[hnbad]

Okay, and how do cryptocurrencies fix this?

Mining is supposed to be increasingly cost prohibitive so in an ideal world it would eventually cease to have a meaningful impact on currency supply within practical timeframes. Assuming economic growth holds, this would mean constant deflation (i.e. value of the currency continually increases as its supply remains quasi constant while the overall economy increases).

Since transfer of cryptocurrencies incurs transaction fees and the value of those currencies only ever increases, transactions would eventually become cost prohibitive for smaller values. So realistically it would seem that we'd eventually have to transition to representative money instead (i.e. you don't transfer crypto between wallets, you shift numbers in a trusted third party's database which itself holds crypto for you). This would lose most of the benefit of the blockchain for these smaller transactions and effectively create banks because these third parties would have operating expenses they would have to charge you for (either directly or by using your crypto for investments).

So in other words, this sounds a lot like returning to the gold standard with extra steps.

[bigger_inside]

that "would" in your shift argument is already reality, that's the lightning network, which transmits bitcoin off-chain for pennies, but in a decentralized way, because it utilizes existing bitcoin balances on lightning nodes for it. There is still no bank, BUT there is a more centralized "arbiter", yes. So your argument does hold about the trustlessness, though not entirely the centralization.

The one thing that's central in this debate is to understand that current currencies are built to be inflationary, which causes the need for constant economic growth. Bitcoin is not. The "bitcoin fixes it" meme is hopeful utopianism, I grant you that, but bitcoin would not carry this growth mandate in its bowels that state currencies do.

[Kbelicius]

> that "would" in your shift argument is already reality, that's the lightning network,

The reality today isn't lightning network but centralized exchanges. That may change in the future but it might not.