Some call it a bubble, some fraud, and some a replacement for money itself. Never before has an asset class generated so much wealth in such a short time than Bitcoin. The most interesting part is that it is not suave bankers or hedge fund billionaires who made it big in Bitcoin but it is early adopters. Most of them in their 20’s and 30’s who invested a few dollars are now worth tens of millions. But like with the industrial, telecom, and Internet revolution the crypto boom has made a ‘few’ people very rich. To give you an idea, according to the Bitcoin distribution curve around 87% of the total Bitcoins mined are owned by the top 1% of the wallets. The decentralized currency was touted as the ‘single largest wealth transfer in the history of mankind’, but it is anything like that. With the cryptocurrency slated to go only up from here, Brian Schuster explains what would happen to the rising Bitcoin millionaires and even billionaires.
I think this is something that we are going to struggle with as cryptocurrency becomes more important.
On the one hand, there is no technical reason for the concentration of wealth to limit people from using cryptocurrency (assuming we can scale the solution). BTC can be incremented to the Sathoshi (1/100,000,000 of a BTC), so even if the value explodes, it can still remain functional. Wealth inequality didn’t change the usefulness of the internet, nor will is change how useful blockchain is. Even if a few people get an overtly out sized benefit, the majority still get a better system, which improves everyone’s lives.
But this does not make it fair. The truth is that early adopters who did not sell (and there are many that qualify) are going to be sitting on top of some very large piles of money, some to the tune of tens of billions of dollars. And there isn’t a lot that can be done about this, at least not without a high level of interventionism.
It’s not fair. It will never be fair. There are going to be people 10 years from now flying around in private jets and buying sports teams because they bought BTC and forgot about it. You’ll likely meet a speaker at some conference who’s only real contribution was reading some doffus’ quora posts and buying based on that recommendation (and selling themselves as a trading genius). There will be more imitators to James Altucher than you can imagine, all making more money than people slaving away for years at an honest career
They got lucky and will have all the benefits that come with this. And for some time, they will be plentiful.
The good news is that over time, those with unearned power tend to lose unearned power. Most family wealth (and we’re talking billions of dollars of wealth) is lost within three generations. Wealth accumulation is a very fragile process and there are many places where you can lose funds (whether that’s a hack, bad investment, drunk weekend in Vegas, etc). So one way to personally ‘solve’ this problem is to realize that those that got lucky, got lucky. But those that remain lucky (and wealthy) had to earn it to some degree, and that many will lose their fortunes along the way.
But I understand that this won’t completely quell feelings of unfairness. That’s a reasonable response to incidents like this. Cryptocurrency was supposed to act as a great equalizer in the world. It is supposed to take down a lot of the institutions that created great barriers to wealth inequality and allow people to create a better future. And in many ways, the technology will still allow that, but it also has created massive wealth for very few, seemingly against these intentions.
So here’s the answer I operate with: Ignore them. There is nothing that can be done to change how wealthy someone got, or the luck that got them there. Going in and trying to ‘fix’ this often creates bigger and worse problems then what you currently have. But the biggest risk is the opportunity cost to yourself. Every moment you spend on wondering about past luck and big fortunes will be another day you’re not building your future, in your image.
It’s not fair, and you will never make it fair. The technology is still going to change lives, and maybe not as fairly as you imagined. But there is still a better world for you to build.
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Quora answers is our weekly feature in which we pick first-hand experiences and interesting opinions from the Q&A site.
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