Bitcoin - a means of wealth redistribution

Amazing things would happen if a large percentage of transhumanists could achieve financial independence. How would this be achieved?

Many transhumanists[note 1] have great ideas, but due to lack of time and money, they never follow through. Only the most determined and persistent H+ people ignore all the obstacles and keep going. Many give up when faced with great difficulties, but a few get funding and keep going. A few even find jobs that allow them to continue pursuing their dreams...

[Note 1] Transhumanist. According to Wikipedia: Transhumanism (English: Transhumanism, abbreviated as H+ or h+), or translated as superhumanism, superhumanism or transhumanism, is a term similar to human enhancement. It is now an international cultural and intellectual movement that supports the use of science and technology to enhance mental, physical strength, abilities and qualifications, and to overcome unwanted or unnecessary human conditions, such as disability, disease, pain, aging and accidental death. Transhumanist thinkers study the possibilities and consequences of developing and using human enhancement technology and other emerging technologies for this purpose. In addition, the dangers and benefits brought about by these powerful new technologies, as well as the changes to the human living conditions, are also the focus of the transhumanist movement.

Obviously, if a large fraction of transhumanists could achieve financial independence, amazing things would happen. How would this be achieved?

There is a way...

We need to redistribute wealth! Here’s how:

Open peer-to-peer currencies in the wild on the Internet represent a coming paradigm shift in the lifeblood of our economy: money. After 400 years of almost uncontested control of the money supply, the world’s central banks now face formidable competition that threatens to render them completely obsolete. Not just central banks, but any form of money transfer will no longer require the help of a payment processor. Without banking networks like SWIFT or SEPA, without any proprietary electronic money, many traditional banking models will become obsolete. We can get by without banks if we choose. Nothing can stop this development unless almost all governments in the world come together to control the Internet, or cancel it altogether. The genie is out of the bottle.

Bitcoin is the first peer-to-peer currency. Like peer-to-peer file sharing, anyone can participate simply by downloading a client. Bitcoin's features are designed to empower users and provide advantages to early adopters:

1. Bitcoin knows no borders. Transactions with your neighbor are the same as transactions with users in the most remote parts of the online world.

2. Bitcoins are not created in arbitrary quantities out of thin air like fiat currencies. Bitcoins are created at a predictable rate through a process called “mining.” At the time of writing, there are 10 million Bitcoins, and there will never be more than 21 million.

3. A Bitcoin address has no obvious connection to its owner. Unless such a connection can be established by other means, Bitcoin transactions are anonymous.

There are two drivers of wealth redistribution: Since the supply is very limited, the value of Bitcoin will rise if demand increases, which is predictable: If the number of users increases, early adopters benefit because their demand for Bitcoin drives the price up. How much higher can the price go? We are currently at 50,000 users and a market cap of $100 million. If 1 billion people use Bitcoin in the future, the price must rise by 5 orders of magnitude to make up for it. In other words, if you buy one Bitcoin today, you will lose $12 if the project fails completely. But if the project succeeds, you will gain $100,000 or more.

This already shows how wealth redistribution favors early adopters. Early adopters are able to get Bitcoin at a low price. The network effect is expanding the Bitcoin community and the price of Bitcoin will rise. Now the question is who loses if someone gains? After all, all currencies today are purely virtual, so it must be a zero-sum game. If Bitcoin goes up, capital flows into the Bitcoin economy. The losers are those who hold other currencies, because they will lose capital. At the current price, this is completely negligible, because Bitcoin's market capitalization is dwarfed by the 10 trillion euro M3 and even higher amounts of the US dollar - the Fed wisely decided not to publish these numbers since 2006. But whether the users of these currencies will feel the loss is the question - the ECB and the Fed will screw them hard through inflation.

Image: Bitcoin price since 2010 until the time of writing. Ignoring bubbles, especially the one in mid-2011, Bitcoin price follows the exponential law very well.

As the Bitcoin community has now learned how to better utilize Bitcoin, the price of Bitcoin is increasingly driven by usage, not just speculation. At some stage of market penetration, Bitcoin will replace Western Union and other remittance services, because this is what Bitcoin was designed to do from the beginning. Once the circulation of Bitcoin is closed, that is, businesses can pay bills with Bitcoin and receive revenue in Bitcoin, Bitcoin's use will explode. Placing money on further growth of Bitcoin seems to be a very good bet - much better than notes denominated in dollars or euros (such as life insurance), which are almost guaranteed to lose value and potentially become a dead letter.

