This is so interesting to me. Thanks for posting. My argument is not so much for the gains in crypto, but to protect the downside against devaluing fiat currencies. If you pull up a chart of USD/BTC instead of BTC/USD, you see that USD (and all government backed currencies) are rapidly losing value. I'd also argue that BTC is more of a safe haven (which I realize means I should not horde it like an investment, or even all it an investment). Lastly, I believe that BTC is part of the blockchain movement to decentralize everything, and to separate money from the state. Telecaster, I'd really like to hear your views on my points above.
It is easy to philosophize about money, because it exists in our minds and no where else. We all somehow agree a dollar is worth something, and therefore it is worth something. And there has been a lot nuttier stuff than dollars or bitcoins used for money over the years. Rai stones for example:
https://en.wikipedia.org/wiki/Rai_stonesIncluding a rai stone that is on the bottom of the ocean but still still continued to trade like a normal rai stone. Or, for example, in the 1600s in Britain, tradespeople would issue their own currencies. An innkeeper might issue leather tokens good for beer in exchange for some potatoes (or whatever). The farmer would then use the tokens to buy a barrel from the cooper, and the tokens would continue circulate just like regular money. It was all fiat money created by the innkeeper.
So I don't see any philosophical reason why Bitcoin or any other cryptocurrency couldn't be widely adopted, it is all made up anyway, right? But there are some practical reasons why that's unlikely to happen. One is that part of the usual definition of money is that it is a store of value. The blacksmith can figure out how many beers a horseshoe is worth, and it will probably be worth the same number of beers next year too, so he's willing to take a certain number of leather beer tokens from the cooper to shoe a horse.
How much is a bitcoin worth? I have no idea, and neither does anyone else. How much is a dollar worth? I have a pretty good idea of the value. It isn't backed by beer, but everyone else has the same idea of the value, so I'm confident a dollar this year, will have pretty much the same value next year. Bitcoin, not so much.
Next, central banks have a vested interest in keeping their currencies stable. Sometimes, they don't, like in Zimbabwe or Venezuela. But there is nothing to keep the price of Bitcoin stable. And if a currency isn't stable, you can't enter into contracts with it. For example, contracts like car loans or home mortgages, or building nuclear power plants. You can't price future costs in bitcoin. Because the entire world economy is based on credit, and always has been (see the example of the lnn keeper's leather token), and you don't know what a bitcoin is worth in the future, you can't have credit priced in bitcoin. You can
pay in bitcoin, but the price has to be in dollars or some other currency that is stable.
Next, the US government, and almost every government, requires taxes and wages be paid in legal currency. Because taxes and wages are the biggest, or at least among the biggest, expenses of almost every business, businesses need dollars, not bitcoin. For that reason alone, I just don't ever seen widespread adoption of any crypto.