He is the SEC guy, he won't say that Bitcoin is going to become a currency because I believe he doesn't want it to become but he is wrong here because Bitcoin is an ideal candidate to be widely used as a form of payment. First of all, it's possible to send coins from any part of the world to any part of the world but that's not possible with visa/master cards. When I want to buy something from a shop that's located in the US, I can't buy because my billing and shipping address don't match (I use freight forwarder) but with Bitcoin, this problem is gone, so it's a great option for shops. With the help of Bitcoin, I was able to shop on many websites and their owners earned additional money from me, so it's a great solution for e-commerce.

I believe Bitcoin network will maintain its decentralization and no censorship but there will be many challenges from governments for changes. Its utilities will be nearly the same but Bitcoin users will have to use bitcoin more differently as their adaptations to regulatory changes from governments.

Governments always want tax and no government want to have less money from their citizen tax. Bitcoin will be their main target for tax increase in future and they will do tax changes on Bitcoin first, then expand these tax policies to altcoins.

Bitcoin can be used in many ways by multiple utilities it has, so if it is considered as currency, it is only one of Bitcoin utilities and governments will be able to define things under their governance. If in future, Bitcoin becomes a currency, it won't help Bitcoin users to avoid tax. Like you can use US. dollar, fiat currency for many things, transactions, trades but you will be taxed. Same for Bitcoin in future, if it will be accepted as a currency.

It will be rather used as digital gold, in my opinion. And the reserves for it would be created (or tried to be created) by govs accordingly.

Bitcoin's whole idea is to be a payment method, the one that will be done without the involvement of 3rd parties, peer to peer but at the same time, it's clear that Bitcoin isn't meant for widespread usage, a little increase on chain immediately clogs the mempool and cost per average size transaction goes to the moon.
Gary Gensler is right in this case, Bitcoin is seen as a store of value instead of a currency and there is a very high chance that the tendency will continue this way, especially when bitcoin developers are more conservative towards Bitcoin's protocol.

AFAIK, sometimes global adoption goes very fast (like with smartphones, and in that case, Bitcoin failed as a currency to gain enough adoption), but sometimes it's also very gradual (like with the Internet, and Bitcoin might still be on track). We can't know for sure how it's going or where it's going, but honestly, I think his opinion is reasonable. Don't most people use Bitcoin as investment and are reluctant to spend it? I suppose, if we experience a major fiat crisis over the next couple of decades, that might significantly change perception and usage of cryptos, but if that doesn't happen, I think he might be right. And by a major crisis I mean something like the USD or EUR suffering from hyperinflation to a point of a strong need arising of abandoning them.
As a Philosophy major, I was also intrigued by his mention of Plato and Aristotle. But, to be honest, I am not sure which particular debate he is referring to here, and more context from him would've been nice.

Why do you need Bitcoin to be legal tender? Would you pay for your coffee with Bitcoin? I don't think you want to use Bitcoin like fiat either. So from that we should be able to accept the fact that Bitcoin cannot replace fiat completely, and let Bitcoin remain as it is. It's fortunate that the government still recognizes Bitcoin as a legal asset to trade, there's no need to go too far to make it legal tender, especially for a large country, because when it becomes legal tender its use is much more complex.

Three pages in and not a single person mentioned Gresham's Law ... which is what Uncle Gary referred to ...

Gresham's law actually says that "bad money drives out the good", i.e. in a situation where hard money competes with a "softer" variant, that "hard money" is more likely to be hoarded and leave circulation, while people will be more eager to spend the "softer" money (like fiat).

But I actually disagree with Gary here. Bitcoin, as an electronic form of money, simply can be used as a transactional tool without giving up the "hardness" quality. An easy way to to this is to simply "stock up again" once you spend Bitcoin, i.e. re-buying every BTC you spend, or getting them through other means. There are some scalability challenges but I think they will be solved soon.

Gensler also mentioned networking to be necessary to develop Bitcoin as a currency, which is interesting, and in this point I agree that there are significant challenges to overcome.

I believe the payment networks in Bitcoin are currently underdeveloped: too many people who accept Bitcoin convert it instantly to fiat. This means that if you pay Bitcoin to a merchant, in reality you're paying them to a payment processor. In consequence, the "real" payment network is actually limited to some financial companies (apart from payment processors also e.g. investment banking companies and hedge funds) with margin to hedge against Bitcoin's swings, and to some relatively few "believers" who really use Bitcoin to pay for goods and services.

Of course volatility is the main reason for this, but the Bitcoin community at least can be able to move away from that very gradually, with more Bitcoin pricing emerging. For example, creators of digital goods can already price them in Bitcoin in some cases.

Why not? As long as you can commit to some hashed data every 10 minutes, and get it timestamped properly, then it doesn't matter, how much data you want to timestamp. You don't have to push everything on-chain, to make a transaction, all you need, is to commit to that data. And a single signature can handle easily a single commitment, without increasing on-chain size, without making additional OP_RETURN; all you need, is just tweaking your signature in a deterministic way. Which means, that you can commit to a single 256-bit number, in every signature, in every block, without any additional on-chain data, if you only want to build an SPV-like proof for your data.

