[mathattack]

There are a lot of bold comments that you're making here.

Pensions would become practically worthless, as they would need to be converted to the new currency to be spent.

If pensions hold real assets (land, companies, etc) the currency of the realm doesn't matter much, whether it's dollars, euros or bitcoins. Most pensions aren't just sitting on cash.

Anyone not holding bitcoin will become the new underclass, and the new rich will be those who got in early

Again, real asset holders don't care about the coin of the realm. If you own a company, you can sell it to buyers in whatever currency you want. Net lenders may be harmed, because they could get paid back in less valuable dollars. Net borrowers may be helped, because they can pay their debts in less valuable dollars.

It will literally be raining cats and dogs in the street.

Literally?

I find a lot to disagree with your points and hyperbole. The irony is I am fully in agreement with your last point. It can't succeed. The current world order won't let it.

[jeremyt]

The cats and dogs line was a joke. In this case, I added the word literally to mean "usually when people utter this phrase they actually mean it figuratively, but I'm making such a strong statement that I'm really trying to say this time it's for real". Its extra hyperbole for comedic effect.

I take your point that a lot of pensions hold real property, but they also hold a significant amount of dollar-denominated assets. They don't have to go to zero for my raining cats and dogs point to hold, they just have to decline a significant amount.

Your second point is actually missing my point. I'm specifically referring to the transition in which anyone holding dollars will find their dollars worthless and anyone holding bitcoin will become filthy rich practically overnight. Think of it like a bank run. After the transition, business will continue as normal in the new currency.

Also, it is a good point that anyone holding debt denominated in dollars will find their debts disappear. I'm not sure this is a positive outcome.

[mathattack]

Also, it is a good point that anyone holding debt denominated in dollars will find their debts disappear. I'm not sure this is a positive outcome.

It's positive for the borrower, negative for the lender. Same as any unanticipated inflation. In your example, it's just a more extreme case.

I take your point that a lot of pensions hold real property, but they also hold a significant amount of dollar-denominated assets. They don't have to go to zero for my raining cats and dogs point to hold, they just have to decline a significant amount.

The denomination doesn't matter as long as it's a real asset. If it's property, you can sell the house in a new currency. If it's a share in a company, the shares may be quoted in dollars, but they can always be sold in another currency.

This isn't to say that there wouldn't be massive upheaval, I just don't see it happening in the way you do. The impact would be more like the scenario if the dollar doesn't become the world's reserve currency. There would be significant increases in US borrowing costs, and a long term drop in our growth rate. But assets won't go to zero.