Just asking the question as a thought experiment. Let's say bitcoin loses 3% of its value every year for the foreseeable future, maybe even loses a lot more than that.
You can still custody it yourself, still spend it, its still secure and censorship resistant... You can spend it peer to peer etc you can still 'use' it basically...
What's wrong with that? As a matter of fact, if it were to loses value each year, especially gradually over time then it would be even easier to use spend and deploy in a 'currency' like way. Plus there would be no capital gains taxes so noone would have to worry about that (eventually).
Wouldn't that make bitcoin more easy to use?
Yes it does. Otherwise you have the pain of finite supply without the benefits. That doesn't mean that it should do a 2x every year - the insane volatility is simply the result of high time preference narratives causing hype.
@Scoresby shared an analysis from Lyn Alden last night, which I'd translate as follows:
from an SoV perspective, you want some certainty. SoV is anti-casino because the point is savings, not speculation, so there's risk management to be done. Bitcoin is anti-yolo. (and thus, it doesn't matter what feature forks are envisioned.)
There are 2 primary perceivable risks that are reducing the value of Bitcoin as an SoV right now:
Right now, both risks have been hit. The former is the hardest, because with all the fudsters out there, the perception is not going to go away. The latter will solve itself as some that were using Bitcoin as a SoV are exiting - to get some liquidity to pump into the AI bubble - and price will drop bit by bit, as it has for a while now. Saylor FUD is helping with that too.
Although I hate the PQ narrative, it would be good to make some progress on fixing at least clear p2tr pubkeys.
What's wrong with it is that if Bitcoin isn't an inflation-proof SoV, then no one will use it as the vehicle to save in. The volatility is already pretty bad from a mid-term perspective, but if there is NgD (against your cost of living) then there is no reason to use it. Instead, you'd just do a sats->gold swap out when you receive your coin income and you do a gold->sats swap in when you need to spend some. Maybe Tether has their tokenized gold on taproot assets now? Wouldn't even have to leave LN then.
I think that you need to think this one through a bit, lol
"Instead, you'd just do a sats->gold swap out when you receive your coin income and you do a gold->sats swap in when you need to spend some. Maybe Tether has their tokenized gold on taproot assets now? Wouldn't even have to leave LN then."
This is exactly my point. Thanks for the comments @optimism .
Yes. So you'll have an asset that no one wants to hold. It will make BTC a utility token, basically like every shitcoin.
I love bitcoin and I love the technology, i don't think its speculative...
But apparently the world doesn't feel that way. Looking a bit more like a shitcoin as of late tbh
Edit: hodl gold or tether gold... Then swap to lightning when you want to spend a little, then swap back to egold usdt to save that's where we might be headed
And on top of that if bitcoin is just 4 year cycles... Then just buy all the way to the calendar top in late October and then sell into usdt to hold till... Early January the bottom year. There would be no need to 'hold' bitcoin long term at all
SoV doesn't mean speculative. Holding Bitcoin isn't a wealth accumulation method like stonks, its for wealth preservation.
Growth and hype made it appeal as a get rich quick scheme (because some people got rich quick) but that won't last. If SoV will go, Bitcoin loses the only moat.
Well it looks like its going dude. You would think with all the instability uncertainty in the world digital gold would at least hold value but... No.
It looks today more like hot potato money. Buying non-kyc for a premium or kyc for a small premium... There is already a spread and if the exchange rate almost immediately drops then what's the point. You hurry to spend it right away... Like the Argentinian Peso but with MoE difficulties as its not widespread accepted so you have to find somewhere to use it.
Bitcoin's slogan: slightly better than the Argentinian Peso maybe lol
I don't think it's going yet. It can be that it'll be a lot cheaper for a longer time. Sucks if you're a pensioner and you converted your entire stash into sats at ATH, but if you're not, you just gotta be productive. You should have been doing that, no matter how rich you think you are. So there's a small group of reckless people that may get hurt, but for everyone else it'll be fine.
Don't buy, earn.
I honestly think our biggest problem isn't ngu or ngd exchange rate... Our biggest issue is the inability to self reflect and course correct.
Why aren't people more educated, why they don't 'get it' and why aren't there more 'bitcoin users?'
Right now its too few people who appreciate it and that's probably what's causing the volatility. If we were a company would be having these discussions... Where are we, what can we fix, and how do we do better? But we don't have those discussions bitcoin is 'decentralized' and so people don't know what to believe.
I would hold bitcoin till it went to zero.... I believe in it and have commited myself to it but my position is not everyone's so that's probably not widespread applicable
The quantum narrative is frustrating because the camps seem to be split between "it's nothingburger" and "we need new cryptography"
The former seems like a not very cautious approach, but the latter seems reckless to me. I am interested in discussion that looks at limiting exposure and providing optionality but this often gets drowned in the fud/reaction.
