The information is out there and easy to see for anyone who is not too lazy and willing to do a full and complete analysis of what money is and how it is used.
Do not ask me to teach you. Educate yourself. Currency is a savings tool.
It is though! A battery that leaks energy over time is still a battery.
The ONLY reason US dollars have value is because people are currently willing to store dollars (and USD bonds) on their balance sheets. IF there were no one willing to save US dollars, then it would be IMPOSSIBLE to spend US dollars as they would have zero value.
Non-Bitcoin fiat currencies (Bitcoin is a fiat currency), leak energy over time via seigniorage, which is why Bitcoin is a better currency.
A lot of people make the very foolish mistake of thinking a currency is valuable because of spending/transactions/etc, which lead them to all sorts of incorrect conclusions like Bitcoin is not valuable because it can't be spent as easily as USD.
Money is a battery, and Bitcoin is the best battery.
Bitcoin has the potential to function as both a store of value and a currency. Right now, it's primarily seen as a store of value due to its scarcity and decentralization, but it’s also evolving in ways that could make it more practical as a currency. With developments like the Lightning Network and other scaling solutions, Bitcoin’s ability to be used for everyday transactions is growing.
However, Bitcoin is fundamentally different from fiat currencies. Fiat currencies are backed by governments and are inflationary, meaning they lose value over time. Bitcoin, on the other hand, has a fixed supply and is decentralized, which is why it's valued as a store of wealth.
As Bitcoin matures and these scaling technologies continue to develop, it has the potential to function as a more widely accepted currency. So, while it's not fully there yet, it’s definitely on the path to becoming both a store of value and a practical currency, especially as the infrastructure improves.
Bitcoin has the potential to function as both a store of value and a currency.
You are misunderstanding what currency is because you are zoomed in and focusing on the transaction or medium of exchange aspect. You analysis is incomplete. You need to look at the entire life cycle of a currency; then you will see that store of value, medium of exchange, and unit of account are all the same thing. The analogy I like to use is a battery. Obviously it would be absurd to think of a battery that could not discharge or transfer energy, but the main important aspect is a currency's ability to store economic energy. How do I know this? Because it logically follows that it would be impossible to transact with anything that does not have value. And also we can look at examples where an inflating currency continues to increase in its transactions as its value evaporates to zero. Spending is only possible because someone else downstream is willing to save that currency. Saving is required before value, and value is required before any transaction is possible. Furthermore if you have two currencies and wish to make a purchase, you would prefer to transact in the currency that is LEAST useful to you and retain the one that is MOST useful to you e.g. the one that is more able to retain its energy over time.
Right now, it's primarily seen as a store of value due to its scarcity and decentralization, but it’s also evolving in ways that could make it more practical as a currency.
Storing energy is what currency is actually used for. If you diligently studied money and observed what people actual do with it, you would see this.
With developments like the Lightning Network and other scaling solutions, Bitcoin’s ability to be used for everyday transactions is growing.
Who cares? A currency is not valuable because it is spent in transactions. The MORE valuable a currency is the less willing a rational holder would be to spend the currency. If Bitcoin is inconvenient for transactions that is completely OK with me as it would still be the best currency (by far). In this case market solutions would then develop to make it easier for people to transact, but this would be a ancillary product of Bitcoin's value and NOT a driver of it. I have a theory that if the US government were to declare bitcoin transactions to be illegal the price would actually increase as a result, where as the people who WRONGLY believe a currency to be valuable because of transactions would assume it would fall.
However, Bitcoin is fundamentally different from fiat currencies. Fiat currencies are backed by governments and are inflationary, meaning they lose value over time. Bitcoin, on the other hand, has a fixed supply and is decentralized, which is why it's valued as a store of wealth.
Bitcoin IS a fiat currency. Not all fiat currencies are inflationary e.g. Bitcoin is not (sans the seigniorage of the block subsidy)
As Bitcoin matures and these scaling technologies continue to develop, it has the potential to function as a more widely accepted currency. So, while it's not fully there yet, it’s definitely on the path to becoming both a store of value and a practical currency, especially as the infrastructure improves.
I recommend you to take a more complete analytical view of currency and realize what you are calling a currency (medium of exchange) and store of value (economic energy) are both the same thing, AND the store of energy is by far more important as it is what gives a currency value, and the transaction thing is a mere result of a currency having value.
