Economist warns of dystopia if ‘Bitcoin aristocrats’ come true

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Not everyone is enthusiastic about hyperbitcoinization.

According to a popular copy and paste meme, Bitcoin hodlers are on their way to becoming a neo-aristocracy as Bitcoin becomes the dominant global currency:

The meme is part of a larger vision for the future of Bitcoin, a semi-serious but above all ironic tale that can be lumped under the umbrella of “Bitcoin Citadels”: a vision of the future in which Bitcoin becomes so valuable that the hodlers become lords literally defending their pieces in castles.

From a Reddit post written by someone claiming to be a time traveler (they called for a $ 1 million prize target in 2021, if you’re curious), the Citadel meme took a life of its own, inspiring even a short film. .

But despite the obvious farce and fantasy behind the meme, an economist now warns that it might not be far from the truth if Bitcoin was successful in its mission to achieve monetary supremacy.

On the website of the think tank Center for Economic Policy and Research, academic Jon Danielsson of the London School of Economics yesterday wrote an article in which he envisions a future where the “Bitcoin aristocrats” “will fuel social division and the populism ”through the extreme inequality of wealth:

“For starters, the current owners of Bitcoin will become the richest people in the world, rivaling the kings and emperors who have ruled over empires for centuries. They will literally own all the money. They can buy whatever they want. There are not a lot. Compared to the multitudes who own assets today through all the pension funds and mutual funds and so forth, this is a small group of people.

The government would be forced to “protect or attack” this new class of lords, those who reached their “rank simply by buying early.” They will not make any contribution to society. ”

Gloominess and grumpiness aside, Danielsson ultimately concludes that such a future “cannot” come to fruition because Bitcoin is not suitable as a unit of account due to its price instability. Due to these “internal contradictions,” Danielsson writes, “the price of Bitcoin will reach zero”.

Other than the economic analysis which comes to the same conclusions as time-traveling Redditors, not everyone is so gloomy about a hyperbitcoinized world. In fact, in many cases this has turned out to be a boon for countries struggling with inflation.