No, I don't believe so. Sure, if no one wants bitcoin, it will fail and not be worth anything. but number go up forever doesn't make sense to me. There is some level where all the people who need bitcoin for what it does (censorship resistant holding and transfer of value) have it.
It's a multi-generational tontine
Because there are no new shares in the tontine, other shares continue increasing in value either as real wealth (stuff) is created or shares are lost/destroyed.
It's literally designed to go up forever, at least until one person has all the outstanding, only then is it the tower of babel
I hadn't heard of a tontine before.
I don't know that I have the analytical brainpower to think through all of humanity, but here's how I do think it through:
Bitcoin exists right now in the world and there are some number of people who really need it and know they need it: maybe they have to get out of their country with their wealth or they want to send money to someone in a different jurisdiction and it is really the best way to do that or they've been debanked and can use bitcoin to fix some aspect of their financial dealings.
Whatever their specifics, there is some group of people who see bitcoin as useful and the way to get something done that they cannot otherwise do.
There is no guarantee that this group will be large. If governments continue to turn the heat up slowly so that most people aren't aware that their freedoms are being removed, perhaps the vast majority never wake up to wanting censorship resistant payments. Perhaps punishments are draconian enough that most people never bother transgressing (and we are quickly getting to the point where transgression cannot be achieved with government money).
As Voskuil says, it's black market money. I don't know that the black market necessarily has to be bigger than the white market. In fact, it is very possible that it remains smaller.
I don't see that all goods have to be traded on the black market. Neither does it seem like all people will be pushed into the black market. So, why should we expect bitcoin to eat all things a la ∞/21M?
This is a niche use-case, propagated mostly through NGO fart-huffing.
As long as there are people trading things there is a need for money, perhaps more importantly, countries trading things across security zones. Bitcoin is the best money.
The best money is the best black market money, it is not exclusively black market money.
Bitcoin is said to have lost market share in the black market for stablecoins.
Now is that a good or bad thing?
Most headlines are fake, so I default to it being neutral. Nobody actually knows.
Also, who defines what a black market is?
That said, it's entirely rational for a number of reasons.
The important question is where are criminals storing their wealth? It ain't in dollars.
I'm confused... What are you talking about exactly?
If it were true that the black market prefers stables over Bitcoin, how could Bitcoiners consider that a bad thing?
To consider it a bad thing, you'd have to view the counter-factual of Bitcoin being used by "criminals" as a good thing.
It's not a very smart thing. Stablecoins are inherently white market tools. I don't see how anyone doing illegal things would feel safe using stablecoins -- if they don't freeze you, they'll rat on you.
I don’t understand it either. Maybe the way this dataset is sourced is biased against smart criminals who don’t get caught? I have no idea.
Black markets are a reaction to white, regulated markets, and in that comparison, they will always be smaller; once the majority becomes the black market, there’s no longer a reason to call it that. Just as agorists will simply be individuals trading with one another without it being a counter-economy in a zone where regulation doesn't apply.
Yes.
Countless shitcoins can be self-custodied, spent etc... and are probably better if that's what matters most to you.
∞/21M is its differentiation, a Schelling point of value that makes it liquid (liquidity is a feature), that's a proxy for NGU.
Understanding this is to understand Bitcoin, otherwise you'll always try to change it or shitcoin for something newer faster better.
Everything about Bitcoin is ultimately in service of NGU, if NGD it's all meaningless.
Interesting.
I guess my point is that if we had something that inflated 3% a year forever... That was still proof of work, and very anti-censorship...
Spending it wouldn't incur capitals gains taxes, it still could be 'freedom money' and used that way, it just might not be a store of value, at least not any more than the dollar for example.
That way people could use it in a freedom preserving way, but just not in a way that particularly stored value or gained in value over time.
Part of me thinks that's simpler, you could use it all one wanted and there would be no complicated taxes of any kind, but still have the censorship reeistance and proof of work. Maybe we will find out (much greater depreciation etc)
You're describing DOGE
Doge is nowhere near the MoE that bitcoin is, nowhere near the nodes or decentralization or mining difficulty (iiuc) that bitcoin has and it has precisely zero L2 or scaling technology.
MoE comes from SoV, otherwise exchange is pointless... DOGE has no MoE because it has no value. The two cannot be separated.
It's less decentralized because no value creates no incentive to run or mine it.
It doesn't need Lightning because the blocks are rapid fire, and its supply is more "divisible" which makes ownership orders more scalable. The faster blocks also amount to significantly more blockspace.
When you look at people trying to "improve" Bitcoin today, it's almost like DOGE is their north star, because they don't understand value is all that matters in the end.
"MoE comes from SoV, otherwise exchange is pointless..."
Now with this I agree.
Thanks interesting thought experiment
Would the tail emissions from Monero suffice your desire?
