Bitcoin is a better money…technically

If Bitcoin maximalists are to believed, Bitcoin is obviously a better money and anyone not yet using it is behind on the times. And yet a lot of smart folks don't agree.

I think this is because Bitcoin is better from a technical perspective at being money than fiat currencies.

Anyone who has google will be able to tell you that money fulfills three needs: a store of value, a medium of exchange, and a unit of account.

Rare metals like silver and gold were the best money technology for a long time, and so most currencies were backed by them. But technology has advanced, and the world's needs changed.

The world demanded a money that was easier to transfer than gold. The world's governments also demanded a way to not be bound by the constraints gold put on their ability to print and spend money. And so we ended up with fiat currencies that aren't backed by any tangible asset.

But fiat currencies have their issues: They're too easy to print and devalue. They can be used by powerful countries to dominate weaker ones (bitcoin is anti-colonial). It's trivially easy for authoritarian governments to censor people that challenge the status quo.

People intuitively understand the value of hard money but there's not been a hard money that can keep up with the pace of the modern economy.

Enter Bitcoin

Bitcoin is a better technical solution for money

Bitcoin has a high stock to flow ratio. Bitcoin is easily divisible. Bitcoin can be transferred securely, quickly, and for relatively low fees (especially in the amounts governments operate in).

Bitcoin can be the foundation for an alternative set of institutions to the US-dollar-backed institutions (banks, loans, payment networks, etc).

Why hasn't Bitcoin killed fiat?

It’s probably because Bitcoin is only accepted by some grocers, and a few landlords, and it’s barely beyond theoretical to buy a house or car with Bitcoin.

Bitcoin has also been historically terrible at price stability, which is the zeroith priority when people are evaluating something as money.

People outside the crypto space that "don't get bitcoin" (like 95% of humans) aren't being luddites. Bitcoin just isn't always a better money for their use cases, yet.

At best people have to maintain two financial lives: one in fiat and one in Bitcoin. That's untenable for all but the most motivated. We need to unify people's financial lives for Bitcoin to truly be better.

What needs to be built to unify people's financial lives

1) Being able to truly bank in Bitcoin.

This doesn't just mean direct deposit dollars as Bitcoin into a pseudo checking account (Coinbase, Strike, etc). That's not enough

Some companies even allow you to ACH dollars out from an account that's full of Ether or Bitcoin. Some companies attempt to solve the problem by offering stablecoin loans that are collateralized by a crypto asset. It's still not enough.

We need something that's non-custodial that allows folks to save in Bitcoin and spend in fiat. That way people have a bridge between the current fiat system and the Bitcoin future.

This could be done with the upcoming developments like Taro which will open the possibility of stablecoins on Lightning. In that world a Lightning enabled bank account/wallet could purchase and send stablecoins that correspond to the value of Bitcoin at the time of the transaction.

We're just not there yet.

3) Better terms if Bitcoin is collateral

In a world where people can use stablecoins on the Lightning network, it's possible we would have a payment network that allows us pay our grocery store, or restaurant, or rent with Bitcoin but it arrives in a fiat currency to the receiver.

In that world, we'll have lower transfer fees which means the merchants, sellers, and landlords keep more of the money. In that world, merchants will be begging people to pay using that payment network. They'll probably offer lower prices, or discounts like gas stations do (cash vs card price).

If Bitcoin becomes a better store of value than the local currency, it's possible that bankers will offer better terms to borrowers if they have Bitcoin as collateral.

Looking down on non-adopters

For those folks looking down on people for not “getting it” and being able to go all in on #Bitcoin  (yet)

We just haven't built enough to have earned the right to be smug. People that see the Bitcoin future and are building towards it have an opportunity to benefit from seeing the future before others, but that's no reason to condescend.

The hardest money will eventually win, and Bitcoin is the hardest money around.

As for me, I’ll still be squirrelling away #Bitcoin  and testing and supporting projects because I wholeheartedly believe it is a technology with the best chance of drastically improving the lives of every human alive