The overwhelming majority of us need to trade monetary energy for goods and services to survive in today’s society. The only controversy that remains is
which products or services take precedence over the opportunity to acquire more sats. It’s a decision that is personal and unique for each of us. The answer should be thought of independently and irrespective of whether that monetary energy is spent in sats, dollars or yen — it’s only the monetary energy saved — that which is left over — that is relevant when it comes to the HODLer’s dilemma.
We are all likely to save more BTC if we begin transacting more in BTC. For one thing, when we deal in a sound money that is a proven store-of-value, we’re more apt to be discerning in our purchases. Sure, we really want the new iPhone, but is it worth 5 million sats if you expect a sat to be worth a penny someday? We might decide to wait another year before we upgrade and retain those sats for the future. On the other hand we all need food, shelter and clothing. If I have a choice between buying my meat from Costco with my Visa card, or buying direct from a rancher who accepts bitcoin, why wouldn’t I choose the latter?
Today, the number of merchants that accept bitcoin is relatively small, though growing steadily. As bitcoiners begin to understand that their “spend dollars, save sats,” theory may be counterproductive, greater numbers will begin to seek goods from merchants that accept bitcoin for payment. This spike in demand will drive merchant adoption, potentially shifting the timeline for a bitcoin economy significantly to the left.
More Exchange Equals More Value
“As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.” — Satoshi Nakamoto
This is where we sit today. There’s a growing number of speculators and bitcoin enthusiasts who have bought into the idea that Bitcoin is a bona fide store of value. This community further believes that the asset’s scarcity will inevitably lend to a supply squeeze that will cause the price to rocket upwards. Sure, it’s possible that this could happen through the mere act of HODLing, but as Satoshi Nakamoto points out, the value goes up when the numbers of
users go up. Does buying and holding an asset qualify as use? If the brilliance behind bitcoin is enabling peer-to-peer transactions without a third-party middleman, are we really leveraging that capability by exclusively stacking and not spending?
I believe that bitcoin needs to become a true medium of exchange in order for it to fully realize its potential as a store of value. Since value is not derived from scarcity alone — demand is fundamental to bitcoin’s price. If bitcoin’s
utility becomes the driving force for its demand, it is at this moment that its true potential as a store of value will be realized. Today’s economic and political backdrop might just be the motivation we all need. But until bitcoin becomes an essential part of our daily economic activity, it is apt to be valued alongside other speculative assets, and subject to the whims of the same fiat system it was meant to supplant.
This is a guest post by Scott Worden . Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.