It is an opinion editor developed by engineer, lawyer and founder Scott Worden BTC Trusts.
“I am working on a new electronic money system that is completely peer-to-peer, with no trusted third party.” – Satoshi Nakamoto
It’s a perfect fall day in Colorado and I’m sitting outside a pub in the late afternoon. I’m meeting a bitcoiner I met in Austin later this summer. As the sun dropped behind the mountains, the sky turned orange, creating the perfect backdrop for a live bitcoin chat.
While ticking off a typical list of things we agree on – censorship is bad, red meat is good, etc. – I expressed my wish for more businesses to accept bitcoin as payment. “Well, not me, why do you want to break up with your sats?” was the reply he threw back. Of course, the bottom line is that a true Bitcoiner values satoshis more than anything else in the world. Why trade them for groceries, t-shirts, or beer? “Haven’t you heard about Laszlo Haniec?” That idiot traded 10,000 bitcoins for a few pizzas. I will not repeat that mistake. “Talk to me when Bitcoin hits $200,000, then it makes sense.”
My new friend is not alone in this way of thinking. This is a sentiment put forward by people like Michael Saylor and others in the HODL community. They will defend: “The least wealth in the world is Bitcoin. It’s digital gold,” “Buying Bitcoin is like buying real estate in Manhattan 100 years ago”, and “Don’t sell your Bitcoin!” However, at the same time, there is an intuitive recognition that if bitcoin can never be traded for a good or service, then no matter what price flashes on the BLOCKCLOCK in the office, it doesn’t really have any value. I call it the HODLer’s dilemma.
But is this really a dilemma? Are these mantras, as fruitful as they are, true to Satoshi’s spirit of innovation? Does the proliferation of the Lightning Network and non-security mobile wallets that our parents (or children) can operate intuitively require us to improve our understanding of Bitcoin’s value proposition? Personally, I think it’s time to stop thinking of bitcoin as just a store of value and start conceptualizing it. primarily as a medium of exchange … it also allows for better retention of value than any other asset on earth. If you haven’t already noticed, there are several reasons why.
Privacy
“Bitcoin would be convenient for people who don’t have credit cards or don’t want to use the cards they have.” – Satoshi Nakamoto
It’s time to start logging out. The signal has never been stronger. Today we live in a world where a fiat system can:
All this is happening today, and this is likely the tip of the iceberg. In a retail system where cash transactions are increasingly rare and inconvenient, most of the big banks, credit agencies and payment systems have acquiesced to the demands of a government that seems to have an existential stake in controlling our behavior..
Of course, bitcoin is not a panacea for censorship—at least not how it’s most commonly bought and exchanged today. The Canadian truck protest showed us that a government committed to drowning out the voices of its citizens will go to almost any length to do so, and in the process taught us that licensed exchanges and chain analysis techniques can be highly effective at blacklisting and even identifying addresses. can donors. These weaknesses need to be addressed to ensure more censorship-free currency exchanges. But by transacting bitcoin with peers and merchants for everyday goods and services as often as possible, we encourage others to both accept and transact bitcoin. Through numbers alone, we can make the bitcoin economy more robust, decentralized, and harder to censor. A community that values privacy will naturally choose to accept jail-free wallets, participate in collaborative transactions, and avoid KYC exchanges. Growing and educating this community has never been more important.
Convenience and Autonomy
“Money can be secure and transactions easy with cryptographic proof-based e-currency without relying on a third-party intermediary..” – Satoshi Nakamoto
A common counter-argument to a bitcoin transaction is that it’s either too complicated or too slow compared to swiping a credit card. This is simply not true anymore. Today, any entry-level Bitcoiner can download Muun Wallet and send Lightning invoices to customers for payment via QR Code in minutes. Coinkite has an NFC device that allows users to sign transactions by touching their cards. There are more examples and more to come. The beauty of these solutions is that they are completely custody-free, meaning there is no central third party controlling your coins. The software simply broadcasts transactions to the network. Lightning transactions clear instantly, with fees lower than the traditional 2-3% of Visa or Mastercard. (For example, it recently cost me about $.60 to send the equivalent of $700 last week to Wrich Ranches for beef. Had I used Visa, the same transaction would have cost the merchant about $20.)
