Vision for New Financial System Under Bitcoin Standard

[danielkofman53]

L1 Bitcoin will be the base layer money for the new financial system. It's current phase where most of it's value for most people comes from store of value (unless you're politically targeted) does not change the fact that in the future it will be the new fedwire. In this world normal people will usually never have to interact with the base layer, the fees of which will be like 30$ per transaction (in today's prices), because that's around what fedwire costs. It will be used as final settlement for huge transfers between banks.

Normal people will use layer 2s issued by banks, which they will have the power to expand and contract as the economy requires. The key difference from our current system is that the base layer cannot expand, so this expansion and contraction will be bounded rather than ever increasing. Fractional reserve banking will still be the core of the financial system because it has a lot of economic value by turning stale funds into growth. Except it will be decentralized and community based, with all profits going back to depositors. And bank deposits will be directly redeemable for bitcoin from the bank, imposing market discipline, with no or very minimal government backstops. This network of decentralized DAO-structured community banks will focus on loans to small and medium sized firms to people they know in their community or projects they believe serve humanity, the innovation engine of the economy, rather than big bank loans to big monopolizing firms and highly unproductive inflationary real estate lending. There will also be full reserve options for people who do not want to take risk, but they will miss out on high yields.

[YOSHIE]

Vision for New Financial System Under Bitcoin Standard

It is not surprising that currently many developing countries such as the US, Qatar, Dubai, China and others insist on placing digital currency assets such as Bitcoin as state treasury reserve assets. Of course this was done with a vision to create a global economy that protects against inflationary shocks.

Of course, this vision strategy will strengthen the global economy, which is likely in the coming years, which is predicted by 2030, the fiat system will shift to a financial foundation which is called a permissionless economic system, By placing this vision against monetary turmoil, of course the government does not need to print excessive fiat money, thus making the economy stable against the effects of high inflation. It could be said that Bitcoin could become a neutral currency that cannot be manipulated like fiat currency.

[Smartprofit]

In my opinion, creating a new financial system based on Bitcoin requires technical improvements to the original cryptocurrency. At the same time, the current Bitcoin Core developers are very conservative. They are against any innovation. 🙋

On the one hand, this is good... A system like Bitcoin should operate reliably. And a healthy conservatism here is entirely justified.

But on the other hand, without technical improvements and innovations, creating a new financial system based on Bitcoin is, in my opinion, impossible. For example, Bitcoin Core developers have been rejecting the idea of ​​drivechains for 10 years. Meanwhile, creating a full-fledged L2 layer would help miners generate additional income. And this, in turn, would motivate them to maintain the network's security. However, this innovation is not being implemented.

And at the same time, Bitcoin mining is currently unprofitable for miners. So how can we even talk about creating a new financial system (when the floor beneath our feet is on fire)?

[Fortify]

You can see from the slow uptake on this thread that people don't really understand the economics behind Bitcoin and whether it can even handle the volume of transactions required in even a small size country. Also, even if it could handle that volume (it can't in the current form including all the microtransactions taking place in a country every day) then does it do it more efficiently than the current banking or payment processor networks? Again, the answer is no. Does it offer the same instant speed or guaranteed fee rate as current payment options? No, it does not. All these things make it simply infeasible to use as the base trading currency of any country. Other crypto could potentially work, but not BTC in the current form and that's fine. Bitcoin as the original crypto can absolutely prosper and serve another role, acting more like a rare commodity or being used for settling larger payments.

[slapper]

The community lending is really astonishing. Loans to small business from their friends. By the way, that's one of the things that Islamic finance is supposed to do with musharakah partnerships. Skin in the game lending. It is a correct idea and so it has been repeated throughout history in various forms.

2026 DAOs are proving this model is not exactly working well btw. Voter apathy everywhere. Governance token concentration. Half of them turning into bureaucratic maul or dying out. The technology is not the problem here. People are.

The real disease of the current system is unbounded expansion. Not fractional reserve itself. The ability to keep going, keep printing, keep inflating asset prices while wages do nothing. Maybe, maybe that's okay with the tradeoffs if Bitcoin's hard cap would add some discipline to L2 growth.

