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So, what if countries start using Bitcoin in either of these ways? There are many (hundreds) of countries, some too small to really develop "counterfeit" proof fiat paper currencies. And with the proliferation of cell phones, digital money is just more efficient so they would be able to leap frog over the whole fiat fiasco by going right to digital.
If the so-called 'bitcoinization' were due to a small country's
inability to develop counterfeit-proof fiat currency then, how would they have the ability to support the whole country's change to bitcoin.
Not only would they have to ensure that Internet connectivity is available and affordable throughout the whole country, how would they go about solving the transaction times? And what happens to those citizens who are truly unable to afford a computer/laptop/or even a smart phone?
As for 'pegging' a whole country's local currency to bitcoin? It's not so bad if it was a sudden huge pull upward, but what happens when the 'usual' $800-$1000 value plunges to $50-$200?
We could handle it even if it stays there for a few months as we have majority of our assets/funds in our own local currency and thus are not truly affected and could still afford to wait, but what if ALL of it were in bitcoins?
Those citizens could still pay for their needs however 'pricey' it may be but, if they do spend, then what happens to holding and waiting for the recovery? The only citizens who won't accrue any loss are those truly rich who can afford to have stashed funds in other currencies.
It's a great dream to think of bitcoin as the main currency of the world but, that's decades yet to come, if ever.