Unlocking Bitcoins Potential: Discover Why Its Real Power is in Motion
Bitcoin Magazine
Beyond The Vault: Why Bitcoins True Power Lies In Motion
Michael Saylor, youve come to realize that all assets intended for storing value fall short, leading you to direct your attention to the only asset that genuinely excels in this area. However, this doesnt exempt you from recognizing the importance of Bitcoin as a medium of exchange. Depending on your perspective, the housing market can appear substantial or dismal. Nevertheless, if youre feeling the pressure to maintain the buying power of billions in your investments, real estate can serve as a reasonable strategy to achieve that.
Your fixation on Bitcoin as a store of value is misguided. The fundamental essence of Bitcoin lies in its function as a medium of exchange. While the fiat system tends to compartmentalize the roles of money, it doesnt mean this division should exist. Acknowledging Bitcoin as a medium of exchange may provoke a backlash from traditional currency advocates, but collaboration could yield a more secure environment for billionaires considering substantial investments. Viewing Bitcoin merely as a tool for storing value undermines its potentialit risks relegating it to the status of mere digital gold 2.0, constrained and controlled.
Without a medium of exchange, a store of value becomes meaningless! The function of exchanging value is paramount. You initiate a transaction first, then you can store Bitcoin afterward. If storing value was the primary focus, imagine if you lost access to your Bitcoinwhile you could still have it, without the capacity to transfer it, any nominal value assigned to it would vanish in a market that wipes away the false fiat value. That value exists solely because it can move and function effectively as a medium of exchange.
A tank of oxygen may be essential for reserves, but the act of breathing holds greater significance. Storing value is secondary and reliant on the ability to engage in transactions. Without this ability, the concept of a store of value becomes irrelevant. Michael, you experienced this firsthand when your million-dollar assets in Argentina lost 90% of their worth. You faced a decline not due to ignorance but because the funds were unusable in transactions. Admittedly, a weak store of value diminishes the medium of exchange; however, why is the latter prioritized? Its because the capacity to exchange empowers you to take action.
Most individuals familiar with Bitcoin have likely seen Jesse Mayerss chart, which you popularized. You assert that nothing surpasses a $900 trillion clean store of value, while simultaneously recognizing Bitcoin as one of the most liquid markets operating around the clock, 365 days a year. Heres a revelation: liquidity is synonymous with the medium of exchange.
Lets dissect the chart by investigating the housing sector, valued at $330 trillion, yet it struggles as a medium of exchange with only $1.3 trillion traded annually. The burdens of regulations and taxation further complicate property transactions. Despite this, its efficacy as a store of value makes it coveted by the wealthy, who are increasingly stifling younger generations from entering the market.
Real estate derives its value not solely from its inherent characteristics but also from its connections to surrounding amenities. Construct a road, and its worth increases. A superstore, gas station, or electrical grid connection raises its value further. The network enhances energy flow to the area, improving the likelihood of transforming that energy into economic value, akin to currency. Thus, interactions within this network amplify a homes value. But consider the perspective of a billionaire: if everyone vies for your resources, you may not desire a large network nearby. You may prefer privacy, sacrificing some value as you focus on driving up the cost for others to access you, thereby lowering the risk of being attacked.
Now, lets evaluate the bond market. Bond valuation stands at $300 trillion, with $140 trillion traded each year and an additional $25 trillion in new issuances. This indicates that the value derived from the medium of exchange comprises roughly half its total annual value. While it outshines housing in this regard, the figures still reveal that its primary use remains as a store of value.
Equities come next, holding a value of $115 trillion and approximately $175 trillion in trades. This indicates their greater strength as a medium of exchange compared to their store of value function. Consider your MicroStrategy sharesyou are well aware of their performance. What value did they hold last year, and how much was exchanged through them?
The subsequent categories are intriguing. The art industry experiences such low yearly transaction volumes that they fail to register on the chart. Conversely, the market for cars and collectibles boasts trading volumes nearing $4 trillion annually. This data illustrates their primary perception as a store of value, but it also highlights the stark inefficacy of the housing sector as a medium of exchange, lagging even behind the automobile market.