BTC is at 60k, institutional money is pouring in on AI, and fear index is at 12, along with huge liquidations . And here you are commenting on the new fedwire. I don't know if that's visionary or delusional.

[rat03gopoh]

I predicted this a long time ago (probably during the high network fee spikes) and don't remember saying exactly what it was on this forum, something like: bitcoin is increasingly not ideal for retail transactions, cannot be applied to small scale businesses, in the future it will only be exclusive to institutional transactions.

Edit: Found some that are relevant.
 bta.lk/thread/5479762.msg63417478#msg63417478
 bta.lk/thread/5578361.msg66552052#msg66552052

[Cryptohygenic]

Vision for New Financial System Under Bitcoin Standard

It is not surprising that currently many developing countries such as the US, Qatar, Dubai, China and others insist on placing digital currency assets such as Bitcoin as state treasury reserve assets. Of course this was done with a vision to create a global economy that protects against inflationary shocks.

Of course, this vision strategy will strengthen the global economy, which is likely in the coming years, which is predicted by 2030, the fiat system will shift to a financial foundation which is called a permissionless economic system, By placing this vision against monetary turmoil, of course the government does not need to print excessive fiat money, thus making the economy stable against the effects of high inflation. It could be said that Bitcoin could become a neutral currency that cannot be manipulated like fiat currency.

Do you think it is really that possible that in due time the  governments will concentrate that highly on bitcoin to re strategies the economy value of the fiats?
This is really hard to believe if they do, the masses financial interests will begin to deviate from the traditional to decentralizations and you know that will look like the fiats will be fading out. Of course you and I knows that the government won't let that happen else they will be loosing control over the monetary systems even while they admit crypto legalization and strengthens regulatory policies.
Bitcoin will surely do so well in the long term and major economy developed countries will adopt to have it share of federal reseve.

[Abiky]

It is not surprising that currently many developing countries such as the US, Qatar, Dubai, China and others insist on placing digital currency assets such as Bitcoin as state treasury reserve assets. Of course this was done with a vision to create a global economy that protects against inflationary shocks.

Of course, this vision strategy will strengthen the global economy, which is likely in the coming years, which is predicted by 2030, the fiat system will shift to a financial foundation which is called a permissionless economic system, By placing this vision against monetary turmoil, of course the government does not need to print excessive fiat money, thus making the economy stable against the effects of high inflation. It could be said that Bitcoin could become a neutral currency that cannot be manipulated like fiat currency.

The US is NOT a developing country. But rather, a developed country. Of course, it makes sense to add BTC to the government's reserves. Bitcoin is the next big thing. Many have proclaimed it's "Digital Gold", ushering in a new era for the mainstream financial system.

Remember the days when Gold was used to back Fiat currencies? The same thing will happen with BTC, as it mimics Gold's store of value properties. It's not a matter of IF, but WHEN. Just you wait and see.

[Darker45]

This is likely the case in the long term. Supposing Bitcoin becomes a mainstream financial system, it's likely functioning underneath separate layers. Bitcoin would serve as the base layer where final settlements happen. Bitcoin itself can't function as everyday money. Your cup of coffee gets cold before your payment is confirmed.

As to fractional reserve, I wonder why this appears almost a natural tendency when it comes to banking. Even the gold standard eventually ended up adopting this. If Bitcoin were to be adopted as a mainstream financial system in the future, would it also follow the same route? It might be the convenient path in the name of liquidity, but this is so susceptible to irresponsibility, abuse, incompetence, negligence, and whatnot that for me it's a bane rather than a boon to a new order.

[WillyAp]

excluding around 70% of the World's population sounds like a bad idea to me.


Banking:
Over 3/4ths of adults remain unbanked or underbanked
https://lucidityinsights.com/infobytes/over-34ths-of-adults-remain-unbanked-or-underbanked

Over here the national economy concentrates on people owning smart phones. Excluding around 50%