Quote from: d5000 on July 08, 2025, 10:49:54 PM

Quote from: Satofan44 on July 08, 2025, 12:17:15 AM

there is good reason not to use it actively

From an individual perspective I agree that there seems to be no direct incentive to use Bitcoin for purchases, and Gresham's law is indeed probably an impedement for Satoshi's "P2P cash" vision. This is also probably the core problem which makes Lightning stagnate. People hoard. But that doesn't mean they will HODL. I see currently more of a "hoard and sell" or "ride the waves" pattern.

It is also possible that Satoshi did not know about this law, at least I don't remember any posts about it. Satoshi is not a "god-like" entity that could foresee everything that is going to happen in the future. The current situation just shows just how bad fiat currencies have become. Would many people have expected this to happen if you asked them 20, 30, 40 years ago? No way. Everything else is so bad in comparison, that as long as you have any other fiat you are more likely going to use that.

While I am leaning to agree with your view that it is probably an impedement, at the same time I am skeptical. Forget about Bitcoin and P2P cash, think about places where there are multiple currencies being used. If for whatever regionally dependent reason one currency is more preferred than the other, does that invalidate the other currency as cash money? I don't think so. The world is very complex. There are places where they may even be using Bitcoin more frequently than anything else right now. Bitcoin's position as P2P cash is just going to vary wildly over time and depending on the location as the economics of the world are currently in a garbage bin, and all fiat is maximally corrupt. Furthermore, Gresham's law does not hold in extraordinary circumstances for example when a currency is experiencing hyperinflation. In that case the existence of bad (worthless) money does not drive out good money, it does the opposite.

Quote from: d5000 on July 08, 2025, 10:49:54 PM

The question "if it's good for Bitcoin if Bitcoin is only used as a store of value" is more complex though. If the "Bitcoin standard" should become true at any time, i.e. the "Bitcoin replacing fiat" or even "Bitcoin as an anchor for a new kind of money" concept, then Bitcoin would eventually have to gain share against fiat also in the payment market. The economy would need other means to grow than the pressure on customers to get rid of their money.

These examples are not equal though? Bitcoin as an anchor for a new kind of money would not create much transaction activity. Why would it? If we are talking about Bitcoin-backed money, you'd just need to acquire the amount needed to issue it and then you'd use that money for payments. What also should be remembered for this is that outsider viewers will never be able to truly tell how much activity is going on. If someone wants do to Bitcoin payments but wants to limit public exposure, then it would be better to do it via a public or private L2. A private L2 could have millions of transactions per day and we would no see any of this. Anyhow, I see that as a more preferable choice for companies or financial institutions as long as they don't need the full security of Bitcoin's L1.

Quote from: d5000 on July 08, 2025, 10:49:54 PM

You could say "that doesn't matter, Bitcoin works well as a store of value only!". It can grow also still a bit driven by this idea, for sure. It can take a more substantial part of gold's market for example. The problem is: I believe the Bitcoin standard vision is the main reason why Bitcoin's price is so high even with such a low adoption on the payment market. This means that the bullish trend gets more stale over several years, and people begin to believe the Bitcoin standard vision has failed, Bitcoin is outcompeted by other assets again, Bitcoin's price will eventually probably fall very low -- and perhaps become much more niche than many would like here.

Actually, I think most of the value that it has gained comes from its function as a store of value rather than its function as a means of exchange. At this point I'm purposely ignoring all other beautiful features from censorship resistance, decentralization, permissionless, hard limit, etc., they are obviously part of it. Think about the function as a means of exchange, cash, and why do people use the cash that they do. Is it because they want to use that? No. It is because they have no other choice but to use that so it became the status quo! Now remember the earliest Bitcoin transactions, like the large pizza purchase. That was a transaction that was done because the owner wanted to use Bitcoin for it, not because he needed to. It is an entirely different motivation behind the "P2P cash" transaction. I believe that most uses of Bitcoin especially in the early days were of this kind, and as such it can never compete with traditional cash in this arena as we are moving towards a "many means of payment" world.

Quote from: d5000 on July 08, 2025, 10:49:54 PM

There are more objections to the notion of "not using Bitcoin for payments". One is that the Bitcoin+L2 transaction cost is potentially smaller than fiat's, because you don't need intermediaries apart from miners. Credit and debit card payments are expensive, because the merchants have to add a percentage to their price to be able to pay the fees. And thus, it could be argued that Bitcoin could outcompete fiat for low transaction cost. Of course only in a "L2 driven world".

I like this view, and most intermediaries are scam operations anyway. They serve to further enrich the rich, and the world would be better off without them. That said, the problem is complex and partially related to the previous point. Under the assumption that an L2 like LN is easy to adopt, which it still is not, I can't hold on to many of the coins that I receive even if I would benefit. Sometimes the problem is of a legal nature, other times it is of a practical nature. How do I pay my suppliers if I get too much transaction volume with Bitcoin if they do not accept it? Having to convert back to fiat somewhat reduces the utility/benefit here, and some may ask himself why go through the trouble at all. It is much easier to simply accept fiat and pay my supplier in fiat and so on. A bit of a chicken and egg problem, just with a sprinkle of technological complexity. Cheesy

Quote from: d5000 on July 08, 2025, 10:49:54 PM

Also Bitcoin has more advantages, like being censorship resistant. Nobody needs permission to use Bitcoin. IMO this advantage is bigger and more unique than the "hard money" notion.

I would argue that you can't have hard money without censorship resistance anymore. If I remember correctly the usual definition of "hard money" does not require this but permisionless amplifies a hard money's core strengths. This is one thing that the altcoin folk fail to understand. A "coin" that is created by a "team", "company", "foundation" and so on can never compete directly with Bitcoin simply because its core strengths are amplified to such a high point that comparing an altcoin to Bitcoin is like comparing copper to gold. Wink

Quote from: d5000 on July 08, 2025, 10:49:54 PM

To return a bit on topic: I guess a healthy growth of BTC even by the popularization of the "not your keys not your coins" principle alone (i.e. without more "P2P cash" adoption) should result eventually in fuller blocks again, just because you need block capacity to store your BTC on your own wallet. Thus if we don't see fuller blocks and Bitcoin is at $200k+, then I would be beginning to worry about centralization.

I would not yet. As I said previously, it is important to look at the wider picture. Is this happening with Bitcoin only or is there a low sentiment all around crypto which is the case right now. Further, we can't use the last cycle for the sake of comparison either as that was a very unusual time. Bitcoin and altcoins were skyrocketing, everyone was home from COVID and people were consuming news all day long. Many people who would not discover crypto for countless years to come stumbled upon it and got involved. It is strongly skewing the picture of all metrics. To get a proper comparison you would have to adjust for this, but I think that would be a massive research project. For example, you'd have to account for the increased daily screen time at the very least.