Of course, Bitcoin has also received its fair share of criticism after becoming popular last year. Here are the most relevant criticisms, along with rebuttals:

* Bitcoin is a Ponzi scheme : Like a Ponzi scheme, Bitcoin rewards early adopters. The important difference is that Bitcoin has utility as a payment method and does not promise interest payments, so there is no obvious point for investors to chase it. Once the bubble bursts, the Ponzi scheme is gone forever. Bitcoin had a bubble in 2011 and burst in July, but has since recovered well.

* Bitcoin is a multi-level marketing (MLM) scam : As mentioned above, there are similarities between the two, but there are also important differences. Bitcoin does not have individual rewards like MLMs, and if you own Bitcoin, you don't need to do anything to profit from price increases.

* Bitcoin has no intrinsic value : There is no intrinsic value in anything. Everything has value, it's just that people value it differently. People tend to think of things with a tradition of value as having intrinsic value, like gold. Bitcoin doesn't have a long tradition yet, but this will obviously change over time.

* Deflation is a bad thing : If falling prices were a bad thing, the semiconductor industry would have been in crisis from the start. In a fiat currency system, a credit crunch is a bad thing: if everyone starts paying back loans instead of investing or spending, productivity is used to destroy money (which is the essence of paying back bank loans). Therefore, the economy suffers, and deflation caused by market forces and defaults forces people to work harder to pay back loans. Governments spread the myth that deflation is a bad thing to justify creating new money under the euphemism of "monetary policy" and collecting revenue from seigniorage and monetization of government debt - an inflation tax.

As with any investment, Bitcoin comes with risks:

* Since Bitcoin is almost anonymous, its application to criminals is obvious. If it is restricted to this group of people, its value will be stuck (cannot continue to develop). The investment will not be lost, but there will be no profit of 5 orders of magnitude.

* Elliptic curve cryptography or the hashing algorithms used are broken : Depending on how this happens, this could be a complete loss or just an outage until an alternative is implemented. There are plans in place for this scenario.

* Government bans Bitcoin : This is a very real possibility, as many governments plan to create cashless societies with proprietary electronic currencies, where every transaction will be monitored in real time, taxed, and possibly even vetoed. A ban could be a major setback, but in such an environment, Bitcoin is very attractive to everyone as a cash alternative. Bitcoin could even profit from a ban.

* The price of Bitcoin can be volatile at times. There is no guarantee at any time that you won't get Bitcoin at a cheaper price later. As a long-term investor, you must be able to ignore such short-term fluctuations.

There are many ways to get your Bitcoins. Once you have your Bitcoins, you'll want to cash them out. If you just want to keep them, create a paper wallet and print it out to store in your safe. Don't forget to print another copy as a backup. Then withdraw the coins to the address shown and delete the paper wallet from your computer so it can't be stolen by malware. That's it! When it's time to spend your Bitcoins, you can access your wallet by scanning the QR code on your computer or mobile device.

Cryonics will find the brain wallet option interesting: since the private key is just a very large (256-bit) number, it can be deterministically created from a passphrase. This is a string of words that means something to you, perhaps with your social security number or something like that added in. Since you can remember this string of words now, you should be able to remember it after you are resurrected. Therefore, as long as you can keep your memory, you will be able to access your funds even if everything else in your dewar is taken away. More importantly, you can prove that you are the owner of the Bitcoin address, and therefore the funds at the Bitcoin address. This is done by signing a message with your private key. Now, anyone can verify your ownership with this message and your public key. Depending on how Bitcoin develops, even one Bitcoin could be a huge sum of money when you are resurrected, so it seems wise to invest this small amount now so that there is a real incentive to resurrect you in the future.

The real value of Bitcoins is using them as a form of payment. You need a digital wallet to spend them.

Transhumanists tend to be freethinkers, which means they often can’t agree on anything. This is both the H+ movement’s greatest strength and greatest weakness. However, if we can agree to use Bitcoin, and use our personal networks to spread it, then we have enough people to make Bitcoin’s success — and thus its price increase — a self-fulfilling prophecy.