Throw in lightning and all of a sudden bitcoin can handle millions of transactions per second using only 6% of the power consumed by the world's banking sector. Not too shabby.
* Gold =~ Bitcoin (2009)
* Gold Standard =~ Lightning Network (2018)
* Fiat Currency =~ (???)the crucial difference is that nothing is held in reserve. ie. you don't have to trust that the bank is going to run away with your deposits.
That, and, I think you have the analogy backwards. It's not that nothing is held in reserve - that would be Tether ;) - it's that everything is held in reserve.
The problem is anecdotally outlined in the article. People are willing to mine bitcoin at a loss if need be and that makes mining rough for everybody because of the increased difficulty.
The problem is it's too easy to mine bitcoin. As the article points out, all you really need is somebody to keep an eye on the servers. People will push it to the edge, at which point, a tragedy of the commons will ruin it for everybody.
The only hope is for bitcoin prices to increase exponentially for all of eternity.
Anyways: The mining difficulty is dynamic. If mining becomes unprofitable and miners stop mining the difficulty will adjust downwards making it easier to mine and hence profitable again.
My point is that that is not how it will work out. As the article points out, people were still mining when bitcoin dropped to $200 even though it was unprofitable. Because they were still mining even though it was unprofitable, they kept the dynamic difficulty high enough that mining remained unprofitable. Why? Because they had the infrastructure and it is easy enough to keep on mining until you are completely bankrupt. You don't quit mining just to make it profitable again for somebody else, so you hope that you can outlast them. That is the tragedy of the commons and it seems inevitable as people spend more and more money on infrastructure investment.