Reserve currencies have been used as a tool for Big Boy Banks(TM) and nation states to influence geopolitics, horded for use in trade (and investment), and as safety net to hedge against bad times in the internal economy. The US dollar is currently holding the position as the most used global reserve currency, backed by the American Empires military power. US Army, Navy and Air force makes sure that the dollar is used, is worth something, and to eliminate any threat to it. The dollar represent control.
When Bitcoin was born, it allowed all of us to “Be our own bank”, as the slogan goes. Not a Big Boy Bank(TM) with military power but one backed up by computer power. Bitcoins network security comes from that computer power and this infrastructure of Bitcoin is so much bigger than all other cryptocurrencies its not even funny. The energy usage alone is impressive. This is why a Bitcoin costs so much (and will cost even more in the future) – The cryptocurrency is only going to add to its computing power the more people understand the value of the network, snowballing the value exponentially.
That is the key aspect of why Bitcoin is going to be the new global cryptocurrency and the dollar and other state-backed cryptocurrencies will be left in the dust. People need a stable currency that they trust won’t be inflated like a balloon every year, which is the current praxis of all nations governments because of the Keynesian Alchemy: The state and its underlings gets temporarily, and in the short term, more powerful with the issuing of new money they can spend on stupid vote-buying programs. The saver gets crushed unless its in bitcoin. If you are saving money here in Norway, your purchasing power gets squished by about 3% every year – That’s a lot of money over a 5-10 year period.
Even if Satoshi Nakamoto’s vision was for Bitcoin to be used as everyday cash, the protocol and how people are using Bitcoin in practice is completely different from that vision: It is more used as a tool for investment and saving. Its used as a collateral in other digital projects as security. It is essentially used as a decentralized Reserve Currency. I think it would be a mistake to do anything drastic with that as things are. People are showing how Bitcoin is used the best. Compare the current market price of Bitcoin to anything else, not only other crypto, and you see with your own eyes what the market say Bitcoin is.
Even if Nakamoto is the artist, the audience will interpret the art as they see fit.Bitcoin doesn’t need to have a high amount of transactions or have fast payments, it just needs to be the most secure cryptocurrency.
Somewhere here are where me and Maximalists depart though: I think, with this as the backdrop, this is where secondary cryptos makes sense. Specialized and localized solutions is the antithesis of the Maxmalist “There Will be Only One Currency” idea, but I can only see payments being solved in that fashion, with Bitcoin as the backbone.
If Bitcoin hits $1million, would you break off a Satoshi to buy a cup of coffee, or would you rather make larger transactions and purchases with your Bitcoin and use lower tier currencies for your everyday dealings? We are so used to purchase everything with the same money that we can’t envision doing it any other way. Bitcoin doesn’t really need to be used for coffee, it just needs to be the most secure form of savings and that is where the energy should flow in my opinion.
Thank you for reading. Feeling generous? Feel free to tip me some coffee money!