[Tepix]

The average transaction fee was more than $40 today¹. I think a transaction fee of more than $1000 could be a problem.

I also believe that the bitcoin core developers have painted themselves into a corner where (urgently necessary) hard forks are super hard. Every hard fork by them will have a huge risk of a group of people staying on the old branch and calling themselves "the true bitcoin" and the forked instance a "shitcoin" or "altcoin" or "not the real bitcoin".

Thus, unable to change and adapt, bitcoin is likely to stagnate and eventually die.

--

¹ according to https://bitinfocharts.com/comparison/bitcoin-transactionfees...

[logicallee]

I don't see any problem with any transaction price around the prices you're talking about. (Obviously if it were millions of dollars per transaction that would be an issue.)

Storing or transporting any amount of gold must be ridiculously expensive and inconvenient security-wise.

[Tepix]

The transaction fee always applies, even if you are trading $1 worth of bitcoin. I guess you didn't know that.

With a transaction fee of $40, trading less than $2000 worth of bitcoin at a time gives you a rather high percentage of fees of more than 2%. You couldn't even buy most flights with bitcoin.

If we wanted gold bars, we would use gold bars. One of the fundamental ideas behind a digital currency is that it's cheaper and faster to transfer than physical goods/physical money.

[sjg007]

You get a gold certificate not gold bars.

[logicallee]

Please excuse my ignorance - how does that not translate to Bitcoin? i.e. why is that not a possibility, if Bitcoin is worth $400,000+ per bitcoin, but transaction fees are very high? What stops credible institutions from making bitcoin certificates? Genuinely curious, I'm not sure what your answer will be.

[sjg007]

Nothing stops anyone from doing that. But you’d now have a 3rd party saying you own the bitcoin but your ownership is not recorded in the blockchain. So do you really own it? You could get fancy and issue another cryptocurrency backed by bitcoin too. I think the recording keeping just gets difficult. There are also forks of bitcoin to introduce lower fee and faster transactions but who knows if they will take over. For bitcoin to continue you need miners to validate transactions and they will only do so if it makes economic sense.

[logicallee]

The essential property of bitcoin versus every other currency is that in an essential way it is deflationary: there are only so many bitcoins. It's not minted by fiat.

This is the essential property it shares with gold. So if we use worldwide gold market cap to set some kind of standard, why shouldn't we use certificates as is used for gold?

By the way, again excuse my ignorance, but what keeps gold certificates from being inflationary? Why can't Goldman Sachs physically own 100 gold bars, and sell me a certificate for 50, you a certificate for 50, and Tom a certificate for 50? Where is the limit? After all, they have enough money to buy gold on the market even if you, I, and Tom all ask them for the physical gold at once. What keeps them from inflating gold certificates out of thin air?

[sjg007]

Nothing stops the except the law. What they are doing in your scenario is fractional reserve banking. They could create more "money" in this case up to whatever leverage limit they would be allowed by law. So at some point your gold hits a max value and your economy can't grow beyond that point. This causes deflation. As far as I understand it deflation means that something that cost $5 now costs $2.5 in real terms. However, producing that thing may still cost $3 so unless you've made productivity and efficiency gains you are losing money. More importantly there is no incentive to spend money today because your money will buy more tomorrow. So then you only buy what you absolutely must.