Topic: The ultimate bitcoin taboo topic - page 6. (Read 10194 times)

The big difference is actually that nowhere do I personally suggest to raise the number of coins.

I speculate (and invite you to speculate as well) about the possibility that this could happen one day, and how to price in this possibility.

My question could have just as well been "How likely is it that mtgox goes bankrupt, and how will it affect the btc price?". You wouldn't accuse me of being a causal factor in mtgox's bankrupcy, would you? :P

Here's a zany idea:

What of it were the Rothschilds who have been buying up and hoarding bitcoins?

They certainly could afford a "controlling interest" in Bitcoin, like they have in global banking. The entire Bitcoin economy is worth less than $2B ATM.

If they keep buying coins as fast as they're mined, they either drive the price so high they make obscene amounts of money by selling to the demand, or the whole thing collapses and a major threat to their existing business is weakened. It's win-win for them.

There's nobody to intervene in an attempt to monopolize currency.

How's that for a "redistribution of wealth"?

 

You're just being stubborn, not able to distinguish your own feelings on the topic from a rational (though hypothetical) discussion: my entire question was obviously based one the possibility of such a fork (if necessary), assuming that this chain will be the one that actually holds any value.

Sure. You can be the one guy screaming "but that's not the original bitcoin" at the top of his lungs, but if the market disagrees, what's the point?

Before you object that it will be just "another worthless altcoin", read my original post again. I said bitcoin holders *themselves* might conclude at some point that redistribution is necessary/in their own best interest.

If the high concentration of wealth of a small number of people starts to cause significant problems, then people will simply move away from BTC and into another more evenly distributed crypto-currency.

However, I don't see it as being a significant enough problem for this to happen.

What's more, who's to say the owners of these large wallets might not act benevolently?

True. There's however another 10 million coins to be mined. I simply wanted to illustrate the extreme concentration of wealth in the hand of a few individuals. On top of that, we will probably have a not-quite-as-extreme-but-still-pretty-bad concentration of wealth in the hand of a few thousand/million individuals.

There are 7,000,000,000 people.  And only 2-5,000,000 of them own bitcoin.
Less than 0.007 % of population own 100% of bitcoins.

You know there's a difference between "cannot happen" and "is not likely to happen, in my opinion".

(your account says you registered in 2011, so I'm sure I don't need to tell you what is technically possible to implement)

I think doubling the total number of coins is never going to happen. Why would anyone willingly agree to such a 50% devaluation? There might be a consensus sometime in the future to at least redistribute coins from very old accounts that haven't been touched for x years or make them available for mining again, but I don't see that happening either. It would be against every BTC holders interest.
Then again, as long as the biggest hurdles for a further growth of the bitcoin eco-system are not mastered (limited number of transactions/sec, exploding energy demand thanks to ever increasing difficulty, taxation and money laundering concerns ... etc.) this whole taboo remains hypothetical anyways. But IF they are overcome, then some few 0.001% will become very, very rich.

If I were the holder of that 450k BTC wallet and price was somewhere near 10,000-100,000$/BTC, I wouldn't dare to spend even a single coin of it anymore - for fear of either the government or the mob tracing that coin back to me, come knocking at my door and cut off my fingers one by one to convince me to tell them my private key ...

Only the ones currently out there, because of lack of another incentive to use it at all.
Just because we don't know how to do it otherwise doesn't mean it can't be done.

"some degree of advantage" is fine. A concentration of wealth an order of magnitude larger than what we have now could be, hm, problematic.

I don't believe Freicoin solves the problem. I don't know if there is a solution... a cryptocurrency needs to reward early adopters to further adoption, but if the concentration of wealth is too high, it might ultimately limit adoption again.

In the beginning of 'recorded history', most material wealth and power are concentrated in the hands of kings and rulers.  Social mobility through  non-violent means is a relatively recent phenomenon.  It's just an inevitable phase in an any developing domain - founders / early-adapters have some degree of advantage over others.  Eventually, things will work itself out.  Or you are a big supporter of freicoin?

I didn't say that's the way to go, I'm sure you caught that. I'm summarizing a hypothetical argument in favor of redistribution.

...

There's a more formal side to this, I suppose. I forgot if there's a canonical name for this, and who commented on it when I first head about it, but if I had to guess, I'd say it was chodpaba.

For any form of currency there has to be some optimum value of distribution in order to maximize the wealth held by the richest individuals.

Say a single person holds 99% of all coins. Nobody would be interested in using bitcoin in that case, so the wealth held by that person would be near 0.

On the other hand, if he would be willing to part with some of his coins, he will effectively increase his wealth, since the value per coin will be higher, because more people will be interested to buy/own/use them.

What about entities in USD? I'm sure there are richer entities out there.
Distribition of wealth is a problem, but not one that Bitcoin did create nor one it will solve.


It is slippery indeed, the idea of lowering the spread between poor and rich is fine (no, nobody earned to be 10000000x richer than somebody else who works all day in e.g. mac donalds, a shoe factory or whatever), but there are many things that can go wrong when trying to implement rules for the greater good.

Slippery slope.

Redistribution of wealth for the greater good used to be called communism.

Let's do some quick, back of the napkin estimations:

The largest wallet holds 447785 btc, there are currently 11643050 btc in existence, and a total of 21M will ever exist.

Fact 1: The largest bitcoin holder holds about 3.8% of all current btc, and 2.1% of all btc ever created.

Note: this assumes the holder of the largest wallet is a single entitity (when theoretically it could be several individuals holding the coins), so the percentage of bitcoin held by a single person could be lower in fact. On the other hand, the above estimation assumes the holder(s) of the largest wallet do not hold any other coins.    
    
For the second estimation, I'm using 2010 data because that's the most recent estimates I found for money supply. Back then, Carlos Slim was the richest man on earth according to Forbes (he still is, btw), at 53.5 billion USD. The global M2 money supply  ("money and close substitutes") in 2010 was 55 trillion according to the estimate I found (Mike Hewitt, DollarDaze)

Fact 2: The largest "traditional" holder of assets of any form holds at most about 0.1% of the entire world's money supply.
    
Note: chosing M2 as the base is a comparably small estimate, as it doesn't include stocks, gold, etc., so in effect the percentage of wealth held by a single person is probably even lower. Bitcoin on the other hand is something of a hybrid -- liquid enough for transactions, commodity & store of value by design, so it could act as both.
        
Conclusion: If bitcoin would ever act as the world's primary monetary basis (and assuming of course the large bitcoin holdings mentioned above are not abandoned/sold in the meantime) we would have an unprecedented concentration of wealth.

Which leads us to the ....
            
Hypothesis / taboo topic

At some point down the road, we might decide to either raise the total number of btc (maybe 40 million? or 4 billion?), or to simply redistribute a percentage of bitcoins acquired before a certain date (10% of every wallet above 100k btc? 100% of every wallet?).

In either case, we're talking about some form of expropriation/dilution of wealth, "for the greater good". (EDIT: there, I added quotation marks around that term. happy now?) How do you feel about this?

If you answer that this will never happen ("bitcoin is deflationary by design and intrinsically rewards hoarding, nothing can change that"), do you see the  -- hypothetical, for now -- extreme concentration of wealth as a problem, at all? For sure, nothing bad could ever come from an individual wielding almost unlimited power.

Final question -- this is the speculation forum after all: how do you price in the mere possibility of the expropriation scenario I described above? After all, you're investing in bitcoin because you know that one day it'll make you filthy rich. What if one day we ourselves have to conclude that we either redistribute some of the bitcoin wealth, or otherwise our little experiment is bound to fail (because, what's the point of a currency if only a minor fraction is held by the general population?)