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Layer 2 does not solve the medium of exchange problem. The cause is volatility which is rooted in Bitcoin's limited supply design. You can dig in Layer 2 adopti

Layer 2 does not solve the medium of exchange problem. The cause is volatility which is rooted in Bitcoin's limited supply design. You can dig in Layer 2 adoption. It's not growing. Bitcoin only has 2 use cases: hold and speculate. Transaction is not a use case. Layer 2 is not necessary until Layer 1 has some kind of stability. Layer 2 can also malfunction during volatility. Ethereum has demonstrated this.

H8crilA 6y ago
Need I remind you that the world has been running almost exclusively on gold, which also has a limited supply "design"? That is if you look back a few thousand years. Deeply flexible currencies are mostly a recent invention, and their fate is not yet determined. Volatility is a result of lack of actual usage of the currency. And yes, bitcoin has virtually no actual usage, save for speculation/investing. Any normal currency has hundreds of millions of contracts attached to it (starting from short term offers on groceries in your local shop). Each of those contracts is a volatility dampener. Saying that Bitcoin is not used because it's volatile it's like saying that x=y because x=y.
- XorNot 6y ago
  And for thousands of years the world languished in poverty. The modern age as we know it with industrialisation and trade started with the Renaissance and boomed with the move away from the gold standard because it meant countries has a way to actually manage their monetary policy against things that mattered.
  - swader999 6y ago
    The move away from gold is still an ongoing experiment. I wouldn't say it's superior or proven at this point.
    - srtjstjsj 6y ago
      Philisophically or sociologically or ecologically, fiat money may be bad, but economically it's a clear winner.
      - swader999 6y ago
        It's prone to boom and bust which has been devastating. Hayek describes a type of money that adjusts it's supply to maintain a stable price. Until now this wasn't technically possible. Ampleforth.org is an interesting experiment to introduce a new base reserve with dynamic supply and eventually a stable price. https://m.youtube.com/watch?v=9-uo-KfnkhI https://m.youtube.com/watch?v=9-uo-KfnkhI
        capnorange 6y ago
        or it's non-vc fork - https://based.money/ https://based.money/!
        XorNot 6y ago
        Economies boom and bust. This has nothing to do with fiat currency, and is a heck of lot better then the alternative where shopkeepers and employees are made poorer due to economic prosperity because they don't adjust their prices fast enough.
      - beaner 6y ago
        The most popular fiat currency, the US dollar, was tied to gold until 1971. It's still not clear that breaking that link was a good move. Also this: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
- betterunix2 6y ago
  "Need I remind you that the world has been running almost exclusively on gold," Actually that is not true. Gold by weight as a currency has been used at times, but many other forms of currency were used historically even by people who had gold available to them. There is a lot of historical precedent for credit money (i.e. people using debts owed to them as currency) and for coins minted with non-gold metals like iron and bronze. The earliest known currencies were "virtual," taking the form of clay tokens that were used for accounting in the ancient near east -- a civilization that was well aware of gold but considered it to be more useful for producing ceremonial objects. Shortly after inventing paper the Chinese started using paper money. Gold is actually a terrible currency that makes trade much less efficient. Historically gold was most useful as a currency when empires were able to procure a growing supply of the metal, and when the gold stopped coming in people would switch to some other currency (typically some form of credit money).
  - H8crilA 6y ago
    Yeah I agree with the first paragraph. I wrote "deeply flexible", that is ultimately not redeemable by gold. Credit is okay with me. Why do you think the second paragraph is true? Gold has been disconnected from currencies only since 1971, and this detachment clearly has had significant impact: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
    - betterunix2 6y ago
      Even if you are only talking about the United States, 1971 was not the first time the country left the gold standard: https://en.wikipedia.org/wiki/Demand_Note#Suspension_of_specie_payment https://en.wikipedia.org/wiki/Demand_Note#Suspension_of_spec... https://en.wikipedia.org/wiki/History_of_the_United_States_dollar#The_Gold_Reserve_Act https://en.wikipedia.org/wiki/History_of_the_United_States_d... Historically the pattern has generally been for a metal standard to be introduced only to be abandoned when the state is unable to procure more of the metal. The Romans abandoned their silver standard and started debasing their coins shortly after the empire reached its greatest extent, almost certainly because they could not find enough silver to keep the system going (though nobody bothered to write this detail down). In ancient China various dynasties are known to have started issuing iron and bronze coins when they could not find enough gold/silver/copper to meet their monetary needs (and when the weight of coins became impractical they issued paper money). There is no question that using weights of gold as a currency makes trade less efficient. Most merchants and most consumers do not have the equipment or expertise needed to evaluate whether or not a given weight is pure gold, and having to pay someone to evaluate a sample amounts to a tax on every transaction. The inability for a central bank to adjust the supply of money in response to changing economic conditions actually led to greater price instability when the gold standard was in place (deflation during a banking crisis). It is economically inefficient to pay people to guard vaults filled with gold bars that are never going to do anything but collect dust. Leaving the gold standard was the right thing to do every time it happened, and going back to it was in every case the wrong thing to do (motivated more by alchemy and tradition than by any serious economic considerations).
iknowstuff 6y ago
Well, there are decentralized stablecoins on Ethereum, like DAI.
beaner 6y ago
Your comment is wrong all around. Volatility doesn't prevent layer 2 from working, and it is growing. [0] [0] https://defipulse.com/lightning-network https://defipulse.com/lightning-network

