Example 2: Why Cryptocurrency Is So Vital: Wealth Inequality
This is part of an ongoing series that I started writing about some of the present problems confronting society and how cryptocurrency/blockchain is the solution.
The first installment was posted yesterday:
https://busy.org/@taskmaster4450/example-1-why-cryptocurrency-is-so-vital-technological-unemployment
This is the second example.
Source
Wealth inequality gets a ton of attention and for good reason. The present system is built upon scarcity. Since there is only a limited amount of wealth to go around, who controls it is crucial. We certainly do have a system that has "the rich getting richer".
The numbers over the past three decades all prove this out. Even in first world nations, the inequality gap is widening. The amount of wealth that is under the control of only a few percent of the people is astounding. The 3% (or 1%) has the majority of all the assets.
Sadly, this is only getting worse and is not going to change under the present system. Many have proposals and ideas put forth but they do not seem to have much traction. The system is one of boom/bust cycles which enables the wealthy to profit from the downturns they create. In fact, the bust cycles only asset in generating more wealth for them because, as Warren Buffet says, things are on sale.
So what is the answer?
Crypto-economics is going to solve this issue.
We are seeing an entirely new economy being created with many opportunities to earn income. People are going to have the ability to capitalize on things they are already doing for which someone else profits.
People who are involved in the Steem ecosystem are familiar with some of the applications that are already providing people with tokens. Some have advanced to the point to have monetary value. Over the next couple of years, we should see a number of other applications following suit.
This is not the only system that will emerge.
For example, how about getting paid for data that is generated out of one's clothing? Smart clothing is being worked on which means there will be data that has value to companies. This is something that can be monetized.
Well, wearables manufacturer Loomia has created smart clothing where each garment is embedded with sensors that collect data about temperature, motion or frequency of wear, which is stored it a battery pack called the Loomia Tile that powers Loomia's technology and also doubles as an Ethereum-based ERC-20 token. Each transaction is secured in smart contracts that are stored in the blockchain. The data can then be sold to marketing companies and researchers as the wearer chooses, creating a monetized data exchange.
Outside of a few nudists, most everyone wears clothing. As we go throughout our day, the data generated can provide each of us with a valuable resource to sell. This is a possible income that will be available to the masses.
One of the biggest reasons for the wealth inequality is the pace of income growth. The last few decades saw the upper end have income gains that far outpace the middle and lower classes. Many assert, that when adjusted for inflation, those two classes had no income growth over the past 20 years.
Crypto-economics is going to reverse this. A project like Loomia is set to offer this. We also see similar projects with computer storage, health records, and GPS information. As people earn tokens for doing everyday things, their incomes will rise. This should translate into more wealth.
The important part is that all of this is outside the established system. This is why decentralization is so important. Permissionless blockchains hold a key to the ability for the masses to step outside the system that has failed them for so long.
The media likes to talk about taxes, redistribution, basic income, and a host of other solutions that are still operating within the existing structure. Even if these ideas were viable and implemented, it would only be a matter of time before the inequality reverted back. Anytime something can be changed with the stroke of a pen (backed by guns), one cannot expect it to be a long term solution.
I already wrote about my views on Security Tokens. Once they are fully established on decentralized exchanges (DEX), the average person will be able to invest in them. At present, investment of this nature are reserved for "accredited investors" which means wealthy. This is a way the wealthy keep the best investment opportunities for themselves while excluding those that could benefit the most.
Wealth inequality is another problem that shows why cryptocurrency is so vital. It is a path that is going to rectify this. The creation and distribution of tokens is going to provide people with a chance at prosperity. As the value of some of these networks grow, we will see the wealth of people holding cryptocurrency grow.
An alternative system is sorely needed.
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Not sure I would call it wealth inequality as it would have connotations that those in power would not like; whereas lifestyle inequality or just the right to live is something that should be a goal for society.
