The end game is bitcoin becomes the settlement layer for the world. Transaction costs are going way up in the future, you're not going to want to do on-chain transactions when it costs $1000+ to do so, but if you're settling a billions dollars, that's a tiny price to pay.
The fact is, whether we like it or not, very few individuals (other than those of us here) will hold private keys in 10 years. The transaction costs alone will ensure it.
This is a very hard thing for the old school bitcoiner to accept. And some will reject it outright. In fact that is why Roger Ver went the way he did. I think CSW is an actual pathological conman, but I think Ver fell in love with a version of Bitcoin that he began to see as doomed, ironically as it began to become successful. But I want to put forth a couple reasons I think what you said above is important and inevitable.
1. The banking infrastructure and concept is STILL useful.
2. We actually NEED it.
Bitcoin, if it does indeed begin to serve the world as even a semi-niche store of value will grow to magnitudes of it's current resource usage. And I am not going to crank the blocksize debate up again, but to put it simply we can either keep bitcoin validation decentralized and thereby enforce the consensus, or we can let it be taken over by a small minority, and end up with a digital panopticon that would make most fundamentalist evangelical's vision of the "mark of the beast" look like Monopoly. The fight is over which resource use grows... and the market has, in some way against all odds, chosen correctly: Fees.
I agree with the market here and I realize the future is not what, even Satoshi, seemed to have seen. Although Hal got it. And WAAAAAY back then too...
I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash. Most Bitcoin transactions will occur between banks, to settle net transfers. Bitcoin transactions by private individuals will be as rare as... well, as Bitcoin based purchases are today.
Actually there is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.
Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.
That was a very wise man seeing the rise of Cash App, Strike, and Kraken back when everyone else was just wanting to figure out how to get around all the regulations that made it hard to play online poker. Insert Ver's scrunched up face here as he foams at the mouth taking about PEER TO PEER CASH!!! AND I AM SORRY I JUST GET SO EMOTIONAL!
No one can stop you from using the chain. Ever. That is CERTAINLY one of the things that makes bitcoin a "zero to one" invention. But if you really want to compete for the kind of VALUE that Bitcoin will command and REQUIRE for on chain transactions??? ...better get that business plan ready. And there are some fairly smart folks out there with a good head start on you already. Bitcoin is not replacing credit cards... Bitcoin is replacing
FedWire.
If we want Bitcoin to be successful then this is where we are going. And we should really be glad. It might not look like what we all thought it would 10 years ago (or 7 or 3 or last week), and part of the reason for that is our vision is limited. We get hung up, like Ver, on shiny things that look more important than they are.
That feeling you got when you did your first few Bitcoin transactions? It's not going away. It's just changing form. And you are one of the lucky ones that got to experience that first. Most people will have the much more ho-hum feeling of just watching the mover and shakers roll out the new world for them...
Personally, I'm pulling out the champaign that market behaviour is indeed producing activity levels that can pay for security without inflation, and also producing fee paying backlogs needed to stabilize consensus progress as the subsidy declines.
-Greg Maxwell around the BTC all time high Dec 2017.
https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2017-December/015455.htmlHappy Saturday!
Just to be clear, you seem to be stating that a future where transaction fees being $100, $1000 or even more per on-chain tx is a distinct possibility?