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10 sats \ 0 replies \ @om 14 Apr freebie \ parent \ on: KYC'd Bitcoin is Worthless bitcoin
Bitcoin is not a big tent.
I find that to be historically and factually incorrect. Here's the famous post by Hal Finney from 2010:
Actually there is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.
Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.
George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self-regulating.
I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash. Most Bitcoin transactions will occur between banks, to settle net transfers. Bitcoin transactions by private individuals will be as rare as... well, as Bitcoin based purchases are today.
using Bitcoin in a non-sovereign way makes little sense if you aren't ideological. It is Paypal with the Bitcoin logo slapped on it, but with the benefits of neither.
Indeed, once you have a Bitcoin-denominated L2 you start wondering about a USD-denominated one:
  • Lightning Labs came up with Taproot assets specifically to transfer stablecoins over LN
  • Liquid has USDT and there's a service to publish transactions and pay fees in USDT for those users that want to have exactly 0 sats
  • Fedi already has a Stablesats module to mint USD-denominated ecash
  • callebtc demo'd a USD-denominated cashu mint
But I don't think it's fair comparing all of that to Paypal. Ecash will at least give you some privacy.
receiver privacy is just bad. Monero stealth addresses make it so any Monero user could have been the receiver. LN amount probing is a well known attack.
OK, I agree that for someone who wants both receiver privacy and sovereignty Monero is a great choice. But I'd advice swapping that Monero for Bitcoin once received. Moneyness requires big tent approach.
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