Indeed using Bitcoin for payment does not seem a good fit. However, Bitcoin could be viewed as the world reserve currency that is impossible to debase. This can give stability to all other currencies that are based on it. I think that would be a good thing. It would reduce governments' ability to deficit spend, thus reduce the likelihood of financing armies that can be used for aggression... It would not eliminate wars entirely, but would make financing them very difficult.
Unfortunately, scammers are everywhere. I think it is my responsibility to do the best I can to avoid falling for various schemes. I hold that Bitcoin is not the cause of the scams. I unfortunately missed the early days of Bitcoin because I was concerned about being robbed and secondarily I did not understand (or even known about) the intent Satoshi had when he invented the thing...
Debasement of currency happens for a few key reasons, most of which are far removed from modern financing in the West. And Bitcoin is, by design, both wasteful in terms of energy, and volatile, which excludes it from any reserve currency status. Remember, these are emergent from the design of the platform and incentives keep Bitcoin from changing.
Deficit spending... sigh. I am sorry, but this idea that deficit spending is irresponsible is often tied to beliefs in gold-backed currencies, hyper inflation being inevitable due to 'money printing' and other misconceptions.
Deficit spending is not bad. Any government who did not deficit spend is basically tying both hands behind their backs. It is an incredibly useful tool that can be used as both to kick-start an ailing economy, or cool an over hot economy through higher interest bond sales. Politicians who insist on no-deficit budgets are generally scammers or populists and, in my experience, will ignore this rule once in power.
The main reason deficit spending is not an issue is that inflation eats away at debt over time. Countries, being effectively immortal, don't have to worry about retirement and so can continue to build wealth and finance debt for centuries to come.
How those loans are spent is a whole different kettle of fish.
> I hold that Bitcoin is not the cause of the scams.
I wish I could agree, as someone who remains eternally hopeful for crypto. Unfortunately, it's almost certainly not the case.
When half a billion dollars goes missing from the US banking system, we can follow the paper trail every time. Criminals never cash out at that scale, especially when they wire money digitally. There's always an account to find, a wire transfer to track, or another bank to contact. The centralization is their saving grace against these scams. When half a billion dollars goes missing from a DAO or someone's cold wallet, they're fucked. Those coins get tumbled and are almost certainly never seen again. The bad guys win every time, which makes it highly unattractive for any investment at scale.
Which raises the ultimatum of Bitcoin, and cryptocurrency as a whole: to hold, or not to hold? That is the question. Custody is the bottom line here, and there's no easy answer. The public will always prefer to have someone else manage their account, which removes their agency and increases the capability of private parties debasing the asset. The higher the demand, the further the centralization progresses. Unfortunately, that demand is nearly unlimited and the benefits of managing your own wallet are slim compared to the work and upfront knowledge it requires.
> It would reduce governments' ability to deficit spend, thus reduce the likelihood of financing armies that can be used for aggression... It would not eliminate wars entirely, but would make financing them very difficult.
This is completely false. There is not a single first-world country that would base the value of their currency on crypto, and having cryptocurrency exist as an independent fiat makes it extraordinarily easy to fund combat. Terrorist organizations could accept donations via untraceable coins and cash out anonymously. Extremist sects could fund themselves privately without scrutiny. Even in your idyllic example, it would only embolden countries like Russia to pillage their neighbors since they don't need to worry about the consequences of financial sanctions, being cut off from the world's banking system, or even worrying about the value of their own currency.
If anything, the world embracing crypto all at once would escalate the financing of combat to unconscionable heights.
But.. this isn’t true on two counts: Cartels smuggle huge amounts of money all the time, and the bitcoin hack involving a YC founder ended with the coins recovered. They were unable to tumble the coins without losing them.
Cartels smuggle cash. Cash is fairly untraceable, so it makes sense. If anything, it reinforces the idea that removing accountability from money encourages bad behavior.
> the bitcoin hack involving a YC founder ended with the coins recovered
Sometimes you get a happy ending. There's plenty of stories about the Wild West that don't end with two dead cowboys. On the other hand though, our banking system can almost universally guarantee a happy ending. Axie Infinity hacks simply don't happen on there. When someone is dumb enough to try it, they're in custody by the end of the day and their money likely never even left the source account in the first place.
Be that as it may, do we really want to enable everyone to have cartel-level money smuggling capabilities? Is that the sort of power we should strive to democratize?
Yes. Everybody, or nobody. Why should some have it and others not?
Note well: In this post, I am not taking a position as to whether "everybody" is the correct answer, or whether "nobody" is. I just want everyone to be at the same level.
I'm not saying that the US would tie the dollar to Bitcoin willingly. It would have to do it out of necessity to be able to interact with nations that have resources that the US needs.
This of course applies to all countries, not just the US. The dollar as the world reserve currency enables the US to rob the recipients of the value of their holdings after the fact. I don't think any nation is happy about that. It would also reduce undue influence of a single nation across the world and therefore maybe reduce the attractiveness of terrorist organizations' railing against it.
A currency that can't be debased is a stabilizing factor in international affairs (my take). This also translates to each country's citizens, they can't be robbed by their government...
Financial (or economic) sanctions affect the target country's citizens. I would submit that after the sanctions on Russia, Putin has gained support from the Russian people. Iran has been sanctioned for how many years? Yet Iran's citizens don't find the means to depose of their leadership... Maybe they like the way things are... Sanctions and all.
In my opinion your statement "the world embracing crypto all at once would escalate the financing of combat to unconscionable heights" is unsupported. Bitcoin is available now (has been for a decade), so what keeps bad actors from using it to purchase arms now. The international monetary system is not a gate (to cash out Bitcoin purchases). The Mexican cartels apparently have no problem using the banking system to finance their operations...
> I'm not saying that the US would tie the dollar to Bitcoin willingly. It would have to do it out of necessity to be able to interact with nations that have resources that the US needs.
I think the idea that the dollar would be replaced by a faceless, useless currency is pretty unfounded. There's no draw to using Bitcoin, even the digital yuan has a better shot at dethroning the dollar than Bitcoin does. Plus, what makes Bitcoin any better than the hundreds of altcoins that came after it, many of them fixing the problems inherent to Bitcoin?
> This also translates to each country's citizens, they can't be robbed by their government...
Right. Now they can only be robbed by each other and the rapid fluctuation of an asset they have no control over, with no stability guarantees. Every day can be a bubble in the Bitcoin-based world!
> Maybe they like the way things are... Sanctions and all.
They have no choice but to like it. I can assure you that the wealthier Russians who woke up to a post-SWIFT nation didn't "like the way things are", nor was Putin very happy when Apple and Google decided to close up shop domestically. I'm not an extremist proponent of sanctions, but there is definitely value in having a network that can shun a nation when they start committing war crimes.
> Bitcoin is available now (has been for a decade), so what keeps bad actors from using it to purchase arms now
Nothing. As a matter of fact, Bitcoin kicked off a digital arms race to make even more private currencies like Monero which are now the preferred medium for transacting pretty much anything illegal, from drugs to weapons.
Unfortunately, scammers are everywhere. I think it is my responsibility to do the best I can to avoid falling for various schemes. I hold that Bitcoin is not the cause of the scams. I unfortunately missed the early days of Bitcoin because I was concerned about being robbed and secondarily I did not understand (or even known about) the intent Satoshi had when he invented the thing...
Thank you for your feedback!