Maybe I'm wrong...
But I don't trust monero, I don't trust that there isn't/wasn't an inflation bug, I'm not comfortable with how easy the community 'hardforks', there is no monero L2 so the way the network "scales" is with 'bigger blocks' which I don't think is a good idea.
Monero is mined with CPUs and was 51% attacked some months ago by some weird... Merge mining group which means that a government that seriously wanted to attack it would do so easily.
If there ever is a q-day the whole thing gets deanonimized, and the hardware wallet/accessories available iiuc are almost nonexistent.
In addition monero core is signed by like 1-2 people as opposed to like 20 and this is when AIs are absolutely wrecking security critical software.
Imo, if a network isn't inherently valuable... I'm not sure any 'tail emission' will keep it secure forever its not a silver bullet.
So no not really
Yes to the title. No to the final question. For Bitcoin to reach its potential it has a lot more NGU to do. I prefer my assets appreciate not depreciate. I think a lot of what makes this work so clownish is that people try to act in the interests of total strangers. Sure it's be great if other people had Bitcoin and used it but what's better than that is for me to get as much as I can first.
Since price mostly reflects demand, stabilizing here would probably mean no additional adoption.
That makes sense
It kinda needs to increase in purchasing power over time.
That sounds more like gold or property
If it doesn't grow we'll have cycles of more bitcoiners selling and then less mining. If it gets to a state where the hash rate is easy to 51% attack then it no longer becomes permissionless money.
The real question is when you say "lose it's value", what are you referring to? I ask this because most people conflate Bitcoin's fiat price with its value and those two aren't the same thing. Bitcoin's value imho mainly comes from its censorship resistance, PoW, and its 21m limit. The fiat price is the toll to exit the fiat system at a given time, but that's not its value. In short, your thought experiment is on the right track.
Why are you worried about taxes if bitcoin isn't a currency, it's money? It's easy to use and always will be, regardless of the price. Now, if by "easy" you mean the number of people using and accepting it, the more people use it, the more valuable each sat will be, and the "easier" it will be to find someone who accepts it as a form of payment.
#1245195
Its money.. But its the most volatile money I've ever seen
Depends on your point of view. It’s not volatile for people living in Bitcoin circular economies, because having goods and services priced in sats at the very least places some inertia on volatility.
Many like to proclaim they are living in the Bitcoin standard because they can pay of their coffee using sats because of square or whatever, but in reality they are still living in the fiat standard, spending fiat denominated fractions of Bitcoin is not, IMO, “living the bitcoin standard”.
Same logic applies for fiat denominated BTC salaries, nothing more than a pair of bitcoiners settling fiat prices using BTC as a payment network, not as money.
I know there are legitimate reasons for all of this, the square merchants couldn’t care less about your bytecoins, the worker has to pay fiat denominated rent, utilities and groceries etc.
Though on that note, some would argue that “real bitcoiners” should be willing to absorb the opportunity costs when it comes to online services at least, ignoring the fact that running a server is most likely to have fiat denominated costs.
It’s not easy or quick to transition currencies without some central planner forcing everyone’s hands into unfair transactions, see how the Brazilian Real came to be.
Its really difficult for 99.9% of people to live on a bitcoin standard, its almost impossible to be 100% the fact people can use bitcoin at all to pay for things... Still amazes me.
IMO the best thing we can do is go use bitcoin, the more we use and embrace it the more normalized using it becomes.
Maybe so, but this would be very difficult today to achieve at any scale with so much volatility.
Difficult, but not impossible. You can already find circular economies sprinkled around places where fiat has met its ultimate demise.
I don’t think these people care to compare Bitcoin with their failed state issued colored paper anymore.
So again, volatility against what? Dollar price is volatile against gold, but not many people put it that way… somehow dollar is still seen as a a stable currency.
Without state intervention, fiat currencies would be reacting to market forces just like Bitcoin. This kind of perceived stability is most likely only possible under coercion.
True
Justin in his flow 🔥🔥🔥
Yes, Bitcoin "value" must go up as the civilization progresses. Volatility is normal. The hypothetical constant 3% depreciation annually wouldn't be normal.
Purchasing power has to go up over time.
As long as fiat, in which I suspect you are measuring go uppiness, always loses purchasing power, the answer is yes.
I mean my point is that if its simply a currency... The biggest currencies lose value every year. Then people would spend it w/o capital gains. If its freedom money then freedom money does that necessitate being a good store of value.
Plenty of shitcoins take that route. You be the judge if the freedom they provide is valuable enough to you to use them.
And if capital gains stop you from spending, you have too much fiat exposure.
I don't know of any shitcoins that offer freedom
What freedom are you after?
I was thinking in terms of being able to transact in a permissionless way.
Yes
No, it has to be used more. When it amount to 1% of the world daily transaction then I'm cool.