We are reading a lot about different countries starting to move towards a "fedcoin". China is one of the leaders in this arena where they will issue a digital currency. If not for the coronavirus, it might be close to being out.
Bitcoin maximalists believe that Bitcoin is going to be the "money of the Internet". This is a view that is mistaken in my belief.
History shows that humanity never used just on currency. Why are we about to start that now? It makes little sense.
In fact, I foresee things going in the other direction. There will not be a single (or even a basket of) currency used. Instead, we are going to see millions of different currencies used as a medium of exchange. This is radically going to change how we view things.
Networks are taking on a bigger portion of our lives. This means the network (digital, physical, and community) that we are interacting on will dictate a lot. When we see marketplaces implemented across the board, the currencies people are holding will be used.
Thus, we get back to the distribution issue. How one acquired cryptocurrency is going to take on greater meaning. The challenge with a "fedcoin" is that it does not alter how people acquire money. Those who are reaping the majority of the financial benefits under the existing system will see the same with a digital coin.
We need a new system. To me, that starts with the ability to get the tokens in people's hands. Having a few whales holding the majority of a token does not scream decentralization. Yet, when you have different whales holding the lion's share of the tokens across hundreds of thousands of different coins, then we see a radically different distribution curve.
Atomic swaps and instant exchange in wallets is going to change how we pay for things. Ultimately, there will be a time when we make a purchase and 5 or 7 different tokens are used in the transaction.
Ultimately, for a currency to succeed, trust is required. That is really what backs it. For all the mention of other factors, one thing we are quickly learning, in times of extreme crisis, the USD is what people want to hold.
Therefore, if government that is not trusted, such as Venezuela, issues a cryptocurrency, it is not likely to be embraced. No matter how it is structured, without trust it is doomed to failure.
This is the biggest lesson as we move forward in the digital currency debate.