If you live in a situation where the only local fiat currency is even worse, then the “volatility fee” of cryptocurrency may be well worth the money to decouple yourself from that bad fiat currency risk. Maybe you can purchase things directly with the cryptocurrency, or maybe you just wait until you can drive across the border to a place with more stable fiat currency, sell cryptocurrency for that currency, and buy milk. Simple currency exchange or traditional custodial stores of value like precious metals wouldn’t work, since you’re still beholden to the original fiat currency problem.
At any given time, some small slice of world currency demand will be focused on this “protection from unstable fiat currency” and some other small slice would be like a prepper mindset hedging their perceived risk of facing that (eg “but what if the US dollar collapses?” from people with very extreme risk aversion preferences).
That total “market cap” demand for cryptocurrency will surely be way, way lower than traditional fiat currencies, but it may still be much higher than the current total market cap for crypto, which means there is room for completely rational speculative buying and holding of crypto, depending on your outlook and risk preferences, for perfectly sound reasons.
I highly doubt Bitcoin is ever going to become a major direct medium of exchange. But also it does not need to become that. It can offer big value in a lesser role that would still justify speculative buying of crypto today.
If someone is in a country with a collapsing local currency, they still have to transfer that money to a Bitcoin exchange before they can transfer the Bitcoin.
If the currency is collapsing, who’s going to trade Bitcoin for the collapsing currency? That’s the necessary first step in this process.
If I’m just trying to cross the border with Bitcoin in my mind wallet so I can convert it back to cash on the other side, why does it matter if 1 BTC is $10 or $10,000,000? It doesn’t, because moving money round-trip through a currency is a matched pair of buy and sell trades in a short period. Net zero, long term.
This narrative that Bitcoin is somehow going to save refugees from oppressive governments is possible, but deeply flawed in practice. Either way, it’s not a long term driver of demand.
Frankly, it’s far more likely that the dictators of such countries would use Bitcoin to flee the country with their citizen’s money and avoid prosecution than the other way around.
> If the currency is collapsing, who’s going to trade Bitcoin for the collapsing currency?
Well, you'd probably find someone wanting to trade Bitcoin for goods, and as part of the transaction, someone else would end up using local currencies to buy those goods.
... Of course, in the general case, you're probably more likely to find someone who wants to trade USD for those goods.
This is why you would speculatively buy Bitcoin and hold it long before that happened, at a time when people are happy to accept your fiat currency for Bitcoin. People learning from experience in Venezuela, Zimbabwe, North Korea, would probably feel glad to put some fraction of savings into crypto just in case, knowing that the interim volatility risk of it sitting in crypto is a worthwhile price to pay to have a reserve money supply that does not need to pass back through their original fiat currency on the way to being spent (as precious metals, stocks, bonds, securities, options, etc. all would).
Ok, now lets say you did the Bitcoin thing and your assets are safe. You are still suffering from poor governance and Bitcoin isn't going to change that one bit.
You can take a bus to Colombia and actually buy food or medicine. You call that nothing, so fine, don’t but Bitcoin if that works for you. It’s surprising you don’t think others might possibly disagree.
> If you live in a situation where the only local fiat currency is even worse
Then you start buying and transacting with good old Yankee dollars, as the good people in places like Zimbabwe and Argentina and Cuba and other such places have done, because this is the low volatility option and dollars are widely accepted. You don't buy the cryptocurrencies, as they are subject to wild price swings and only marginally accepted.
If you can't buy dollars, something like gold is a much better hedge than bitcoin.
Gold would specifically not be a good choice in that situation, because you have to pay a custodian to deal with the gold and store it for you. That means either transacting in the original risky fiat currency any time you convert between the currency and gold (such as to buy things), or else transacting in the original risky fiat currency to get a foreign exchange to another currency and then transacting with a custodian - which defeats the whole purpose of converting the asset away from the original fiat currency that exposes untenable risk.
At any given time, some small slice of world currency demand will be focused on this “protection from unstable fiat currency” and some other small slice would be like a prepper mindset hedging their perceived risk of facing that (eg “but what if the US dollar collapses?” from people with very extreme risk aversion preferences).
That total “market cap” demand for cryptocurrency will surely be way, way lower than traditional fiat currencies, but it may still be much higher than the current total market cap for crypto, which means there is room for completely rational speculative buying and holding of crypto, depending on your outlook and risk preferences, for perfectly sound reasons.
I highly doubt Bitcoin is ever going to become a major direct medium of exchange. But also it does not need to become that. It can offer big value in a lesser role that would still justify speculative buying of crypto today.