CryptoCurrency : Why I no longer support Bitcoin
Will prob get downvoted to hell by maxis.. here we go:
Initially, Bitcoin’s appeal to me was not to just to be able to send money globally, “fast”, for a “fair price”, “with no intermediary” – most of which I now know to be untrue. Bitcoin mainly represented the liberation from the system of financial control established by debt. It was the fact that no one would be able to profit from the money system at the cost of others. It was supposed to be a fair money. However, what I observe is that Bitcoin is just a new make up for the system we currently live in. Here’s why.
Banks, the controllers of the global financial market, are able to ever extend their wealth through the use of debt. Debt in its current form is the best investment someone can make, especially if you have the brute power (military might) to enforce your credits. There is no risk of default when you can just beat the hell out of your debtor to get enough assets. Today, when you lend money and charge interest, you are multiplying money with little to no risk. Debt is a mechanism that allows for effortless and endless income. When you lend money, you don’t need to produce 1% more to profit. You transfer the obligation of productivity to another person, that now has the burden to literally create / produce 1% more than they did before, or else lose money to you. Charging 1% interest is waaay easier than increasing production by 1%+. If increasing production was so easy, society would know no poverty.
Even if debtors default and have no assets, banks are still gonna get payed, they just print more dollars, passing the responsibility of the risk they mistakenly assumed into the population, to be slowly payed through the years. We live in a rigged system where Banks suck value out of their “costumers” and are not allowed to go bankrupt due to bad management (like any other company in any other industry). Bankruptcy is natural selection in the market. Bad companies fail, and that is a good thing. It allows the market to restructure itself, to transfer value from inefficient / bad players to more efficient ones, and come back stronger. By constantly bailing out bankrupt / bad companies, we are insisting in a proven mistake, and going against the natural forces of the market, at a very high cost – only to the benefit of the banks themselves.
The current scenario is one where the (i) maintainers of the global financial system (Banks) (ii) profit endlessly and effortlessly (iii) by slowly sucking out value from the network of participants (inflation through debt). What many fail to see is that the Bitcoin protocol reproduces the same aspects of the flawed current system, but with a different format.
The new (i) maintainers of the system (Miners) will profit endlessly and effortlessly (turn on a machine) by sucking out value from the network of participants (inflation by block rewards + wealth concentration through fees). **This allows for value to go to people who produce nothing** (but new ASICS to ensure their monopoly position / status quo). In the long term, if protocols like Bitcoin, which are both centralizing in terms of Consensus Participation and Wealth, become predominant in the economy, we won’t correct / fix the mistakes we currently observe, but only enforce them.
If only new network participants could be equally rewarded, it would be fine. However, the system is so broken that the barrier for entry is too high – and so are the costs of keeping up with competition, forcing many miners to LEAVE THE ECOSYSTEM. Today, only a few people are able to mine without considerable cost – which will only increase in the future. The centralizing nature of Bitcoin ensures that early entrants in the mining space have an increasing edge over late adopters. This first mover advantage allows initial players to increase their influence proportionally to the growth of the network. As network value raises, they can afford even better and faster computers, increasing their share of the hashpool – creating never-ending centralization spiral. Such concentration is enforced by the open or secret development ASIC miners which are only accessible to a few members of the industry, further increasing the competitive asymmetry between participants. Sadly, a greed based incentive model inevitably creates a breach to systemic corruption and overlapping – which has already taken root.
Currently, there are three main pools in the Bitcoin network, the biggest being Bitmain. Today, it is valued at 14b, and made a Q1 profit in 2018 of +1.1B USD. What many don’t realize is that Bitmain is not invested in the Bitcoin network. It cares not for its tokens or participants – most of the BTC they mine gets instantly dumped in the market. As a COMPANY, ran by businessman, it cares only for PROFIT. They are only invested in (i) Mining the most profitable chains and (ii) HARDWARE sales, which can be used to support any minable blockchain. Bitmain does not support any network but maybe their own (Bcash). If Bitmain wishes to, it can easily cheat BTC-like protocols, create coins from thin air and crash the system. They can do all this and switch to another protocol WITH NO PENALTY WHATSOEVER. They will still be the most sought out Mining hardware supplier in the world. BTC-like protocols are at the mercy of a single company. It is not decentralized, but EXPLOITABLE, UNRELIABLE, FLAWED and DOOMED to FAIL. The fact that those who exert the most power over the system have NO SKIN IN THE GAME whatsoever makes it even worse.
Many say Bitcoin is money like Gold. While they do share many money characteristics, Bitcoin differs from gold in a key one, which originates from Banking: the charging of fees. When you pay someone with a gold coin, the other party receive the whole coin – no part of it gets vaporized and magically sent to the “gods of transactions”. If it did, these people would be the richest people on Earth. What happens in Bitcoin is that miners not only take part of your money for the simple fact of you using it (fees) – they get double rewarded by diluting the value of every other participants Bitcoin by inflating the supply (block rewards). In this sense, Bitcoin is a very costly money, both in short and long term. Although block rewards are programmed to end, transaction fees are a core element of the protocol. Since the system pushes for extreme competition in hashpower, participating effectively in network consensus requires a considerable initial investment
A truly decentralized system would reward every node or user equally. The “meritocracy” argument that contributing with more hashpower = more right to own reward is a shitty one in the end. This flawed greedy approach does not increase network efficiency – on the contrary, it contributes to never-ending centralization and network cost, both in electricity and hardware.
I love the liberating nature of cryptocurrencies. I was once in love with BTC, but today, I see it does not reflect the fundamentals it seemed to. If BTC ever gets adopted as the global standard money, it will increase wealth inequality and energy consumption – both which I am against. It is a system in which value does not go exclusively to those who are Productive and *de facto* add value to the economy. It allows for leeching, and has the same flaws the current banking system has.
TLDR: True money should be fair and equal. A means of exchange, store of value and unit of account. Not a tool for profit. Profit should be reserved for those who add real value to society.
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Author: sneaky-rabbit
Score: 23
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