I agree that Bitcoin remains volatile. It will never stabilize. But there's a misunderstanding that Bitcoin will replace fiat. It doesn't have to compete directly. Bitcoin is an alternative money. It's volatile but predictable issuance. Fiat is stable but has unpredictable inflation (debasement). They co-exist. From a philosophical perspective, Bitcoin and fiat are the two extremes of Yin and Yang. They're both necessary for a functional money system.

https://bitflate.org/post/2020/08/24/yi-ching-and-cryptocurr...

The relatively predictable deflation rate of Bitcoin is completely swamped by Bitcoin's extremely high exchange rate volatility versus other assets. Inflation for the dollar and other major currencies is not really a problem anymore because when money supply increases or money becomes less scarce that excess is now absorbed by speculative increases in asset prices rather than CPI inflation. Thus housing and stocks, and Bitcoin go up in value but by definition these prices don't matter for inflation. Bitcoin's run up in recent years is almost entirely due to easy money (low interest rates) not due to increased usage in commerce or intrinsic factors like Bitcoin's endogenous deflationary tendency. There is no reason, why in the face of a general financial crisis, where asset prices are generally falling, prices of houses and stocks, etc, are falling, that bitcoin would not also crash. Its current price is not supported by internal deflation or increased usage. Its current price is part of a broader asset price bubble that can and will pop someday, probably soon. There is no reason why sub $100 Bitcoin is not possible a year or two from now.

Bitcoin is not really like digital gold because gold has unique properties that can not be duplicated. Anybody can create a new cryptocurrency at any time. There is no scarcity of cryptocurrency as a whole.

>Inflation for the dollar and other major currencies is not really a problem anymore because when money supply increases or money becomes less scarce that excess is now absorbed by speculative increases in asset prices rather than CPI inflation.

It's "not a problem" in the sense that you won't be struggling to buy food with your worthless dollars, but it's still problematic because it exacerbates inequality (rich people tend to have more assets that would appreciate in value).

Well this recent time you have massive inflation in speculative assets being offset by deflationary forces from massive layoffs so not much inflation overall. A huge transfer of wealth is occurring.

Anybody can create a new Facebook or Amazon at any time. Yet somehow it doesn't happen, why?

Network effect. Same with Bitcoin.

Over a long enough timeline Facebook and Amazon will also reach very low valuations.

Many here would find ampleforth.org's redbook fascinating.

You're assuming fiat currency is reliable, which is proven wrong in many jurisdictions.

Its reliable enough for the average person's purposes in my juridsiction. If we're talking about market forces that is really all that matters.

>fiat

There's that word again. Bitcoin is fiat. You can't turn it back into electricity.

> The only way that the dollar can and will be dethroned is if some other currency becomes widely used in commerce.

Ultimately, it boils down to: 'do the people want a deflationary or inflationary currency?' Stability is subjective but purchasing power isn't. What's a fair function of money for society? Not a clue.

In other words, in your view, the dollar literally cannot go tits up?

It can go out of use but it won't be due to competition with Bitcoin. A digital currency that did what the dollar does but better could give the dollar a run for its money. No such currency currently exists and I have a hard time envisioning one right now. Maybe something based on kWh as the unit of account.

The world would literally collapse if that happened.. so, no.

No, it would figuratively collapse.

I figuratively apologize :)

The world literally collapsing would be much bigger than an economic problem. Yes markets would fail along with it, but the world wouldn't end. The US isn't the first with major economy or currency and its arrogant to think it will be the last.

The Roman Empire was unstoppable until they over extended themselves with endless war and tried to solve it by debasing their currency. It may not happen anytime soon, but America won't lead the world indefinitely forever, its only 244 years old for shit sake.

> The Roman Empire was unstoppable until they over extended themselves with endless war and tried to solve it by debasing their currency. It may not happen anytime soon, but America won't lead the world indefinitely forever, its only 244 years old for shit sake.

Sure, but Britain didn't lead the world forever, either, and it's not exactly like the £ collapsed leaving everyone who held it in ruin.

American won't lead the world forever doesn't mean much unless but it's collapse will be so sudden and unexpected as to leave no opportunity to unwind dollar positions without catastrophic loss.

It might be worth hedging against that, but digital collectibles are a poor hedge for that circumstance. Physical resources for community self-sufficiency and physical defense against the ravening hordes are the hedge you need if you take that threat seriously.

It is a common trope to compare America to Rome. Economically America has almost nothing in common with Rome. Rome was a non-industrial economy mainly based on plunder or at least transferring products from the provinces to the central government and upper class in terms of taxation (in kind, e.g. Egyptian grain, and monetarily denominated). When the Empire stopped expanding new wealth, for the most part stopped being created. Perhaps there is a little bit of a comparison with 19th century America and expanding to the west in manifest destiny but in modern America economic growth is driven by technological change. Not conquest.

This is the rise and fall of civilizations, while expansion is possible in the sense of, the majority of people can "win" at their culture (or have a clear path to), a civilization is successful. In Rome, and America this usually means economic improvement. In Egyptian times, this meant falling in line with the religion. Carroll Quigley has a very nice framework for what is a civilization. Let's just say he was a very influential historian, mentor of one rather recent US president.

Let me pose it to you this way. In what situation could the dollar collapse without the world being in ruins?

>but America won't lead the world indefinitely forever

I'm not talking about America. I'm talking about the dollar. In our highly tied global economy- those are very much two different things. Do you think any wealthy person in the world does NOT hold dollars or have direct exposure to it?