Quote from: d5000 on July 10, 2025, 06:44:56 PM

Quote from: Satofan44 on July 09, 2025, 04:11:39 PM

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.

I agree here, and it matches my own experiences in countries where the local currency is competing with the USD as a "harder" currency. However, much depends on the type of money you actually get for your work. If you get the "hard" money directly, you may as well spend it directly if you have the opportunity. Thus, if Bitcoin really begins to circulate, the hesitance to spend it should be lower than in a scenario like now when you've to constantly re-buy BTC. This is of course a chicken and egg problem. And that's why I think if you like the idea of Bitcoin as a global currency, and have the opportunity and see good deals, you should support merchants offering the BTC payment alternative so the circulation can gradually improve.

Yes, I think the root here is the chicken and egg problem and the fact that Bitcoin is simply different from traditional currency than this being a real problem or deficit of Bitcoin. There is no country with millions of workers that get paid in Bitcoin because it is the only legal tender. There are only a few workplaces that maybe give you the option to receive your salary in Bitcoin, but again wherever you are you will be faced with the same problem. Why would you take your salary in Bitcoin when you have issues spending it? In most cases people would take a small amount or none at all.

Quote from: d5000 on July 10, 2025, 06:44:56 PM

Quote from: Satofan44 on July 09, 2025, 04:11:39 PM

These examples are not equal though? Bitcoin as an anchor for a new kind of money would not create much transaction activity.

While that wasn't my point here, you're of course correct that Bitcoin only as "backing" currency for some "new kind of fiat" would not generate that much onchain activity. It depends though how this is organized. If it's backed by a trusted entity, like a government or a large corporation (just like stablecoins today) then indeed the blockchain footprint should be minimal, but in a more decentralized backing scenario which is organized more like a second layer, more activity should also be recorded on the base layer.

My point was more the following idea: In the "Bitcoin bull" world, I often see very utopia-ish predictions where Bitcoin one day magically "changes state" from a speculative asset to the "world global currency". This transition would probably not happen that smoothly if current use patterns contininue to prevail (hoard and sell). All major cyclic crashes have been of more than 75% which means there was always massive profit taking, and the downside volatility decreases much less than upside volatility.

I agree with you, I don't think that we will see a fast transition. I personally think and expect the major crashes to continue to weaken especially now with the interest of institutional investors and treasuries. A serious treasury will not sell in the short term in hopes of chasing the bottom. They are more likely to buy more and DCA down to increase their profitability from other's panic at limited risk. The problem with massive downside volatility is that the price increases are still massive. It will take quite some time before this stabilizes completely, and I'm excited to see one cycle where it goes notably down let's say to a maximum of 50% for the first time ever!

Quote from: d5000 on July 10, 2025, 06:44:56 PM

And it's possible that this bumpy ride to the Bitcoin standard will mean that this utopia will never materialize. Just a random scenario: imagine the US buying a large stash of Bitcoins for their strategic reserve and running into a deep bear market just afterwards, followed by a government change which changes the Bitcoin policy again to restrictive, which amplifies the bear market. This would hurt the "strategic reserve" idea much more than El Salvador's meager results in their adoption, and could end the dream of a lot of Bitcoin bulls. It's a scenario with a certain likelihood, considering the current high valuation of Bitcoin.

The risk of political shifts in a large nation state is acknowledged. It is a good point. As much as it pains me to say it, a reserve by countries with centralized and sustained leadership such as China and Russia would be safer for Bitcoin should they really commit to it. Further, a reserve is a funny thing these days. Should governments sell depending on the market behavior of the assets and try to acquire more, or should they sit tight? I would only consider it a proper reserve if it seems like a quasi permanent thing, i.e., subsequent parties don't try to sell it just because its price performance in the short term is not particularly good when there is no economic need.

Quote from: d5000 on July 10, 2025, 06:44:56 PM

A smoother transaction would happen if Bitcoin achieves the "world currency" status not by speculation by nation-states and companies, but by P2P cash usage, at least for international payments, larger online purchases and such stuff (not for your day to day coffee). This would boost liquidity and lower volatility in a more natural way. Currently I think the largest impedements to that "alternative utopia" is volatility and lack of hedging methods which preserve the decentralization, followed by the bad usability of L2s. There's progress but still a lot has to be done. But it doesn't hurt to promote the P2P cash idea.

