Great post, enjoyed reading it.

You will mostly use your local currency, but you will also have an app or card or payment method that instantly converts your local currency into bitcoin, settles your transaction using the bitcoin network, and converts that bitcoin back into your local currency. Depending on how the app or service is delivered, you may not even notice you're using bitcoin.

I think something similar to this, but more like the opposite version. I think it's possible governments/banks will (eventually) back their currency by a set amount of btc.

So you'll trade the currency notes, and they represent btc, but each transaction doesn't need to run through the network, and old people don't need to learn anything new or know the difference.

(And the smart money should probably be skeptical that the government will actually honor redemption, lol. And then eventually the local currencies stop being used.)

Because nobody controls bitcoin, its price is not stable. People prefer using money that has a relatively stable price. This is psychologically soothing and also practical---how could you ever plan anything if you didn't know how much your money will be worth in the future? Modern central banks exist to keep government currencies from going up or down too much at any time. No such mechanism exists for bitcoin.

"exist to keep currencies from going up or down too much" is the story line, but are you sure it's true?

If the value of the currency is trying to rise, they can issue more units and keep the price steady. But the other way around is hard.

In the US and Europe it's been stable most of our lives, but a lot of people in other parts of the world and throughout history have experienced really bad instability with bank notes.

It's basically like they have a 1-way mechanism. They depend on the currency wanting to rise. For the US, being the global reserve and regarded as the safe haven helps pump demand into it, especially when other countries have problems.

So they're able to extract value (for themselves, wars, whatever interest groups lobby the govt etc), and their justification is it stabilizes the currency.

If this perception ever changed and the price tended towards wanting to go the other way, I don't know what wizard shit the banks would be able to do to stabilize it.

It helps too that money naturally wants to rise, as technology improves and it's easier/cheaper to make things.

So to me central bankers are kind of like "hey if you have a mature economy, we'll be able to leech a little and you won't feel it too bad". But if things were going south they wouldn't be able to do anything besides exacerbate it.

Bitcoin is very different from gold or other assets we've known, in the sense that it isn't impacted by changes in the weather or demand for jewelry or guessing how much supply is in the ground etc.

There will be no inherent reason for it to fluctuate too wildly. It might be shockingly steady.

When Bitcoin is mature and markets have had generations to weigh and consider it, I feel like smart money speculators will essentially do the job that people think central bankers are doing right now. They'll anticipate changes and build it in smoothly.

Because many people consider bitcoin valuable, they tend to hoard it. What good is money if nobody spends it? Isn't that the whole point of money?

There would come a point where this isn't true anymore though. Right now people behave this way.

But really it's only the niche strongest hands who behave this way. The average person would have smashed the sell button 8 years ago.

Whenever Bitcoin is commonly adopted, there comes a point where it stops making sense to expect it to go up a lot. You'll want to keep some as a default, similar to holding USD today, but other things you can invest in will start to beat it.

I guess in general you see Bitcoin as a payment processor rather than money itself.

It's an interesting take, and I know my comment is a big long disagreement. But where I disagree just seems like the most interesting way to reply. Really enjoyed reading your take on it.

I actually think it's shoddy as a payment processor. There's an inherent cost and friction that you can avoid by using a centralized processor.

And centralized processors seem fine, like we don't worry that your bank will screw the grocery store and not settle up payments with them.

What's important, imo, is the underlying currency. That no one has special privileges and the ability to tinker with the currency, and the dilemma of the people in charge having access to so much value.

Long-term it seems so impossible to have confidence in a system that a few people control like that.