I totally get how, on its surface, Bitcoin can appear like an electronic version of the kind of cash currency people are familiar with.
This "familiarity" is really important. It's about trust in its store of value being stable compared to the goods people buy with it.
But I think this conception of Bitcoin has led to much of the difficulty preventing its wider acceptance because it does not really act like a very good proxy of local currencies.
It doesn't "act" like a good proxy because it's not a good proxy. I can't rely on it as an exchange medium because it doesn't allow me purchase goods with any kind of regularity (it can't purchase anything I truly value, like my tax obligation, my groceries, and my rent). The one time I suggested an exchange of goods with Bitcoin, the seller told me that he would not, in fact, actually accept bitcoin because its value is changing too rapidly. For the undereducated: "I can't accept bitcoin because what you pay me with tomorrow has the potential to be worth way less than I am willing to accept for these goods today." This is the
A lot of the lament from many users is related to the dissonance between how their widely accepted, government backed, local currencies work and how Bitcoin actually works when they try to use it as a proxy for their native currency.
I recognize that government backed currencies are very much manufactured in the sense that their value is based on policy, powerful individual decision-making, taxation-backed, etc. And centralized fiat currency definitely has the potential
to be manipulated in a way that ruins life. See Zimbabwe inflation. But the fact is, USD has not done this
. It's very well understood in the US elite Fed crowd that a reliable store of value (read: stable in terms of the goods it can buy
), plus wide adoption (salaries and taxes paid in USD) matters enormously. Trust, based on stable currency-to-good exchange is paramount.
I like the idea of an unmanipulatable currency. This really is Bitcoin's strong point. But you need much, much more than this. You need stability in terms of goods, you need predictable access (regulation and assurance that you get what you pay for), and you need reduced barriers to entry to make any exchange medium useful. Bitcoin has none of this compared to USD, and there's nothing inherent in Bitcoin to ursurp a well-established system that just works, on a day-to-day level.
This isn't some grand conspiracy. Bitcoin sucks as a way to pay for things. And for this reason, it will either remain a speculative toy, or die out like many, many attempted stores of value.
Basic point: the most reliable, safe, and easily accessible currency will win out in exchange. Anything else is a pure commodity rife with speculative prices.