This makes some very valid points, nevertheless there are some areas where I have to disagree.
1) The state is by far not the biggest source of friction in the current fiat money system. Most of the friction comes from the actions of entrenched players such as banks, credit card issuers and other entrenched providers such as Western Union. These entrenched private sector payment providers are for the most part responsible for most of the fees and restrictions with electronic fiat payments today. I actually doubt that crypto will have that much impact on the state. We must keep in mind that in the 1950's and 1960's top marginal income tax rates were close and in some cases over 100% of income, yet for the most part transactions were in the form of cash and bearer instruments (bonds, stocks etc). The role of the banks and other payment intermediaries was greatly diminished when compared to today. Crypto in this respect is in fact turning back the clock by 50 - 60 years.
Well, I consider that the "bad" aspects of banking are state-induced. Of course, banks are on one hand private entities that want to make money, and as such, they want to get your money. But in as much as they would be private entities in fair competition, a market would emerge for every service provided and the greedy ones would be out of competition wrt. less greedy ones, as is the case in every free market.
However, banks have become, despite themselves, parts of the financial control of states. Some regulation in the banking sector can be seen as customer protection, but most of it, especially KYC / AML is nothing else but forcing banks to be part of law enforcement. That banks take fees and that this is some friction is one thing (but crypto also has this kind of friction). The REAL problem is that banks have to comply to a regulation that is for 90% state interest, and only for 10% consumer protection (the funny games that led to the crisis of 2008 were not against regulation but against consumer interest - the Swiss bank privacy has always been a consumer interest, but has been broken because every bank in the world is now turned into some fiscal law enforcement agency of the USA. The fact that you cannot freely deal with people through bank accounts is not because banks are playing it rough on their customers, but rather because they have to comply to state regulation, not in the interest of their customers, but in the interest of states.
This is why, even though bankers are a greedy lot, I consider that the main problem with banking comes from their compulsory compliance with states. Banks are in a certain way enslaved by states to do their dirty oppressive stealing jobs.
2) The role of speculators and investors in crypto currency is to anticipate the future value of a crypto currency due to market use under Fisher's formula. One would expect during the initial growth phase of a crypto currency that a very significant part if not most of the market capitalization is due to investment and speculation. This is both normal and actually necessary for the crypto currecny to function as money in commerce; however one must always keep in mind that the ultimate justification is the future value of the crypto currency for use in commerce. The market is simply attempting to predict this future value. In this respect Monero is no different from Bitcoin.
I agree with you that the current price of an asset is the market's best guess of the future price, taking into account that it might make a mistake. That is, if the market gives it a 5% chance that bitcoin will be $ 10 000 in "the future", the market price now will be $ 500.
However, and that is where our opinions differ, the market may very well estimate that *speculators* will have driven the price to $ 10 000 with a probability of 5% in the future. In other words, the use of bitcoin as a currency may very well be estimated at essentially zero, as long as speculators now speculate that there will be speculators buying it for $10 000, they will pay $ 500 for it now. Compare it to a random work of art. If you think that with 5% probability, some people will estimate it at $ 10 000 in the future, you may very well be willing to pay $ 500 for it now. Even though that work of art will never be a currency and is right now, nothing else but some coloured lines on a piece of canvas.
The current price is the expectation value of what one thinks future people will pay for it, but these too, may have their reasons which is not "currency".
3) Bitcoin has a very significant problem that is completely orthogonal to privacy, anonymity and fungibility. This is of course the protocol limitation of the 1 MB fixed blocksize limit. Furthermore there no clear solution to this problem in Bitcoin that does not lead over time to a situation where the Bitcoin miners do not have an incentive to secure the network. Monero has addressed this issue with a tail emission. I must emphasize this. A Monero style adaptive blocksize without a tail emission such as is the case in Bytecoin, is a prescription for disaster.. This is why the blocksize limit in Bitcoin is so intractable, and why those in the small block Bitcoin camp also have very valid arguments. Bitcoin like coins such as Litecoin and Dash also have the same fundamental problem as Bitcoin here since they both have a fixed maximum number of coins. Dogecoin could safely use a Monero style adaptive blocksize limit since it also a tail emission.
Monero could over time overtake Bitcoin in market cap simply by taking over the growth in the demand for crypto that Bitcion cannot accommodate. This is because accommodating such growth while maintaining the security of the Bitcoin network, may well require breaking a fundamental social covenant of Bitcoin; namely the 21 million XBT limit. The privacy, anonymity and fungibility aspect of Monero would simply add fuel to the fire.
This is a very valid remark. But this finiteness of transaction volume might actually suit bitcoin in becoming a "store of value". It is not suited to become a currency, that is true. The finite transaction volume on the chain implies that one can only afford doing BIG transactions, with BIG fees. This fits with the "speculative asset" aspect that bitcoin is having, over the "currency" aspect.
But as such, to me, bitcoin has lost its roots. Very big amounts of value will be transacted on its chain. Now, very big amount of value will of course always be scrutinized much more closely by states. An open block chain, strict regulation, and an institutionalized aspect is, I think, the fate of bitcoin. Not a thing with which you will be able to pay someone freely and escape state interference.
Bitcoin will be too expensive to be used as a currency.
That said, in the long run, block chain technology has a fundamental problem with large transaction rates per second in any case. Monero too. Even though the system allows it in principle, it is not practical to have a block chain with terabytes of data to be added every month.
I think the Lightning network is on something, but it is, like bitcoin, not mature enough to solve all issues. Once you have a block chain, you can use it to guarantee off-chain payments, because you have some value at stake on the chain. The way the Lightning network is set up is IMO not right, but there are good ideas in it. I think we should look at how it evolves on bitcoin, to learn from it, and build something better afterwards.
I fully agree that the finite amount of money (a "sound money" purity) is more problematic than anything else, and that tail emission is a very good idea.