Why? If you have a single block every 10 minutes, then it doesn't mean, that miners are sitting idle, and suddenly submit something, after those 10 minutes. They are actively trying to build new block templates, over and over again. And if you explore weak blocks, then you can see, if your transaction is included or not. More than that: by exploring miner shares, you can actually measure, how many Proof of Work was already contributed, and provide an SPV-like proof for that, for any hashed transaction.

So, if the difficulty is set to X, then on average, statistically, every second, the whole network produces Proof of Work, equal to 600 times lower difficulty. And you can find a time, where the global difficulty was 600 times lower than today. Which means, that the same power, that was needed to produce a single block then, is spent to mine your transaction now, for every second. If a single confirmation for some amount was safe then, why it suddenly became unsafe now?

For many payments, you don't have to wait for a single confirmation. A rule of a thumb is to measure the "coinbase coverage". If the coinbase reward is 4 BTC (3.125 BTC plus 0.875 BTC fees), then if your transaction sends 1 BTC, you probably need 0.25 confirmation. If you can get a weak block with 0.25 of the current difficulty, then you are probably good to go.

Also, if you want to limit potential replacements, then you can explicitly apply OP_SIZE on a signature, and then it will be guaranteed by the Script, that any replacement will require a given amount of Proof of Work. Which means, that if you can measure other party's hashpower, then you can require putting a given amount of Proof of Work, to actually make a valid second version of the transaction in the first place. Then, you can safely accept for example 0.25 confirmation, because it will reach a single confirmation, before a second party will produce a second transaction version, and broadcast it successfully (also, you can use locktime to control ownership over time).

Because you want to measure, how many goods and services you can buy with coins, that you are currently holding. If you have more BTC than USD, then it makes sense to measure things in BTC. People in other countries, where USD is not the national currency, are measuring everything in EUR, GBP, CHF, and other units. The reason is simple: they have more locally used coins, than USD. And the same is true here: if you have more BTC than USD, then why measure things in USD?

Also, sending round amounts can make it easier to hide in the crowd. Because it is more natural, that more people would send 0.01 BTC than 0.01001234 BTCs. Using round amounts in USD, converted into satoshis, is tricky. It is easier to find two users, one having GBP, and one having USD, and both picking 0.01 BTC, than trying to guess the right amount, which will be round enough for all users, using non-BTC as a measurement unit.

Of course, nobody measure things in meters and kilograms, and everyone is using Fahrenheits. Obviously.

In practice, you have at least two systems, if not more. And if you have some legacy software, then it is hard to change some protocols, when you agree upfront on interfaces. For example: I was working with code, where interfaces sent things in Celsius. To introduce Fahrenheits, we need to convert units back and forth, because old devices accepted messages in old units, and you simply couldn't send them a message with "100F", because they would interpret it as "100*C". And nobody wanted to refactor 90% of existing and working code.

So, in BTC, under the hood, we have just satoshis. We can write software, which will display USD. We can use some tricks, to get millisatoshis. But the protocol is already established, and if you want to send 250 msats, then you need to do some tricks, like "4-of-4 multisig on a single satoshi", to express the fact, that there are four users, owning 250 msats each.

With approximately $40 billion in hardware, Bitcoin handles about 500,000 transactions per day. Worldwide, there are about two billion transactions per day. This means we would need 4000 times more capacity for Bitcoin--and based on the architecture, the scaling would absolutely not be linear. In other words, it's.. impossible.


LOL. Off-chain = NOT Bitcoin. Yes, as I said above, there are L2 networks, apps, brokers, and other digital currencies that "eventually" back up to Bitcoin, but that is... not Bitcoin.


Put it this way: Bitcoin has been around for over 15 years now, and it's... slower and more expensive than it's ever been. There is no "fix" to this. Bitcoin is Bitcoin and it was never meant to scale and it... doesn't.


Those people will want to measure in EUR, GBP, CHF and so on, not this measurement that basically nobody knows.

Put it this way, do you want to measure your city's weather forecast in... Kelvin? Why not? Because you don't know what that means. You measure it in Celsius for Fahrenheit because that's what you are used to.

Regardless of the adoption of Bitcoin, the old way of measuring will stay the same basically forever because there's no reason to change anything.


That's exactly my point: software will entrench the use of USD/EUR/GBP/etc. forever and ever because it will automatically give people the measurement they know and they will never have a reason to learn anything else. So we'll use USD as a measurement metric forever--and what you use an investment will be different, and what you use to transact will be different.

Bitcoin is now and will remain a means of speculative investment. It will not "replace" USD for any other purpose because it is not practical to do so. This is not a government conspiracy, it's just plain old consumer demand.