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IS the blockchain economy helping to increase the wealth inequality ?
Many people think that the blockchain economy empowers people to defend themselves against the tyranny of big enterprises and governments. For example Bitcoin theoretically could be used to hedge against inflation of fiat currencies in the long run. But the reality seems to be that the blockchain economy still takes after the economy of scale in real world. Take mining for example, the relationship between return on investment (ROI) versus computing power is not linear. Having 100 mining machines going on at the same time gives you more than 100 times the ROI than if you were to own and operate only 1 machine. Nothing new under the sun: The rich get richer and the poor get poorer. And without a centralised authority to regulate the transfer of wealth, the rich can avoid paying more taxes because the blockchain economy is less dependent on physical infrastructures. For example the government can set disproportionate inheritance tax rates in real world, but in blockchain economy one can simply "inherit" cryptocurrencies by taking over the private keys of the accounts. WHAT is your take on this issue?
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3 ANSWERS

It definitely sounds like you're far more versed in the pros and cons of cryptocurrency than I am... but since you asked for my opinion...

I don't doubt what you said about one person with 100 machines versus 100 people with one machine, and I guess my retort to that is that Bitcoin isn't perfect... but it's better than what we have currently and I personally see it as a bit of a do-over.

So... as I'm sure you're super familiar; in 2008 after years of reckless leaning, parceling debt for sale and other dodgy practices, banks that were too big to fail were hit really hard by the housing market crash... it was catastrophic and caused the GFC.  The US Fed did it's best to contain the impact by quantitative easing... where they print more money, sell government securities... and used taxpayer money to bail out those banks.

In their defense though, millions of people would have lost all their money if all those banks had collapsed.

That printing of extra money wasn't loaned... it was given away to companies that made decisions they knew were harmful... but everyone was doing it.

Bitcoin is capped... as you know there will only ever be 21 million bitcoins, and it's a global currency.  I've lived in 2 countries, and have bought property in both, and I can tell you from experience that the fees, charges and massive delay it takes to transfer between banks locally, and then way worse for banks internationally.  Bitcoin doesn't have those issues... one country can't decide to print more Bitcoin because it suits them.

I honestly don't know how taxation is going to work in the future... and I totally understand your concerns.... but the ability for the rich to avoid tax is also the same system that makes it easy for me to move countries or travel without carrying huge sums of money.  I'm hoping that it forces governments to simplify taxation anyway.  If you live in this neighbourhood, you pay this much tax.  That's it.  If you want to live in an expensive location, you pay more tax... if you don't you don't.

The rich are already experts at avoiding taxes... it's seriously the middleclasses that carry most countries burdens.  I don't believe for a second that Bitcoin makes it easier for the rich... I just see it as evening the playing field.... or creating a new playing field.

I also see cryptocurrency as opening up entirely new revenue streams for people... maybe instead of enduring commericals during their favourite TV shows the whole process will be tokenised.  Since Bitcoin has so many more decimal places to play with... people can earn fractions of fiat by lots of people... something that isn't possible today with transfer fees and charges.

I don't for a second believe blockchain technology will solve all our problems... it's likely just to swap our current problems for new problems... but I do think it will change the current economic dynamics... it still might end up being super unfair... but at least we're trying something new.

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It isn't because  it's allowing regular Joes and Janes to invest in something that could potentionally be their lottery ticket out of servitude to the current financial system. The question remains, if the Joes and Janes are smart enough to invest and HODL or not. 

It is not  blockchain that  is broken and flawed but the people in their mentality and attitude towards blockchain and crypto in general.

They don't understand the power, implications, nor the potential and thus they will always make bad decisions and lose money, or just make less than those who are well informed. Knowledge is money and  power. If one has enogh knowledge on a certain subject and uses in the right way, sky is the limit to what he/she can achieve.

 

People will always try to find a scapegoat for when they fail because of their incompetence thus, many blame wealth inequality and how much easier it is to make money with money. That is so whrong,  I don't even want to get into it as I'm getting frustrated just thinking about it.

That's something we can't fight against. It's logical that it's easier to make money with money. It can't be easy to create it out of thin air as that kind of a economic structure would crumble in days. 

A system where it's harder to earn money the more one has doesn't make any sense. It repels investors away and it wouldn't hold any real value as people would just try to abuse it to the max of its potential.

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There's that old dilemma. To have so little government that everyone can make money and have a shot at becoming wealthy, versus having government big enough to secure and preserve every persons individual rights such as the right to own property.

Blockchain changes nothing in the terms of the economy and it's growth. It's just another tool by which you may seek personal gain. The more tools to ones disposal, the better chance you make it.

Once you earn your first $ through investment, You can pat yourself on the back and say "you made it kiddo"

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