H8crilA 6y ago

Need I remind you that the world has been running almost exclusively on gold, which also has a limited supply "design"? That is if you look back a few thousand years. Deeply flexible currencies are mostly a recent invention, and their fate is not yet determined. Volatility is a result of lack of actual usage of the currency. And yes, bitcoin has virtually no actual usage, save for speculation/investing. Any normal currency has hundreds of millions of contracts attached to it (starting from short term offers on groceries in your local shop). Each of those contracts is a volatility dampener. Saying that Bitcoin is not used because it's volatile it's like saying that x=y because x=y.

XorNot 6y ago
And for thousands of years the world languished in poverty. The modern age as we know it with industrialisation and trade started with the Renaissance and boomed with the move away from the gold standard because it meant countries has a way to actually manage their monetary policy against things that mattered.
- swader999 6y ago
  The move away from gold is still an ongoing experiment. I wouldn't say it's superior or proven at this point.
  - srtjstjsj 6y ago
    Philisophically or sociologically or ecologically, fiat money may be bad, but economically it's a clear winner.
    - swader999 6y ago
      It's prone to boom and bust which has been devastating. Hayek describes a type of money that adjusts it's supply to maintain a stable price. Until now this wasn't technically possible. Ampleforth.org is an interesting experiment to introduce a new base reserve with dynamic supply and eventually a stable price. https://m.youtube.com/watch?v=9-uo-KfnkhI https://m.youtube.com/watch?v=9-uo-KfnkhI
      - capnorange 6y ago
        or it's non-vc fork - https://based.money/ https://based.money/!
      - XorNot 6y ago
        Economies boom and bust. This has nothing to do with fiat currency, and is a heck of lot better then the alternative where shopkeepers and employees are made poorer due to economic prosperity because they don't adjust their prices fast enough.
    - beaner 6y ago
      The most popular fiat currency, the US dollar, was tied to gold until 1971. It's still not clear that breaking that link was a good move. Also this: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
betterunix2 6y ago
"Need I remind you that the world has been running almost exclusively on gold," Actually that is not true. Gold by weight as a currency has been used at times, but many other forms of currency were used historically even by people who had gold available to them. There is a lot of historical precedent for credit money (i.e. people using debts owed to them as currency) and for coins minted with non-gold metals like iron and bronze. The earliest known currencies were "virtual," taking the form of clay tokens that were used for accounting in the ancient near east -- a civilization that was well aware of gold but considered it to be more useful for producing ceremonial objects. Shortly after inventing paper the Chinese started using paper money. Gold is actually a terrible currency that makes trade much less efficient. Historically gold was most useful as a currency when empires were able to procure a growing supply of the metal, and when the gold stopped coming in people would switch to some other currency (typically some form of credit money).
- H8crilA 6y ago
  Yeah I agree with the first paragraph. I wrote "deeply flexible", that is ultimately not redeemable by gold. Credit is okay with me. Why do you think the second paragraph is true? Gold has been disconnected from currencies only since 1971, and this detachment clearly has had significant impact: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
  - betterunix2 6y ago
    Even if you are only talking about the United States, 1971 was not the first time the country left the gold standard: https://en.wikipedia.org/wiki/Demand_Note#Suspension_of_specie_payment https://en.wikipedia.org/wiki/Demand_Note#Suspension_of_spec... https://en.wikipedia.org/wiki/History_of_the_United_States_dollar#The_Gold_Reserve_Act https://en.wikipedia.org/wiki/History_of_the_United_States_d... Historically the pattern has generally been for a metal standard to be introduced only to be abandoned when the state is unable to procure more of the metal. The Romans abandoned their silver standard and started debasing their coins shortly after the empire reached its greatest extent, almost certainly because they could not find enough silver to keep the system going (though nobody bothered to write this detail down). In ancient China various dynasties are known to have started issuing iron and bronze coins when they could not find enough gold/silver/copper to meet their monetary needs (and when the weight of coins became impractical they issued paper money). There is no question that using weights of gold as a currency makes trade less efficient. Most merchants and most consumers do not have the equipment or expertise needed to evaluate whether or not a given weight is pure gold, and having to pay someone to evaluate a sample amounts to a tax on every transaction. The inability for a central bank to adjust the supply of money in response to changing economic conditions actually led to greater price instability when the gold standard was in place (deflation during a banking crisis). It is economically inefficient to pay people to guard vaults filled with gold bars that are never going to do anything but collect dust. Leaving the gold standard was the right thing to do every time it happened, and going back to it was in every case the wrong thing to do (motivated more by alchemy and tradition than by any serious economic considerations).

iknowstuff 6y ago

Well, there are decentralized stablecoins on Ethereum, like DAI.

beaner 6y ago

Your comment is wrong all around. Volatility doesn't prevent layer 2 from working, and it is growing. [0] [0] https://defipulse.com/lightning-network https://defipulse.com/lightning-network