Reader Questions Part 3

Three final questions. The ones that zoom out furthest.

Could Bitcoin and CBDCs coexist — or is it winner take all?

Almost certainly coexist — at least for a very long time. CBDCs will likely become the standard digital payment infrastructure for most countries. Fast, convenient, integrated with existing financial systems. Most ordinary transactions will probably run on some form of digital government currency.

Bitcoin occupies a different role: store of value, censorship-resistant alternative, savings outside the government monetary system. People in countries with sound government financial management may hold mostly CBDCs for spending and some Bitcoin for savings. People in countries with unreliable monetary systems may lean much more heavily on Bitcoin. The two serve different functions for different needs.

What does a Bitcoin standard world do to welfare states and government services?

This is genuinely uncertain. Hard money constrains government spending — which could mean smaller, more fiscally disciplined governments, or it could mean reduced ability to fund social safety nets. The historical record of hard money periods is mixed: economic growth was often strong, but the human cost of financial panics without monetary policy tools was real. A Bitcoin standard world might require fundamentally different approaches to social insurance — private, decentralised, community-based — rather than the tax-and-redistribute model that depends on a government’s ability to create money.

If Satoshi came back tomorrow, what would they say?

Nobody knows. But the clues left behind suggest someone who was deeply concerned about centralisation of any kind — including of Bitcoin itself. Who built disappearance into the design precisely to prevent the project from depending on any single person. They’d probably be uncomfortable with the ETF concentration in Coinbase. They’d probably be pleased that the protocol has remained essentially unchanged. They’d probably say something brief, go quiet again, and trust the network to continue doing what they designed it to do.

Tomorrow: what Bitcoin needs from its holders.

— The Daily Bit