The evidence that should change your mind shouldn’t be proof that crypto isn’t speculative. All currency is speculative. The best evidence should be a more nuanced comparison of cryptocurrency against a conventional currency.
All currencies are subject to speculation in the way that you’re talking about. When people feel like the dollar is not doing well, they’re less likely to spend. When people feel more optimistic about the economy, they do spend. These are similar pressures to what you’re talking about, but when you’re operating at the size of a nation state, and you have the backing of your whole economy and a bunch of cash reserves, it’s an order of magnitude less likely, but still possible, that your currency goes belly up. When a country’s currency does go belly up, then everybody who has cash in that country’s currency gets caught holding the bag in the way that you’re talking about.
I think there’s a significant network effect happening on the side of conventional currencies. Specifically, since so many people use it, there is extra utility, and less speculation. To make a fair comparison, you need to be talking about a cryptocurrency that has reached the same scale as a state-backed currency.
It seems to me that a fair comparison is instead “if you scale cryptocurrency up to the same network size as conventional currencies, does it deliver better utility?”
There are a few reasons to think that this might be true.
It’s harder to steal money, because you have to convince the whole network (instead of just one bank)
You don’t have to put your trust in a bank.
Transactions are more private
Transactions are more convenient
All of this is to say that when you scale up cryptocurrency, it might actually win a head-to-head match up against the dollar.
Despite this, I think there are a few factors slowing down the uptake of cryptocurrency:
A negative reputation on the part of cryptocurrencies (the term is practically synonymous with scammers these days)
Pressure from the competition
Requiring technical knowledge to understand in a way that conventional currencies don’t. This hinders the uptake in confidence that you need for the average person to actually trust the currency.
I think this leaves two questions which for me replace your first point of evidence:
Is there a likely path from where we are today to such a scaled-up cryptocurrency?
Even if there is only a small chance that you are successful, are the benefits so good comparative to a conventional currency that they are worth spending your time and resources on achieving those benefits?
The evidence that should change your mind shouldn’t be proof that crypto isn’t speculative. All currency is speculative. The best evidence should be a more nuanced comparison of cryptocurrency against a conventional currency.
All currencies are subject to speculation in the way that you’re talking about. When people feel like the dollar is not doing well, they’re less likely to spend. When people feel more optimistic about the economy, they do spend. These are similar pressures to what you’re talking about, but when you’re operating at the size of a nation state, and you have the backing of your whole economy and a bunch of cash reserves, it’s an order of magnitude less likely, but still possible, that your currency goes belly up. When a country’s currency does go belly up, then everybody who has cash in that country’s currency gets caught holding the bag in the way that you’re talking about.
I think there’s a significant network effect happening on the side of conventional currencies. Specifically, since so many people use it, there is extra utility, and less speculation. To make a fair comparison, you need to be talking about a cryptocurrency that has reached the same scale as a state-backed currency.
It seems to me that a fair comparison is instead “if you scale cryptocurrency up to the same network size as conventional currencies, does it deliver better utility?”
There are a few reasons to think that this might be true.
All of this is to say that when you scale up cryptocurrency, it might actually win a head-to-head match up against the dollar.
Despite this, I think there are a few factors slowing down the uptake of cryptocurrency:
I think this leaves two questions which for me replace your first point of evidence: