ETH's "Burn" Model and its Relationship with Politics/CharitiesIn today's inflationary economy where money printing reigns supreme, the idea of "burning" money to maintain a currency's worth stands out as counterintuitive and different. It's also highly illegal - creating your own money supply (counterfeit) or destroying them are usually both felony offenses in most fiat systems right now.
In a way the ability to control a currency's money supply is the biggest draw of crypto on a fundamental level. What happens when we give that power to the people instead of relying on the government to do it for us? When the recession hits later this year, people are going to have a lot of time to ponder that question further.
Vitalik Buterin, to his credit, paved the way towards a "burn charity" model. The "fairest" way to redistribute wealth isn't to start a nonprofit or charity - it's for people to simply destroy their wealth and remove it from the ecosystem. This makes everyone else's money worth a little bit more as a result, always in favor of those who have less.
In a way, it functions like an Universal Basic Income, raising the economy from the bottom up, as Andrew Yang claimed during his US presidential run in 2020. (Vitalik supports UBI too btw.) It is the "fairest" way to redistribute wealth.
The "burn charity" model gets interesting when applied to politics and sociology because it highlights the fundamental problems with human nature in a very clear way. If the end goal is to destroy money supply, it explains why people might get appealed to violent ideas such as "eat the rich" or the destruction of private property - it is striving towards that same idea of redistribution of wealth through the destruction of money in itself. (Luckily in crypto, we can do this in a peaceful way, which politicians should be talking more about, imo.)
On the flip side, fiat has always been against "burn charities" -- you can't create nor destroy fiat money (not that there's a strong will to do that right now by anyone) and the problem with redistribution through taxation is that the government can't be trusted to handle the money in a responsible way. (A "fair" government would take money they seized/collected and simply destroy them, not keep them, imo.)
All of these ideas seem outlandish and radical to our sensibilities right now, which might explain the reasons why good ideas like UBI has had trouble passing in political arenas, despite its popular appeal. People intuitively know that it's a good thing, but often can't explain why. But maybe the idea of "burn charities" might get us a little closer to what we want. Couldn't hurt, either way.
And crypto is the ideal place to experiment with these ideas that are untenable in the real-world due to political realities right now. But I hope that the #Web3 folks will see the opportunity that's there and push the envelope further - it may be our only hope, after all. 🙏
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