Inequality¶
While there is a lot of bad faith criticisms about inequality and Bitcoin, this is an area that deserves nuanced exploration. Inequality presents a moral claim, and it might be helpful to suss out the moral claims from the technical claims and understand them as such. It is not useful to employ moral arguments when pursuing technical truth -- if Bitcoin is true, it's not because it's good or bad, it's because it's true.
In other words, if Bitcoin turned out to be morally reprehensible, resulting in a catastrophic end for civilization, would that make it false? No, it would still (obviously) be true. Importantly, knowledge of such immorality would do nothing to stop it, much like knowledge of the problems of fiat don't fix the problems of fiat.
However, knowledge of the morality of Bitcoin can help guide us as individuals seeking truth in order to live moral lives, and aim towards a good future.
Technical Claims¶
Bitcoin may lead to more inequality
Compared to what? Definitely not fiat. The fixed supply of Bitcoin prevents Cantillon insiders from enriching themselves through seigniorage. Fiat is unconstrained and the supply is controlled by the dictates of those in power.
Since 1971, since the start of global fiat, inequality has only increased. We are now at a level of inequality never before seen in the world, greater inequality than even the famed "guilded age". Whatever may be true of Bitcoin's inequality, this claim that Bitcoin could lead to more inequality than fiat is demonstrably false.
Bitcoin won't fix existing inequality
How could it not? You can no longer arbitrarily inflate the money supply and concentrate wealth. The only way to acquire Bitcoin is through work, producing something others find valuable -or- confiscating wealth from others (through taxation or by other means); either way, this requires work.
Under Bitcoin, wealth isn't subsidized through government grants or easy money policies. However, we should consider that our entire culture and modern society has been corrupted by fiat and seigniorage. What are the ramifications of sound money on a population that grew accustom to fiat?
It's clear that Bitcoin won't (and can't) continue growing the existing inequality; but it's not clear that it reduces the level of inequality. It's possible that a Bitcoin standard will simply lead to a similar level of inequality but with wealth concentrated in different places than politicians and central bankers. Perhaps all that it does is replace one group of oligarchs with another.
The claim that Bitcoin won't fix existing fiat inequality is most likely false, but not definitively so -- only time will tell exactly what inequality will look like under a Bitcoin standard.
Moral Claims¶
The technical claims about Bitcoin's inequality range from definitely false to most likely false. It's difficult to find a reasonable scenario where inequality under a Bitcoin standard continues as it is under fiat. However, we can steel-man this argument and explore the moral issues inequality would pose under a Bitcoin standard and what, if anything, could be done about it.
Inequality is bad
Is it even possible not to have inequality? Perfect equality, what would that even mean? We live in a universe of unequal distributions, specifically Pareto distributions. There is a natural distribution one can expect, and to fight against this seems as wise as fighting against mathematics.
However, it is also clear that there exists within our fiat system extreme and (dare we say) unnatural levels of inequality. In other words, wealth inequality beyond a Pareto distribution. In practice, when inequality breaks the social order, stratifying a single society into multiple societies, this is clearly beyond a "natural distribution". Further, the destructive influence of this kind of cultural disintegration can most certainly be considered morally wrong (assuming the culture in question is better than its disintegrated parts).
Inequality beyond a natural distribution is bad
This claim is difficult to argue against. Obviously if income inequality grew beyond a natural distribution such that our civilization disintegrates -- this would be very bad. In fact, this is exactly what we're witnessing today in this ~50 year global fiat experiment. The wealth gap is accelerating such that the top 0.01% are making the rest of the top 1% feel like the bottom 99%. But worse, there are insufficient cultural touchstones to unite society.
In the interest of steelmanning this argument, let's imagine that a Bitcoin standard does nothing to fix this problem; that the same extreme inequality we see with fiat persists with Bitcoin. In this situation, Bitcoin will fail. Let's be clear, this would disprove Bitcoin, rendering it false. A stratified civilization cannot and will not sustain the level of infrastructure and cooperation needed for Bitcoin. Remember, Bitcoin requires electricity, computers, and a global network.
"And if a house is divided against itself, that house will not be able to stand."
Fortunately, the technical claim here is most likely false. In fact, if inequality under a Bitcoin standard returns to a more natural distribution, then Bitcoin will have "fixed" this issue. Otherwise, and importantly for the survival of our civilization, this issue must be resolved; if not by Bitcoin than something else.
This would mean Bitcoin is "necessary but not sufficient" for the survival and flourishing of human civilization.
For many other reasons, this is perhaps the most healthy view to take. Bitcoin does and can solve many important problems, but it cannot succeed without us choosing the right path, the moral path -- that which is best for you and your family, now and in the future, and simultaneously what is best for those around you in your community and in the broader culture, now and in the future.