This is one of the things I find hilarious about cryptocurrency discussions. When I point out it isn't a good asset, people argue it's really a currency. When I point out it's a bad currency, people argue it's an asset. I'd love it if you all could get together and agree on what it's supposed to be good for and just leave the rest of us out of it.
But addressing your point directly, it's bad as a currency. It was launched in 2009 as e-cash, and for a while people argued it was going to be a great medium of exchange. Now, more than a decade later, Bitcoin is doing what, 100m transactions per year? Most of which are not real economic transactions for goods and services. Venmo, which started around the same time, does over 2 billion. M-Pesa, a "digital money" solution the same age does 15 billion. US credit transactions? 45 billion. Debit? 75 billion per year. And unlike Bitcoin, most of those are what people would call real transactions. Bitcoin's real use as a currency/payment system is a rounding error.
Anyhow, as others point out, actual major currencies are backed by very sophisticated organizations dedicated to maintaining the value of those currencies. Which are in turned supervised by national governments, most of which are democratically elected.
For Bitcoin, at best you have a set of shadowy organizations manipulating the market to their own advantage. E.g., reasonable people suspect that Tether is behind quite a bit of Bitcoin price appreciation. They have been proven to be liars about what they're doing and how much money they have. This is great for creating hype and volatility, but it's very much not what you want in an actual currency.
And merchant adoption actually declined heavily for Bitcoin. It had a period where many online merchants and some offline merchants tried it out. Everybody gave up on that because it is not a good currency. That's when prominent advocates pivoted to "store of value" (which it is also bad at). For example: https://avc.com/2017/08/store-of-value-vs-payment-system/
The whole "but look at the fuuuuuuuuuuture" routine was plausible early on. But at this point there's nothing but wishful thinking to suggest that there will be a radical change. Whatever it is, Bitcoin is what it is.
You could argue that BTC is backed by one of the most powerful networks of computing power on the planet. I don't think that's better than what the USD has, but it isn't 'Nothing'. The fact it can't be debased as easily as fiat currencies is not a tangible thing but it does compel interest in it.
> The fact it can't be debased as easily as fiat currencies is not a tangible thing but it does compel interest in it.
That is not a benefit to a currency, quite the opposite. A deflationary currency would likely lead to a deflationary spiral, savaging the job market [1]
It also leads to a monetary system that cannot adjust to a changing population or to transient issues such as COVID. If BTC were the currency of record in 2020, the economy would likely have been utterly devastated.
[1] https://www.investopedia.com/terms/d/deflationary-spiral.asp
Let's just wait I'm sure OP will deliver even a single one that isn't crime, regulatory capture or gambling.
> Not having a central authority is interesting and appealing to many.
Lots of counterproductive things are appealing to lots of people. Rolling coal is appealing to lots of people. Not getting vaccines is appealing to lots of people. That doesn't mean the benefits outweigh the costs socially, and it doesn't mean that it should be legal.
> Deflationary by nature makes it an excellent store of value.
And that makes it an awful currency. The fact it's a negative-sum MLM which creates no value whatsoever while creating the illusion of wealth is what makes it an awful asset. There's nothing left.
I’ll bite. Donating to a Ukrainian twitch streamer. PayPal doesn’t allow it, every other option requires entering your credit card details on potentially shady sites.
Caveats: This was a few years ago, not sure what the situation is now; Current BTC tx fees make that rather expensive (which may or may not be alleviated by lightning or a cheaper to send crypto).
What about Xi in China with their real life social credit system built by exactly who? Should that regime be trusted with that much control over that much humanity?
And that huge computing power is employed to basically solve Sudokus whose difficulty is adjusted to burn as much energy as is put into it (which unscrupulous people will do as long as that energy is still cheaper than the mining rewards).
However, most of the ability of the United States to execute such power is centralized in Washington D.C. and New England. Centralization brings immense efficiency, but also vulnerability. Those geographic regions are a potential target that takes a lot of energy to defend. Why do you think the 9/11 terrorists chose New York and D.C.?
Meanwhile, China just fully outlawed cryptocurrency and mining, and it was a minor hiccup in the network. Bitcoin's hash rate as already recovered. The price has doubled. It's stronger than it's ever been.
That's what makes bitcoin such a potentially powerful store of value. It's security mechanism is incredibly anti-fragile. There's no throat anyone can choke. It's also globally available and permissionless, so it accepts everyone and anyone without judgement. These traits are powerful, in a different way than the power that backs the USD.
That's why bitcoin matters.
