> crypto case study_

I'm not here to argue whether being under fiat is better or worse compared to the gold standard, but we have to look at the facts and historical issues associated with it. When money is backed by gold, instead of people freely buying and selling and creating cash flow that grows the economy, individuals are incentivized to hoard money. Because they are not worried about their dollar today being worth less tomorrow, and instead expect it to gain value, they delay spending and investment. This reduces circulation in the economy, which can suppress small businesses and wages, creating an economic slowdown. This is exactly what happened during the Great Depression. Economists Bernanke & James (1990) demonstrated that countries most tightly tied to the gold standard suffered the most and recovered last. This is why printing money, even though it causes inflation, is considered a critical tool for economic recovery during downturns. (Bernanke & James, 1990, NBER; Temin, 1989, MIT Press)

So how does this apply to Bitcoin?

There is a clear parallel between the traditional gold standard and Bitcoin. Due to Bitcoin’s finite nature, and especially after all of it is mined, it will increasingly incentivize hoarding rather than its use as a medium of exchange. A fixed supply with no inflation mechanism creates the same psychological incentive: hoard it because it will be worth more tomorrow. Bitcoin maximalists call this "HODL culture" and celebrate it, but it may undermine Bitcoin’s original purpose of functioning as a currency.

Once miners cannot mine anymore, they will have to rely on transaction fees, meaning 2 things:

One issue is the idea called “undercutting” which I do not wish to expand on here but you can read about by clicking on its link. (Carlsten et al., Princeton, 2016)

Second thing is the issue of stability and security. It is debated whether there will be less people on the network when there is less incentive due to no block rewards, or if Bitcoin’s value and transaction demand will still be enough to keep miners active. The original design by Satoshi Nakamoto assumes fees will eventually replace block subsidies, but it is still uncertain if fees alone can sustain current levels of mining participation.

The concern is that if fee income is not high or stable enough, fewer miners will participate. (This does create a feedback loop: if fewer miners participate, those remaining earn more fees, which could then attract more miners again.) However, hypothetically if there is simply less overall mining participation, this would reduce total hash rate, which directly affects network security. Lower hash rate makes the network more vulnerable in theory (e.g., 51% attack risk), and could also lead to less consistent confirmation times during low-fee periods.

My prediction is that once it’s only based on transaction fees, there will be far fewer miners than today. Even if Bitcoin survives, security will likely be weaker, and network performance may become more unstable depending on fee demand.

I have thought about the possibility of having Bitcoin as a daily currency in the future for everyday tasks and very quickly I saw a flaw, which I decided to call the “coffee shop dilemma.” When you go to get some coffee at a coffee shop, hypothetically being able to pay with Bitcoin, you quickly realize you can’t. Why is that? It’s due to the 10-minute rule of Bitcoin, which is stated in the original Satoshi paper, where every block takes around 10 minutes. This does not even include the 6 confirmations before a transaction is considered final (which takes roughly 1 hour).

Yes, the Lightning Network exists, but it is not universal and is a separate discussion.

Monero’s main supply had already been minted by May 2022, so does that mean it falls into the same issue as Bitcoin with a finite supply? No, it does not. The protocol switches to a permanent fixed reward of 0.6 XMR per block, meaning it has a perpetual tail emission. This creates a permanent inflation rate that maintains miner incentives without forcibly removing the psychological pressure to hold XMR as “digital gold.” (Monero Project, Tail Emission)

As I mentioned, this crypto is fully private, meaning it offers such a level of security that even governments cannot break it directly to monitor it. So, on one side, it is the best crypto as it gives full anonymity, but on the other hand, this tech allows criminals to stay loose. Looking at the data, 73 exchanges have delisted it, and the dark web has been increasing its adoption of Monero every year from 40% to 48%. (TRM Labs, 2025; CyberNews, 2025) Monero is great, but governments cannot allow it to thrive.

to run your own validator node and earn staking rewards directly, you need exactly 32 ETH. (ethereum.org/staking; Ethereum Consensus Specs, GitHub)

if you hold less than 32 ETH, you are forced to surrender custody of your crypto to a third-party pooling service like Lido just to participate. "not your keys, not your coins," but the system effectively requires you to give them up if you don't have significant capital.

Lido Finance held approximately 31.7% of all staked ETH at the start of 2024, declining to ~28.4% by December 2024 as competitors grew. (Unchained Crypto, 2024; Xangle, Dec 2024) this means a single third-party liquid staking protocol was approaching the 33% threshold needed to disrupt the network, not through malicious intent, but simply through market dominance.

in ethereum's PoS system, controlling 33% of staked ETH gives an entity the ability to prevent the chain from reaching finality, effectively halting the network. controlling 51% gives the ability to censor or reorder transactions at will. these thresholds exist because capital controls validation, and capital concentrates. (ethereum.org — PoS attack and defense)

Proof of stake is frictionless. You own ETH → you stake it → you earn more ETH → you stake that too → repeat. The loop is largely financial and self-contained. There’s no physical bottleneck like factories, energy procurement, or logistics in the same way as industrial systems. Once you have enough stake, your position doesn’t just earn yield, it begins to structurally reinforce itself through compounding rewards. Issues of capital gain without creating true value is debated here.

Proof of work works with the idea of using proper hardware with real energy use and physical infrastructure. So how do the rich get richer? It’s clear: if you own the hardware, you make the profits. If you’re broke and don’t have money for hardware, you make nothing. It’s not pure auto-compounding, but for those who can afford and scale hardware, it still behaves like a compounding system driven by capital and efficiency at scale.