The biggest problem with cryptocurrencies, from the beginning, is that they are effectively deflationary. They are designed to give out huge amounts of coins at the start, and then trickle down to zero. Before they get to zero, they will start to become deflationary (declining supply over time) due to people misplacing their keys at a higher rate than new coins are being mined. Popular coins are probably already at this point.

This is a great idea if you want to get early investors because you are basically guaranteeing them a good return if they wait long enough. The supply is only decreasing so if demand grows at all then you will make money. This is like an even more exaggerated version of gold or other commodities, cryptocurrencies don't have to actually have any intrinsic use case or value they just have to cause a bit of FOMO to generate cycles of boom and profit out of nothing. We all know this, it is extremely familiar by this point.

Now for the controversial part: I think this is the worst decision for the long-term use of cryptocurrencies that could have possibly been made. The technology behind crypto is amazing, mindblowing, could transform the financial world. I believe in all of that harder than most people. The privacy guarantees that are possible with crypto and the empowering nature of self-custody are revolutionary. But, the deflationary aspect all but guarantees it will not be widely adopted and not reach its actual potential.

Suppose we could flip a switch and all fiat would be replaced by popular cryptocurrencies tomorrow. Here is the dystopia you would be asking for…

Guaranteed Wealth Inequality

Since the currency that you would be using in your everyday life is deflationary, every new generation of people born would be more and more royally fucked than the previous ones. We are talking wealth inequality that would put the current system to shame. Not only is the currency supply decreasing, guess what isn't? The population. The economy (well, I'll talk about that later too). If crypto was the defacto currency, demand would be proportional to the size of the economy, which is in turn at least proportional to the population.

Nominal wages would decline over time. Real wages would stay the same (hopefully), but that means that people who just sat on their money from a previous generation would have unimaginable wealth that you, as the next generation, could never hope to accumulate. This is literally built into the currency system, not just a nebulous effect of capitalism/government policy/society like it is now. Every person born would be at an immediate disadvantage compared to previous people, with nothing you could do about it.

Spiraling Economy

Back to this point, if you are encouraged to hold onto your money because it will always be more valuable in the future, then you are not encouraged to invest it. There will be basically no available capital. Interest rates will be through the roof, because you have to make more money on the loan than you would get from just holding the cash. No regular people will be able to get a loan, you will never be able to buy a house, a car, you will be forced to live paycheck-to-paycheck for your entire life, renting or leasing everything. The whole, "you will own nothing and be happy"? That is basically guaranteed by a deflationary currency.

Moreover, the economy itself will collapse. Nobody will be able to start a business. Risks and innovation will be discouraged. Everything will stagnate or go downward.

A Better Choice

I am a cryptographer, I have been aware of cryptocurrencies since basically right after Satoshi published his paper. I have seen the prices climb from pennies to tens of thousands of dollars. And I have never bought any cryptocurrency, because from the beginning I knew that even though the tech was amazing they were inherently predatory.

You can say that it is still early for CCs, but lets be honest it has been 15 years. No other technology with this kind of promise has taken that long to mature. Do you realize that Satoshi's paper was published very nearly at the same time as the first iPhone was released? Compare their respective impacts on the world for a minute and let that sink in.

I truly believe that if it had been designed to have a constant, or even adjustable rate of inflation based on demand, and wasn't frontloaded to dump out most of its coins onto early investors, it (and other CCs afterward, which all just followed in the steps of Satoshi) would be used by everyone today. It's such an inherently useful technology, it is only held back by the focus on making investors money rather than being an actual currency.