When comparing BTC to a traditional fiat currency, one should take the following into account:
- Fiat Currency has attrition due to lost currency but that attrition is simple to rectify because you can just print more to replace it.
BTC, also, has attrition but those lost coins can't be replaced and must be dragged around by the entire chain for ∞.
This in of itself implies that the production and/or the increasing of decimal places will always have to outpace the attrition of BTC.
- Fiat Currency has no block chain bloat and no progressive cost of production of currency.
BTC gets harder and harder to drag around with time. The cost of production is on a progressive scale. (cost more over time)
This can be seen with rising rates for transaction fees, and the progressive scale in the size of the blockchain itself.
It is natural for transactions to be forgotten over time. Unfortunately, without a way of determining lost coins from saved coins, you can't prune the blockchain if even a way was developed to do so and maintain the cryptographic chain with confirmations.
If compared to a traditional currency, the Dollar, imagine if the first dollar ever created requires a ledger from every transaction that ever was done with it. The ledger would be very large indeed when multiplied by all dollars and their ledgers. If a dollar is out of circulation, one can assume it to be lost and print another without the need to verify it as lost or saved (under a mattress). If the dollar re-enters circulation in the future, you can decrease the supply to adjust properly for the new found forgotten dollar.
In Bitcoin, all "lost" coins must be assumed to be "saved" coins.
So when students, enthusiasts try to apply current tradition metrics to bitcoin, try to make a calculation that represents the differences. There is a difference and the same models won't apply.
How can you solve? Well, you do it the same way countries replace their currencies. After a period of time, you put out notice that BTC will transfer to BTC version2, and you need to transfer you money over or the old ones left behind will be useless.
The EU is the most recent example of this occurring when they switched to the Euro. French Francs, Italian Lire, etc... all switched to the Euro. Some believe they will be switching back. That will be interesting to watch.
The Bitcoin Central Bank: Well this is gray. The -core-dev would be the Board, the Miners would be the Reserve Banks controlling flow with 'fees'. It's gray, because if they all went away tomorrow, bitcoin could still work. The Dollar couldn't. Problem is that most end users would just drop out of the market.
Transaction Fees are a form of control, and Time is the punishment for not paying fees. There is a basic cost to fees tho, the actual cost of mining, but there also has to be a profit in mining too. So they have to take the Basic Cost + Profit Margin = Transaction Fee. Collusion can lead to hefty fees.
I'm not saying that collusion is occurring but that it can occur and if done correctly no one would ever know.
