Thread by @Rewkang

0) Unpopular opinion: Native digital assets, including BTC and ETH will never be good money used on a mass scale

This may sound like hearsay to CT, but let me explain why 👇

1) The short answer is that volatile currencies create an awful economic environment not conducive for growth

2) A common counterargument is that being a native asset class, cryptoassets like BTC/ETH just haven't had the time to mature and first become a good Store of Value (SOV)

3) The rationale goes that once BTC/ETH reach valuations similar to traditional SOVs e.g. gold, and the boom/bust cycles become less extreme, that volatility will decrease and they can evolve into good moneys

4) But even as a SOV thousands of years old, gold has a volatility issue itself.

From 2001 to 2011, the price per ounce grew from $399 to $1560 - That's an inflation adjusted CAGR of 12%

5) While not the same magnitude of returns you would see in crypto, can you imagine consumers or companies spending money when the effective annual rate of deflation is -12%?

Consumption and Investment would grind to a halt.

6) On the flip side, gold dropped 26% from Aug 2012 to Aug 2013.

If a mass adopted money experienced this depreciation, Access to credit would be dramatically reduced as companies and lenders fear reduced value/purchasing power of their future money

7) Yes, BTC and ETH are used and have been used as a medium of exchange / money in various niche cases. Buying drugs, ICOs, etc, etc.

But will they become as ubiquitously used as money as fiat is today?

8) Let's take a look at current onchain data.

The following graph shows Tx Volume starting from Jan 2018.

Purple = ETH
Dark Green = USDT Omni
Green = USDT ERC20

9) Here's the REAL flippening.

In the beginning of 2018, ETH volume was 24x that of USDT volume.

Today, USDT volume is 2x that of ETH Volume.

Even in the crypto ecosystem, ETH is losing the money battle to our traditional fiat overlords

10) Working in the OTC SAFT space, I've personally seen 8 figures of payments being handled in crypto.

95%+ of that volume is in stablecoins, and the rest in BTC.

11) Even crypto natives prefer payment in stablecoin (pseudo fiat) as its just more convenient to handle. With BTC/ETH payment, there complexities that arise such as agreeing on index rate, settlement time, reconciling with accounting systems, etc.

USD is just easier.

12) I'm excited about native digital assets, and I believe they'll have their places - just not as money.

Tell me why I'm wrong

ETH is shitty money

@RyanSAdams @TrustlessState @econoar @sassal0x @iamDCinvestor @JWilliamsFstmed @VitalikButerin