Understand what's at stake + personal remarks on how I will handle the current situation as an oldtimer.
What makes crypto special?
- P2P transactions without intermediaries
- based on sound money principles
- permissionless to any participant in any possible role (dev, miner, user, investor, node operator, business).
A crypto with a built-in tax (no matter if it's called a "dev tax", a "miner tax" or an "investor tax") is against the principles formulated in the whitepaper.
Only users have to pay a fee in order to make use of their right to transact on-chain. Despite the users self-interest to pay a fee as low as possible there is also self-interest in generally paying a fee as it secures the network. This means their incentives are aligned.
Now I suppose that neither in 1913 nor in 2020 people are thinking about the (real) long term consequences of their actions. Some may question if such a thing as karma (action) exists or not. Still it's undeniable that actions have long term consequence resulting in responsibility today.
This is meant when we are talking about precedents (bending principles we signed up for), as well as tragedies of the commons (we didn't sign up for but likely ignored). More could be said about slippery slopes and degradation of values over time resulting in divide and rule schemes or why the road to hell is paved with good intentions (from good guys). Because people always forget that all three: intentions, people and successors change over time.
So I may be the first to ask this question: Who has thought about the long term consequences of this tax proposal*?
*Remarks: I know that funding devs is a hard problem we as community should tackle. Still I think it's a red herring (propaganda) to frame this tax around a thing we all can agree upon. Namely that development (caveat: NOT developers) need funding in order to develop and scale this project.
So fast forward [>>] : After installing this temporary tax (we all know it won't be temporary) what potential outcomes can be expected in the future when reward (inflation) tends against zero.
In this not to distant future fees have to pay for security of the network. Notice how BTC and BCH fundamentally disagree on how fees have to pay for security. But they both agree that fees will have to and also will be sufficient to pay for security. (Notice how Monero begs to disagree and uses tail emission instead).
In that future world what implications does a "mere" 5% tax have? Which incentives do the tax collectors in control have? But most important: Won't they be incentivized that the stream of funds will never stop even if rewards decline (like every other tax system in human history)?
Now what kind of methods can they use to leverage their influence over the network? And how easy is it to influence certain policies (from easy to hard):
- Keep or change beneficiaries
- Increase or decrease tax?
- Increase or decrease fees?
- Increase inflation aka 21M limit?
I am quite sure the list above is incomplete. My main take away is that by adjusting the effective tax rate after (and even before) rewards have gone to zero, "we" created a financial policy instrument that will be used to influence the economy built on top of Bitcoin (Cash) as well as control other (opposing) participants.
If an entity (let's call it "Fundstream") can leverage centralized control over the network AND use this for all kinds of monetary policy (e.g. alimenting the good developers aka the good guys and fighting against the bad guys, whoever they may be) a central bank like structure has successfully been established on top of Bitcoin. This is genius -or NOT!?
Fellow Bitcoiners. This is our personal Wilson Woodrow moment. Everything else is history.
Personal remarks:
I will immediately stop any activities that will lead to more adoption for BCH be it through new users or through investors. I can not recommend to invest in a project that is planing to introduce a tax on their investors. That's 100% against what Bitcoin stands for. I already started to talk to current investors and make them aware of the situation including the potential for complete divestment.
As someone who entered this market as an investor in 2011 and someone who manages quite a huge amount of BCH for others I will observe the situation closely and am already looking into best divestment strategies in the case Amaury gets his way.
A funding model based on voluntarism and accountability like it's perfectly working on Monero is the way forward and anybody denying that is either not interested in accountability or is more interested in attacking Bitcoin (Cash) right before it enters a new bull market and just before BTC's fee problems could wake up plenty of people. Monero proves and other oldtimers agree with me that funding is not the problem. UX and accountability is. I hope Flipstarter can help in this regard just like CCS helped Monero.
If this was about funding developers we would simply sit down. Evaluate what projects need to be funded in the next 3 or 6 months (looking at the roadmap) and come up with some numbers. But this is not about funding developers. This is about playing a power play to gain as much control over the Bitcoin protocol as possible in order to define monetary policies a decade or two down the road.
I wonder when we will call this an attack of one or two colluding miners who built a cartel with the devs of the reference client maxing out their current power (going all-in on control).
The BTC capture has been bad. You can like the propagated arguments for node decentralization or not. But in the end a fee market is still some kind of free market. The capture of the protocol we see in BCH is even worse. It introduces government and central bank like capabilities into BCH. And believe me - it won't be temporary. If anything it will kill the host like every government system does if you give it enough time as there never will be enough taxes for all the wonderful things we could fund.
Also notice how BTC produced a spill over effect into alts in early 2017 when it maxed out for the first time. The tax on BCH willl create another spill over effect as miners can enforce some rules but fortunately they don't have ultimate power. Capital controls won't work in BCH. Imagine what would happen if citizens were free to move their money in the light of the fact that a 5% tax is going be enforced on all investors in stock markets...
Without capital controls the money will simply leave! That's economics 101.
I fear for the long term prospects of BCH if economic illiterates take over once again just like they did when Amaury himself had to provide the code for a fork from BTC.
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source https://www.reddit.com/r/btc/comments/f670m3/understand_whats_at_stake_personal_remarks_on_how/
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