“The result is a slowdown in economic activity and the concentration of wealth in fewer and fewer hands.”

This statement relies on a fundamental misunderstanding. If a person literally never spends or invests their bitcoin, they do not become wealthier in any meaningful sense (nor does anyone else necessarily become poorer). It is just the same as if one hoards paper currency: the only way they become wealthier is if the subjective value of having paper is greater than the alternatives of spending it on consumer goods or investing it in order to obtain more. Also, the more that is hoarded, the greater the opportunity costs of hoarding, as prices will decrease and interest rates will tend to increase.

Furthermore, I doubt that a proposed currency that somehow disintegrates will be able to compete with bitcoin: why would anyone want to accept a currency that will automatically decrease in purchasing power when there is an alternative that does not?

Lastly, I question the author’s understanding of money when he proposes that new currency be issued equally to all parties. Clearly, this does not change anyone’s purchasing power, it just causes the nominal price of goods to double. If this were just a one-time event, then the ones who spend the money first will gain at the expense of those who spend the money last. If this is a repeated event, then prices will rise in anticipation of each round of inflation. This really does nothing to improve the well-being of the less well-off.

-John Galt