Why not gold? Central Banks already have it. I think crypto-currencies will also shine in this scenario, but don’t see governments reaching for leaderless tech less than a decade old to balance their books.
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Many central bankers your age? They won’t use anything they don’t control. First attempt: SDRs from IMF, if that fails then gold backing. But agree younger people would flee to crypto and it would be explosive. Maybe few generations supplanting gold as money of last resort.
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SDR is just 5 fiats. If fiat devalues so does SDR. If tens/hundreds of millions use cryptocurrency it becomes on its way to be global reserve. Power is Money that others desire, accept and hoard. Central Banks will similarly want the currency that others are using.
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To be honest I think Central Banks will die. I think the future are Private Central Banks issuing stablecoins on the blockchain and competing against one another globally.
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Or simply Bitcoin itself.
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What you are proposing is a migration to full-reserve banking. This is not something original, both Fisher and
@JHS_Oficial already advocated this solution. You don't even need bitcoin or an implicit debt default to implement it. https://en.wikipedia.org/wiki/Full-reserve_banking …https://www.youtube.com/watch?v=0d52UMkxDLI … -
Either Bitcoin wins via hyperbitcoinization OR the world will be Private Central Banks issuing stablecoins on the blockchain and competing against one another à la Free Banking. In any case Fractional Reserve is still possible, but much harder than under state monopoly on money
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Bitcoin is deflationary and doesn't need a monetary substitute like gold backed notes issued by banks/govs, so adopting bitcoin means renouncing to credit expansion. Stablecoins are overrated. Volatility is only a problem if Sharpe ratio is <1 for your savings target period.
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How big would Bitcoin have to be in 2018$ terms to be usable as MoE? There are disicinventives to spend pre-hyperbitcoinization
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Deflation is not such a huge obstacle. People is spending bitcoin everyday, even when it was really inconvenient before LN, mostly for high value use cases like trading. I don't think size is very useful to calculate post-hyperbitcoinization target price.https://twitter.com/fnietom/status/986951378861002752 …
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You must realize many people are still not convinced of bitcoin hypermonetization. Otherwise everybody would move all their savings from fiat to bitcoin. There is a wide range of believers, willing to buy lambos as soon as their investment multiplies 10x the first time, the 2nd..
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What do you think are the biggest reasons people aren't 100% confident that hyperbitcoinization is a certainty?
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I'd say they are mostly political. People tend to think if most of them don't agree with a certain scenario, it won't happen. Democratic bias.
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The US govt debt isn’t that big of a problem as its denominated in USD. The problem lies within the debt of other sovereigns
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All fiat is hurt by the existence of Bitcoin equally
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Thats true as the demand for currency isn’t increasing much amd there is significant gain in marketshare by crypto
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If you have a currency whose supply is expanding 6% per year (USD) and one whose supply is fixed, the world will move towards the latter. This remonetization is happening right now.
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Would be really interesting to see deflationary economics, I’ve been thinking about it lately, I’ll share it with you
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not sure of a jubilee for govts -- during the time they embrace bitcoin, their fiat will devalue
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Yes and their $22T debt will be cancelled because it is underwritten in USD. Get it?
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