Ah, gold! Enthusiasts rave about its 5,000-year legacy, deeming it the ultimate store of valueyet it commands a mere 1.78% of the total store of value market. This reality underscores that, stripped of its medium of exchange function, it becomes susceptible to capture and manipulation. Sadly for gold aficionados, that proverbial genie isnt going back in the bottle. Gold retains a value of $16 trillion, with proponents claiming it could encapsulate $120 trillion. Their desperation to inflate their investments starkly contrasts with market sentiment, which values flawed fiat currency at ten times the worth of the lustrous, inert metal. Is gold superior as a medium of exchange? On an annual basis, it trades at $54 trillion, buoyed by derivatives, making its medium of exchange usage 3.5 times that of its function as a store of value.
While money may not reign as the pinnacle store of value among asset classes, it undoubtedly claims the position of the leading medium of exchange. Other assets designated for value storage cannot compete. If the dollar, as the primary currency, were to transform into merely a store of value, it would collapse the USD network, consequently enhancing the value of assets outside the U.S. as they stepped in to fulfill the demand. Over time, the value of these alternative stores of value would escalate while USD assets would plummet. Globally, the total money supply approximates $120 trillion, yet when analyzing transaction volumes from major central bankssuch as Fedwire at roughly $1,182 trillion, TARGET2 at about $765 trillion, CHAPS at around $145 trillion, and others conservatively estimated at $500 trillionwe observe that while the store of value is pegged at $120 trillion, the utility of these networks as a medium of exchange surpasses this figure by over 20 times, totaling around $2.5 quadrillion. Now, imagine the added medium of exchange value if we incorporated the 2 billion unbanked individuals. How many additional transactions would spring forth? What if we could enable microtransactions?
So where does Bitcoin fit into this intricate system? The prevailing narrative encourages holders to maintain Bitcoin indefinitely, portraying it exclusively as a store of value. However, market statistics offer a counter-narrative. In 2024, Bitcoins market capitalization soared to $2 trillion, while the trading volume on its primary blockchain layer achieved $3.4 trillion. When considering the Lightning Networkdespite some uncertainties surrounding its metricsthe combined total likely nears $4 trillion. This suggests Bitcoins role as a medium of exchange is double that of its store-of-value application. What transpires if the established narrative of hold forever starts to wane?
Bonds and equities function as financial instruments masquerading as money due to the inherent flaws of fiat currency. This creates a marketplace that excludes a substantial portion of the population from securing their wealth, further complicating the store of value aspect of money. However, how accessible are these instruments? Or do they merely serve as mechanisms for siphoning value from the fiat medium of exchange, redistributing it to the privileged elite, including billionaires who seek to hoard?
Worldwide, merely 10-20% of individuals have any exposure to bonds, primarily through pension or investment funds rather than direct ownership. For equities, access is similarly restricted15-25% of the populace engages with them. This reality leaves at least 80% of the world without these safeguarding tools, rendering them susceptible to exploitation. Segregating the store of value from the medium of exchange establishes a dynamic of extractors versus the extracted. It amplifies the Cantillon Effect, wherein those with the power to issue the medium of exchange accumulate store-of-value assets, thereby marginalizing 80% or more of the population. This cycle perpetuates a systemic rift, widening the divide between the affluent and the impoverished. The more currency is produced, the greater the disconnection of money from its intended store-of-value role.
Another considerable factor in this ecosystem is the pervasive fees. There are costs associated with transferring dollars via banksa service, indeedbut these fees surge when converting from the medium of exchange into store-of-value instruments. This friction inflates the entire system, inhibiting those without wealth from preserving their value. At this juncture, the medium of exchange becomes increasingly seen as a medium of extraction rather than exchange. Such dynamics contribute to the allure of the store of value case within a fiat system.
Bitcoin isnt merely a facade of money like its counterparts; it represents the first engineered form of currency that doesnt degrade over time and is inherently inclusive. As it lacks a backing printer, theres no pull to exchange it for a superior store of valuethere is no second-best option available. Even for individuals who dont own Bitcoin, they can still utilize it to craft the lives they envision. This philosophy encourages a transition from pursuing money solely for storage to building and enriching lives on the foundation of Bitcoin.
The ultimate concept isnt merely to store valueits to transfer it. However, to facilitate the movement of value, one must first have it stored. Conversely, for someone to possess stored value, a transfer must first occur in their favor. This delineates why affluent individuals gravitate toward assets that dont diminish like melting ice. Those at the beginning of their careers, however, tend to concentrate on receiving value rather than hoarding what they have yet to acquire.
