But it really depends on being able to transact at one of the very limited set of vendors who would accept crypto, especially overseas.

It’s a chicken/egg problem because without an extensive ongoing economy which would allow one to conduct a significant portion of total spending in crypto, it will be required to buy and sell back and forth to fiat.

So far costs of exchanging crypto to fiat are significant. I tried to figure out a way to use it to transact with a vendor I do business with overseas. We don’t care about bitcoin, we were just looking for a cheaper way to make the remittance.

Doing it with crypto was harder and more expensive than even PayPal. Especially because it subjects you to volatility risk and information blocks due to transacting between 3 currencies: USD-BTC-EUR.

You could argue that as “adoption” increases (using crypto as real currency) this problem would lessen.

I doubt this will be the case, even if the “scaling issue” is solved.

I don’t see any reason that crypto will lower the cost of securing transactions. Currently, the cost of digital transactions include fraud protection and regulatory compliance.

A currency that operates out of the jurisdiction of government cannot scale, as being a “black market” currency is inherently limited is scope.

The biggest problem is that distributed, peer to peer, currencies provide a vastly larger attack surface for hackers. They also require large scale duplication of security practices, implemented by relatively inexperienced (at providing security) users.

This is the worst of all worlds. The drastic consequences of being hacked either require the user to undertake the costly risk mitigation strategies and accept the risk of losing funds or...use custodial solutions like exchanges or banks.

That means at least a lower cost per user for security, but it shouldn’t be any lower than cost of bank security practices, at best.

For proof-of-work coins the cost of securing the network must also ultimately be borne by users. There are not infinite speculators willing to cover the mining costs.

Ultimately, this leads to a currency that has a high cost. It therefore will lose out to centralized currencies.

Crypto currency has two properties competing digital currencies lack.

True peer to peer transactions and censorship resistance.

They also have some properties that make them useful as a vehicle for pure speculation, which is a perennial interest of humans.

But the type of transactions that benefit from the peculiar properties of these digital token systems are not that numerous, and are mostly black or gray market activities.

When you add in the fact that it is trivial for governments to crackdown on crypto currencies, just by making them illegal, or even just enforcing existing tax regulations that make each transaction a taxable event,it’s clear the odds are stacked against crypto currencies becoming widely adopted.

Facebook is not going to be able to avoid the costs that other digital cash systems have. So they may succeed, but their token will not really be in the same category as the “real” crypto currencies.

They will be subject to as many regulations as PayPal, Apple, Venmo, etc.

They will also have the same need for security and fraud protection.