The problem that I have heard being stated before is that Bitcoin is associated with real money. This basically leads to the value of each Bitcoin increasing, and then early adopters making gains that they shouldn't really be making. I don't know how a system would look, where everyone starts off with X Bitcoin, though the current system feels wrong where some people now have $100s millions of Bitcoins and didn't do anything for them. This value should be re-distributed somehow.
... Why? It seems to me that it works the same as any system with early adopters willing to take on risk. People that got into twitter early make more than people who get in later, without any necessary correlation to how much work they've contributed. Early investors in a company often put in no work beyond their capital, should their shares be redistributed after it becomes a sure thing?
If bitcoin fails, the losses of those that went into bitcoin certainly won't be "redistributed", so why should the gains? Not to mention the current monetary system also has huge disparity so it doesn't really seem to be a property exclusive to bitcoin per se.
A system that offers no rewards to early adopters makes no sense because everyone is incentivized to just wait until it proves itself since the gains will be redistributed anyways, so why bother with the risk before it's a sure thing?
Bitcoin as an ecosystem is extremely complex, and even after trying to learn actively its pieces for about 6 months now, I feel I'm not very far passed the surface. I imagine most people will only dedicate the time and mental energy to basic micro- and macro-economics. People in general, the brain, is very bad in general at understanding and seeing the exponential effects of systems. It's nice to see contributions like yours that help balance out and show another part of reality. :)
I feel your comparison is apples and oranges, other than that the current structure of Bitcoin gives gain to early adopters, and early adopters / investors in a business potentially allows investors to have higher gains. However they are different systems.
Why can't the system exist just based on the incentive of the value that system brings? Why can't that be reward enough? The issue here is allocation of resources - to build and implement this structure and have it being adopted. The reason this is getting exposure is because businesses can make a profit, in a de-centralized Ponzi-scheme like structure - and with it being de-centralized giving it a huge amount of momentum and putting it to a holistic scale, where there can be lots/"unlimited" players perpetuating the system in different ways.
An alternative is the government implementing this system - and then why not the government (society as a whole) make those gains/rewards that occur? And I'd more imagine an international government than individual nations.
What I am trying to contrast it to is how it would look if everyone was already in this system, and then furthermore, if they were all brought into the system at once - having it mirror current resources and ownerships. This isn't easy to conceptualize either, as people's time is a resource - and what's the minimum value of a base unit of time?
Yes, giving reward speeds up how quickly the system will exist or seemingly be adopted by people, though it doesn't mean it's actually implemented in a secure and stable way. Its competitor is essentially money, so people who want to keep the status quo of money in place will be a very strong friction against Bitcoin. When people buy Bitcoin with real money, if they are the last ones, what they get from each Bitcoin will be less than what the early adopters do - which I feel is a very large disincentive for Bitcoin ever being fully adopted by everyone. And if 90% of people are now using Bitcoin for transactions, how much is real money actually worth? Those "late" adopters will not have places to spend that money, fewer and fewer, and so they end up absorbing the downside or rather they end up paying for the upside that current investors / early adopters are gaining. Is this wrong logic? If not, how is this fair? Simply saying "don't be the last!" isn't really an adequate response either. The value of real money won't decrease any time soon, though as a system similar to Bitcoin has higher adoption rate there will become a tipping point where people just won't accept real dollars in exchange for Bitcoin because they won't have as many places to spend it, it won't be as easily "liquidated."
The why is so you can create a system that doesn't punish or put "later adopters" at a disadvantage. If putting $1 in of current money into the system, and then the equivalent of $1 into the system 5 years from now gains you the same value, then that would be fair and balanced. There being a fixed amount of Bitcoin, that isn't structured to be immediately distributed to 100% of existing money, is a problem. It's currently structured to be a land grab, where land is a finite resource.
Perhaps I am missing some foundational understanding of how Bitcoin works and that is skewing my understanding and answers.
Who's an early adopter? Before December, every single day in bitcoin's history was a good day to invest and be an early adopter. But nobody knew at the time. They could have lost everything. Nobody knows when the final peak will be and if today is part of the early or late adopters stage.
Another point - Even late adopters can obtain millions of dollars worth of bitcoins just buy buying them with millions of dollars. In other words, people who are enormously rich with real money (by whatever unfair ways) can be enormously rich with bitcoins too. All we have is those same rich people plus a few new ones (early adopters). Someone who inherited a fortune can buy bitcoins and be another "unfairly" rich person. What difference does it make if they got their money from bitcoin luck, inheritance luck, or anything else?
It has to be structured such that there is first mover advantage otherwise there is no incentive for anybody to get on board and make it a thing in the first place.
The redistribution of wealth is something that we've learned to deal with once already (progressive taxation) so hopefully we can learn how to do it again with cryptocurrencies.
> people now have $100s millions of Bitcoins and didn't do anything for them. This value should be re-distributed somehow.
That is ridiculous. Those people invested early, which drove the price and popularity up, which adds legitimacy and publicity to the system. This is a perfectly fair reward for being on top of technological advances and understanding them enough to want to invest, I see no reason to rescind any of it.
Addressing inequalities of opportunity created as a result of historical factors which predate the adoption of a libertarian system is one of the problems with adopting a libertarian system (aka, the "Libertarianism, starting right now" problem). As Bitcoin is generally promoted from a libertarian orientation, Bitcoin must also face this issue.
Replacing one system of "I or my ancestors were smart enough to do this a long time ago" with another one does not particularly improve matters.
Indeed, they didn't do anything for those values to be increasing 'exponentially.' And landlord and rents cause problems such as gentrification and a reduced quality of life for all, among a few of the core problems.
