> Bitcoin gives you two currency exchange transactions to do where previously there was only one.

Not true. Bitcoin in and of itself doesn't work like this. Yes if you have dollars and you need bitcoin then it's an extra conversion. But it's like saying it takes two conversions to use the dollar when you happen to have euros or yen or whatever else. This is a startup phase issue, not a long-term issue. And even if you just begin, you can buy e.g. $1k of bitcoin and buy hundreds of cups of coffee, and only that first transaction was 'double', not the hundreds after. Moot point as far as I'm concerned.

> Bitcoin's transaction cost and risk is necessarily greater than any centralised solution

No it's not. Would you say for example that, putting all the power to vote in elections on 1 person is less risky than democratically letting the country vote? Centralized solutions are more prone to corruption, 'too big to fail', and lack any redundancy. A decentralized solution however is very hard to corrupt, if any of its elements fail it can continue to exist, and thus it's less at risk of individual failure.

Transaction costs of centralized solutions aren't necessarily cheaper. They certainly can be, I agree. But that doesn't mean it will be. The reason for that is that payment networks like Visa operate with billions of plastic cards with passwords written on them and chips that can be scanned by thieves just sitting nearby with a computer, millions of vendors with archaic hardware, with an insurance product built on top of this unsafe 1950s invention known as credit cards. There are huge costs involved here. A network so expensive that there are only a few major credit card players involved. Same with something horrible like SWIFT. If anything, this is a payment system that will be disrupted and undercut, not the other way around. Perhaps after that we'll see a centralized solution that's actually better and cheaper than both, sure, but it's like saying let's not invent the car even when it's better than the horse, cause we may invent flying cars that'd be even better so why bother. It'll just be 'undercut' anyway.

> don't quote the minimum transaction fee in response to this, quote the miner electricity cost per transaction

On the first point: electricity costs of miners is not a marginal cost, thus you can't quote it as a transaction fee. It's a systemic cost. i.e. 25 bitcoins are rewarded every 10 minutes with every block regardless of whether there were 0 or 1 trillion transactions. Just think about that for a moment. It's a systemic cost to run the network even if NO transactions happen at all. It's not tied to the transaction number. Fees are. Block rewards are not. And in the long term, which we're talking about, block rewards are zero. And given that blocks are on a course to go from 1 mb to 1 gigabyte in the next few decades (under the plan of Chief Scientist at TBF Gavin Andresen, we're looking at 1000x more transactions. As such, transactions can replace current block rewards and then some, without increasing the fee per individual transaction (a few pennies). To compare this with roughly 30c + 3% fees on a purchase of a $1k laptop that credit cards or Stripe or Square or Paypal offer you is ridiculous. On the smaller end, microtransactions aren't even possible with most payment systems today, and on the larger end of the spectrum, million dollar transactions still cost pennies with bitcoin.

> the exchange bid/offer spread

Again, treat it as a currency. To use a currency there is no conversion involved. We covered that already. You can already get paid in bitcoin and pay bills in bitcoin, and remember we're talking longer term where paying with bitcoin is like the choice to pay with cash or card: ubiquitous.

But hell, even if you want to include the conversion like any other currency: check the bid/offer spread at your bank for dollar/euro, or at Paypal, it isn't pretty. Meanwhile at Circle the bid/offer spread is 0 and you can instantly buy and sell bitcoin. And at large exchanges the spread is generally much less than what I see at my bank or paypal (when I say generally read always, but I'm saying generally as I'm sure there are exceptions to be found.)

> this is what happened in the leveraged property downturn as recently as 2008.

You're misconstruing his point about capital flight. i.e. that is that if you build a house and create construction jobs, have value in the house, sell said house for money and then leave the country with said money by exchanging it for a foreign currency, the house is still there and the money didn't leave, it was bought by someone with foreign currency who obviously wants to spend that money in your economy. Nothing really left and no value was destroyed. There are certainly some effects but his point is that value isn't destroyed, it's just moved around or transformed.

"Just fix your current account deficit" is about as useful a piece of advice for countries as "just create jobs", ie not very.

Agreed that's a bit too simplistic. But I think the larger point he made holds true, that most governments over the long run shouldn't have to worry about capital flight. It's just one of many forms of protectionism that will fade away with time, and with it, one of the big reasons countries like China don't want bitcoin to become too big.