My guess is they meant their equivalent of the $4 cappuccino is now $10 (or more) in their local currency, which while not mathematically correct is probably the most intuitive way to understand it (as compared to losing 60% which would more than double prices).
In all honesty though if you started using BTC as your main currency*, replacing your national currency, one day you'd have your money in BTC, the next day their value would be wiped out. We're not talking about a slow and steady decline, halving of the value in a decade. We're talking "no money to buy food for the next few months". Many people in countries with unstable currencies are particularly vulnerable to this kind of fluctuations because in general they have nothing to absorb the shock, no assets, no savings, etc. Unlike traders these people can't just wait for the rebound, by that time they're bankrupt.
BTC is useful for exactly the scenarios it's almost exclusively used in now: speculative transactions (buy low, sell high), or transactions for less than legal stuff and the overwhelming majority of proponents are in these 2 camps. There's a much smaller group of proponents made up of people who don't understand currencies in general (besides the basics, like spending them), or cryptocurrencies in particular.
I'm sure some form of electronic tender would fill this role you're describing but it's not BTC and probably none of the major cryptocurrencies on the market now.
* (putting aside the network capacity, number of transactions/sec, the cost of producing a BTC and of a transaction, etc. which make it completely unsuitable for the purpose of using the currency instead of just storing and trading it, which is probably the only significant purpose of BTC today)
I don’t think you’re wrong. You might be missing a bigger game though.
BTC is fundamentally deflationary in nature - let’s ignore the price volatility and the like for now, I’ll cover that later.
It has also so far proven incredibly resistant to attack, both inside and outside the community and despite easy billion dollar payouts if an attack would be successful.
There are also efforts making good progress (lightning network among others), addressing structural issues, and large scale semi regulated brokers with good track records (coinbase, kraken).
The price volatility is speculative, and while some is get rich quick (well, a lot), some is also what happens in a deflationary spiral.
If we speculate that Bitcoin will end up being a ‘not able to be broken by a greedy gov’t like all the other currencies’ means of exchange, the current price is cheap. Every large institution will need some to clear central bank type transactions (the part that may be what ends up on the blockchain), and 14 million ish isn’t enough at current prices.
If we speculate that will never happen; the current price is ridiculous and it’s all just a giant Ponzi scheme.
Frankly, neither of these options it is fair to rule out, and the volatility is because of uncertainty and the wide variability in value for Bitcoin between these options.
We’re entering a stage where global attitudes are shifting to one of distrust, especially between countries and citizens and their gov’ts, and some means of exchange that doesn’t require a distrusted entity to play nice has value, even if it isn’t 50k per.
I agree but in the grand scheme of currencies and payment infrastructures they barely got out the door.
I believe today and for the foreseeable future BTC will be adequate almost exclusively for speculative traders and people who need legal deniability. Most people throw around narrow interpretations for why BTC would be good and they're all good explanations if you look just at selected arguments. Take the "BTC is great as a currency in countries with steady high inflation" stance which might hold if you consider only a really narrow set of set of BTC criteria.
I'm not ruling out anything for some future really. As a personal opinion I believe there's room for e-coins (I'll stay away from the "crypto" nomenclature as they may not rely on a blockchain or crypto per se) but BTC in particular has no real room in a CB for more than a fad (also speculative). Think at the central mandate of a CB: price stability and inflation. Controlling these is quintessentially antithetical to BTC as a main currency, or as a currency. BTC as a decentralized currency takes central banking out of the equation. Or conversely central banks take decentralized currencies out of the equation.
So even if you think of it pragmatically, no government or central bank (since they should be as independent from each other as it gets) would allow replacing the country's currency with BTC both for "selfish" reasons - they'd lose control. But maybe even more importantly for national security reasons. No country wants a coin which can be sent spinning just because some CEO (or worse, your enemy) decided to pull a shady maneuver for personal gain.
The kind of control currencies need to be fit for the purpose of a general, national currency for your citizens simply precludes using BTC at that scale. Should BTC ever become as "big" as a real national currency I'm certain it would show many of the same cracks. Except the small players (average Joe) would have nobody to turn to when things go sour. No central authority, no central responsibility. You see this whenever there's a new hack or financial maneuver that parts people from their hard earned cryptomoney how they suddenly lose that blind faith in "the coin that governments can't control" and start asking for regulation. You can only regulate when you have control.
First part of your argument - Isn’t this literally the argument against every new anything?
Second part - I think you’re also misunderstanding? Central banks hold gold and other countries currencies for international clearing, export/import, and national security reasons. A central bank is not holding them for price stability and inflation control. Only a small handful of central banks (the fed) meaningfully target those goals, and if they do it is for their own fiat currency.
If you think a central bank is going to hesitate to hold a useful asset for international exchange purposes if a ‘ceo or worse your enemy’ could send it spinning, you’re not paying attention? China’s central bank holds at least $1 trillion US dollars for instance [https://en.m.wikipedia.org/wiki/Foreign-exchange_reserves_of...], along with Euros and every other currency useful for it’s goals. There is a huge variety of foreign reserves currencies in wide use [https://data.imf.org/?sk=E6A5F467-C14B-4AA8-9F6D-5A09EC4E62A...] covering everything from Chinese renmenbi to Swiss Francs and UKP. All of these change dramatically relative to each other on short notice, all are enemies or economic competitors with some selection of people using them as reserve currencies, and there is no central authority to go crying to if one of them defaults on their debts or inflates their currencies.
