> it requires trust that the asset you are receiving is roughly equivalent in worth to the asset you're giving
Checkout uniswap. Which is a decentralized exchange which the smart contract ensuring you get X asset for Y btc.
Checkout uniswap. Which is a decentralized exchange which the smart contract ensuring you get X asset for Y btc.
My point is not to say that the problem can't be solved on a technical level. It's that it still requires trust. That problem doesn't get eliminated, it simply moves.
Fluctuates relative to what? If BTC becomes the unit of account (as it already apparently has in certain channels of international trade), then it’s only fiat money doing the fluctuating, while goods and services are priced in BTC.
In other words: the mass public is unlikely to become Bitcoin-first until they can gain confidence in the stability of Bitcoin. This is notwithstanding the fact that stable governments likely will not accept BTC as a national currency, meaning citizens will still need USD/EUR/GBP/their local currency for paying taxes and transacting with the government.
It feels as though your post just handwaved away all of the practical issues with actually making the world BTC-first and then asked why I cared about them. Because, in order for the world you're proposing to exist, we almost certainly have had to solve them.
When the amount of goods and services you can buy in any country swings by 10% in a day, you’re nowhere near being treated like a currency.
Classic example of buying a good using BTC: say it costs 100 satoshis. By the time I click and purchase, and by the time the BTC arrives at the seller's address, the value may have changed for the better (BTC price goes down - hence I paid "less") or for the worse (BTC price goes up - hence I paid "more"). For the most extreme example, imagine how people that bought a pizza with Bitcoin when it was worth 5$ feel right now. A 15$ pizza in 2009 or whatever is worth ~150K USD now.
The pizza was 10k BTC (now ~$443M). Tesla bought about 25k BTC.
A 15$ pizza in 2009 or whatever is worth 18.10$ now.
So which currency should you be spending or which one should you be saving?
On the topic of price fluctuations, I'd like to point out that not only are there a plurality of stablecoins pegged against and collateralized with dollars, there are also synthetic assets like DAI which follow in Satoshi's footsteps - using game theory, economics, and finance, to novel and practical effect.
I highly recommend reading the Bitcoin, Ethereum, and DAI whitepapers (in that order).
https://bitcoin.org/bitcoin.pdf
https://crypto-anonymous-2021.medium.com/the-bit-short-insid...
DAI specifically is collateralized with ETH using smart contracts - it's over 100% collateralization is incontrovertible.
So effectively, you've linked DAI to the value of a coin that is set by tether. That being the case, the actual value of the collateral is in question.
That's why I replied that way.
For Bitcoins, concerns about trust are warranted. Currency requires trust that it retains value; that is not given for Bitcoin and its countless clones at all.
Stablecoins collateralised by actual dollars quite obviously require trust, namely in the entity providing and holding the collateral.
Stablecoins collateralised by "the algorithm" have never been seriously tested, in my opinion, and it not clear to me at all whether you can manufacture stability algorithmically. DAI, SAI, MAI, whatever, are only collateralised by "assets" on the Ethereum blockchain, so ultimately self-referential (or, if collateralised by something tied to something real, require trust there.)