Now with fees back to normal, time will tell if bitcoin will gain adoption as a currency or if it's too late.
The systems which are being built on top of bitcoin will enable the use of the currency in practical payment systems: instant transactions, very low fees, and automation - some of which on a scale which was never previously possible because of the high cost of payments in existing payment systems. Systems like the Lightning Network will enable the creation of brand new economies which were simply not possible to do before bitcoin.
In terms of deflation, bitcoin is also more similar to gold - it cannot simply be created out of thin air, and must consume energy to extract from the earth. The deflationary nature of bitcoin, and gold before it, make it an excellent store of value, even if it is not the most practical solution for national economies which, according to Keynesians, require stimulation through inflation.
The money people are using for their payment systems does not necessarily need to be backed 1-1 by real bitcoin. We can already see some services like conbase are taking custody of people's money, offering debit cards to consumers and Point-of-Sale services to merchants. These will enable the everyday use of bitcoin without any strain on the bitcoin network, and without it necessarily being backed 100% by actual bitcoin. These may benefit their users by providing convenience, but can only work for as long as the providers are sufficiently responsible as to not become insolvent.
There are plenty of people who will refuse to use such "fiat bitcoin" services, and will only ever use bitcoin proper. This makes it kind of difficult for conbase and the like, whose fiat bitcoin will end up trading at a lower rate than bitcoin proper - and who will probably try to counter this damage by preventing withdrawal of bitcoin proper from their digital coffers, making their fiat bitcoin only spendable to merchants who will accept fiat bitcoins. They are essentially, trying to recreate the existing banking system on Bitcoin.
There's a big difference between the banking system and bitcoin though, and that is permission. Nobody needs permission to use bitcoin proper, and given the choice of fiat bitcoin or bitcoin proper, those with sense will choose the latter. It doesn't matter that bitcoin is deflationary, because people will always act in their own best interest and acquire the most saleable currency, which will continue to be bitcoin proper.
The opponents of deflation think that somebody ought to dictate the supply of currency, or that individuals should act against their own self-interest for the good of the many, but this is just a complete ignoring of the reality of human nature. People will always act in their own interest, and deflation is beneficial to ones own interest if they are intent on saving money.
Unlike historical events where governments have threatened to send in their henchmen if people don't surrender their gold, bitcoin can not so easily be seized. Bitcoin does not care if you think that deflation is bad, or whether you think "expert economists" ought to decide how much inflation there should be. They are absolutely powerless against the force of Bitcoin. Everybody is. Nobody can control it, but everybody controls it through their own selfish interests.
If this happens to lead to people accumulating and spending less, and this leads to economic depression, then that's what will happen! It might make you uncomfortable to think that you are no longer in control, but you're going to have to get over it. The die has been cast. If economic depressions end up occurring as a result deflation in bitcoin, we'll just have to find new ways of dealing with it, because Keynsian's forever money printing method has run its course.
When I was talking about «really narrow ideological view of money», here we are.
Edit: I'm especially referring to the narative against keynesianism, when it even goes against the neoclassical/monetarist view of money.
The Keynesian view of economics requires that there is centralized control of monetary policy.
In an economy where there exist no overlords who can dictate what people can do with their own money, then people are free to act purely in their own self interest, and they will.
It doesn't matter what 1000s of "educated" economics professors think any more. They're irrelevant and they've dug their own ditch.
Go find a recent economics graduate and ask them what they know about Austrian economics. Good luck!
(There are graduates who had never even heard the term "Austrian economics" until after they graduated. What does this tell you about narrow ideological viewpoints?)
Oh, good to see you live in a parallel world …
I have an engineering degree (graduated in 2013) and during our economic class, the Austrian were the subject of a full lecture. If you think there's a conspiracy to erase them from economic history, I don't really know what to say…
A WHOLE lecture? Wow. I bet you covered all the works of Mises in that time. Thanks for reinforcing my point.
I'm not suggesting that anybody is trying to erase Austrian economics, only that the industrial mills which turn out economics graduates deliberately chose to give it little to no attention as though to shrug it off as "this is what some people used to think, but we don't think this way anymore."
Of course they don't think that way. Keynes gave them the gift that keeps giving. Wouldn't want to throw that away.
You can make a good career following the system, and going over that way will make you an outcast. Wouldn't want to be an outcast, would you?
The earlier point is that Keynesian economics does not apply to Bitcoin, and cannot apply to bitcoin, because nobody holds the keys to tweak the monetary policy.
You are welcome to think that it won't succeed based on this. Be my guest.
Bitpay (one of the largest Bitcoin payment processors in the world) processed a record $1 billion in transactions in 2018. This impressive increase of people using Bitcoin to buy real-world products and services shows Bitcoin is doing very well as "money": https://www.businesswire.com/news/home/20190116005701/en/Bit...
> In the past year, the BitPay wallet added integrations with major gift card brands, enabling users to buy gift cards in-app for travel, food, and shopping with Bitcoin and Bitcoin Cash.
They don't break out what types of goods/services are being purchased. I wonder to what percentage of their transaction are being used to sell / launder bitcoins associated with illegal activity by buying gift cards that can then be resold.
Also, $1 billion sounds huge, but for a payment medium it's still really low: worldwide, last year that's also the order of magnitude of the transactions made in Vanuatu vatu. As a comparison, PayPal recorded more than 500 billions dollars in transactions last year.
That’s the crux of store of value. The bitcoin data structure has inherent non zero value just based on the audacious amount of electricity to build it.
Bitcoin has no inherent value. None. Zilch. Nada. We assign it value completely arbitrarily, hence it going from pennies per bitcoin, to $20k, to $4k.
So turns out there are some people who want to save money without it being involuntarily taxed (through forced inflation), and that itself is valuable. Bitcoin has inherent value, and unlike the fiat money it is competing with, that value cannot be arbitrarily adjusted by a monopoly control of money printers, but it is dictated entirely by supply and demand in a free market.
The "BTC/USD" exchange rate is not the value of bitcoin, but is a big distraction. If you are tied up in thinking of bitcoin in dollar cost you will end up being the greater fool who only buys when the price is rising rapidly because of FOMO. Or instead, you might be the greatest fool, who resists it until the last possible moment when you realize the world has moved on and nobody wants paper money anymore.