That has nothing to do with the currency. I'm not saying its good, or bad, I'm saying you've stapled together two unrelated concepts.
The US army is a small fraction of GDP and exists to support the defense of the US as a nation, and to further its interests abroad. That will remain the case whether the currency is fiat, gold, BTC or shoelaces. Unless you think that the army will be disbanded because BTC is going to make Xi Jinping come to the table with Tsai Ing-Wen over Baijiu and apologize, that the Sudanese are going to lay down their arms, Kim Jong-un is going to find Jesus and so on. However that's completely unfounded.
The US army predates the fiat dollar by two hundred years. World wars were fought on the gold standard.
Further, the backing of dollars is only in limited part due to "the army" - fractional reserve lending means that each time supply is added, demand for that supply is also created as the loan issued must be repaid with those same dollars. This is what actually fully backs the dollar.
It's also why countries that use the USD, like El Salvador, have their own armies. And why some countries that use fiat dollars don't have armies at all, like Japan and Iceland. There is no causative relationship between fiat money and armies. There is a causative relationship between the existence of militaristic states and armies. There are hundreds of years of proof that the backing of the currency has little or no bearing.
This theory is a pile of misconceptions stacked on top of each other.
You can't ignore this cost. Maybe the US would cut military spending, maybe not, but as long as it wants USD to be the coin of the realm, there's no choice in the matter.
(1) Domestically, the US Army does not enforce law or make sure the dollar is the "coin of the realm." That would violate Posse Comitatus act. US domestic law enforcement enforces laws, domestically - including legal tender laws. I agree you can apportion some of the strength of the US dollar to its legal system, which makes sense, as the currency is an emergent property of the state. However, shifting to BTC instead of USD will simply reallocate the expenditure not reduce or remove.
Counterfeiting is an issue broadly. A small one. Of course, the expense of a Bitcoin transaction (literally 60 days of power for an average US household and 1 iPad of e-waste) far, far, far outweighs the expenditure of the secret service whose job it is to act on counterfeiting. AML and KYC rules, and a counterfeit detection pen will prevent this fake money from turning into a digital representation.
The army isn't generally called in to stop counterfeiting because nation-states have basically zero incentive to counterfeit on a large scale. What good are a few fake paper bills, when the Treasury would just cut you off from the entire world financial system?
(2) How do you explain that countries that do not have armies at all, like Iceland, are able to issue their own fiat currency with value?
(3) If you cannot draw a direct line between switching the currency and reduction in military spending, does it really make sense to apportion value that way?
Imagine for a moment the world suddenly adopted the Nicaraguan Córdoba as the common reserve currency. How long before it gets printed everywhere? Who is going to stop it? And how far do you think Nicaragua's AML/KYC regime would actually reach?
Iceland's currency wouldn't work as a world reserve either, for pretty much the same reasons. You can get away with being small and isolationist if your currency isn't that important.
Make no mistake, "cut off from the entire world financial system" requires the threat of violence. Banks get fined, countries get sanctioned, warrants are issued for people that have never set foot in the US. I don't know exactly how to apportion the cost of that enforcement, but I know you can't ignore it.
[citation needed]
> Imagine for a moment the world suddenly adopted the Nicaraguan Córdoba as the common reserve currency. How long before it gets printed everywhere? Who is going to stop it? And how far do you think Nicaragua's AML/KYC regime would actually reach?
Why would any state on earth illegally print Nicaraguan money when they can instead print their own legally? What's the goal? Is this really the easiest path to achieve that goal?
> Make no mistake, "cut off from the entire world financial system" requires the threat of violence.
It really doesn't. In this case the carrot is way bigger than the stick.
Please tell me, what stops North Korea (or Iran, or any other US-hostile nation) from printing as many USD as it likes? Don't tell me "risk of being cut off from the US financial system"; they already are. Furthermore, NK already tries:
https://www.google.com/search?q=north+korea+counterfeit
> Why would any state on earth illegally print Nicaraguan money when they can instead print their own legally? What's the goal? Is this really the easiest path to achieve that goal?
You seem to have just asked "Why would any state on earth illegally print the world reserve currency when they can instead print their own legally?" That seems pretty self-evident, but you can look to Venezuela or Zimbabwe for answers.
This excess low cost energy that can't be moved easily to other areas is often the only kind of energy bitcoin can use to win the economics of btc mining. It in fact subsidizes a lot of green energy and makes it more viable in the longer term.
People make the fundamental mistake thinking these things are investments, they aren't, it's just currency or forex speculation that we are doing here.