And yet, Bitcoin and other cryptocurrencies, are valued in US Dollars or other established currencies, and traded/exchanged for “real currencies” to spend as you’ve dismissed the importance of transactions.
Governments can regulate crypto, and corporations will form to control them.
This is no different than a dollar being priced in gold terms or the pound sterling being priced in terms of silver when paper money was relatively new.
A dollars were originally redeemable for $20.67 [1] and then later $35 per ounce of gold [2]. This ended when we got got off the gold standard in the 70's.
As bitcoin becomes the dominant non-sovereign store of value, we’ll slowly start to reprice things in terms of satoshis (sats), the smallest denomination of bitcoin [3].
Sats are already the standard on Cash App and other apps and services that exchange fiat for BTC. It's just a matter of time before all fiat is priced in terms of sats.
[1] http://www2.econ.iastate.edu/classes/econ355/choi/1900mar14....
[2] https://livingnewdeal.org/glossary/gold-reserve-act-1934/
[3] https://medium.com/in-bitcoin-we-trust/talking-in-sat-rather...
I don’t tell people my car is worth 20 gold coins....
> new financial system outside the control of existing governments and corporations
would be to utilize its basic functions for something fun and cheap - such as buying coffee, or integrating it into a chatbot that sends my friends pictures of my cat in exchange for a fraction of a coin, or something silly of that nature.
If I can't do any of that feasibly, then I have no use for bitcoin at this time, personally.
Think of bitcoin as digital gold.
If you owned blocks of gold, it wouldn't make sense to scrape some off to buy coffee. Coins, then notes were created because walking around with gold is inconvenient, to say the least.
There's no reason why these everyday purchases shouldn't continue to be done using dollars or another fiat currency. It makes more sense to use the continuously inflated dollars which will are losing purchasing power the longer I hold on to them.
Bitcoin is expected to continue rising in value… for example, it doubled ($20k to $40k) is 3-weeks. So the $5 worth of BTC I spent on coffee last month would be worth $10 today and probably a lot more in a few months. Why would I do that?
Sure, it's been 12 years but in terms of being a monetary good, bitcoin is brand new. It's going to be a while before there's enough people who own bitcoin to make payments make sense. Lightning Network is great, but it's still essentially a beta product and some of the UI/UX issues are still being worked.
Lightning is where the internet was back in the 90's before Netscape and broadband networking were available. Early adopters were fine but it wasn't a mainstream thing just yet.
Couldn’t have expressed my thoughts any better. And to add to this, the more that one comes to understand the machinations of central banks (particularly the behavior of the US Fed), and the limited long-term viability of the dollar-centric monetary system, the more one sees it from this perspective.
Another comment below notes how Bitcoin and US equities are correlated. I could see many reasons for this, but one of them is very likely that both are an effect of quantitative easing policies, but for very different reasons...
I have a pretty good idea of the way the Fed works and I have no interest in holding bitcoin. The Fed seems to be doing a really good job targeting the inflation rate even in times of financial crisis in the past couple of decades.
Bitcoin prices are too unstable to be anything more than a crypto lottery.
> and the limited long-term viability of the dollar-centric monetary system, the more one sees it from this perspective.
If anything the dollar has become stronger since we got off the gold standard and has become the unofficial currency of the world. China may be eventually be the other -- that is, if you ignore things like the mysterious disappearance of Jack Ma.
That's absolutely not true. Getting off the gold standard removed the pretense that there was a limit to the amount of dollars that could be printed. The purchasing power of the dollar has continued to drop since then—https://howmuch.net/articles/rise-and-fall-dollar
There's also no guarantee the dollar will remain the reserve currency, as China, Russia and others are creating ways to get off the dollar standard [1].
[1] "The Fraying of the US Global Currency Reserve System"—https://www.lynalden.com/fraying-petrodollar-system/
I wasn't talking about price since inflation guarantees the price of the dollar will drop over time, so technically you're right. I was really talking about trust.
And much of that trust is that the dollar is that the price is the same from day to day for the most part. Sure there's inflation, but if I own $1M I don't expect it to be worth 10% of that tomorrow.
> There's also no guarantee the dollar will remain the reserve currency, as China, Russia and others...
So, would you really really trust Russia and China with their currency? Where the hell is Jack Ma? Huh?
I don't dispute the relative importance, but sometimes the unimportant is important. When you've got a horse and a cart, the contents of the cart may be much more important to you than the horse. But that by no means means that it makes sense try and push the cart down the road and hope the horse will sort itself out. That approach will only work until you get to the bottom of the hill and lose your gravity assist.
I always find this sentiment a little funny, because I think payments are the least interesting thing about Bitcoin. Fast and easy payments will come in time with crypto, but in most developed countries the credit card system is a safer and easier consumer alternative anyway.
Crypto is way more than payments, it's an entirely new financial system outside the control of existing governments and corporations. If you don't understand why this is way more important that being able to buy a coffee easily, you haven't been paying enough attention. There's only so many options for long term wealth storage, and crypto represents an entirely new class, so from a hedging perspective it makes sense for all high wealth individuals to have a small allocation. We're reaching the point where you're at a greater long term risk not holding any.
As more money is stored in crypto and more trust placed in it, there will naturally be more desire from those users to be able to easily use it for consumer purchases, so give it time. But again, the most interesting stuff is what's being built out now, which is an alternative to the legacy financial system, not a Visa competitor.