Bitcoin: digital gold or digital cash? Both.
Tuur Demeester

I think you have captured an important point. We are not facing a choice between all-on-chain or some-off-chain. We have already departed from all-on-chain and for good reasons.

Our choice is between:

Off-chain trusted third-party custodial — Exchanges using databases for off-chain transactions, with very poor security fundamentals and where trust is required (counterparty risk)

Off-chain trustless custodial — Lightning network/Tumblebit second layer solutions that are trustless and eliminate counterparty risk by using bitcoin transactions instead of SQL databases.

#1 is what we have today. Ironically, people who object to LN are vehemently against #1 but by resisting segwit are actually encouraging and feeding centralization into more counterparty-risk through centralized intermediaries. Demand is already pushing us that way. The lack of a trustless alternative leaves only one alternative. No segwit/No LN does not mean on-chain transactions. It means on-coinbase transactions, which is worse.