Oddbean

I’m just curious, I’ve never received a solid answer to this question. What exactly does a world look like on a Bitcoin standard when it’s known that 7 tps isn’t going to cut it for a global economy. I’ve never heard a solid answer to this.

Bitcoin will be mostly custodial in the future. The custodians will be the new banks. The rug pull risk will still exist. The risk of these new banks rehypothecating your Bitcoin will exist. So how are we going to prevent another 6102? The difference is that the Bitcoin standard allows you to hold the majority of your savings in self custody while your daily/weekly/monthly spending money is handled by a custodian. The gold standard was the opposite. You held the majority of your gold with the banks. That created a huge rug risk which would be devastating for everyone. Losing a couple hundred bucks on wallet of satoshi isn’t going to ruin your life. So I think we will see people get rugged endlessly by custodians but the damage will be minimized because it’s only a small percentage of your wealth.

Well that’s the most thought out answer I’ve heard so far. So basically the only way Bitcoin works at scale is through custodians? Kinda goes against the Bitcoin ethos don’t it? At least your answer is based on reality of the tech and not some hand wavy, we”ll get to it in the future. I can see this reality happening because it’s already starting to emerge. Coinbase, Blackrock, hell even Microstrategy could spin off a BTC bank in the future, with lightning serving as rails between banks… Not the future I want per se but I appreciate your honest answer 🤝

Idk the exact numbers but I’ve heard this multiple times: there aren’t enough sats for everyone in the world to open a lightning channel. And high fees will make it difficult for poor people to add liquidity. I’ve lost more money trying send payments on lightning than on the base chain. Lightning sucks. I think solutions like liquid are powerful and offer the best tradeoff. Yes it’s technically custodial, but the rug risk is minimized because there are so many entities that would have to collaborate together to rug you. And custodial services like these can provide you more privacy. Obviously they won’t all do that but it is a feature that can be offered. And it’s more practical than teaching people coinjoin and join market stuff. The only thing the user has to determine is how much he’s willing to lose in his custodial wallet. That is the tradeoff that must be made.