Deflationary economics create old money; old money creates dynasties.

in LeoFinance14 days ago

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Nasty Dynasty.

You know who the biggest hypocrites in the world are theses days?
Bitcoin maximalists.

These people pretend to care about decentralization when they really just want to build up a pile of wealth so big it would put ancient China to shame. Imagine the nerve of these people. Claiming they want a better world and spout off all this nonsense of decentralizing power, as they try to consolidate as much power for themselves as they possibility can. Silly humans: can't even follow your own rules.

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Deflation is bad.

It is known. There's a reason gold and silver are constantly underperforming, and derivatives manipulations is only a small part of it. Money is an abstract concept, therefore money taking physical form is automatically a bad idea from the get-go.

Money velocity.

Bitcoin is a unicorn asset that's been doubling in value for the past 8 years (even more in the early years). Defi applications are the latest craze, and it's becoming obvious that there is very little reason for users to sell their Bitcoin going forward.

Why would you sell your Bitcoin when you can throw it into a yield farm and fund a retirement account for the rest of your life? Why would you sell your Bitcoin when you can lock it up as collateral and draw loans from it? Yeah, you wouldn't. Therefore, in combination with outrageous transfer fees, it becomes obvious that the velocity of Bitcoin is going to grind to a halt as time goes on and the positions of strong hands get more solidified.

Again, this is bad for everyone. It creates a stagnant economy where everyone is hoarding and no one is spending. The Bitcoin economy is going to constantly be in "survival mode" where everyone is afraid to spend the token. Not great.

In my opinion, Bitcoin is still a fantastic buy as long as you can afford the transaction fees. These fees are still relatively quite low (especially from self-hosted wallets aka not-exchanges). It's when Bitcoin's fees get up to $100+ on the low side that the party ends for the little guys and the only way to interact with Bitcoin profitably will either to be filthy rich or by trusting an intermediary to maintain custody of funds and route transactions together for a cheaper overall price.

Sure, it's possible that the blocksize starts increasing, lowering the fees, but who does that benefit? It certainly isn't in the best interests of the miners. Miners want to make more money and higher fees provide that. It's not good for the node-runners because it will make nodes more expensive. It's not good for the lightning network because it makes them less relevant.

The only group that benefits from a bigger Bitcoin blocksize are the users of Bitcoin who are transferring it around. Funny story: the users of Bitcoin have no say in the governance in Bitcoin. OOPS. Too bad so sad, try again.

The people who run the Bitcoin network are the devs, the node-runners, and the miners. Nowhere in that equation are the actual users who hold and transfer around Bitcoin. This is why DPOS is in many ways an absolutely superior governance structure that the world has been largely ignoring.

DPOS

With DPOS, your stake is your vote. Many will claim that in theory this leads to corruption. Yes, well, that's nice, in theory. In reality the exact opposite thing is happening. This can be verified provably on-chain over time.

What happens when the rich and powerful are in charge and they exploit the economy? They make money off of those exploits. The thing about DPOS is that it's a self-correcting system. The users here that take gains and are selling off Hive? Yeah, they are losing power. And who's gaining that power? The users buying who actually give a shit. In another four years this place is going to look a whole lot different, that's for damn sure.

"My vote doesn't matter!"

Yes, that's true in the legacy economy. One-person one-vote enforced by KYC is obviously a failed system. Many on Hive tend to lean towards this idea that small votes don't matter here either. That is false.

The minnow example.

A minnow on Hive has around 500 coins. With 141.4M Hive tokens powered up, that's a weight of 0.00035%. Or, in other words, if 282,800 users had exactly that much stake it would equal 100% of the entire voting power on Hive. Let that sink in for a bit. A quarter million users is a nothing amount in terms of the borderless internet.

A stack worth less than $200 on Hive gets you a stronger vote than you could ever hope to get within legacy republics. Don't forget that republics have already been full on hacked a thousand times over, and that propaganda, lobbyists, and the money behind the curtain is what's driving this Goliath beast of a system.

It's even more crazy to think that my personal share in this network is one out of 637 at the moment. My stack is big enough that I've actually been personally asked multiple times to upvotes witnesses and proposals via DM. I started here with nothing and 3 years later I'm a fairly big players, and I haven't even built anything yet. Crazy stuff.

Inflation doesn't matter.

