible"?
Because when all prices get denominated in BTC, you won't see your holdings appreciate. The only effect you will see, caused by deflation, is that prices of things diminish over time. Which is kind of what happens nowadays with hardware (because it's the goods where the effects of technology improvements are noticed in the most sensible way), however I don't know anyone that hoards their holdings to be able to buy a better and cheaper computer tomorrow.
One link more:
Checking accounts (M1) have grown by (only) 8%/year over the past 2 years.
Savings accounts (M2) have grown by (only) 6%/year over the past 2 years.
Physical cash in circulation has grown by (only) 5%/year over the past 2 years.
Even if we value bitcoin today only by it's future 0% emission rate starting at around the year 2036, bitcoin shouldn't have been rising more than 7 or 8% per year relative to the US Dollar. Anymore is unlikely to be sustainable. Am I missing anything?
Citation: https://www.federalreserve.gov/releases/h6/current/default.h...
If anything, it is more traceable and public than physical cash. The difference is that you don't know who 63dca1f6eddfb659d71ec5244ab950a4 or e3557c1e589e2a687f6afe1a253196ca are. But when you do associate a person with a given key, that association probably persists over time.
>If anything, it is more traceable and public than physical cash.
That's true, but cash has its own set of limitations. Using cash to transfer large sums of money in not very convenient and good luck explaining to the border police why you have $20 million in cash with you. Spending and laundering large amounts of cash without raising suspicions is also pretty difficult.
>But when you do associate a person with a given key,
s/when/if/
>that association probably persists over time.
How so when you can generate a virtually infinite number of new addresses whenever you like and the current practice is to avoid reusing the same address if at all possible?
Sure if I buy some drugs in BTC and then I see that some money transits directly from the destination address to the known address of some politician then I know that something fishy is going on.
But if the money is then split and merged to a bunch of different addresses, then moved to an exchange in china where it's converted to LiteCoins, then put through a coin mixer, then moved to an exchange in Brazil where it's converted back to Bitcoins then I wish good luck to the IRS employees.
And you can do all of that from the comfort of your home in an afternoon, through TOR, without having to reveal your identity to any 3rd party.
> Untraceable money
Bitcoin is pseudoanonymous with it's public ledger, hardly untraceable. Look into Monero for a proper anonymous coin.
> Untraceable money means that corruption and tax evasion would be easier than ever.
A contrary point is that today corruption and tax evasion is only for the very rich, see the paradise papers for example. In a sick way this could give the common man more power and maybe make the world a little more balanced.
Also tax collection is already heavily based on social pressure and doing the right thing. It's not obvious that the threat of getting caught, compared to the social stigma, weighs more.
> Deflation means that the rich will get richer doing nothing while the poor won't be able to get a loan to bootstrap their businesses. Forget about trickle down economics, this is downright "trickle up".
I also don't like extreme deflation, but I also don't like the inflation based system we have today.
Inflation basically eats away at your savings. This is a bigger problem for everyday poor people compared to the rich as they have more investment options. Their buffer they hold in banks or in cash is smaller percentage wise, they can more easily invest in housing and they can more easily grow their capital as money breads money. The problem with rich getting richer is already present.
Without inflation loans would harder and would combat the very real problems with too much loans (housing bubble, student loan crisis, ...). It could also help to reign in fractional banking as it would get riskier/harder.
Fair enough, how about "trivial to launder" instead? The fact that every transaction is visible on the blockchain means that people who don't bother obfuscating their tracks (i.e. honest people who don't feel they have anything to hide) are the one who risk their privacy invaded: "hey, look, this is the address where we pay X his salary and some of it got transfered to the known address of this sex shop website".
If you want to hide your tracks however it's easy. Say I'm a politician and I want to accept a bribe. I can get a briefcase full of cash, but that's bulky, not very convenient and I could get caught if I try to move it (especially across borders).
Or I could try to open a bank account in some place where people look the other way but it's more complicated, involves third parties who could expose me (panama papers, lux leaks...), leaves a paper trail etc...
With BTC I click "generate a new receive address" in my wallet, give it to my anonymous benefactor and that's that.
Then after that if I really want to make it difficult to follow the money I can split my coin in multiple addresses, do a bunch of dummy transactions to obfuscate where the BTC change hands, go through a bunch of coin mixers, maybe convert to an other crypto (monero for instance?), do a bunch more mixing, and then back to BTC. Good luck unravelling all that.
>It could be stablished as a law that public money when being spent in the blockchain needs to be auditable by the people (identities of sender and recipient known), and this way you would end up with even less corruption than the current system.
Public spending is already supposed to be auditable in the democratic countries I know of (except in very specific cases, like "black boxes" for paying informants etc..). Generally corruption and waste is when people overpay for a service, like say paying 10x the cost for the construction of a new stadium, favouring a contractor over an other etc... I don't think BTC would help greatly with that. There are many, many ways of making "technically legal" purchases that conceal corruption, I don't think it would improve things very much. "Here, have this very valuable painting by Manet as a thank you for your help", "Here, let me make a charitable donation to your foundation", "Here, let me change this piece of regulation that will benefit your company", etc...
Unless you want to force all citizens (in the public and private) to publish their addresses I'm not sure you can really reign that in. And even then, how would you enforce that?
> Fair enough, how about "trivial to launder" instead?
It's absolutely possible to do it correctly. But the number of people who have been caught by blockchain analysis on darknet markets show that it's either not trivial or people are really stupid.
Even after you get your Bitcoin by buying it cash, perfectly anonymously, you can still be caught. For example the person who bought them from can give up some information which may implicate you if they ever mess. You also want to spend your Bitcoins and presumably you might then leave a trace connecting on of your addresses to you. By analysing your address they might find your other addresses and it's game over.
