Hanshan
· 21h
Would somebody please remind me of the mechanism that makes Bitcoin eat all other assets to the point central banks voluntarily give up the ability to print money?
How was that supposed to work agai...
Credit bubbles go until they can't anymore. Bitcoin isn't here to kill fiat. It's to be an Ark so that when fiat implodes under its own fragility, there is a monetary asset with sound money principles and means of exchange that are permissionless and verifiable over long distances in a very short amount of time.
Arguably the more people opt out of fiat, the sooner its fragility gets to it, as the whole issue is that it is backed by an indefinitely large web of rehypothecated real collateral.
Calling it fiat is something of a confusing point I suppose, because it's really just credit -- ledger money, and not technically the same thing as true fiat which only draws value by mandate (and is actually even worse). The taxation mandate plays a role, as do reserve type requirements, but it is still more a promise that in the future these notes will be accepted for real shit.
Even in antiquity when ledger money was in broad use, largely before gold had been monetized and other commodity money had other drawbacks (such as spoilage or supply issues), debt jubilees would be the pressure relief when these systems would become unsustainable. The issue with a debt jubilee though is that you are at the end of the day robbing the ones who are saving their own resources and financing economic activity (with more or less corruption and exploitation of course) and they're keen on avoiding being the bag holder. Sound money provides a solution that requires no one to hold the bag, and the jubilee to not be required. If you have a hybrid system, you end up somewhere in between which realistically is more likely. But prohibitions on riba/usury have at times had us closer to sound money than others.
But yes, it sounds like you're calling out the cartoonish oversimplification (one of many I hear often). Monetary literacy is quite low. Even in Bitcoin where it's better than average I'd still deem it sophomoric.