What happens if Bitcoin market cap reaches a globally significant level? In the following I'll try to sketch why it will be in the interest of the bitcoin community to hard fork to a different supply scheme and sacrifice bitcoin's original philosophy.
Assumptions for such a fictive day in the future:
- Bitcoin becomes widely adopted for legal commerce and its market cap reaches an economically significant level.
- the bitcoin community has become ideology-free due to mass-adoption
- bitcoin holders and miners act rationally and purely out of self-interest
Consequences:
Central banks will loose power due to the unregulated cryptocurrency and they will not like that (And I don't want to discuss if they are right or wrong here.)
Governments will not like the fact that their central banks can't control money supply anymore and will therefore regulate the use of cryptocurrencies. Most probably they will forbid all companies to accept bitcoin.
(And do not think that such a ban would only be imposed by "evil governments". Such a decision could very well be made with democratic legitimacy.)
In the best case they will allow the use of cryptocurrencies under the condition that a central bank controls their money supply.
edit: This assumption is not plausible. Gov. has no reason to leave mining decentralizedSo the bitcoin community will face a choice:
- Stick to the fixed supply model and get banned from legal commerce. This would destroy BTC value and bitcoiners would lose a lot of money (or more precisely: wealth) within short time.
- Accept regulation of money supply by a central bank and hard fork to a centralized money supply algorithm. This would prevent a price crash for BTC as the currency could survive as a legal means of payment
As I assume rational behaviour of at least 51% of the miners, the choice is obvious. The loss is smaller in the second case. The 21M money supply cap will fall.
