...
Yes Bitcoin provides a superior SoV function, but it has a superior Payment-Function to fiat and that is what will slowly win over individuals. Essentially Bitcoin provides all the benefits of fiat ledger money with the benefits of direct control/interaction (no middlemen), this combined with personal computing creates a vastly superior Payment-Function, which is what will drive adoption.
...
Bitcoin has a superior payment function *right now*. In theory, there's nothing preventing a cheap, global, fiat payment system except rent-seeking and politics. Granted those are strong forces, but in the face of enough competitive pressure from Bitcoin, the legacy system will be spurred to improve. That may already be happening as a direct result of Bitcoin, if you read between the lines of the Fed's recent payment-system-improvement paper.
So I think we need to expect that the legacy payment system is going to get a lot better quickly. Bitcoin will still have many broader payment-sys advantages (eg, no international friction, immunity to capital controls, etc), but the day-to-day "save 3% on CCs", or "don't wait 3 days for an EFT" arguments are going to be moot at some point in the not too distant future. Best to be conscious of that now in order to focus efforts where BTC has the longrun advantage.
Good points, fully agree.
The challenge for the FED though is even if they fully see Bitcoin for the threat it is and take an "all hands on deck" approach to completely revamp the current dollar system to better compete with Bitcoin, what will hinder them are the mountains of regulations they and their banking partners have created (ironically to entrench their position).
Sure the FED could create a Bitcoin style direct access for the dollar, but will anybody be able to directly access it? Or will the next changetip be required to go through mountains of regulatory approval requiring millions in startup funding that does not go directly to product development?
The other challenge for the FED is cross boarder transactions, which are critical in our multi-national world today. The FED can only create a US centric dollar, while Bitcoin is global. Humanity wants a single unit of money. The FED can only address this by assuming the dollar is the global unit of account, which it is today but many countries want off.
What Bitcoin has going for it is that it is censorship resistant and governments know they cannot control it. If it was in any possible to control Bitcoin the US government would have already shut it down the same as other attempts such as the Liberty Dollar.
Your point though is Bitcoin will start to see real competition, which is a good thing. That competition is why I think Bitcoin needs the ability to improve functionality over time
through market based approaches (not centralized developers). This is why I think some form of SCs could be useful (if properly/carefully implemented, not Blockstream's approach), a good version of SCs could enable Bitcoin to extend it's functionality in a market based fashion, and compete with an aggressive FED. I've come around somewhat to Adrian's and cypherdoc's view though that the current Blockstream approach is at best not fully understood and more likely a threat to bitcoin.
