Bitcoin Inequality Problem Puts Dollar to Shame

Image of the article titled The Bitcoin Inequality Problem Puts the Dollar to Shame

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Cryptocurrency lovers have always embraced decentralization and the democratization of technology supposedly encouraging it, but new research Hinge The Wall Street Journal points out that inequality problems are worse than the disgraceful performance of the United States under Da look. Fantastic achievement Looking at income inequality in 2020, America was the highest among all G7 countries according to OECD data. seen before Pew Research.

This illustration, from fading Bitcoin’s small financial elite, revealed in a new National Bureau of Economic Research study written by professors from MIT Sloan School of Management and the London School of Economics. And it found that out of the 19 million Bitcoins currently in circulation, only 0.01% of buyers control about 27% of the total supply. This 27% is about 5 million bitcoins, which in turn amounts to about 232 billion USD. By comparison, the richest 1% of American individuals “only” control about a third of the nation’s wealth, the magazine notes.

The professors conducted their research for the first time by mapping and analyzing every Bitcoin transaction over its 13 years of existence. Since the identities of users on the blockchain are not directly linked to their transactions on the blockchain, the professors have not been able to get much information about who exactly is the biggest beneficiary of Bitcoin. Instead, the research paints a picture of how the bitcoin economics in general works. This negligible concentration of great wealth means that the Bitcoin rich will only likely get richer if the value of the cryptocurrency continues to increase. It also means that power is less dispersed, which could make bitcoin more vulnerable to “systemic risk.”

These results do not bode well at all encryption enthusiasts those who have human The perceived ability of technology to reduce inequality. The argument here goes along with something along the lines of Cryptocurrency will democratize finance by redistributing power away from global governments and the wealthiest power brokers on Wall Street.

This argument was not necessarily foolproof, but arguably had more weight in the early years of bitcoin as entry costs were low, and nearly anyone could afford it. mine Their bitcoins with a file An accessible platform. Despite this, the overall landscape has changed drastically, especially in the past two or three years like the price of Bitcoin rose. Through this process, bitcoin has not reduced inequality at all. If there is anything, he repeats it.

At the same time, there were experts and academics ringing their own alarm bells about the potential for inequality to cause Bitcoin inclinations. in a interview With CNBC Cornell University, Professor of Economics and author money future Crypto giver Eswar Prasad may make digital payments easier, but he said this does not guarantee any reduction in inequality.

“Because of the disparities that exist in digital access and financial literacy, they [cryptocurrencies] It can exacerbate inequality,” Prasad described Bitcoin as a bubble. “In particular, any financial risk arising from investing in cryptocurrency and related products could end up falling heavily on gullible retail investors.” Prasad also warned that bitcoin and other cryptocurrencies could contribute to monetary and financial instability, a potentially much worse problem if they were housed in a largely unregulated system without enhanced investor protections.

Despite all this, “decentralization,” “democracy,” and “independence” are frequently referred to in relation to cryptocurrencies as a new wave of Web3 Investors and enthusiasts spend Millions Lock in NFTs and formation DAOs to make group purchases.

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