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How Bitcoin's story could become Gold's story based on incentives and psychology.

1/ More and more Bitcoin influencers pushing people toward synthetic exposure via companies who mostly don't provide proof of reserves, fewer and fewer Bitcoiners actually hold their own keys.

Just look at the salaries and bonuses these treasury companies execs are paying themselves, Bitcoiner plebs are paying premiums to NOT hold their own keys and practically align with the State.

2/ ChatGPTs answer to my question

Having the perfect tech is not enough if the majority of people don't care to use it.

3/ The big question is: can governments get CBDCs right without major mess ups?

As of now, 137 countries and currency unions, representing 98% of global GDP, are developing Central Bank Digital Currencies (CBDCs) - so practically everyone - it's kind of obvious - we have a world government.

Governments have been researching and developing CBDCs since before 2014, but the official narrative states that their interest became significant around 2014, so they are really trying to get this CBDCs thing right.

Can they make CBDCs friction-less and make BTC annoying to use for your average normie (regulation, taxation at point of conversion, surveillance).

4/ Re privacy coins

5/ The likely base case

CBDCs will very likely come with:

- UBI deposits (that you won't be able to use to buy Bitcoin)

- Instant settlement for bills/taxes.

- Welfare + subsidies integrated.

So for your average normie "Why hassle with Bitcoin when my CBDC wallet just works"?

If this happens, Bitcoin stops being transactional; it’s just a "hard asset".

In a time when most of the Bitcoin economy exists as ETFs, custodial wrappers, and synthetic products, the narrative will become "Bitcoin is fine as an asset, but unsafe/unnecessary for payments".

It's very simple, for the vast majority of people comfort > sovereignty.

So you kind of have to hope that governments mess up with their CBDCs rollout - they glitch at scale (multi-day outages, privacy scandals, mass mistaken freezes).

You kind of have to hope that eventually a large BTC custodian (e.g. Coinbase) is caught short real coins (rehypothecation scandal), so that people start self-custodying again.

You kind of have to hope for plug-and-play self-custody + amazing non-custodial, widely-adopted Lightning applications (e.g. Fedimint/Cashu) to reduce friction levels to near-CBDC or even better.

6/ The SEC approving "spot" Bitcoin ETFs with 3-2 votes was some of the best kosher theater I've seen.

7/ Nowadays, you don't really win against governments, it's just shades of losing

A true Bitcoin breakout requires financial system confidence breakdown + self-custody culture surge - as of now, very unlikely, but possible.

Will Bitcoin's story become Gold's story? Unless there is a major fuck-up on the side of governments, or an unexpected self-custody culture surge, likely so.

SatsAndSports 4mo ago 💬 2

> If this happens, Bitcoin stops being transactional; it's just a "hard asset"

We all know Bitcoin is *the* hard asset. Gradually, more of the world will realise this. When merchants realise this, they'll want to collect Bitcoin as it's the store of value

Then, merchants will actually push for it to be used in payments, when they see all the other advantages: lower fees than Visa/MasterCard, instant settlement, no chargebacks

When most of the world wants Bitcoin, many transactions will be where both sides have Bitcoin. And then paying via bitcoin will be natural

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Discussion

SatsAndSports 4mo ago

And I'm not really worried about the custodial options. Bitcoin is permissionless, which means we can't stop custodial solutions.

Our priority is to make self-custody safer and easier. As long as we keep doing this, including more great things like cashu, and the number of self-custodying users increases relentlessly, then the custodial users will gradually transition to self-custody.

I just orange-pilled a friend, who's doing lots of research now, and my friend didn't even know that self-custody was an option.

Control-Plane Capital 4mo ago

Yes, we know Bitcoin is a hard asset and the idea is keeping it that way.

As I said in the post, Bitcoin is permissionless, and we can't stop custodial solutions, however, we can incentivize Bitcoin treasury companies, ETFs, exchanges to provide proof of reserves by investing in only those who do.

This prevents paper Bitcoinization and rehypothecation.

Once people start trading non-existent Bitcoin (similar to FTX) on a large scale, then Bitcoin becomes less of a hard asset.

At one point in time more than 100 times the existing gold was being traded (paper gold) which lead to massive price suppression.

To your other point about merchants accepting it when they see the advantages about lower fees than Visa/MasterCard, instant settlement, no chargebacks, you are basically projecting the current state of affairs forward.

Governments aren't exactly known for giving up control and embracing competition and as the post states: 137 countries and currency unions, representing 98% of global GDP, are developing Central Bank Digital Currencies (CBDCs).

In the not so distant future, people are going to be paid UBI deposits using CBDCs and I'm going to take a wild guess that you won't be able to use the UBI to buy Bitcoin.

The whole idea of the post is for the vast majority of people comfort > sovereignty.

If governments make Bitcoin very annoying to use with regulation, taxation at point of conversion, surveillance, excessive KYC with Digital ID at the exchanges, Bitcoin wealth tax, and at the same time make CBDCs frictionless, there's going to be less people using Bitcoin.

Especially if this trend of paper Bitcoinization continues, and the price is suppressed for long periods of time because everyone and their mother starts a Bitcoin treasury company that doesn't provide proof-of-reserves.

Again, most people are expecting for governments to just roll over and give up control.

That has not been my experience, but optimism is great to have.

It's great to think you're so smart and governments so incompetent, and at the same time governments are always incompetent when it comes to stealing money or rights from the plebs, and never incompetent in favor of the plebs.

It's almost like these retards you see on TV aren't the actual people pulling the strings and making the decisions.