Cryptocurrency — Wealth Redistribution or Concentration?
By Andrew Gillette on ALTCOIN MAGAZINE
Twitter: @Infosec_Andy
In a star system, the top players are rewarded tremendously, while almost everyone else — facing in our era an ever-larger, more global body of competitive peers — is driven toward poverty (because of competition or perhaps automation). To get a bell curve of outcomes there must be an unbounded variety of paths, or sorting processes, that can lead to success. That is to say there must be many ways to be a star.
— Jaron Lanier, Who Owns The Future
The promise of decentralized blockchains and the cryptocurrency economy rests in large part on the possibility that finally, here and now, is a *real* shot at global wealth redistribution.
As traditional big money-men sat out the early days of bitcoin and emergent blockchain startups like Ethereum and Stellar, younger people from all walks of life gambled and won big. Everyone’s heard stories of a friend’s friend who, as a lowly freelance graphic designer, put $3,000 she couldn’t afford to lose into the Ethereum ICO and became a millionaire somewhere during the crypto bubble of late 2017.
Such stories make the rest of us dream of not only our own potential wealth, but that perhaps blockchain is enabling a shift away from the concentrated forces of decision takers, money makers, and financial overlords that have so dominated the limited paths to success we have in life.
However, as the crypto space has matured and the economy being built around it has similarly come of age, we see through the lens of a few key events that we may be in for more of the same. With every passing day, traditional finance’s forces gradually reshape the crypto economy in a constant drive to make it resemble markets as we already know them, and as *they* already control them.
Hoarding the Picks and Shovels
While attention has focused on the cryptocurrency bear market, the *real* story about the battle for crypto’s future is happening behind the scenes.
In early 2018, Goldman Sachs-backed Circle purchased well-known crypto exchange Poloniex for $400 million. A few months later, Intercontinental Exchange, owners of the NYSE amongst other major financial properties, declared they were launching a crypto exchange called Bakkt in cooperation with Microsoft and Starbucks.
Bank of America, IBM, Mastercard, Fidelity, TD Bank, Dell, Visa, Intel, American Express, PayPal, Amazon — the world’s largest corporations are all locked in a race for blockchain patents, with some, such as Bank of America, racking up over forty of them.
Whereas the inception of blockchain with Satoshi’s whitepaper left the door wide open for innovation and possibility, the current period seems dominated by the very industries and entities that once had their powers threatened by crypto.
Early Heroes Turned Into Crypto Villains?
Perhaps the real story here is that blockchains as we’ve known them so far are asset-based. Those with buying power can hoard them like anything else — gold, oil, diamonds, real estate.
PoW and PoS systems all require a stake whether it’s computing power or tokens. In such a circumstance, the scale will always favor those that have versus those that have not, and when governance mechanisms benefit crypto-oligarchs, it should come as no surprise that protocol changes favor concentration of power.
Figures such as Roger Ver, Jihan Wu, and Craig Wright — the major players in the recent Bitcoin Cash drama — have proven that with the wealth and influence their early bitcoin adoption affords them, they can tyrannize the direction of the cryptocurrency market and limit the range of possibilities within it for others. Just this past week Roger Ver’s #hashwar sunk crypto prices to the lowest prices of the year and nearly every altcoin was affected by this war between BTC and BCH.
Is the meaning of decentralization that 2% control the majority of resources rather than the 1% we’ve become accustomed to in traditional industries?
These are questions that will need to be sorted out with time, but the accumulation and concentration of assets into the hands of a few — even if they are new hands — isn’t conducive to the democratizing of technology and wealth that blockchain seemed to offer at its outset.
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