And third part - I’m not saying it’s likely any government would replace it’s fiat currency with BTC or any other currency out of it’s control. I’m saying Zimbabwe and many other places don’t really run on their local currency, they run on what people use (currently dollars in most cases, but some places BTC is getting traction) - because their gov’ts destroy the utility of the their local currencies and people can’t trust it.
> First part of your argument - Isn’t this literally the argument against every new anything?
Oh, that wasn't meant to be an argument against something new. As I said repeatedly, it's an argument against BTC as it exists now and as it will be for the foreseeable future. The expectations for a stable "national" currency are incompatible with the pillars of BTC. That was my original point.
The Fed, the ECB, the Central Bank of China all have price stability and inflation as a mandate, of course for their own currency. And this should already hint that they want control over their national currency. Gold and other countries' currencies are explicitly things that are regulated by the respective countries and/or "relatively" stable. I'm not aware of any national currency as volatile as BTC. They're all substantially more more resilient to outside manipulation because they're regulated and traceable. Governments and Central Banks don't want their country or citizens to rely on a currency they don't have any control over especially in places like US, EU, China, Japan. Just think of the UK refusing to give up the GBP to adopt the EUR because it involved losing control of the currency. So while I can imagine a bank (central or commercial) holding BTC one day as an asset, I'm having a really hard time seeing the "unregulated currency BTC" being used as a "national currency" in any place that matters.
> If you think a central bank is going to hesitate to hold a useful asset for international exchange purposes if a ‘ceo or worse your enemy’ could send it spinning, you’re not paying attention?
If you were to ask Mario Draghi or Christine Lagarde they would tell you no CB should hold BTC. I'm not saying I can see the future but I'm trying to understand what you know and they don't.
When China deliberately weakened the yuan to gain an advantage in the trade war with US (to boost exports) it was immediately noticed and attributed and that could be (was?) used as justification for sanctions and tariffs. Bitcoin is decentralized and pseudo-anonymous.
> I’m saying Zimbabwe and many other places don’t really run on their local currency, they run on what people use (currently dollars in most cases, but some places BTC is getting traction) - because their gov’ts destroy the utility of the their local currencies and people can’t trust it.
So they rely on a well regulated currency like the USD. How would BTC improve on this? The USD is stable enough for Zimbabwe to use because it's under central control.
Taking more practical approach for the regular person, at the absolute minimum a currency is supposed to come with consumer protections that are derived from regulation. BTC was specifically designed to curtail regulations. This won't be fixed by faster or more efficient networks. That can't be "fixed" at all because it's one of BTC's tenets: stay unregulated and out of gov't control. So your citizens are not only using an unregulated currency that offers them no protections, they're also extremely vulnerable to outside manipulation.
BTC is an unstable coin, that cannot be regulated to offer consumer protections or complying with anti money laundering laws. In theory this recommends it to speculators and people who are looking to be shielded from the law. The reality just happens to match the theory to a T.
Some e-currency will surely fit the bill one day though but I'm not entirely sure if there's one to be both regulated and unregulated at the same time, to make everyone happy.
I think you're fundamentally misunderstanding my comment, and we're mostly agreeing with each other - apologies if I wasn't clear!
I was quite explicitly referring to speculative future events, and how their odds of happening directly impact current pricing of bitcoin.
USD is reasonably well regulated now and has been historically - by some definition - at least as well as any of its competitor currencies, though none of them are looking particularly great right now by traditional measures.
What are the odds it will remain so for 10 years? 20 years? 50 years? Less than 100%, better than 0%.
As BTC addresses issues over the next 10, 20, 50 years - could it be a viable option for central bank clearing in the way JPY, USD, or gold is now? What are the odds? 100%? 0%?
With the work, attention, and considering the existing progress it's made, will it be a viable option for a trans-national or even national currency over the same time frames? What are the odds? 0%? 100%?
I'm pointing out that 1) none of those options is clearly a 0% or 100% outcome over the time frames we're talking about 2) depending on your individual judgement and how optimistic or pessimistic you are about various parts of these equations, depends on what you think BTC's value currently is.
Even people just hedging their bets against a not impossible outcome can lead to a deflationary spiral, leading to high prices until there is clear data one way or another where things will end up.
Let’s talk larger game - assume the btc-denominated economic zone becomes non-negligible in size. The best defense for neighboring economic zones is good fiscal governance. Because BTC land will be an anarchic mess. It will have multiple germanies and Greece’s and Nigeria’s within it, and Cartel controlled sub zones, etc. who will deal with rising levels of indebtedness in BTC instruments? Who will deal with fraud, cartels seizing companies and households’ reserves, or simply defaulting on debt in this “trust less” Dystopia?
Vastly different levels of productivity between regions of the same economic zones or between zones can result in crazy social friction without trade regulation and controls - how will BTC land manage this friction?
Additionally - the energy and security requirements of btc zone participants will become crushing. Why will market participants continue to labor in this spiraling High energy hell when they can retreat to the much lower energy state of a trustful, managed economic zone? It will be like a breath of fresh air.
This is pretty misleading though, 2008 the USD tanked. GBPUSD and EURUSD were crazy high and currencies like RON, PLN had bigger swings, but if you look 20 years you can't say things have changed that much, esp with all the other changes in the world.
Interestingly we have the opposite problem, our customers mostly pay in USD and many of our employees are paid in EUR, which is pretty high vs USD lately, and that difference costs us quite a lot.