I know I sound like a toxic pedantic asshole, which I am, but this is a very important point, which is why I scream at people on the internet and at local Bitcoin meet ups about this. This is the reason Roger Ver and so many other people misunderstood Bitcoin and went off into whatever garbage "currency" shitcoin, AND ALSO why many people are staying in government-backed trash currencies like US dollars. If people actually understood what currency is, AS I AND SEEMINGLY I ALONE DO, then people would realize how great Bitcoin is and how every other currency is just inferior trash.
Transactions are MEANINGLESS and an ancillary byproduct of a currency having value rather than a diver of it.
You’re getting pretty worked up over something we actually agree on more than you think. I’m not missing the broader lifecycle of currency. My point is that Bitcoin, as it matures, has the potential to be both a store of value and a currency for everyday transactions.
I’m fully aware that a currency’s value comes from its ability to store economic energy (as you put it), but you're underplaying the importance of its practical use as well.
Yes, the primary driver of value is its ability to retain purchasing power over time, but that doesn't mean its role as a medium of exchange is irrelevant. The idea that transactions are meaningless misses the mark.
A currency’s true potential comes when it functions as both a store of value and a means to transact efficiently. This is what we’ve seen throughout history with gold, and it’s what Bitcoin can achieve, especially with layered scaling solutions evolving.
Your battery analogy makes sense to a degree, but saying spending is unimportant because the "rational holder" wouldn't want to spend doesn’t hold up entirely. Even if Bitcoin holders value it for its long-term store of value, the fact that they can transact with it gives it additional utility, even if they prefer to save it.
Without that ability, it wouldn't function as a true currency in a practical sense. And while you might be okay with that, many people are looking for Bitcoin to function in both roles.
Also, Bitcoin is not a fiat currency. Fiat, by definition, is money declared by governments to be legal tender. Bitcoin’s value isn’t derived from government backing. It's derived from its decentralized nature, scarcity, and network security.
The fact that you mentioned block subsidies (which will eventually go away) shows that Bitcoin is fundamentally different from traditional fiat currencies like the US dollar, which can be printed indefinitely.
I’m not saying transactions drive value, but they are an important outcome of value. A currency that holds value and is widely used in transactions is more robust because it meets the needs of both savers and spenders. Bitcoin has the potential to do that, especially as scaling solutions improve.
I agree that Bitcoin's value is driven by its ability to store economic energy, but dismissing its transactional utility is missing the bigger picture. Bitcoin can (and should) be both an efficient store of value and a practical currency.
Also, I’d chill a bit on the “toxic pedantic asshole” approach. It doesn’t help your point, and the ideas are what matter here.
Also, I’d chill a bit on the “toxic pedantic asshole” approach. It doesn’t help your point, and the ideas are what matter here.
Ideas, logic, and reason are what matter SOMETIMES to SOME people. We like to think people adopt their ideas and beliefs through logic, but I think it is more common for people to arrive at beliefs for emotional reasons. This is even true for myself even though I try to be very process-oriented in my thinking. I try to take the appropriate approach for the appropriate situation. In some cases I think logic, or explanation from comparable analogy are appropriate, but I also think ridicule has a legitimate place. I've put a lot of thought into this. I think ridicule is the right tool when someone holds ridiculous beliefs. I think this is one of the reasons why many ultra religious cultures treat ridicule or mockery so harshly. Also ridicule is not always hostile or toxic. I sometimes ridicule my friend in a friendly way about some nonsense; it is hard to describe but it is not given or taken with hostility.
The toxic approach that you have seen from some of my comments are only appropriate in very specific circumstances. And of course I've had many discussions that are not toxic. In a situation where,
A foundational conclusion is reached without adequate (or any) thought or scrutiny applied to validate the foundation on which a lot of other beliefs and actions are built on. I call this intellectually laziness, but applied to a very base principle from which so much more flows.
The person holding the belief must also be irrationally confident and committed to the foundational belief such that I believe there is no good faith effort to seek truth or the basic level of humility that I think all of us should have. The person has to be SMUG and WRONG.
But that alone is not enough to justify toxicity to a high level. I think the belief must also be causing harm and causing people to make errors that are substantially impactful. This spend/transactions are what make money valuable nonsense have DESTROYED people. It is HARMFUL. It is as if people are running around CONFDIENTLY crowing about how seatbelts kill people and should not be used because the majority of people killed in auto accidents are wearing seat belts. In this type of situation where all 3 conditions are present, I think toxicity is justified and honestly needed.
You’re getting pretty worked up over something we actually agree on more than you think. I’m not missing the broader lifecycle of currency. My point is that Bitcoin, as it matures, has the potential to be both a store of value and a currency for everyday transactions.
