What is SUPPOSED to happen according to economic theory is that as quantity of money creation decreases (halvings), velocity of money (transactions) is supposed to go up to compensate, maintaining the balance of MV=PQ. This clearly cannot happen if scaling is slower than halvings.
Sidechains, lighting network, etc are no substitute because they effectively trade Bitcon IOUs and not actual bitcoin. You get the same problem that the fiat world has: a fractional reserve money multiplier than can either run positive or negative and screw up the balance.
Somebody please tell me the error of my thinking, or a slow liquidation becomes a serious consideration.
Apart from some other concerns you raise, which I think have merit, I would like to respond to 2 things where I believe you to be wrong:Sidechains, lighting network, etc are no substitute because they effectively trade Bitcon IOUs and not actual bitcoin. You get the same problem that the fiat world has: a fractional reserve money multiplier than can either run positive or negative and screw up the balance.
Somebody please tell me the error of my thinking, or a slow liquidation becomes a serious consideration.
1) I don't know where you get the assumption that the halvings are supposed to have an effect on velocity of money.
2) I think bitcoins paid through LN are economically the same as on-chain transactions. Yes you could describe it as some kind of IOU, but it is mathematically/informatically based on the same bitcoins, these bitcoins are "anchored", so you should treat these like regular bitcoins. It's not the same thing as a paper IOU (or a digital one) where the only "link" is the trust you have in the issuer of the IOU.
EDIT: actually, maybe LN might have some effect on money velocity in the future, by allowing (especially by machines) much more and faster transactions.
