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This will be my first article where I react to another article touching the ethics behind Bitcoin. I want to discuss the arguments made in the article and show where the flaws in the argumentation are:
I don't do this to discredit the author. The article was wrote by ssaurel a couple weeks ago. I follow him, am a big fan and love his Blog. If you haven?t already please follow his Blog “In Bitcoin we trust”. He is a very good content creator and he inspired me to write this article. I think discussion is healthy and when we end up using better arguments overall, everybody is benefitting from this. In his article he wants to prove that Bitcoin is a fairer monetary system and would promote the social mobility of the poor in the world. I largely agree that Bitcoin will make things better, but for other reasons. So lets start with the points I do not agree with.
He thinks the current monetary and financial system and getting rid of the gold standard promoted income equality and an unfair distribution of wealth:
„All this is leading to an incredible increase in income inequality between the richest 1% and the poorest 50%. “
Even though the statement is true, the conlusion is based on a logical fallacy called a “non causa pro causa”. By concluding about the cause without having enough evidence to do so, he commits this causal fallacy.
Just because there is a huge income inequality, which is increasing, doesn?t mean it is the outcome of the current monetary system. It could also be the fault of the current trade system in place, or have tons of other reasons. This could probably also happen with a non-fiat system. One reason why the current monetary system is not to blame for the decreasing social mobility seems to be the rate of extreme poor people worldwide:
https://en.wikipedia.org/wiki/Extreme_poverty#/media/File:World-population-in-extreme-poverty-absolute.svg
Since getting rid of the gold standard and during our current monetary system, the rate of extreme poor people worldwide decreased drastically!
That doesn’t mean the system is good, I am just pointing out the possibility, that the social mobility and the number of extreme poor people could have nothing to do with the current financial system.
It is true, that there is an inequality of income, it is increasing, and social mobility is declining:
„Social mobility has been on the decline since 1975
The second thing that is striking when reading this OECD report on social mobility is that social mobility for people whose parents were poor had increased between 1955 and 1975. This corresponds to a time when the Bretton Woods system was in place.“
Again I am not convinced, that this has anything to do with the change in monetary system as suggested. I rather think this is a another logical fallacy.
It is called “cum hoc ergo propter hoc “ or the correlational fallacy. This fallacy happens when you interpret two things found together as being causally related by mistake. And I think this is the case. The increase in inequality of income and the decrease of social mobility may correlate with the new financial system but not having a causal relation. I rather think they may have a third (or even more) factor(s) causing all of them to occur around the same time. Correlation is not the same as causation and certainly, doesn?t prove anything.
Also the next point, that in the 90s social mobility got even worse, does not support the idea, that the change in monetary system is the reason for the worsening. Because we didn?t have another change in the system and it still got worse. It seems there are other causal factors in play.
„From my point of view, only a complete change in the global system can give the necessary boost to move things in a new direction.“
I am not sure this is true, the biggest change, when it comes to increase in wealth, was in China around the same time since they changed their economic system and opened up for capitalism:
“According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty; China's poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015[…].”
https://en.wikipedia.org/wiki/Poverty_in_China#cite_note-worldbank.org-4
This drastic change was not due to a change in the monetary rather than the economic system. So the current financial system did not lead to the inequalities in income and did not make the poor people poorer. There were other factors in play, so I would not jump to the conclusion, that we have to get rid of the current system.
But would it be still better to have a Bitcoin monetary system?
One reason why ssaurel and a lot of other crypto enthusiasts think so is because they think Bitcoin is a fairer system:
„Once you have in your possession the private keys associated with your Bitcoins, you become a full user of the Bitcoin network. You have the same weight as any other user of the network.“
But this is not true in every sense of the word because the weight of a whale is much more than that of a holder of some satoshis. Whales can manipulate the market and with their buying power compared to the buying power of someone who holds a couple sats, it is almost sarcastic to say they have the same weight. And in a distant future where Bitcoin is the new global financial system, there will be whales holding the most Bitcoin and therefore the biggest share of wealth and the poorest in the world will have basically nothing left again.
I do not see how Bitcoin for that reason alone will change anything for the poorest in the world.
The one thing Bitcoin will change for sure is that governments cannot inflate money any more. But as I recently stated in my article:
https://www.publish0x.com/crypto-ethics/is-bitcoin-generating-value-for-humanity-xdgrzlg
I am not convinced that this is a good thing. People and states that are in debt profit from inflation. So very poor people will have a harder time to get rid of their debts because inflation will not help them.
That said I do believe cryptocurrencies and especially Cardano will help the poorest in the world but for other reasons:
https://www.publish0x.com/crypto-ethics/is-investing-in-cardano-helping-the-worlds-poor-xdggnvo
Again I have not made this article to discredit the author, but I read many of these (moral) arguments in the cryptospace and I think they are not good arguments. However, there are very good (moral) arguments for Bitcoin and other cryptocurrencies. Let us use those good arguments and not those easily dismissible ones, to convince noncoiners that cryptos are a good thing. I think this would help the overall cryptospace more than repeating weak arguments, hopes and suggestions.
If you like read, comment and share. I would love to hear your opinion on the topic.
