[samatman]

Bitcoin would no longer be volatile if it expanded to represent an appreciable global fraction of liquid value.

Which is a huge if! That's the maximalist bet, and I still have trouble believing in it even as I've watched intermediate predictions come true.

If the BTC chain became a Schelling point, where all market players see it as their best move to hold some, then eventually a satoshi could be worth about a 2021 US cent. It would then be unlikely to fluctuate more than a fraction of a percent in BTC/fiat pairs per day, unless one of those fiat coins happened to be hyperinflating.

If both of those things happened, then pricing things in satoshis would be more stable than pricing them in fiat, because that's what hyperinflation is: it's when inflation in a currency gets so bad that it becomes a bad unit of account.

The fact that there's no alternative to the USD at the moment is the best argument for the BTC chain forming that Schelling point. But! It hasn't happened, and contrary the maximalists, there is no law of nature which says that it will.

[cwkoss]

The total value of all gold ever mined is just 10.5x greater than Bitcoin's market cap. It was only 6.1x at the peak in April.

From my maximalist perspective, we aren't that far from Bitcoin becoming a viable global reserve currency (El Salvador just made it legal tender, other countries are investigating doing the same).

The moon may not be that far away.

[jkhdigital]

The legal tender point is the most important, as to whether or not Bitcoin will become a global reserve currency. The tipping point comes when entire chains of real economic activity can be settled in Bitcoin, and the friction of using Bitcoin for working capital fades away.

[cwkoss]

Yeah, if this move plays out in El Salvador's favor, other countries are going to try to emulate it, and we'll start seeing significant trade flows settled in Bitcoin. That's when things will start getting really exciting.

That seems like a bright future to me, but my cynical tinfoil hat worries that the US will find some pretext to invade El Salvador to 'root out terrorists' or whatever so that dollar hegemony is not threatened.

[imtringued]

Countries that want to run a budget surplus without taking the surplus from their domestic economy must take it from another country. No government wants to take money out of their domestic economy in a way that harms it.

What happens is that these countries buy the safest bonds possible and those are issued by governments. You are relying on the ability of the government to collect taxes to pay the debt and that ability correlates with military power as having a weak military would be a risk vector. A destroyed government is unlikely to honor its debts as seen with the Weimar Republic.

The rhetoric that the US is going around the world with guns to force people to buy their bonds (and therefore USD) doesn't make sense because countries are voluntarily selling products for USD and then buy US treasuries with the USD. They actually want the military protection.