I think that the current laws and regulations are making this very difficult. There is too much KYC and AML going on, and I don't know whether many merchants or service providers ask for information on the source of your coins. Probably for large purchases they might. Depending on the country and regulations you may need to provide a very extensive list of documentation or history. This is completely contrary to cash up until the imposed limits by a country. You go somewhere, you spend it. That's it. No questions, no need to track any history and hope you have sufficient documentation to pass. The problem is amplified by the fact that there is no automatic refund if you are unable to provide enough information, the money may be locked for months or even years depending on the situation! Who wants to risk all of this?

Quote from: d5000 on July 10, 2025, 06:44:56 PM

I largely agree with the other points of your post, for example the chicken and egg problem for merchants and the amplification of the characteristics of "hard money" by being censorship resistant. I also agree with the multi-currency idea, I don't think Bitcoin will be the "one and only" world currency. But it could, on a global level, become something like the USD today, an alternative, harder currency, and this is more likely if the P2P cash idea thrives.

I agree.

Quote from: d5000 on July 10, 2025, 06:44:56 PM

Quote from: Satofan44 on July 09, 2025, 04:11:39 PM

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.

This is indeed an interesting argument, but as these times are over (and they were already over in 2023/2024 when the intermediate transaction activity high was recorded), I still think if retail interest picks up again (current Google Trends values hint that this is still not the case), and then we're not seeing an increase in on-chain activity (including L2's of course), it may be time for a "not your keys, not your coins" campaign to avoid further centralization.

I was also thinking about the price performance in this context. What is good to use for retail interest besides Google Trends is app store rankings of main exchanges. Usually during peak sentiment they start topping the charts. Currently they are nowhere to be found. For transaction activity in particular it is even more difficult to make proper comparisons and draw conclusions as it is influenced by some many social and economic factors and hype. To name two examples: For Bitcoin the ordinals and runes created a temporary and extraordinary high. For Solana the memes did. Sustained economic activity would not lead to significant reductions in on chain activity, but activity that occurred largely due to hype would. I think when running comparisons at the very least we have to somehow take into account these events.

Quote from: d5000 on July 10, 2025, 06:44:56 PM

A point which is a bit less important for the topic but I wanted to ask anyway:

Quote from: Satofan44 on July 09, 2025, 04:11:39 PM

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.

What do you refer to "bad" in relation to fiat here? The inflation wave in 2022/23? Because currently, most money supply charts (e.g. M2) show a contraction or at least stagnation again, which hints that at this moment, fiat is relatively "healthy". I may agree more about the burden of debt in selected countries, but also here, not all have deteriorated, most countries in Europe for example were lowering their public debt in relation to GDP in recent years.

Fiat has been very bad probably for at least 2 or 3 decades, but it was corrupted a long time ago. If you trust the very manipulated government numbers, it has lost a significant amount of value since we came off of the gold standard. The reality is much worse though. I'm ignoring this year because of Trumps policies to keep it simpler, but just before his election the USD has lost at least 50% of the value it has before the pandemic (and so have most currencies, some less others more). This is the reality, not cherry picked individual data points where it shows minor price increases or even decreases because of improvements in supply or supply chains or other reasons. Cheesy

For rich people that have infrastructure and connections fiat is great. Debt is cheaper to pay off, in similar ways to what Saylor is proposing. For everyone else it is a complete scam. Everything is getting significantly more expensive and wage increases usually do not keep up with this.

The real and only reason why money printing became a thing is the ability to finance wars. Before money printing, wars were constrained by the country's budget and by the amount of money that it can reasonably borrow. Now the state is able to utilize everyone's wealth to finance war. Every dollar printed is a dollar of value that is stolen from the country's population divided by the number of its people. Because it is equally divided, it hurts those that have less much more than those that have a lot. It has nothing to do with economic activity, fighting deflation or any other of that pseudo scientific bullshit that comes out of lobbied universities. There was not a single period in history that empirically proves that controlled deflation is bad and must be fought with any means necessary, a key argument of money printing proponents. The USA great depression thing is a bullshit example which had nothing to with deflation itself but was caused by a combination of many catastrophes such as bank panics. Please note my emphasis on controlled deflation, it is most probably significantly better than controlled inflation but for status quo reasons they won't even try this temporarily. You could argue that one should not gamble with the economy in this way, but they make all kinds of gambles all the time so this argument is very weak.

My last statement here would be that inflation promotes all kind of irrational behavior, dangerous consumerism and degeneracy. We could split this into a separate thread entirely and discuss where appropriate.