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by gonehome
1550 days ago
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> “ Why wouldn't they just use the stablecoin?” This is a good question and I think there’s a two part answer. Part one is stable coins still have smart contract risk in the arbitrage style version, and fraud/authority risk in the custodial version. Stable coins that peg a government currency are also vulnerable to all the same issues fiat currencies are vulnerable to. Bitcoin is a better store of value than fiat (which is a bad store of value - we store wealth in assets primarily because of this). So you’re better off storing value in BTC like gold and then moving pieces of it to transact in small amounts if you must. If you can’t (exchanges are locked) you’ll need to find someone willing to transact in BTC despite volatility (or someone willing to trade you fiat in person). Is this optimal? No, but it’s about degrees of control. Wealth locked up in banks controlled by authoritarian governments give you fewer options. |
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This is the part I have an issue with when talking about Bitcoin as a currency. Forgive my oversimplification, but it really sounds like what you're saying to me is that Bitcoin is not a good currency, it's an investment asset, but for the moment it can be converted into other good currencies. However, it turns out that most of these stablecoins and other currencies have very similar properties to traditional government-issued currencies (risks of fraud, inflation through issuance, etc). These are all the things that Bitcoin is supposedly going to fix, but then it turns out that transacting with Bitcoin is largely reliant on keeping those types of currencies around.
The hope is that Bitcoin will continue to be convertible into good currencies, and to a certain extent that's a valid hope. There are scenarios where a government might censor traditional currencies before they regulate exchanges (see Wikileaks, for example). But that's also exactly what people are calling out here; we're questioning how reliable or censorship-resistant those exchanges actually are in the long run. I'm not sure that's a problem that can be glossed over, it's a big fundamental part of the disagreement.
Additionally, I would ask the question, how much of Bitcoin's current value as an asset store is tied up in the fact that exchanges are operational and relatively easy to use? I strongly suspect that if the US government ruled that exchanges were illegal tomorrow, the value of Bitcoin would plummet. And if that's the case, then we have a currency that not only needs some way of exchange with traditional currency in order to be spent, it's also kind of reliant on those exchanges being easy and operational in at least one or two wealthy countries in order for it to be used as an investment vehicle or store of value at all.
If those exchanges get shut down, and Bitcoin is hard to exchange but still valuable, then that's not the worst thing in the world for Bitcoin. It's pretty bad, but it's still a store of value in that scenario. However, if those exchanges get shut down and Bitcoin is both hard to exchange and the value is plummeting because ordinary/rich people aren't using it as an easy investment vehicle anymore, then that's an extremely bad outcome for Bitcoin.
> Wealth locked up in banks controlled by authoritarian governments give you fewer options.
Really, really important to clarify that we're mostly talking about theory here. In practice, wealth locked up in banks controlled even by authoritarian governments like China currently still give me exponentially more options than Bitcoin does for most purchases, with only a few minor exceptions. Could that change? Sure, absolutely. But it's not the current situation.
Even looking at something like Russia; I think depending on how this war continues, it's going to be interesting to see if Bitcoin actually ends up being useful for ordinary people there in the long run. I am fairly skeptical; multiple countries have tried to use Bitcoin in the past during currency disasters and I have not been super-impressed with the average result. And none of those countries were being as aggressively sanctioned as Russia currently is.