1. Bitcoin can buy coffee but that's never the function of a base layer serving 8 billion people.
When you buy a coffee with a credit card you are using a L2-L3 payment without final settlement. If Monero served 8 bn people then its base layer could not be used for buying a coffee. Since almost nobody uses Monero, you can absolutely buy a coffee on its base layer. If a form money becomes widely used then it won't make economic sense to buy a coffee on its base layer.
2. Scaling Bitcoin to meet the needs of 8 billion people will primarily happen on L2-L3 since the base layer must be secure, decentralized and allow noderunners to run local nodes. Ignoring this fact is an appeal to magical thinking. We can't achieve bandwidth for 8 bn people on a secure base layer.
3. Bitcoin is rules without rulers. If you want decentralization, property rights and liberty for all, Bitcoin game theory can achieve that while Monero doesn't have that sort of impact on politics.
Monero might be useful as dark money at some point but it is not a store of value that can enact a positive pressure on nations/jurisdictions to increase individual liberties. The game theory of Bitcoin will pressure nations to either lose capital in capital flight, or, improve individual liberties in order to keep capital (Bitcoin). Liberty arbitrage requires a global store of value.
I wrote a piece on the game theory of why taint will not work against Bitcoin and it also lays out how liberty arbitrage works. This is dependent on Bitcoin being a global store of value.
A few thoughts on the game theory of tainted bitcoin.
TLDR; taint cannot work over time.
Let's visualize a possible scenario where a jurisdiction, for example the EU, decides to classify certain bitcoin addresses as tainted.
A few expected outcomes:
1. Many entrepreneurs would likely leave the EU in reaction, either because they own bitcoin or because they consider the regulatory move to be a red flag indicating more coming authoritarian measures. If A happens, then a logical B can be expected to follow.
These entrepreneurs won't take their bitcoin *with them* because all bitcoin exists globally without borders and their bitcoin are already waiting for them in the new jurisdiction. Their bitcoin does not move when they move, but their spending is now relocated outside of the backwards jurisdiction.
2. Let's then assume that some entrepreneurs have had their bitcoins classified as tainted by the EU. As they settle in a new jurisduction - which doesn't care about the EU:s taint decisions - these "EU-tainted" coins are soon entering the economy and switching hands. Nobody in a free economy has any reason to care about the dictatorial phantasmas of the EU.
3. After these coins/sats spread in the free market economy, they will eventually end up in contact with the EU again. At that point, the coins are now integrated in the economy and the "EU-taint" will be considered obsolete.
If the EU decides to keep rejecting the "EU-tainted" coins/sats, the EU will lose out on more and more commerce due to self-quarantine. The number of tainted coins will grow over time and the EU will have to eliminate themselves from an in increasing amount of valuable trade.
Over time the taint policy will become so ridiculous and economically harmful for the EU that there won't be any public support to keep the taint regulations.
Besides, as the coins/sats have moved through the free, prosperous and just jurisdictions of the world where property rights are respected, the laggard economies that issued the taint will have little incentive to remain laggards. Or Lagarde's, as they may end up being called.
Don't be a Laggarde!
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