Thank you for the informative answer, that all makes sense. So then a widespread Bitcoin usage would require near-zero volatility? How can that be achieved if most vendors/merchants are quick to liquidate to fiat?
Not really, with how the price of bitcoin is moving right now that would be hard to achieve because of forks,halving,countries banning things related to crypto etc. That's one of the negative things for us who hold bitcoin to spend them. To avoid losing value I simply trade my bitcoin for an altcoin with a low volatility like tether where the price always sits at a dollar.