How the Blockchain can be valuable while bitcoins are not - A hypothetical scenario

With so much talk about the value of bitcoins versus the value of the Blockchain, I thought it would be fun to think about a possible scenario in which the Bitcoin blockchain (aka the "World Wide Ledger" or just "The Ledger") has significant value while bitcoins have little or none. Although I have a vested interest in seeing the value of bitcoins increase, it’s healthy to take the contrarian view once in a while. Below is the scenario that I came up with.  I would welcome comment.

Imagine if you will, the following chain of events:

1. Major financial institutions and governments decide to issue fiat currencies on the World Wide Ledger.  (i.e. they create coloured coins like USDcoin, EURcoin, GBPcoin, CNYcoin, etc.)

• Reason 1: these organisations can reduce their production and administration costs, significantly improve the trackability of their issued currencies and further strengthen access to new lucrative international markets. (UPDATE: Citi group is already recommending that the UK government consider doing this!)
• Reason 2: by creating fiat coloured coins, governments gain the benefits of the blockchain while still retaining control over monetary policy with respect to their national currencies.

2. Bitcoin miners start only accepting transactions with fees denominated in fiat coloured coins.

• Reason 1: No consensus is required for bitcoin miners (or "ledger verifiers") to choose which transactions they accept or reject. In fact this happens routinely today.
• Reason 2: Earning fees in fiat coloured coins, which may have less price volatility, zero exchange rate risk and will presumably be accepted in millions of places worldwide (in the case of a USDcoin, EURcoin or CNYcoin for example), will be compelling.
• Reason 3: Given the various savings the issuers will achieve, it is reasonable to assume that the value of fees given in coloured coins could be significantly higher than fees given in bitcoin, at least initially.

3. Consumers start to use fiat coloured coins en masse

• Reason 1: The institutions backing these coloured coins will have the financial, marketing, political and physical resources needed to promote these currencies and even mandate their use among populations they oversee.
• Reason 2: From the average consumer's point of view, these fiat currencies will appear to be the best of both worlds.  They will have many of the benefits of cryptocurrencies and fiat currencies combined. Although some will understand the benefits of a purely decentralised currency like bitcoin, it may be a while before a average person in Boston, Lagos, Buenos Aires or Manila prefers a bitcoin backed by the "Blockchain" over a USDcoin backed by the US government.

Conclusion: In this hypothetical scenario, the value carried on the Ledger could grow exponentially and indefinitely while the value of bitcoins not associated with a coloured coins (what I call "naked bitcoins") will tend towards zero.

• Reason 1: There will be very few things that the average person could not do with fiat coloured coins that you could do with bitcoins.
• Reason 2: There will be less and less consumers or businesses willing to accept naked bitcoins as the reasons to do so diminish.
• Reason 3: This still leads to a stable ecosystem.  It is just one where naked bitcoins (awarded or earned through fees) have little or no value and that value is replaced by coloured bitcoins that are easier to understand and utilise for consumers and ledger verifiers alike.

Fundamentally, 2 premises would need to come together to make this scenario possible.

1. There exist very large, well capitalised and powerful institutions who like the potential benefits that a world wide ledger could bring for them but have a strong vested interest in maintaining control of their currency.
2. Ledger verifiers would prefer to earn fees in coloured fiatcoins over naked bitcoins as they feel that these transactions will make them the most money for the least effort.

Final thought:

This is only one interesting experiment where I have attempted to think of a particularly extreme scenario. This is not some kind of Pascal's Scam where I am trying to convince you that a particular version of the future is more or less likely.  In the end there are so many variables that it is by no means certain what will happen.  However, as a member of Coinfloor, a UK based bitcoin focused company, I am privileged to have a front row seat while this all plays out.