What fuels the fixation on the store of value narrative? Perhaps its the minimal effort involved. With a store of value, you simply buy and holdno further investment of effort required to enhance your circumstances. In contrast, using a medium of exchange necessitates active engagement to cultivate savings, compelling others to transact with you in Bitcoin for your goods or services. Another aspect: for the majority, their fiat holdings still overshadow their Bitcoin assets. Only when Bitcoin overtakes their fiat portfolios will they contemplate leveraging it to improve their quality of life. This transition, however, is not challenging for a considerable portion of the worlds populace, who lack savings or assets. It offers an insight into why the existing system works to prevent them from escaping, fostering dependency by offering to securely hold their Bitcointrading one form of dependency for another.
Even the notion of ossification relates to the necessity for broader use of mediums of exchange. You, Michael, advocate strongly for ossification, yet if Bitcoin fails to reach more users, you are stalling that process. Unlike your static approach, history illustrates that America understood the need for widespread distribution of dollars to cement them as the worlds reserve currency, thereby strengthening the network effect. Their focus was on expanding the network, which functioned smoothly since the cost of printing and circulating paper bills is minimal. With Bitcoin, its inherent scarcity mandates a careful equilibrium between dispersion and retention. Nonetheless, this doesnt imply that spending should be completely off the table.
Utilizing the analogy of storing fat for survival is crucial for long-term existence. While its true, it neglects the essential requirement for a steady stream of income to ensure survival prior to building reserves. Without income, theres nothing to set asidethus, transactions hold precedence. However, for individuals unconcerned about hunger, the emphasis shifts toward preserving food to avoid spoilage. I stress this point to illuminate your bias toward the store of value, which distorts your perspective and misleads others.
At this point in my exploration of Bitcoin, I have reached the conclusion that the pursuit of wealth can corrupt. Bitcoin interrupts this cycleit ceases the confrontation with endless money chasing and enables individuals to utilize it to construct the lives they desire. What occurs when one possesses everything they could want? What next? With Bitcoin, that scenario becomes feasible, and every Bitcoin advocate should be prepared with a response for when that moment arises. In contrast, chasing wealth represents an unending abyss that can never be fulfilled. The biblical saying regarding the love of money as the root of all evil resonates with me. But how does this manifest? What is the mechanism? The pursuit of wealthestablishing it as the primary goal while relegating other prioritiesis the mechanism.
You are not establishing a Bitcoin standardyou are merely stacking the odds in your favor. Much like gold in the past, you are currently hoarding Bitcoin from individuals and institutions, fortifying the fiat status quo. Saylor, your approach may not be perceived as an attack on the dollar; in reality, you are inadvertently reinforcing it by elevating your stock and its derivative ecosystem. Instead, you are speculatively targeting those financing your Bitcoin acquisitions, inadvertently causing harm to them while simultaneously enhancing the dollars status, exacerbating the predicament for other currency holders. Accumulating sats under public scrutiny? That doesnt set you apart; rather, it resembles a gated estate sustained by the very people who fund it.
I cant help but speculate on whether others would invest their Bitcoin in your securities. How many would genuinely commit to such an investment? I suspect true Bitcoin maximalists wouldnt trade their pristine store-of-value asset for a fiat instrument. Ask yourself, would you exchange your Bitcoin to acquire Apple stock today? After all, you have invested in them previously. It serves no logical purposeI would merely be providing you with Bitcoin to convert into some fiat vehicle, incurring associated fees to benefit fiat custodians and intermediaries only for you to buy Bitcoin again afterward.
Ultimately, I lack concrete evidence, but I am fairly confident that you are already aware of everything detailed in this article/message. Although directed at you, Michael, it is geared toward individuals who perceive you as a new Bitcoin messiah, following you blindly without scrutinizing your actions. These individuals make risky financial decisions that could jeopardize their Bitcoin holdings, often without the financial buffers and interest rates available to you. Your narratives, which they echo, may not be applicable to the broader human experience.
Bitcoin transcends being just another asset or financial instrumentit serves as a borderless, permissionless currency for the people. Treating it merely as a store of value undermines its fundamental significance. Solely retaining it will not yield freedom. Allowing sats to circulate builds the network, fosters collaboration toward a brighter future, and fortifies the ecosystem. Set some aside for future use, but dont become the wealthiest individual in the gravesave a portion for plans that ensure continued movement.
This is a guest post by Ivan Makedonski. The views expressed are solely those of the author and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
This post Beyond The Vault: Why Bitcoins True Power Lies In Motion first appeared on Bitcoin Magazine and is authored by Ivan Makedonski.
The post Unlocking Bitcoins Potential: Discover Why Its Real Power is in Motion appeared first on Crypto Breaking News.
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