Money occupies physical space, so for most of history there was a pretty low cap on how much you could bring with you at once, which placed a cap on how much a single mistake could cost you.

That cap has always and still does exceed the median worth.

> cap on how much you could bring

Bring to where ? Are you mapping the crypto wallet concept to the physical wallet concept as a mobile storage concept ?

All your money is the limit, however you store it.

> there was a pretty low cap on how much you could bring with you at once,

you didnt need to bring a case of cash to buy anything before the 20th century

Currency was traditionally made of precious metals which often gave them a rather high starting point of value. It also made them inflation resistant meaning the real value only grew over time. For instance in the Roman Empire an aureus [1] was worth 25 denarii (prior to inflation) and was about 2cm in size, so roughly the same size as a dime, made of pure gold. And a denarius was worth about a day's wages. So you could comfortably hold decades of wages in a small coin purse. And as inflation ravaged the Empire a single aureus gradually came to be worth thousands of denarii.

[1] - https://en.wikipedia.org/wiki/Aureus

This is what transit payment cards in Japan at least do, you can tap to pay most places but there’s a cap of 20k yen you can add to your card, so there’s a cap to how much you can lose.

I love how these cards work in Japan. There’s a bunch of different operators but they all work across the country – for example, if you buy a KITACA in Sapporo, you can use it in Tokyo and Osaka and anywhere else. And of course you can use them in a bunch of places, from all the transit options to vending machines and coin lockers on stations to konbini everywhere and even some restaurants.

(Of course it’s a bit more complicated: https://commons.wikimedia.org/wiki/File:ICCard_Connection_en... – but still impressive nonetheless!)

Yes, by evolving banks to solve some of the problems of lugging around lots of cash and/or stuffing it in a trunk in your house. And assuming you are known at your bank and/or can (eventually) prove your identity there, you don't have the same "lost wallet" problem being discussed here.

Yeah and it sucked which is why we invented better solutions.

What most bitcoin fans seem not to understand is that for the vast majority of people, transactions being reversible by authority figures is desirable.

You didn't lose your entire savings if you lost your wallet, usually.

Perhaps micro wallets should be a thing where your wealth is distributed across many keys mitigating some loss.

If I’m having trouble juggling a single ball, why would it help to add more balls into the mix?

At which point I gained the problem of having to keep track of all of my microwallets securely, hopefully in a way that survives my phone being lost, a house fire, or my untimely death, leaving the wealth to inheritors. All while, at the same time, not ending up behind a single key that has access to all the information to those micro wallets.

Quickly you end up in a situation that either starts to look like how financial companies keep their most high risk keys, or end up outsourcing the whole thing to something that quickly starts to resemble your bank.

So ultimately it's just like cash: Fine for small amounts. Risky, but maybe livable for somewhat larger accounts, or a giant headache that will probably bite you when you start looking at lifetime savings.

Physical money is physically recoverable after lost

No it isn’t. No more than a wallet key.

If I lose $1 note. It’s gone. If I recover it, then it’s no longer lost.

A $1 note being a macro scale physical object enjoys a variety of benefits such as object permanence which provide a baseline level of recoverability. Whereas a wallet key l, being a number, enjoys no such protections.

Of course you may choose to encode your wallet key on paper, metal, or stone granting it properties not unlike a note. However you have now compromised the security of your wallet as well it becomes no mere $1 note, rather it is a note that represents all or a significant fraction of your net worth.

You can encode your bitcoin in wallets of predetermined size, spreading your risk.

But you’re reinventing money with extra steps.

> But you’re reinventing money with extra steps.

But you gain some desirable properties over traditional money.

Without crypto, you don't have frictionless and permissionless transfers of arbitrary value across international borders.

There's no fundamental property of the monetary system that prevents transfers of arbitrary value across international borders. There's just a large number of financial regulators, border guards, etc. who will throw you in jail if you carry a big block of gold across the border or accept a large wire transfer without filling out the necessary forms. In many countries, the laws governing those forms don't yet apply to cryptocurrencies, but I'm skeptical it will remain that way forever.

That's true, and the AML laws for crypto are already becoming more strict, especially in Europe. But in practice, it will be much easier to evade those laws than it is with fiat transfers or moving physical cash/gold.

There’s also some weird technicalities:

Eg, if you shard a key into three pieces and each person carries one through security, did anyone actually transport the money through?

For the system yes, a dropped coin eventually reenters the market and a burned bill can be reprinted again. Can't say the same about a crypto wallet. For an individual though, in both cases, a lost wallet is a lost wallet.

While an interesting difference to study, the average person is not going to care about the former case. They just don't want to keep their life savings in an asset as easy to loose as their pocket money.

If you drop your wallet in a bar, there's a chance you can recover it by returning to the bar and searching for it, by the bartender or a patron returning it to you based on the address or a number in your wallet, etc. Physical money really is not the same, even for the individual.

A burned bill can be replaced because its value is backed by an institution--the absence of such an institution is the premise of crypto.

> I don't know, we carried physical money for millenia. Humans managed that.

Yeah, but if I lose the physical 100$ I am carrying, that doesn't prevent me from accessing the rest of my cash stored elsewhere.

I've never lost access to the rest of my cash stored elsewhere.

Yes and people quickly realized that there is an amount they don’t want to carry around. No one carries their life savings and few would even keep it in a safe in their house.

Banks have been a thing almost as long as money.

And the notion of credit has been a thing even longer than both money and banks. You don't need to carry money around for every little transaction if people know you're good for it someday in the the future.

Don't you need an idea of credit for money to work at all? You need to be able to trust that the shiny rock you give me today for my wheat will be worth anything tomorrow when I want some of your meat.