I encourage you (or others) to read David Krawisz article
http://bitcoinist.net/the-two-ideologies-in-bitcoin/ he is quite knowledgeable about economics and able to reason. He draws a conclusion that is a little different to what most are assuming: that it is investors that drive bitcoins price & network effect, and transactional usage follows; rather than the assumption many make that it is the usage that drives intrinsic value & network effect. I am not sure about that - maybe its a bit of both, but its an interesting and well reasoned argument, that is somewhat reassuring - we're not fully beholden to the success of people like bitpay trying to integrate merchants and the success of those merchants in having people pay in bitcoin etc. if Krawisz is to some extent right.
Right. At the end of all of this, stands bitcoin's status as limited-supply, censorship resistant money.
It's something of an accident that *right now* bitcoin enjoys superior transactional properties to online fiat payment systems. Legacy money will get better over time, and crypto won't have the same sorts of obvious and immediate transactional advantages that it currently enjoys. How would the btc merchant-service-providers fair if legacy payments didn't suck?
At that point, it should become more obvious that bitcoin's strength and value proposition is not so much in payments, or even "programmable" money, but as fully independent money. People have to eventually find value in that for bitcoin to have a robust future.
Yep. Bitcoin has a lot to offer, and some of those things are not possible for the legacy systems to mimic. Particularly sound money, no counter-party risk, irreversable transactions (seizing and freezing basically prevent that outside of paper cash, though even that is partly relying on fungibility laws or it could have reversibility problems). Smart-contracts that are strengthened by no counter-party risk and irreversibility are one of the most interesting advantages I think. Without irreversibility and no freezability a "smart-contract" isnt smart, its just an electronic contract and we already have those. Ultimately if you combine it all you could rearchitect the financial system to largely remove systemic risk, add competition legacy systems cant react to (they intrinsically need their governance costs).
This is why people gave us $21mil. Bitcoin all-in is a big deal. Sound-money is cool, but its only part of the picture.
Even if bitcoin transactions ended up costing more than headline fees for some transaction types, but it would still be worth it because of those features, the legacy system has higher costs, its just those are appearing in other places or disguised in the price. The dispute resolution cost and auditors and governance and separate of duties and systemic risk and strong relevance of credit rating create an environment that must charge higher fees, and can charge much higher fees on top because of the barrier to entry to obtaining a corporate credit rating and reputation. With bitcoin technology the product has the credit-rating, and is subject to real-time audit like bitcoins real-time assay.
A good day to buy more bitcoins. Its cheap at the price and most do not understand this potential. Its like 1990s internet tech stocks.
Adam