Bitcoin is not a “payment system for the masses”
As for the long transaction delay and poor scalability, I long considered bit gold as a design for “high-powered money” that like gold could be used as an investment vehicle, a medium for large transactions, and a reserve currency against which digital notes could be issued. It would be however be far more securely auditable than remote gold vaults.
If you’re right on this critique Bitcoin may be destined to become a high-powered money rather than a day-to-day payment system for the masses.
Nick Szabo, Bitcoin, what took ye so long?
I’ve been on a heavy bitcoin kick recently. Bitcoin is still a pretty contrarian investment, even in tech circles. On top of that, Nick Szabo’s opinion above is contrarian within the Bitcoin world, so it’s doubly contrarian. (Nick Szabo is an academic with some excellent essays on cryptography and how human history has been shaped by various technologies, especially security technologies).
The majority of the Bitcoin community hold that the technology should become, needs to become and will become the “payment system for the masses”, helping the unbanked in Africa and helping developed world consumers save on their credit card fees, that sort of thing. On the other hand, a very small but extremely intelligent minority hold that the characteristics of Bitcoin make it unsuitable for such uses — and that its real utility is as a secure store of value that can’t be inflated away. In the long run, Bitcoin is even harder than gold. (The gold supply grows by about 1.5% a year — there’s a lot of gold still to be mined in the world — whereas after 2024 the supply of Bitcoin will be growing by less than 1% a year, with the growth rate halving every 4 years after that. After 2028 the growth rate will be less than 0.5%, and so on). The more people decide that Bitcoin is the safest place to store their wealth, the better investment Bitcoin becomes (and vice versa) — so that Bitcoin either reaches an equilibrium price of $0.00 or it takes over the world. There’s a lot of game theory, geopolitics, cryptography and systems security required to form a more detailed analysis of how this will all play out — but just the basic trend is extremely interesting.