Oddbean

It says that these don’t make economic sense as massive, market dominating corporations. It means that on a bitcoin standard they would be far more distributed and competitive and the value provided would be catered to more specific and smaller audiences and would change more based on locale and other factors. If you think that it means we can’t have what Amazon offers without a giant, corporate, unprofitable, VC backed institution to suck up the whole market and push everyone else out, then I think you are misunderstanding the nature of value and how the market provides it. To the contrary, Amazon is *destroying* value, because there is a better and more economically sensible optimum for providing the service. Evidenced by the fact that without being subsidized and killing 1,000 competitors while losing money for a decade on cheap fiat loans and VCs, it wouldn’t have lasted. It would’ve had to provide net value *much* sooner and at a smaller scale.

Amazon launched in 1994 with Bezos parents help. Company went public in 1997, this means it was floating without profits for 3 years. Going public gave it access to funding (this is literally the market - the same market that would exist on the bitcoin standard, maybe not as generous). Obviously investors saw potential, or they wouldn’t buy Amazon’s shares (I don’t know if index funds / passive money was a thing in 1997). According to my handy AI prompt, it became full-year profitable in 2003. So it was floating on market sentiment for 6 years, not quite a decade. The big unknown for me is exactly how mucH VC money Amazon raised, but it sounds like it wasn’t much. ChatGPT seems to think it was 8 million from one VC (not a big deal if you ask me - especially if they understood Bezos’ vision). I don’t buy the idea that the bitcoin standard would basically humble any company trying to achieve scale because those companies would still have access to the same markets (perhaps more conservative, but still ready to fund the right companies). We have to also assume that on the bitcoin standard, bitcoin is not going to be ripping 40% year over year. In bitcoin terms, the yield would be much less, and investing in companies would still make sense if they can achieve scale. Is Amazon and the likes destroying competition? Sure. But are they destroying value? I am not so sure. Insane profit growth seems to indicate they are providing much more value than any single smaller business could. I also don’t see why it would not provide equivalent value on the bitcoin standard. It’s not like smaller companies would be all the wiser all of a sudden to do just as good of a job or better. If they could, they would be. They too had the same access to VC funding at that stage yet here we are.

Well then Amazon might not be the prime example for this problem then. The frustrating thing is that we can’t know without ever having had real interest rates during that span. Although interest rates during the 90s were far closer to floating. It wasn’t until the early 2000s that the price controls got really bad.

I also didn’t say that “a bitcoin standard would humble any company trying to do something at scale.” That is not the statement when one says “fiat unnaturally benefits companies who grow off of constantly devaluing debts.” It doesn’t mean scale isn’t naturally more economical. It is in most cases to a certain size and with agility being the opposing pressure. But fiat **subsidizes** bigness and causes bloat and waste across the board. I’m not just saying that “everything will be small and big isn’t possible,” I’m saying the explicitly those things that aren’t sustainable but survive because they are huge and get subsidized debt and fake prices, THOSE corporations can’t sustain themselves. There is no way to know exactly which ones they are either, it’s just an educated guess. There is no control in this experiment and can’t be.

For a long, long time we had 0 interest rates (actually negative). I tried to explain ppl around me that they need to be in debt. It's the only sane decision with fiat standard. The general consensus in my country is that debt is dangerous and dishonest. They were all wrong. And will unless we actually see deflation pressures. Be in debt. Land fiat against bitcoin collateral. Don't pay (capital gain) taxes.