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Comment by ArtTimeInvestor | Hacker News Reader

Gold is cumbersome to handle and prone to inflation as more and more is mined. Just one example that recently caught my attention: Germany is currently discussing how to get back the part of their Gold reserves they have stored inside the USA. It is a pretty hard task. And afterwards it would be hard to use that Gold as a means of exchange, as it would have to be physically shipped around the world.

Bitcoin seems to solve all the problems the Dollar and Gold have as a reserve currency. It is independent of trade deficits, can be stored and transferred easily. Cannot be printed away.

What alternative future is there to Bitcoin becoming the new reserve currency?

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1) > Cannot be printed away.

Why would any government want this a feature? As far as sovereigns are concerned, this is a bug, not a feature. You and I might or might not agree with it, but no sovereign government would give away its ability to print money.

2) Bitcoin has a public and transparent ledger. Why would any government want the whole world to see their reserve amounts and movements in real time?

> Why would any government want this a feature?

I'm not a sovereign and I don't want this feature either.

On an selfish/individual level it’s rational to prefer no inflation or even deflation if you have a lot of cash and no debt.

For the economy as a whole? Well it leads to a lot less debt amongst other things constant economic depressions (like back in the 1800s)

    no sovereign government would give
    away its ability to print money

Germany can print Dollars?

It can indirect influence the amount of dollars US is printing. e.g. having Euro interest rates at 0% or less would force the FED to lower them to some extent too.

How would a government get the ECB to lower interest rates? They could change spending and taxation to affect its own economy (increase/decrease inflation/growth employment) which can influence the ECB but that and any political pressure would face opposition from other governments, the markets and the ECB itself.

> Why would any government want this a feature?

As an issuer, they wouldn't. But nobody can issue Bitcoin anyway, so that's clearly irrelevant.

As a reserve, it would be the same ones who buy gold, for the same reason.

> What alternative future is there to Bitcoin becoming the new reserve currency?

Bitcoin not becoming the new reserve currency.

That's not what "reserve currency" means. A reserve currency is a currency which a country reasonably expects will be widely accepted in international trade, even in an economic crisis where other countries may not trust its own currency.

Bitcoin is ridiculously unsuitable and horrible as a currency, calling it that at this point is silly.

Also extreme price volatility make it not a great reserve asset.

I agree that on intrinsic characteristics, it makes more sense than gold. But most people do not even think about what 'money' is, and as with anything there's a lot of inertia in established practices. Esp. when a key aspect of money is salability, any alternative has a very steep hill to climb.

Gradually, then suddenly

Bitcoin is held in a ledger and need to be mined constantly. I do like Bitcoin but it is not comparable to Gold which is an offline asset.

It doesn't need to be mined constantly. In theory people could propose new blocks that don't create any new coins.

Nobody has enough certainty that Bitcoin is resilient against a determined state actor in case of war.

What type of attack do you envision?

Say country A trades goods with country B and they pay each other in Bitcoin.

Now what could country C do about it?

DDoS on Bitcoin via combination of a war chest of zero-days and physical destruction of internet infrastructure. Maybe combined with a takeover by spinning up enough of own miners.

The Dollar won't work without internet either. Unless you put dollar notes on a ship and send it across the ocean. But that is extremely slow and cumbersome. And having that ship shot down and the notes destroyed is even worse.

What do you mean by "takeover"?

Gold will work without the internet though.

> What do you mean by "takeover"?

I meant a 51% attack by a state actor.

Gold works without the internet but it is very slow and cumbersome to ship gold across the ocean to pay for goods.

Building out 51% of the world's hashrate is probably possible, especially for a country like the USA who already has something like 40%. But it is still much harder than to just press a button and deny other countries to use the Dollar.

Bitcoin has too much volatility right now. Maybe that will change one day.

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