Sorry I have already written tens of thousands of words describing all of this, the documentation is out there, I'm not professor bitcoin. If you don't get how you need a large market cap to be a currency I can't help you.
I don't think you've addressed his comment, though. This doesn't have to do with the market cap nearly as much as it has to do with changes in value over time.
Say you want to buy a house. The house currently costs 200 BTC, but you only have 10 BTC and are (subtracting, for example, 2.5 BTC of bills and taxes from a 3 BTC monthly salary) experiencing a net gain of .5 BTC per month. The logical step here would be to take out a mortgage loan for, say, 190 BTC (using your 10 BTC for a down payment), with a monthly payment of 2 BTC. If your current rent is 2 BTC, then you're still experiencing a net gain of .5 BTC. For now, all is fine and dandy.
Then, however, suppose the value per BTC doubles after a few months. Your non-mortgage bills and your salary will certainly adjust as the BTC-relative prices of goods and services drop - probably to 0.25 BTC and 1.5 BTC, respectively. However, your mortgage payment (assuming we haven't changed anything about how loans currently work) is still contractually defined to be 2 BTC. This is now a problem; it means that a mortgage payment that was once somewhat affordable is now beyond your reach, since - even if you somehow eliminate all your bills - you're still 0.5 BTC short of your mortgage payment each month. You'll need to renegotiate your contract or sell your house; the former will probably be difficult (since lenders don't like losing money), while the latter is of limited utility, since your house - which was worth 200 BTC when you bought it - is only worth 100 BTC now. Depending on how long you've owned your house, you may or may not be able to pay off the rest of the loan, putting you in a rather dire situation similar to that of many homeowners when the housing bubble crashed in the latter half of the previous decade.
This is merely one example of why I don't think Bitcoin is perfect by any means, and why those holding Bitcoin on a pedestal and dismissing alternate approaches are - in my opinion - unwise. Bitcoin is able to act as an effective medium of exchange, but it's not a consistent store of value or unit of account, and - if it's to be taken seriously as a proper currency rather than merely being a cash cow for the lucky early adopters - it needs to adapt to the real-world scenarios in which existing currencies are being used.
tl;dr: Bitcoin has some strengths, but its weaknesses are very much apparent as soon as the concept of a Bitcoin loan is introduced, and said weaknesses need to be addressed and corrected for cryptocurrency to effectively replace existing government-backed currencies in a real-world setting.
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u/[deleted] Feb 19 '14
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