Bitcoin Fixes Massive Wealth Inheritance
By Enabling a Profound Level of Altruism
One of the things I love about travelling, is getting exposed to new ideas that I’ve never considered before. I was delighted to be given a new perspective by someone Mrugakshee and I met during our stay in El Zonte (Bitcoin Beach). His name is Erik Dale and his YouTube channel is Kongeriket.
I had just finished telling Erik that one day, Satoshi Nakamoto will be the wealthiest person in the world, and Satoshi is essentially no one. This was all well and good, but Erik gave us an insight that made me look at the inheritance of money in a new way.
The Problem with Inheritance
Right now, some would say (not me) that inherited wealth from family members is not earned wealth. This is especially true if the amount of money being inherited is an obscenely large amount of money. Shouldn’t that money be donated? Or distributed amongst several charities? Or taxed before it goes to the inheritors? Or outright seized and given to the government to decide how to use it?
I really only like the option wherein the individual who is passing on the wealth gets to decide what to do with their money. That’s because I value property rights and optionality.
Is Equal Distribution Possible?
In a perfect world, the person passing along their wealth would be able to take some or all of their money and evenly distribute it to every individual on earth. How in the world would this be possible though? Surely this is a monumental task for those who would undertake the responsibility of doing the distribution.
Well, there is now a solution for exactly this scenario.
Equal Distribution of Inheritance is now Possible
Instead of passing along the keys to your bitcoin wallet, what if you just died with the keys? The bitcoin in that wallet would then be locked forever. This might seem like a waste; the money (bitcoin) just sits there, never to be spent ever again. But the devil is in the details.
The effect of losing one’s bitcoin is that it increases the overall scarcity, and reduces the overall supply of bitcoin. Every other bitcoin in existence just got that much more valuable, simply by voluntarily losing the keys to the bitcoin. This has already happened many times in the 13 years since bitcoin began. People have lost their keys, hard drives, and wallets in hundreds of cases.
The most notable case is Satoshi Nakamoto’s wallet wherein more than 1 million bitcoin (approx. 5% of the total supply) has never been touched. Then there is the bloke from the UK that accidentally tossed his hard drive in the trash with more than 100k bitcoin on it.
Losing bitcoin is akin to sinking a boat full of gold. This happened in 1857 with the sinking of the SS Atlantic. Around 30,000 pounds of gold sank to the bottom of the ocean reducing the overall supply of gold in circulation1. The event sent panic into the markets, and shook public confidence in the economy. But as a result, all the gold in the world was that much more in demand, driving the price of gold up. Anyone holding gold at that point got equally and proportionately more wealthy.
An Act of Altruism
In the economic paradigm we come from (fiat standard or gold standard), the equal distribution of inherited wealth would be practically speaking, impossible. Now, ones wealth can be equally distributed to every corner of the globe, simply by doing nothing at all. No effort is required to die with one’s keys. A massive act, through inaction.
A Connection to Taoism
After learning that this act of altruism is possible, my mind went to a Taoist teaching from Lao Tzu2.
The Tao abides in non-action, yet nothing is left undone. — Lao Tzu
The idea is that events and circumstances would naturally unfold optimally and as they’re supposed to without the intervention and action of humans. If we left more things to develop this way, then we would paradoxically accomplish more.
The foolish expend a great deal of time and energy trying to do everything and end up achieving nothing. — Lao Tzu
These quotes remind me of government in general, especially expansionary, Goliath sized governments. They collect taxes, and have a hand in just about every aspect of society, trying to guide and control the direction of all things. A great deal of time, energy, and money is siphoned off of the efforts of citizens, only to be wasted in frivolous acts. The end result is difficult to discern, but it often seems like nothing ends up being accomplished.
Now, the Taoist philosophy of inaction can be made manifest because of Bitcoin. Inaction can now lead to massive and equal wealth transfer. What is more altruistic than choosing to do nothing, and having the result being the financial enrichment of everyone holding bitcoin on the planet?
Parting Thoughts
Will I let all of my bitcoin die with me? Probably not, but that’s also a long ways away. I don’t know how much bitcoin I will have, and how much it will be worth at the time of my death. I might die with some bitcoin, and pass the rest onto my children. I’m grateful that this is not a decision that I need to make anytime soon.
Please leave me your thoughts and comments on this either in an email or the comments section.
Regards,
Keegan