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I think your post introduce us the future of humanity. Thank you for this valuable post
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No doubt there are "solutions" and there are solutions. I really do see things becoming alot more divided before they get better. Cognative dissonance will have the masses arguing and fighting over 'solutions' while others will be flocking towards the new paradigms emerging....they will even create ways to broaden the possibilities available with blockchain. An alternative method is sorely needed indeed.
Let's be realistic. The crypto economy will not fix lazy. It still requires people to put in the work to create value. Even within the crypto ecosystem there will still be inequality. People who put in more work will earn more tokens. Even the STEEM platform you evangelize on has huge wealth inequality on it.
Sure. And that is changing every week. 3 years ago, what did the breakdown of STEEM (SP) look like? It was in how many wallets at that time? A few dozen since it was still being mined.
Now look at it.
And there is a lot more than just STEEM on here. HUNT, AFIT, and other tokens are being distributed daily. The STEEM Whales and Orcas are not the ones earning all of them.
As for the rest of your post, I think you missed the fact that people will be compensated for all they do. The Loomia project will compensate people for the data from their clothing, much if it just monitoring temperature. This same thing will hold true for personal medial monitoring devices. People are going to be paid for the medical data.
What does one have to do for that?
I guess they would have to buy "devices" and "clothing", which still requires some sort of effort. Aside from that, the compensation will be low because there will be a nearly unlimited supply of passive participants. I agree with the spirit of what you say, but I have serious doubts of the utopian vision you espouse. In contrast, I do believe that those who seek to create value and actively participate will be rewarded well beyond clothing telemetry. Even this discussion has value, which is why I choose to upvote even those I don't agree with...
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Utopia is a moving target and something people do not even realize. I guess because it conveys perfection which isnt going to happen.
Aren't we in a Utopia compared to 150 years ago? Of course, this a relative view and depends upon perspective. There is no doubt we have issues today but look at many things that are no longer an issue.
Even compared to 50 years ago, things are much better. Cars are safer, surgery more advanced, and communication much easier. Infant mortality rates are down along with the number of people living in complete poverty.
Will we have Utopia in 20 years? Yes and no. I guess those who seek to find things wrote and promote those views will say it will not be.
Coincidentally, I was walking through the royal palace in Madrid just this morning, and I was thinking how even people considered poor today have better health, more access to information, and are more comfortable than royalty of the 18th century. On top of that, while the furniture was wonderful to look at, it looked uncomfortable.
I cant disagree.
100 years ago, the wealthiest person on the planet did not have air conditioning. Living in Florida, I can only imagine what the richest person in this state went through 100+ years ago. Now, every building built has A/C...even the lowliest of "shacks".
The picture on a $50 smartphone is light years ahead of the most expensive television in the 1960s.
I experienced what you did when I walked through President Franklin Roosevelt's personal residence on a tour a few years back. It is a house similar to the White House in Washington DC (same architect) but inside is straight out of the 1930s. And I know what you mean about the furniture....it was a step up board and hay but not by much.
Haha, reminds me of Trump basically calling the White House a dump! It probably is compared to his place.
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We agree more than we disagree. I just think that you won't be able to to escape economics. The more you tokenenize the mundane, the less value it will have. What's more exciting to me is all of the potential that is going to be unlocked by fixing incentives, not people being rewarded a pittance for their metadata and telemetry. I personally don't want to give up my privacy for tokens any more than I want to give it for social media access.
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My view is what we know about economics is changing. It is an entirely new field. Just like Quantum sets Newtonian physics on its ear, I think crypto-economics is an entirely different animal. Classical economic thought will find itself being less useful going forward.
This is the holy grail. A digital ID system that enables both is yet to be created. It is being worked upon but a monumental task.
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Perhaps crytoeconomy is also not exempt from the system where the rich get richer. But the poor get richer here as well. Thanks to cryptocurrency like Steem everybody can invest time or money or both and profit in the process.
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