I see a lot of value in Bitcoin, but strangely enough, I can see that value without looking at Bitcoin at all. Confused? Let me explain the non-obvious reasons why I think Bitcoin has a fair chance.
(I've been following Bitcoin since it was at $1, so I had a lot of time to think about it ;)).
1. I don't expect my kids to ever carry around wallets or keys when they are older. Everything will be in their smartphone. Passport, pictures, credit cards, VISA card, car key, key of house, etc. There is nothing there that couldn't (technically) already be in your smartphone.
When doing payments, I expect them to just physically hold their phone close to some shops terminal, or when doing personal payments, send it over chat.
2. What is the value of Dollar or Euro's nowadays? (I thought a lot about this, but think to have a proper answer). The value is in the network, just the same as with Facebook. In US, every shop supports Dollars, so it has value there. In Europe, Euro's, so that has value. Same with Bitcoin, the new technology might instigated it, but in the end, it's the network of people using and supporting it that give it value.
3. The world is bigger than the industrialized countries alone. Dollar and Euro might be considered more stable than Bitcoin, but not all currencies are like that. For a recent example look at Zimbabwe.
4. (A) A bubble occurs when people think something has more value than it actually has. (B) People think the numbers on their bank account is the money they instantly have available. (C) Fraction reserve banking multiplies money so that the number on your bank are not actually money that is available instantly.
5. Which do you trust more: (A) governments and banks or (B) math and algorithms?
6. A global currency would be very convenient for people who travel a lot.
Of course, there are still a lot of questions too.
1. How will government legislation treat cryptocurrencies in the future?
2. Will some cryptocurrency ever have a stable enough price (such as gold), so that goods can be expressed in it?
3. Will some app make it simple/easy/convenient enough and have a big enough network so all people can agree on starting to use it for making and receiving payments?
4. Will lightning network and/or sidechains be enough and a good solution for the limited payments per second?
Final conclusion: In the end, it will all come to which payment system will have the network. If people want to get payed in Dollars because everybody else works with Dollars, that will have the network. If people want to get payed in Bitcoin because everybody else works with Bitcoin, that will have the network. Is Dollar/Euros Facebook, or is it MySpace? Who can tell? I think nobody at this point. But it is fair to say that fiat money might be Goliath and crypto might be David. Only time will tell.
> In the end, it will all come to which payment system will have the network.
Dollars, in the usa at least, already has the network and banks are already innovating on top of this network. For instance, sales through credit cards are now often deposited into the sellers bank account the very same day as the transaction. Credit cards also allow buyers to send money to strangers with confidence knowing they will be protected. This also benefits the seller as it makes it easier to make a sale.
From an american perspective - crypto as a payment system is also pretty cumbersome with it being treated as an asset. There are simply not many people out there who will want to keep track and report every payment to the IRS.
Your point 5 is quite a strawman. As everyone who does real (applied) crypto knows, it's not about maths and algorithms. Those are sound, but the devil is in the implementation details.
Let's not pretend cryptocurrencies are usable for payments. They are not: the technical side is way too hard for random people to use. I'd say, PGP-hard.
You are correct about point 5 that the devil is in the implementation details. But in the end I think that's not a problem (and that my explanation was actually incorrect).
If you look at what happened to Ethereum when something went wrong, the community just decides to rollback the mistake.
So maybe it's not "math and algorithms" as I stated it, but more like trust in "the community". The community just uses math and algorithms, but is not afraid to rollback when an implementation mistake was made.
You are also correct that cryptocurrencies are not usable for payments. But I would add a "yet" to that. That's why I added counterpoint 3, that an easy to use app needs to be made for the regular public.
I don't see this as a major hurdle, because nowadays even grandparents and kids can use a computer to go on the internet.
(I've been following Bitcoin since it was at $1, so I had a lot of time to think about it ;)).
1. I don't expect my kids to ever carry around wallets or keys when they are older. Everything will be in their smartphone. Passport, pictures, credit cards, VISA card, car key, key of house, etc. There is nothing there that couldn't (technically) already be in your smartphone.
When doing payments, I expect them to just physically hold their phone close to some shops terminal, or when doing personal payments, send it over chat.
2. What is the value of Dollar or Euro's nowadays? (I thought a lot about this, but think to have a proper answer). The value is in the network, just the same as with Facebook. In US, every shop supports Dollars, so it has value there. In Europe, Euro's, so that has value. Same with Bitcoin, the new technology might instigated it, but in the end, it's the network of people using and supporting it that give it value.
3. The world is bigger than the industrialized countries alone. Dollar and Euro might be considered more stable than Bitcoin, but not all currencies are like that. For a recent example look at Zimbabwe.
4. (A) A bubble occurs when people think something has more value than it actually has. (B) People think the numbers on their bank account is the money they instantly have available. (C) Fraction reserve banking multiplies money so that the number on your bank are not actually money that is available instantly.
5. Which do you trust more: (A) governments and banks or (B) math and algorithms?
6. A global currency would be very convenient for people who travel a lot.
Of course, there are still a lot of questions too.
1. How will government legislation treat cryptocurrencies in the future?
2. Will some cryptocurrency ever have a stable enough price (such as gold), so that goods can be expressed in it?
3. Will some app make it simple/easy/convenient enough and have a big enough network so all people can agree on starting to use it for making and receiving payments?
4. Will lightning network and/or sidechains be enough and a good solution for the limited payments per second?
Final conclusion: In the end, it will all come to which payment system will have the network. If people want to get payed in Dollars because everybody else works with Dollars, that will have the network. If people want to get payed in Bitcoin because everybody else works with Bitcoin, that will have the network. Is Dollar/Euros Facebook, or is it MySpace? Who can tell? I think nobody at this point. But it is fair to say that fiat money might be Goliath and crypto might be David. Only time will tell.