Cryptocurrencies could see massive adoption perhaps in a way a typical fiat currency would not. Here is how:
As people will keep spending fiat (why hold on to it, it loses quickly in value) they will naturally try to preserve and hold on to their bitcoin. Exceptions of course exist: if there is some real imperative for them to spend, they will spend their Bitcoin – this alone has been hailed as distinct marker of a debt-ridden society in which capital continuously gets misallocated and one where a limited asset constraints capital investments and makes sure they will have a superior return of investment. Now, just as consumers will hold on to their bitcoin, business owners, who are people too, will also want to keep their cryptocurrency of choice. They will think of ways to get bitcoin from their customers and partners. They will realize they can’t get them in the normal traditional way (i.e. simply installing a new point of sales system with bitcoin capability will not at all induce their customers to give up their precious bitcoins.
The result: Businesses will come up with ingenious ways to entice people to give them their Bitcoin. Special discounts (which we already see, up to 20% off retail prices), special fire sales, special deals and arrangements – this will lead to a price drop if you switch into bitcoin. At some point the appreciation of bitcoin and the incentive offset and consumers will pay in Bitcoin. This leads to a drop in prices, a continous push up for Bitcoin, a shrinking of the debt economy and the idea of what hard money means will comes back from the grave of the industrial revolution era as prosperity increases once again as per measure of increased productivity it should!
Bitcoin being non-dilutable past 21 million coins expresses increased purchase power much better than an ever inflatable fiat printed piece of green paper bill.
Because in reality, prices should fall – over time, all over an economy – and your purchasing power should go up, per unit of currency, because of technological advances and productivity gains… If someone introduces a new factory, a new robotic system, a new time saving methodology or life saving drug – these repercussions on one end of the global economy will be felt like waves on the limited / fixed unit of accounting that is bitcoin, lifting all boats higher when the tide rises. This is what happened during the industrial revolution, when money was mostly tied to gold and gains rose everyone’s living standards over time, as the dollar/pound kept appreciating. The only one who suffered, in a sense, was the burgeoning governments that were stifled in their growth and ability to wage (and pay for) massive wars.
But we have been foregoing a hard-monetary system, because we allowed our massive bureaucratic governments to siphon that extra gain off for the benefit of “price stability”. For some, this has the signs of the greatest heist in the history of mankind – which, slowly, might be coming to an end.
At the very least, Bitcoin’s rise has made people reconsider the role, origin, intent and effect of money in their lives and society. Most excitingly, if a hard monetary system of competing private distributed cryptocurrencies would push technological development stronger and faster than a centrally planned central-bank bureaucratic ever inflating system, it could usher in a new era of prosperity and innovation.
