This is a conflation. Trust can certainly be a problem, and the demonstrable proof is the 2008 bubble and any other historical bubble with similar features.
> (3) Banks are trusted and regulated.
Again, until they're not or they collude. This isn't slippery slope stuff, this has actually happened in the recent past.
> (4) Fractional reserve lending is fine because the FDIC guarantees the funds in the event of a run.
It's difficult to judge whether this is true because as far as I know it's never been put to the test. Historically, banks aren't great at guaranteeing funds during a run no matter what they say (Great Depression).
The majority of your arguments centre around efficiency over trust (i.e. you trust in the system enough that efficiency has become your only concern when it comes to transacting with value). For most day-to-day operations you're probably in the right here. The problem is when you're wrong (and there are always these events in economic history where the "system" fails) then you're really wrong.
And that is not a problem cryptocurrencies solve. These systems can also fail.
Not that bitcoin offers that iirc, just saying.
Micropayments can exist, as simple ledger entries. You pre-load a, for instance, PayPal account then PayPal can allocate pennies or fractions of pennies on your behalf. There's no technical mystery. It feels like this hasn't been done due to lack of desire for it rather than any inability to execute.
It feels like this hasn't been done due
to lack of desire for it rather than
any inability to execute.
1. A chicken-and-egg problem, where users don't join micropayment platforms because they don't have major content producers, and content producers don't join platforms because they don't have users.
2. There are actually a bunch of different visions for micropayments (articles costing $0.50 vs $0.05 vs $0.005 vs $0.0005; voluntary vs paywalls; drm-free vs drm; ad-free vs ads vs ad-blockers; articles vs music vs video; automatic vs manual payment vs automatic-with-refunds; quality professional journalism vs anyone can take part; free speech vs not funding hate groups....) and as your product vision becomes clearer, more and more stakeholders notice your vision isn't quite their vision.
3. If you're making a stored-value account in my country there's a bunch of regulation due to a history of scams. Presumably you would have to comply with regulations in every country you operate in, which would be nontrivial.
This feels like a response to a straw man, or at the very least an uncharitable interpretation of pro-cryptocurrency views. The problem cryptocurrencies intend to solve isn’t that trust is bad, but rather that in the real world you are effectively forced to trust a single entity or a small group of entities. I don’t think any cryptocurrency advocate claims that cryptocurrency is great because there’s no need to trust the parties on the other end of your transactions.
Your optional-trust model is effectively what we have now, with bitcoin + exchanges. You can opt to trust an exchange, and yes, that does reduce load on the network, however the network is still wildly inefficient because it needs to also support the use case of zero-trust transactions. Traditional banking is an exchanges-mandatory system, which is why it's so much more efficient.
NOTE: This is not an equivocation of the wild-west unregulated crazy-town exchanges of the crypto space and real banks, just the roles they play in their respective systems.
We already have limited options with different features regarding fraud/chargebacks, like paying for something with cash versus with a credit card. Clearly both cash and credit cards can exist together.
Similarly a health care system designed to support people with and without preexisting conditions must be designed to support the lowest common denominator, those without cover, which forces huge inefficiency into the system.
Maybe a poor analogy.
Cash and credit aren’t really analogous to exchange and peer-to-peer as in crypto the former is built on top of the latter. Credit isn’t built on top of cash in the same way, as a trusted intermediary abstracts the two concepts. To some extent they’re both eventually built on top of ACH.
The point you're skipping over is that there are network effects in the role of trusted third party, leading to monopolies/oligopolies, which can extract artificially high fees.
This is where distributed consensus has an advantage: it can provide the same and even stronger guarantees on the integrity of records, while preventing any third party from using their monopolistic position to extract high fees.
(2) Not inflation is bad, but trusting others to choose the value of your money.
(3) Cryptocurrency exchanges are not Bitcoin - just as a Stock Exchange is not a $100 dollar bill.
(4) Not fractional reserve lending is bad; but trusting good behaviour and recovering after bad behaviour has caused harm.
(5) This argument works for all private property not held by a trusted third-party.
(6) Micropayments are more likely to be used for resource management between machines.
If you don't find that useful, then you should consider yourself fortunate and privileged. There are literally billions of people in the world living under authoritarian regimes right now.
And yet here we are, living in a world where this isn't happening.
People are using cryptocurrencies, today, in regimes such as Venezuela, and yet your prediction of it being successfully banned, has yet to come to pass.
(1) If you can't move currency out of the country the whole thing is zero-sum. You're just buying bolivars from one guy and taking his BTC. You're leaving others within the country holding more bags of bolivars. The problem hasn't been solved at all just redistributed.
(2) If you can move money out of the country, you'd have done much better just buying USD and holding onto it, or using it there.
The success of one's investment has nothing to do with censorship resistant financial transactions. It is irrelevant.
> If you can move money out of the country
You can move crypto of the country with the clip of a button.
Also, you can move it to the other side of the same country, quickly as well.
A financial transaction is an exchange of money, for a good or service. You send money to someone, and they give you a good. Crypto makes the money half of the transaction censorship resistant.
Why would they care about crypto?
(1) Trust is not a problem, it's a huge optimization. The sheer power consumption of cryptocurrencies is hard, demonstrable proof that trust is an efficiency.
(2) Debasing money (aka inflation) is a feature. It's a regular haircut for unproductive capital, and is, as designed, completely irrelevant to people who invest their capital. Even in most people's biggest investment, their own homes.
(3) Banks are trusted and regulated. Exchanges are totally unrelated fly-by-night banks set up because being your own bank sucks. This is not an improvement.
(4) Fractional reserve lending is fine because the FDIC guarantees the funds in the event of a run. This is a further efficiency, allowing the economy to move faster with freer access to capital.
(5) Identity thieves draining your account at a traditional bank has recourse. As we've seen in crypto, that's where this is a real risk - you've got nobody to hold accountable.
(6) Micropayments aren't something people want as it turns out.