What matters is who controls that inflation in combination with liquidity factors. When inflation is centralized, it's easy for corruption to set in and for funny money to be printed and spent in every direction. Meanwhile, crypto is programmatic money that is impossible to counterfeit and very hard to double-spend. The future is here, the world just hasn't embraced it yet.

Conclusion

Inflation is great when it's allocated in a decentralized manner. This mechanic not only allows for users to escape the burdens of centralized inflation, but also on a more subtle level allows old-money to exit the system and new money to thrive. In combination with DPOS where stake is equivalent to voting power, we see some truly interesting network effects pop up.

Bitcoin will never die, but its complete lack of proper inflation incentives will push it lower and lower on the market cap when the time comes. As a deflationary asset, Bitcoin is not the most valuable asset in the space, it is simply the safest asset in the space. The anchor. It will always continue being the anchor, even to the point of weighing the rest of the market down when we are ready to fly.

Less inflation will only equate to a higher token price if that inflation was allocated incorrectly. Correctly allocated inflation generates more liquidity than it drains. Bitcoin has no inflation, making it the safe play, but there are thousands of other networks out here tinkering around with models that higher cap coins could never dream of risking. There will obviously be a spectrum of winners and losers that consistently outperform/underperform the networks that take fewer risks. This is decentralization at it's finest. Calling everything that isn't Bitcoin a "shitcoin"... isn't.

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On top of this, because new tokens can be cheaply created or old forked, any system that gets too oppressive can be split and redistributed without any kind of takeover required. Act like assholes, get replaced. This can lead to greater balance, especially once it happens a few times.

Bitcoin is the safest way to store value and if you want to use it like that and put your retirement funds then yes it is a superior asset. I don't know what is your problem with the deflationary asset, I am seeing in your most of the article you are complaining about it.
And comparing Bitcoin with other altcoins is nothing but stupidity. Bitcoin has already got the network effect and every other crypto project is trying to get the same thing. The motto of Bitcoin doesn't matches with Ethereum and so with all other alts.
Every projects are unique and have their own standards and protocol.
Last thing, I would like to make you understand is 1 satoshi= 1 satoshi and 1BTC=1 BTC. This will always be the standard, if you compare BTC with VEB, Yes you will see some serious massive gains. SO, it is up to people to trade BTC against something or not.

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I don't know what is your problem with the deflationary asset.
I am seeing in your most of the article you are complaining about it.

Obviously I haven't complained about it enough if you're still confused about my position.

And comparing Bitcoin with other altcoins is nothing but stupidity.

Very much spoken like a true maximalist. The value of all these assets is synergizing together. When Bitcoin spikes up, value trickles into every single other crypto. These networks are intrinsically linked and inseparable, with an emphasis on interoperability being one of the main development points.

1 BTC will always equal 1 BTC,
but literally nothing is priced in BTC,
making this sentiment totally irrelevant.

It should be obvious by now that BTC will NEVER be a unit-of-account,
and that's a pretty severe disadvantage.
Good thing there are thousands of other projects out there to pick up Bitcoin's slack.

It should be obvious by now that BTC will NEVER be a unit-of-account,

It already is for some people.

In another four years this place is going to look a whole lot different, that's for damn sure.

What it’s going to look like would be a great post. Get to it!

Deflation kills Innovation.

In a modern world, everyone should be able with smart tasks to become a whale/rich/ successful.

If this is not possible, no one wants to be innovative. It's the same reason communism doesn't work.

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Deflation is bad.

Just ask Japan.

Interesting post on the day when the CPI numbers come out and put up a doozy of a print. I am sure Peter Schiff is going ape shit on this one. The inflationists are head over heels on this one.

My bet is that the Velocity of Money number that comes out for the second quarter will show another decline.

Ironic that the VOM of Bitcoin is likely worse than the USD which is at pathetic levels.

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"My vote doesn't matter!"


Yes, that's true in the legacy economy. One-person one-vote enforced by KYC is obviously a failed system.

Voting in a political system is what failed. When people vote, they should get what they want; why vote if you won't get your way?

The voting system which succeeds is an economic voting system. People vote with their currency by buying, or even voting, for what they want. If people don't want something, their either abstain from buying or they outright sell.

Regardless of our account sizes, economic voting allows everyone to get what they want by means of currency or money. Even if it isn't true 100% of the time, it's true enough far more often than in a political voting system.

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It is time to end central banks and defi should takeover!

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Well here's what i think Each time i think about deflation i dig a bit deeper. You make some valid points about deflation because i look at the bitcoin model in its horrible. The bitcoin maximalist are a cult of idiots. However Dpos can't get a pass either. I don't even think it's a matter of determining which is better. I think the better model is just better than them both.