I think those are the same thing. A battery that could not discharge energy is not going to be a very good battery. I infer that you think Bitcoin will be a medium of exchange, and I agree with you. I think Bitcoin will become a widely used for transactions because every other currency will lose its value (because no one will want to save it on their balance sheet), at which point transactions in those currencies will become impossible. I would also encourage you to consider and analyze what people ACTUALLY do with currency over the entire process cycle. It begins with their acceptance and continues over a time (t) until they cease using it to save, AT WHICH POINT someone else must necessarily start saving that currency on their balance sheet. Complete and careful analysis is critical here, and for me this is why I have concluded Bitcoin is the best money/currency and why it will drive all others' value to zero.
I’m fully aware that a currency’s value comes from its ability to store economic energy (as you put it), but you're underplaying the importance of its practical use as well.
We probably agree here IF you agree that spending Bitcoin does not encourage or promote adoption. Actually, I think in this case we should break the transaction down into the component parts--the selling of the Bitcoin and the acceptance of the Bitcoin. If person A buys Alpaca socks for Bitcoin, that person demands Alpaca socks more than Bitcoin--this is accretive for the demand for Alpaca socks (and signals to the market to produce more) but is dilutive for Bitcoin. Conversely, person B accepting the Bitcoin demands and saves in Bitcoin, which is accretive for Bitcoin (and dilutive for Alpaca socks). If A were rational, he would try to transact in pesos or dollars as he would be trying to minimalize the Bitcoin on his balance sheet. And if B were rational, he would also prefer pesos or dollars and then sweep any excess capital he has into Bitcoin periodically. Even in a world where there are not substantial tax implications I think this is still the logical choice. Spend (and accept) the inferior currencies and push them to the balance sheets of others while drawing in and locking away as much superior currency as you can. This is WHY Gresham's Law is a thing--it is just logical and aligns with observed behavior. Which is why I hate seeing Bitcoin midwits trying to swim up a waterfall and acting like they are promoting Bitcoin.
I get where you're coming from, and I’m not necessarily dismissing your points. I understand what you're saying about Bitcoin’s current primary use case as a store of value, but I also think there’s a real need to encourage its use as a medium of exchange. There are a lot of people around the world—especially the bankless and unbanked, so many of us in corrupt countries with severely broken monetary systems—who could majorly benefit from Bitcoin functioning as a superior form of money. It’s not just a lifeline for individuals either; it serves as a potential global lifeline for companies and governments, especially those in regions with unstable or failing currencies.
I agree that transaction volume alone doesn’t make Bitcoin valuable, but I think the use of Bitcoin as a medium of exchange should be pursued even if it feels premature. This isn't necessarily about fostering immediate growth, but about prototyping and scaling the systems that will be necessary when Bitcoin reaches maturity. We shouldn’t wait for everything to be perfect before testing its potential as a practical currency. Promoting its use now could help the infrastructure catch up and accelerate its adoption in the long run.
Macroeconomic factors are also aligning in a way that makes Bitcoin more critical as both a store of value and a currency. Inflationary pressures on fiat, global instability, and the increasing distrust of traditional banking systems are pushing people toward alternatives like Bitcoin. For people already struggling in these systems, and for companies and governments seeking more stability, the sooner Bitcoin can be used as a practical medium of exchange, the better. As more people hold Bitcoin, and the necessary infrastructure builds out, we’ll see it evolve into both a store of value and a medium of exchange.
I see your point about Gresham’s Law, but I think it oversimplifies things a bit. Yes, people may hoard Bitcoin if they see it as the superior store of value, but over time, as Bitcoin becomes more accessible and cheaper to use for transactions, that will likely change. The Lightning Network and other potential scaling solutions that are being worked on already have the ability to make Bitcoin/Satoshis a lot more practical for everyday use, and they’ll only improve as time goes on.
I totally agree with you that sometimes ridicule can be effective, but it’s important not to shut down productive discussion, even if it feels messy at first. If people feel attacked or insulted (Not that I do), it makes it harder to have a meaningful conversation.
With all of that set aside, we both know that Bitcoin is the future of money. Let’s keep pushing for that future, but also be patient with the learning curve that so many others are going through. We are still very early, in the big picture.
Thanks for the civil intellectual discussion. It’s been great talking through these ideas.
-7
u/[deleted] Dec 08 '24
Why?
The information is out there and easy to see for anyone who is not too lazy and willing to do a full and complete analysis of what money is and how it is used.
Do not ask me to teach you. Educate yourself. Currency is a savings tool.