Nic Carter

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Tweet: Opinion on Wealth Concentration

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Tweet: Opinion on Wealth Concentration

By Nic Carter

Posted August 14, 2019

My view on wealth concentration

  • bitcoin is an emerging monetary system, it started with a GINI of 1 and decreases over time
  • ‘fairdrops’ don’t work; see the voucher programs in the USSR
  • the best thing you can hope for is equality of opp. and no seignorage (bitcoin has both)
  • long term holders sell out as their wealth increases. this is empirically observable in Bitcoin (@unchainedcap ‘s Hodl waves analysis makes this point)
  • this is a natural and organic force which disperses supply
  • wealth concentration is something to worry about if wealth can be transformed into political power, because you kick off a feedback loop of wealth -> power -> discretion over system features -> more wealth
  • luckily, bitcoin manifestly does NOT care if you are wealthy
  • in this context, the concentration of wealth in bitcoin is not something that worries me, even a little bit. Bitcoin ‘governance’ is nicely poised between nodes, devs, miners
  • if wealth meant power in Bitcoin, S2X would have prevailed. it didn’t. compare that with other chains
  • given that wealth does NOT equal power in Bitcoin, worrying about the concentration carries sinister undertones
  • it insinuates that the outcomes in Bitcoin are ‘wrong’ and may need to be remediated
  • if you believe in free market money, you believe in free market outcomes
  • thanks to a decade of PoW and an unrepeatable launch where coins where freely traded for years without a $ value, Bitcoin has an enviable distribution
  • the chosen metric (% of addresses owning % of supply) is comically bad
  • every other coin is empirically more concentrated
  • this is a great case study in how data can be both trivially correct and very misleading
  • the default thing people do with data is misrepresent things
  • this is a difficult subject which requires nuance & a patterned analysis, not just a single metric
  • if you think that ‘bitcoin is unevenly distributed’ will inhibit adoption, you are in for a surprise
  • Bitcoin has long succeeded in spite of political unacceptability and bad optics. this probably won’t stop it
  • fin