> Then after that if I really want to make it difficult to follow the money I can split my coin in multiple addresses, do a bunch of dummy transactions to obfuscate where the BTC change hands, go through a bunch of coin mixers, maybe convert to an other crypto (monero for instance?), do a bunch more mixing, and then back to BTC. Good luck unravelling all that.
Multiple addresses, dummy transactions and mixers are already being traced through with fair success [1]. Monero gives good privacy, but you might still trip up when you go Bitcoin -> Monero or even Monero -> Bitcoin if you convert very similar amounts during a specific timeframe. And you must always shield your IP and browser fingerprint...
It's possible, but this is not "trivial to launder" for most people.
[1]: https://themerkle.com/blocksci-succesfully-traces-transactio...
If your currency needs multiple 'Explain it like I'm 5' posts, it really isn't for the masses; it's for the world's technocrats.
Of course, there are truly poor people out there who can't have a dollar to spare, but it's mostly due to geography, corruption or war, not evil capitalists.
The people who are most able to take risks (in the investment sense) are those with the most. An exponential growth system such as this only widens the gap, voluntary or not.
Everyone can get in, but the benefit is unequal. You need money to make money. This does not solve any equality issues on the grand scale, and only elevates a few lucky ones. To expect people to educate themselves on cryptocurrencies and understand the market when half the people in tech don't know what's going on is not reasonable.
You're right, imperialism did cause problems, but the extreme poverty has been shrinking. And now we have the mechanisms for almost anybody to get out of it. I grew up very poor, as in barely enough money for basic food and new clothes once-twice a year. Now I'm in the top 3% of US earners (not counting Bitcoin).
I would argue they are very tied, but that is a much larger argument not needed here. To give the short and incomplete version, they are both derived from the idea of exploiting others for profit. The level of exploitation is just much less in capitalism and masked behind the guise of fairness, ignoring power dynamics, original capital, and exponential growth considerations, etc. Again, this argument is very incomplete as stated here, but they are not orthogonal concepts. How much of a connection they have is a very valid debate, one not needed here fully though.
> extreme poverty has been shrinking. And now we have the mechanisms for almost anybody to get out of it.
Getting better does not mean that everyone can get out of poverty. We also haven't gotten that better. Most of Africa is still being exploited and most living there do not have any realistic means to get out of it. The countries as a whole still struggle on a macroeconomic level to get out of poverty due to the exact exponential growth issue seen in Bitcoin but with general investment.
The US is not representative of the rest of the world, and also is still far from equal opportunity. While we're on that subject, good luck easily buying cryptocurrencies (accessible to a non-tech audience) while living outside the US. Even my Canadian friends struggle getting Coinbase to let them.
Bitcoin is only really accessible to the tech community, an already privileged community.
Because that would not solve the problem, and it's quite naive to think it would. This gets into lots of debates in ethics that are far from solved.
I do however donate regularly to groups that do economic development in African communities across the world though (more than the cost of a new iPhone annually), so no, I am not a hypocrite (fully at least).
In fact, if you want a great non-profit idea, make a company that translates bitcoin profits into economic development in those communities. My donations have recently been coming from said profits.
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Regardless of whether I am a hypocrite or not, it does not change the facts of the world and bitcoin. Just because my actions do not match perfectly does not mean they shouldn't. That's not a valid argument against my ideas, just against me personally.
> you're still typing into this tech forum
I didn't know using technology is immoral now if others are suffering injustices. Not to mention that there's plenty of utilitarian arguments about cascading effects of convincing others.
Let's look at an example of Bill Gates - if instead of investing any money or time in Microsoft, he gave away everything he could, he would not help as many people in the end. Again, you need money to make money. Of course you need to also consider the other effects of Microsoft in the calculation, which is no easy matter, but the general point is that investment by him eventually led to greater helping of those suffering injustices.
This does not consider that subsidizing someone's current lifestyle doesn't nearly have the impact of helping them develop economic means. It's a classic give a fish versus teach fishing.
And again, someone being hypocritical is not an argument against the logic. It just means that person is selfish and hypocritical. I don't claim that solving these problems is easy or not in direct conflict with human instincts.
There are also issues of fixing injustices justly. It's hard to give up x% of your wealth for a good cause when others are not. I would love to see something like a global 5% reparations tax (scaled by income, benefit from injustice, etc) that I would happily pay because it would be just for all. Of course, getting that to happen is kidding yourself at best.
All of your flawed arguments are still based on you assuming that I'm a hypocrite and no information that I gave you. I would call double BS on your reasoning for disagreement given that you had no knowledge of it when you took the position. Your argument neither had the knowledge nor logic to stand even with the knowledge present.
> but the extreme poverty has been shrinking
Indonesian 12 y.o. who makes Nike sneakers for 1$ a day will probably disagree. Humanity as a whole have made tremendous advancements in medicine, engineering and agriculture, technology as a whole have been advancing in giant leaps, yet benefits of those advancements are largely felt by 10-20 countries and 3-5% of the population. Even in the US some people cannot afford insulin and other types of basic healthcare. Workers's wages are stagnant for the past 50 years, while their productivity was steadily rising (https://www.theatlantic.com/business/archive/2015/02/why-the...).
> And now we have the mechanisms for almost anybody to get out of it. I grew up very poor
Survivorship bias, "if I've made it, then anyone can".
Gambling's rarely been mandatory. If you were going to recommend your folks to have a punt, wouldn't a casino be better? You know the odds then.
I considered what would happen if something like bitcoin would become a global internet currency, and any way I sliced it, the upside was too huge not to try.
> I don't mind money being more concentrated among tech people, they are generally more rational and tend to spend on important things.
Yeah, I don't but that at all either. Even so, you are basically advocating for an oligarchy led by tech and removing autonomy from everyone else in the world. That's a terrible dystopia.