The key difficulties of cryptocurrencies are:
Until those problems are solved, the only real applications of cryptocurrency will by illegal activities, notably buying drugs, paying for ransomware. But also paying for anti-censorship services from inside dictatorships. It is for this reason that Ciro Santilli believes that privacy coins are the best investments until then. People concerned with their privacy are likely to more naturally make fewer larger payments to reduce exposure, and therefore transaction fees matter less, and can be seen as a reasonable privacy tax. Also drugs are expensive, just have a look at any uncensored Onion service search engine, so individual transactions tend to be large.
- how do transaction fees/guarantees/times compare to centralized systems such as credit cards:Obviously, decentralized currencies cannot be cheaper to maintain than centralized ones, since with decentralization you still have to send network messages at all times, and instead of one party carrying out computations, multiple parties have to carry out computations.
Crypto could however be close enough in price to centralized systems that it becomes viable, this can be considered.
- bitcoin.stackexchange.com/questions/1261/is-it-possible-to-send-bitcoins-without-paying-a-fee "The Blockchain Scalability Problem & the Race for Visa-Like Transaction Speed" (2019)
The battle for a scalable solution is the blockchain's moon race. Bitcoin processes 4.6 transactions per second. Visa does around 1,700 transactions per second on average (based on a calculation derived from the official claim of over 150 million transactions per day).
- how can governments tax cryptocurrency. Notably, because:See also globalization reduces the power of governments.
- taxation has to be progressive, e.g. we have to tax the rich more than the poor, and anonymity in transactions would weaken that
- it would be even easier to move money into fiscal paradises, and then just say, oops, lost my passwords, those coins are actually gone
If crypto really takes off, 99.99% of people will only ever use it through some cryptocurrency exchange (unless scalability problems are solved, and they replace fiat currencies entirely), so the experience will be very similar to PayPal, and without "true" decentralization.
For those reasons, Ciro Santilli instead believes that governments should issue electronic money, and maintain an open API that all can access instead. The centralized service will always be cheaper for society to maintain than any distributed service, and it will still allow for proper taxation.
Ciro believes that it is easy for people to be seduced by the idealistic promise that "cryptocurrency will make the world more fair and equal by giving everyone equal opportunities, away from the corruption of Governments". Such optimism that new technologies will solve certain key social problems without the need for constant government intervention and management is not new, as shown e.g. at HyperNormalisation by Adam Curtis (2016) when he talks about the cyberspace (when the Internet was just beginning): youtu.be/fh2cDKyFdyU?t=2375. Technologies can make our lives better. But in general, some of them also have to be managed.
In any case, cryptocurrencies are bullshit, the true currency of the future is going to be Magic: The Gathering cards. And Cirocoin.
One closely related thing that Ciro Santilli does think could be interesting exploring right now however, notably when having Monero-like anonymity in mind, would be anonymous electronic voting.
TODO evaluate the possible application of cryptocurrency for international transfers:
Of course, the ideal solution would be for governments to just allow for people from other countries to create accounts in their country, and use the centralized API just like citizens. Having an account of some sort is of course fundamental to avoid money laundering/tax evasion, be it on the API, or when you are going to cash out the crypto into fiat. So then the question becomes: suppose that governments are shit and never make such APIs, are international transfers just because traditional banks are inneficient/greedy? Or is it because of the inevitable cost of auditing transfers? E.g. how does Transferwise compare to Bitcoin these days? And if cryptocurrency is more desirable, why wouldn't Transferwise just use it as their backend, and reach very similar fees?
While the idea that inflation due to money creation in fiat currencies does feel kind of bad, it could also be seen as a form of taxation, which is something Ciro Santilli sometimes thinks we should have more of. Ciro hasn't fully researched/rationalized how they compare, and would be open for arguments, see also: Section "Money creation vs tax".