‘Bitcoin Aristocrats’ Pose Danger to New Adopters

Share Article
In Brief
  • Economist Jon Danielsson says 'bitcoin aristocrats' will get their title solely by being early-adopters rather than contributing to the space.

  • In the Vox EU article, Danielsson argues these so-called aristocrats are the inevitable consequence of the top-cryptocurrency's success.

  • If his prediction comes true, the crypto-community will have to grapple with the resulting inequality and retreat to wealth-based centralization.

  • promo

    Want to learn how to trade? Get a beginners guide from _BeInCrypto Academy_ now!

The Trust Project is an international consortium of news organizations building standards of transparency.

A prominent economist at the London School of Economics (LSE) says Bitcoin early-adopters turned crypto-aristocrats could harm the cryptocurrency space.



A New-Age Aristocracy

According to the director of the Systemic Risk Centre at the London School of Economics (LSE), Jon Danielsson, the cryptocurrency market is at risk of producing a “Bitcoin (BTC) aristocrat” class.

The wealthy members of that class will achieve their rank solely through the early-purchase of the market’s top-cryptocurrency, rather than producing anything of value, the economist continues.



Indeed, the aristocratic class pose a danger when they inevitably start spending their trillions, Danielsson adds.

“We do know that such extreme levels of inequality fuel social division and populism. The bitcoin aristocrats will come under increasing threat, and the government will have to respond. It will protect or attack; it can’t be neutral. Either way, political and social instabilities get worse.”

Jon Danielsson – Director of the Systemic Risk Centre, LSE

In fact, soundings of an emerging “ennobled” group of hodlers have permeated the crypto-space for several years.

An infamous Reddit post entitled “I am a time-traveler from the future, here to beg you to stop what you are doing.”, describes a “Bitcoin Citadel” in which a wealthy BTC hodling elite do everything they can to protect their wealth.

Notably, the author, a “u/Luka_Magnotta”, wrote the post over seven years ago, describing a dystopia where BTC hit $1,000. Today, the top-cryptocurrency is over $43,000, hitting a high of $58,640.77.

An Expectation of ‘Success’

Danielsson also highlights several causes for Bitcoin’s premium today. One of his principal conclusions is that people are simply expecting the top-cryptocurrency to appreciate further.

This is the only thing, in his opinion, that explains the high valuation, with little, he thinks, regard to its actual use.

Moreover, he questions what “success” looks like for Bitcoin.

“The bitcoin enthusiasts are quite vague on what success means beyond rising prices, they seem more fond of arguments wrapped in mysticism than basic economic logic. The most important criterion for success is that cryptocurrencies end up being used in commercial transactions, like Tesla accepting bitcoin today.”

Jon Danielsson – Director of the Systemic Risk Centre, LSE

Additionally, he examines a number of “value propositions” other cryptocurrencies put forward. These include their use in payment systems or as safe-havens when it comes to stablecoins.

“The Emperor Has No Clothes”

These, he says, are where the real value might lie. However, he points out that the majority of the current crypto-crowd does not appreciate this fact.

“To the vast majority of bitcoin investors, success means its price continues to rise. But if that is all there is to it, someday a little boy will yell, “the Emperor has no clothes”, and the price will come crashing down.”

Jon Danielsson – Director of the Systemic Risk Centre, LSE

Indeed, the language native to the crypto-space, particularly the investing or trading factions, follows a pathetically fallacious pattern, linked to the market’s swings.

Think “pump”, “dump”, “moon”, and “crash”. None describe the experiment that is taking place behind the scenes.

While Danielsson’s comments might be considered critical, in actuality, he simply urges the community to look towards “buidling”, not gaining.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
Share Article

Emmanuel entered the cryptocurrency space in 2013 as a cryptocurrency broker. He is a crypto-enthusiast, entrepreneur, and investor, who has built and led several projects and communities in the space. He is CEO and co-founder of Provence Intelligence, a boutique crypto-consultancy firm that aims to bridge the gap between the cryptocurrency and DLT space and the traditional world. Interests include DeFi, non-blockchain DLTs, and the synthetic derivatives space.

Follow Author

Trade with the Best Crypto Signals - guaranteed profits with over 70% accuracy

Join now

Want to learn how to trade? Get a beginners guide from BeInCrypto Academy!

Learn now

Bybit Bonus Bash. $1,000 Bonus to be Won!

Join now