Given what governments worldwide have done with currencies in the past, I think you’re underestimating their capacity and how much they care about the functioning of their currency.
If you’ll excuse my admittedly also-naïve wargaming of their responses:
“Dear ISPs, this is the government. That stuff you do to block piracy and illegal porn? Do that for bitcoin.”
“Dear Banks, this is the government. Purchase of bitcoin is now a federal offence. Tell us if anyone tries to exchange them for money.”
“Dear The Power Company, this is a government order. Turn off power to these properties who are engaged in illegal Bitcoin mining.”
“Dear everyone, this is the government. Your taxes can only be paid in dollars, not in bitcoin.”
(Not that I would say such things will never happen, only that I expect America to become irrelevant on the world stage before it happens; and even in the most extreme USSR-mimicking scenario that is not something I expect before 2041).
As I mentioned in my reply above, I think the way it can work is if it grows exponentially, and the US government doesn't respond in time at which point not using crypto will put the US at a disadvantage. Crypto has the unique ability to spread across borders with ease, no other currency has had this ability. So I think it's a pretty unique scenario in that case.
Another scenario is if it grows slowly amongst the countries that have unstable currencies. Slowly it takes over the USD as the world currency. At a certain point, the US would have to allow it to participate in that economy.
Nations with bad currencies and mismanaged economies sometimes switch to the USD.
Such nations collectively switching to a different currency like the Euro or the Yuan is way more plausible than switching to Bitcoin; and not only do none of the USA, the Eurozone, nor China have economic policies compatible with giving up direct control of inflation, the usefulness of a shared single currency isn’t enough to outweigh the political costs for the UK to use the Euro (famously), or South Korea to use the Yuan, or Canada to use USD.
Money in the scale of governments isn’t like money on the scale of individuals. For governments, money isn’t even like it is for the richest individuals, different as it is between the rich and normal people.
I don't follow. Why would a country's citizens choose to use a different country's currency rather than a denationalized currency? i.e. couple their monetary policy to the world market, rather than to a single country's market. Given they just experienced one countries economy create poor monetary policy, why trust a single entity rather than diversify by trusting the group decision of many decentralized entities?
And why wouldn't a government whose citizens do not trust the government's currency, not incentivize its citizens to use a denationalized currency instead of funding potential threats?
e.g. The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties, rather than decided by a single foreign entity with potentially malicious intent.
Aaa… this will take too long to do justice to the topic, but politically speaking, the Euro is supernational and the UK collectively hates it, that sort of attitude is part of the problem. “Loss of sovereignty” is how they felt about it, how many discussed it.
> The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties
Why would those parties have Venezuelan interests in mind rather than their own? One of the arguments against the Eurozone (I’m not qualified to judge it on quality, but it is given as an argument) is that Northern Europe “should” have different inflation to Southern Europe to help boost the local economies. Can’t do that with a single currency, they say, and that would apply more the wider that zone spreads. A single global economy — fiat, digital, or metallurgical — would never be able to resolve it.
> “Loss of sovereignty” is how they felt about it, how many discussed it.
Yup! I agree, there will be many holdout countries. However, even the UK uses the USD as the world's reserve currency.
> Why would those parties have Venezuelan interests in mind rather than their own?
Venezuela was fucked because a handful of people are performing bad monetary policy. While the interests of each mining operation would be their own interests, in aggregate, the interests of all BTC mining is a globally averaged monetary policy. Unaffected by corruption, or stupidity (whichever you think is a more apt description of Venezuela's current monetary problem).
I don't know what a globally averaged monetary policy will look like (or who it'll benefit the most), but I can say that for any population currently living with a monetary policy below the average (i.e. because of corruption or stupidity), it'll be an improvement and they will adopt a denationalized currency to get it.
> The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties, rather than decided by a single foreign entity with potentially malicious intent.
No, the Venezuelan government has tried to create its own cryptocurrency called the Petro in order to have control of it.
Of course they did! They want control. Meanwhile, the population doesn't trust its government and wants a non-Venezuelan controlled currency.
Legitimizing crypto currencies by creating one, without increasing trust in the government just results in more of the Venezuelan people buying a denationalized crypto.
> It’s possible that, as Jiménez suggested, Venezuela’s peer-to-peer bitcoin activity wouldn’t be where it is today without crypto-friendly initiatives from the government itself. It’s also possible that bitcoin adoption in Venezuela may be driven by the sheer rate of Venezuela’s hyperinflation, which outpaces other crisis economies. [0]
If you’ll excuse my admittedly also-naïve wargaming of their responses:
“Dear ISPs, this is the government. That stuff you do to block piracy and illegal porn? Do that for bitcoin.”
“Dear Banks, this is the government. Purchase of bitcoin is now a federal offence. Tell us if anyone tries to exchange them for money.”
“Dear The Power Company, this is a government order. Turn off power to these properties who are engaged in illegal Bitcoin mining.”
“Dear everyone, this is the government. Your taxes can only be paid in dollars, not in bitcoin.”
(Not that I would say such things will never happen, only that I expect America to become irrelevant on the world stage before it happens; and even in the most extreme USSR-mimicking scenario that is not something I expect before 2041).