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You're acting like I'm saying we're near mass adoption
No Sr I don't!
there is no single point of switching over from one currency to the other
That's exactly the argument of the paradox. It happens precisely because of the unavoidable graduality of an adoption process.
It doesn't matter how few are currently doing so currently because I'm talking about the trend.
It absolutely does matter how few. If the trend of people adopting stablecoins grows faster than the trend of people adopting bitcoin, the distance will grow over time, which will cause bitcoin having an increasingly small percentage of the user base, despite being increasingly more adopted. As that tendency continues, which is currently the case, volatility will remain, which is currently the case.
Your paradox doesn't really factor in to it
It effectively does, as it contemplates what happens when those actions on the margins try to scale up.
so we might not be that far apart in what we think is coming
My argument is that both things will help each other. Bitcoin will not replace a currency like the dollar but it will allow to implement a better dollar. In that sense I side with the argument that bitcoin is digital gold, rather than currency.
it will allow to implement a better dollar.
I'd say "require", rather than allow. I don't see it as sustainable, though. Just like with gold, the ability to cheat will eventually be too tempting for the money printers and the dollar will collapse like every other fiat has.
If the trend of people adopting stablecoins grows faster than the trend of people adopting bitcoin, the distance will grow over time,
Not indefinitely. Adoption curves are logistic, not exponential. If bitcoin is on a logistic adoption curve that is lagging stablecoins, it actually implies that bitcoin will displace stablecoins in the future: i.e. stable coins plateau and then bitcoin eats into their share.
I don't see it as sustainable
Not if centralized, that's for certain. I see the solution in the free competition of issuers.
i.e. stable coins plateau and then bitcoin eats into their share.
That's assuming that stablecoins have not solved the problem themselves (in which case bitcoin would lose its edge). My argument is that they will be more adopted than bitcoin because they will solve the problem, and that bitcoin will be adopted indirectly in consequence, for I think that the only stablecoin which can properly solve the problem has to be built upon bitcoin.
Until that's done, this will be an eternal battle between bitcoin trying to rise (prevented of doing so because of the volatility implied by the paradox) and an unending series of stablecoins rising to eat the share of the falling stablecoins, which will keep bitcoin's share at bay as the race to the same plateau never ends but remains a boom-and-bust cycle.
Hence the reason the only solution to the paradox is a hybrid: not "stablecoins or bitcoin", but a stablecoin built upon bitcoin.
Adoption has started. You're acting like I'm saying we're near mass adoption, which I've never said and is obviously not true.
Where I think your paradox doesn't make sense is that there is no single point of switching over from one currency to the other. Adoption occurs at the individual level, for idiosyncratic reasons, and even there it's not all at once.
More people are holding more bitcoin and taking payments in it. It doesn't matter how few are currently doing so currently because I'm talking about the trend. As that continues, it functions more and more as a unit of account for those people, which reduces its volatility.
As more people have and use bitcoin and more people request it for payment and its volatility declines, it becomes more attractive for others to use more than they already do.
This action on the margins was my case when we discussed it two years ago and it still seems right to me. Your paradox doesn't really factor in to it, beyond being one of many factors on the margins for people.
I have also said for a while that on a global scale we probably will see hyperdollarization before hyperbitcoinization, so we might not be that far apart in what we think is coming. I just don't think the process will stop until we land at full bitcoin monetization.