Next decade?
You forgot the "s" after "decade"
In fact the late 2030s is the earliest period I could imagine the "Swiss Franc" scenario to happen.
The volatility of bitcoin would need to become similar to established fiat currencies such as the Swiss Franc, because merchant wouldn't have any reason not to accept it as a means of payment if that happens.
I don't think volatility will have to go down that much for that transition. The "average" fiat currencies are a bit more volatile than USD, EUR and CHF. For example, the Brazilian Real has roughly a similar volatility to gold
(play around on Bitbo.io), only that it "corrects" mostly to the downside (instead of gold "spiking" to the upside).
(BRL vs gold volatility - ignore the period after 2024 where gold wasn't measured anymore).
A Bitcoin with "BRL-style volatility" would thus already be probably accepted as a "currency", and even more if it corrects to the upside - people would perhaps not spend it as much as the (downwards-moving) BRL but they could slowly use it for a low- to medium-risk saving vehicle and take profits via spending it (see answer to @atookz).
I’m still not sure about the transition period. The big returns are still expected, so there’s not much incentive to spend (Gresham’s law). However, when the returns level off, some may simply exit since they get bored with it. I don't believe that the path towards that balance will be always easy.
I actually agree here, it won't be an automatism to evolve in that direction. I think a lot depends here how the Bitcoin influencers frame the evolution of BTC's price in the coming 5-10 years. There were several influencers who declared Bitcoin "dead" due to gold's better performance in the last 1-2 years. But on the other hand, from the people getting involved in Bitcoin, at least some tend to learn about the fundamental unique characteristics, and those generally will stay, even if it becomes "more boring".
Its likely we will see a tipping point in the next decade which decides if the path towards currency usage will be a smooth one (gradual transition) or a bumpy one (long bear market before currency adoption due to "bored" high-ROI investors selling) or if will not take place at all. I think the probability is close to 33% for each scenario.
The on-chain use-per-user could be even more efficient with L2 batching and channel factories, and while that's fantastic for scalability, it also represents a loss of fee revenue per user.
Just let's do some math. We are now in a speculative/SoV scenario, where most people do not move their BTC for several months or years (I'd say the average tx per "on chain" user is around 0.5 - 1 tx/month). With 5,000 txes on average per block, we can serve around 20-40 million users. We have probably around 5x more Bitcoin users now but they hold their coins on exchanges.
The "Swiss Franc" scenario, even an "early" incarnation (transition period), would be very different from this. I'd expect at least 200-300 million users, moving their BTC around on average 2 times per week. Purely on-chain, that would bring us to almost 500,000 transactions per block, impossible without L2's. Unfortunally we have no good data about how much Lightning transactions happen per channel opening, but assuming that number being as high as 1000 (probably unrealistic), we still would use more block capacity than today because Lightning channel openings occupy up to 2 times more space.
In fact I expect in such a scenario blocks will be constantly full and fees would probably reach an equilibrium at values where it still isn't too costly to open channels or to peg-in into a sidechain (e.g. 10$ / tx) but there is already a big incentive to use L2s.
Poll
