Tyler Cowen: belief

Transcript context

…Well, I don’t think it will fork, at least nothing with substantial adoption. There will only be 21 million bitcoins, and that’s how that’s going to stay. I feel pretty confident about that. It depends what layer you’re talking about. If you’re talking about the base blockchain layer of bitcoin, we’re probably not going to grow the capacity of that to do tons more transactions. It will only be used — the base layer of the blockchain — to move pretty large amounts infrequently that the transaction fees, as more and more people use bitcoin globally, could go up there. There are things called, like, layer 2 solutions, which would offer faster payments, or there are other blockchains that are trying to target more that medium-of-exchange layer where fees could be very low forever and really focused on scalability. It’s like the internet had to move from dial-up to broadband and enable all these new applications. There are a lot of people working on the broadband or the more scalable versions of blockchains that could enable that medium-of-exchange use case. If we know the net mining fees are going up, shouldn’t our prediction for the long-term equilibrium be one of very low velocity, and in some ways, the uses of bitcoin will be more restricted than now, and it will be quite inert. It will be there as a thing in portfolios, but actually, in a funny way, a little boring. Look, I think of bitcoin as being like digital gold, so it may turn out that it’s not going to be the medium of exchange unless those layer 2 solutions start to really work. If we don’t get layer 2, then I think bitcoin will probably stay like a digital gold, and you’re right, it will be large, slow-moving amounts. It’s like the asset that people flee to in times of uncertainty, almost like the reserve currency of the crypto economy. I don’t know if it’s boring or not, but you may see lower movement of money and that kind of thing.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.