So i think the issue of deflation and distribution is a bit dated. i generally refer to the problems with gold vs currencies and we generally end up with the same position of gold had many problems of not creating economic prosperity. Bitcoin isn't creating any real economic prosperity either that is significant and i dont think it will. So its quite similar to the gold versus currency problems of lack of velocity of money.

The problem is in dpos for all intent and purpose most are going to just walk away and say this is a centralized system no matter how you flip it. It doesn't seem to do any better in the distribution model than bitcoin does. So it's not winning there. So i don't see it as contributing to economic prosperity. For me its just yet another option to lead to the same thing.

You see this low pool of witnesses to entrust the network too i just no longer feel its a great model and there is no data to suggest it is. It has performed much more horrible than bitcoin. It doesn't seem to be getting any better besides our hope it will.

Bitcoin more to entrust the network to but none represent me. We know the reality now is that the majority of us won't be doing bitcoin mining. So thats more a mining monopoly. I just refuse to believe there can't be a viable option that works better. Thats' why i have spoke about our community governance model where groups are formed and if one person comes to your group you now have voting power. The idea is even at the most severe level of gaming the network. We'll still have pretty close to an accurate representation of what the network wants.

So similar to our voting system that i'll say has run pretty good provided you count all the stolen elections still statistically not bad. I'd say for the most part the countries wishes in the limited scope of who's president were honored. I don't believe americans wanted trump to be president again so i'd say it worked out pretty well.

This is how i'd want the chain to work as well. That pretty much the entire chain has their wishes met The only way to do that is exclude money. We haven't yet been able to do that unless you include lottery systems. Even with pow mining the cost to mine is still not allowing for the best outcome.

So that's why i think my network distribution group function on btcmyk makes more sense. I don't think its so much the monetary policy as gold worked different than crypto works. in crypto the amount of coins or tokens matters about as much as it would in a stock split. In a stock split psychologically sure it may cause some attractive pricing make people set a certain attitude. However we still know as far as vote and influence concern its the same exact thing in the governance. Same thing in crypto when we change coins.

digital allows us to make even a small amount of coins divisible by several decimal places. So i dont think thats really the problem as much as the mining pools .. mining production.. governance and small groups controlling the network. I think thats really what the issue is.

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You started out here with nothing? Did you grow 'organically' up to your current level? Am just surprised

Just been pumping in my own money from day one.
I've also taken loans from friends and family.
So I owe people money, and investment returns.
Plus blog rewards, which is far less.

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On-chain data indicates I've earned 56,477 during my time here.
I did use upvote bots a tiny bit back in the day, so it's even less.

If powering up 50/50 it only counts half, so it is more, but this doesn't necessarily mean you converted the hbd to HP.

Does the API really not count HBD?
Silly.

Yeah, so it is hard to know precisely what had been earned. Someone who powered up 100% for ages, looks like they earned more than someone who powered up 50% and sold the rest. :D

Loans for hive? That's crazy optimism. Well I think the result speaks for itself though

I think it is smart because the internet is evolving every day. Web1 Web2 and now web3. With the different things become faster and faster.

Not a long time ago, there was no smartphones. Crazy if we think about it.

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not for hive in particular
just crypto in general
the mixed bag of my portfolio

This is a balance system where you need
all tokens to mind their objectives.
BTC has its place, just like Hive making
wave in its space.

!BEER

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Learn how to earn FREE BEER each day by staking your BEER.

A stack worth less than $200 on Hive gets you a stronger vote than you could ever hope to get within legacy republics.

That's very true. If one think they are too far from the whales in here, try the legacy economy...

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You know who the biggest hypocrites in the world are theses days?
Bitcoin maximalist.

I'd love to hear your opinion on Pomp.

His Twitter has gotten painfully self serving imo.

I'm sure you have a fire take.


PS. You always post from the LeoFinance front-end, right?
When you internally link back to your past articles, you should try and use the leofinance.io link, not the peakd version.

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I think BTC will still be around and it will probably still be fairly high on the list of marketcaps even in the future. Its deflationary nature makes it a great choice as a store of wealth. This deflation just kills the economy in my opinion.

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BTC will be around for the foreseeable future, even if an altcoin replaces it as the standard by which all other cryptos are compared. It's not as if it will end up as a 8472nd-place crypto on CoinMarketCap.

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