In addition, these transactions promote the autonomy of both parties. Lightning transactions, like everything backed by Bitcoin’s proof-of-work, occur without counterparty risk. What’s taken out of the equation is the risk of the consumer not paying their bill, having a payment dispute, not having enough money in their account, or filing for bankruptcy down the road. All these risks manifest as transaction inefficiency and its costs are directly or indirectly absorbed by merchants and consumers. Thus, a trusted system like bitcoin is more efficient, reduces risk for merchants, and ultimately makes goods and services cheaper for responsible consumers.
“I am sure that in 20 years there will either be a very large transaction volume or there will be no volume at all.” – Satoshi Nakamoto
It is better to think of all our transactions in terms of bitcoins. When money is truly a store of value, we take a measured approach to spending and take into account the future growth in value that money can achieve. This makes sense and applies whether you spend sats or dollars. The website bitcoinorshit.com drives home this point quite clearly.
There is also the story of Laszlo Hanyecz, who famously bought two pizzas for 10,000 BTC in 2010. In fact, considering the market value of BTC after ten years, Laszlo paid several billion USD for the pizza. It amazes me that Bitcoiners, being economically naive, jump on Laszlo and use this example to support their position that bitcoin is never spent. The simple truth is that everyone who bought a pizza in 2010 spent thousands of bitcoins on it.. The only way to avoid this would be to eat something cheaper or starve. The fact is that every fiat transaction we make is a direct trade to potentially increase our stack. Once you understand this, the public debate about spending bitcoin on products or services dies down.
The vast majority of us must embrace money energy for goods and services to survive in today’s society. That’s the only argument left which products or services are superior to the ability to get more sats. This is a personal and unique decision for each of us. The answer must be thought of independently, regardless of whether money energy is spent in sats, dollars or yen – it is only money energy. rescue – what’s left is relevant when it comes to the HODLer dilemma.
If we start more transactions in BTC, we will all save more BTC. First, we tend to be more careful with our purchases when we’re dealing with sound money, a proven store of value. Sure, we really want a new iPhone, but is it worth 5 million sats if you expect it to cost a penny one day? We may decide to wait another year before upgrading and saving for the future. On the other hand, we all need food, shelter and clothing. If I have a choice between buying meat from Costco with my Visa card or buying it directly from a rancher who accepts bitcoin, why wouldn’t I choose the latter?
Today, the number of merchants accepting bitcoin is relatively small, although it is steadily increasing. As bitcoiners begin to realize that the “spend dollar, save” theory can backfire, more people will start looking for goods from merchants that accept bitcoin for payment. This spike in demand will drive merchant adoption, potentially shifting the graph significantly to the left for the bitcoin economy.
More exchange equals more value
“As the number of users increases, the value of each coin increases. It has the potential for a positive feedback loop; As users increase, the value goes up, which can attract more users to benefit from the increased value.” – Satoshi Nakamoto
This is where we sit today. A growing number of speculators and bitcoin enthusiasts are embracing the idea that Bitcoin is an honest store of value. This community further believes that the scarcity of the asset will inevitably lead to a supply squeeze that will push the price up. Of course, it’s possible for this to happen simply by the act of HODLing, but as Satoshi Nakamoto pointed out, the value increases when the numbers increase. users stand up. Does buying and holding an asset qualify as a use? If the brilliance behind bitcoin is that it enables peer-to-peer transactions without a third-party intermediary, are we really taking advantage of this opportunity by just hoarding without spending?
I believe that for bitcoin to realize its full potential as a store of value, it must become a true medium of exchange. Demand is the basis for bitcoin’s price, as value is not created solely by scarcity. If you have bitcoin utility if it becomes the driving force of its demand, its true potential as a store of value will be realized at this moment. Today’s economic and political backdrop may be the motivation we all need. But until bitcoin becomes an essential part of our daily economic activity, it is to be valued alongside other speculative assets and subject to the whims of the same fiat system it was designed to replace.
This is a guest post Scott Worden. The views expressed are entirely their own and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.