0 sats \ 11 replies \ @KoreaComK 26 Jul 2023 \ parent \ on: What's something bitcoiners do that HURTS adoption more than it helps? bitcoin
Not necessarily.
A medium of exchange NEEDS to be a store of value, but not every store of value will be a medium of exchange.
this is post-hoc rationalization. it was MoE before it was SoV. It has lost ground on MoE
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this is post-hoc rationalization.
Exactly. But some maxis have lost the plot and are acting as if this is just a question of "consensus" and make-believe and having a functional network doesn't matter at all. They sound almost like keynesian clowns at this point.
it was MoE before it was SoV.
I believe they are simultaneous. To be a MoE it must have value. And to be SoV it must be able to be used as MoE. One cannot happen without the other. Trying to argue which one happens before sounds like a chicken-egg problem to me.
It has lost ground on MoE
It has taken a long time between the blocks becoming full and having a functional lightning network. That caused many merchants to stop accepting bitcoin. Now that lightning is functional it should regain the lost ground and hopefully much more.
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No, it's not. It is the opposite.
Only you realize that Magic card collectors. Many keep their rare and very rare cards stored as SoV. Only after they use them as MoE.
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"Stage 1: Collectible"? WTF? Maybe we should be happy that the 'ordinal wizards' have finally gotten the ball rolling. /s
Bitcoin has been used as a medium of exchange for a very long time, at least since Laszlo's pizzas in 2010. Then there was the Silk Road (among many other things). All this is conveniently omitted in the SoV narrative. Have you ever asked yourself where does bitcoin's value come from? Stages 2 and 3 are simultaneous and interdependent. They feed on each other. Hodlers are free-riding on the efforts of people who use and promote bitcoin as a medium of exchange, and some of them are so self-absorbed that they don't even see it.
Reductio ad absurdum: Why even bother with the Lightning network? Bitcoin doesn't need it to become a SoV! Just watch NgU and you'll be rich in no time!
I agree that bitcoin as a unit of account will be the last to become widespread. But we can already see some entrepreneurs pricing their offerings in sats.
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Dude, this diagram is basically saying what Saifedean Ammous says in his book The Bitcoin Standard. If you think this is wrong, argue with him, not me.
Another point, they are not interdependent. A prime example of this today is gold. It is a store of value, but it is not a currency. So this proves that interdependence does not exist.
The fact that you have one or another thing being used as exchange does not make it currency. What defines it as a currency is the consensus when using it, as well described by Ammous in the book.
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Dude, this diagram is basically saying what Saifedean Ammous says in his book The Bitcoin Standard. If you think this is wrong, argue with him, not me.
I hope that your rationale is not that you are right simply because Saifedean Ammous says so. I appreciate many of the thoughts that Saifedean brings to the table, but I've felt there is something missing in this thesis since I read it in The Bitcoin Standard.
And, again, bitcoin has been used as MoE since almost its very beginning. Even before the pizzas, Satoshi sent bitcoin to Hal Finney. This happened only a few days after bitcoin's inception.
I posit that Bitcoin's value comes from the fact that it can be 'transmitted' (annotated on the ledger) without intermediaries and censorship. And since the amount of bitcoin units is finite, each of them have a portion of the value of the Bitcoin network.
Let's make a thought experiment and assume that the blockchain froze and no new blocks could be created. Would bitcoin still be valuable? Could it still be considered a SoV? I don't think so. So, in order for bitcoin to be a SoV, new blocks need to be added to the blockchain. Blocks contain transactions. Every time a bitcoin transaction is included in a block, bitcoin is being used as a MoE. So SoV and MoE are interlinked; they cannot be separated. Bitcoin's value is dependent on its ability to be used as a MoE.
Another point, they are not interdependent. A prime example of this today is gold. It is a store of value, but it is not a currency. So this proves that interdependence does not exist.
Gold was a MoE in the past and arguably even a UoA. I believe that gold is on its way out, in the process of devolving from Stage 3 (or maybe 4) back to Stage 1. First, the UoA was captured by sovereigns, because they had the power to dictate the units of weight, measure and value in their territories (in order for gold to be a UoA, value must be expressed in weigh or volume of gold -- and account for purity). Then, gold's role as MoE was supplanted by fiat currency. As bitcoin grows, I believe it will steadily absorb gold's premium as SoV. Eventually, gold will only retain some value as an industrial commodity and beautiful shiny metal and that's it.
Bitcoin is an entirely new beast. There had never existed a functioning and lasting expression of value-as-information before bitcoin. Of course, bitcoin is linked to the physical through proof-of-work. What I'm trying to say is that, because we cannot fully explain bitcoin yet, we keep coming up with these analogies to previous things to try and explain parts of it. But, while being helpful, these analogies can be incomplete and limiting.
The fact that you have one or another thing being used as exchange does not make it currency. What defines it as a currency is the consensus when using it, as well described by Ammous in the book.
I don't understand how this ties into the rest of the discussion.
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I hope that your rationale is not that you are right simply because Saifedean Ammous says so.
Of course not, I just showed that his arrogance in this phrase "WTF? Maybe we should be happy that the 'ordinal wizards' have finally got the ball rolling" just denotes that you say that these stages are thrown from a Mankiw book or you of any other mainstream economist, when the truth was a summary of Ammous.
And, again, bitcoin has been used as MoE since almost its very beginning. Even before the pizzas, Satoshi sent bitcoin to Hal Finney. This happened only a few days after bitcoin's inception.
I say it again: What defines something to be MoE is the consensus on using it as currency. By his simple definition of "if I transfer bitcoin to someone, then he is MoE", then, there was no barter in society. After all, at that time, everything was MoE, however, by definition of what an MoE is, its concept is wrong. MoE for you may be that, but it is not what the consensus is for other people.
Gold was a MoE in the past and arguably even a UoA. I believe that gold is on its way out, in the process of devolving from Stage 3 (or maybe 4) back to Stage 1. First, the UoA was captured by sovereigns, because they had the power to dictate the units of weight, measure and value in their territories (in order for gold to be a UoA, value must be expressed in weigh or volume of gold -- and account for purity). Then, gold's role as MoE was supplanted by fiat currency. As bitcoin grows, I believe it will steadily absorb gold's premium as SoV. Eventually, gold will only retain some value as an industrial commodity and beautiful shiny metal and that's it.
This does not invalidate what I said.
I don't understand how this ties into the rest of the discussion.
What defines whether something is MoE is the consensus on its use given a society. I can't say that a chicken is an MoE just because I used it to buy my neighbor's eggs. For it to be an MoE, the society where I am inserted must also accept it, so that it can be given as an MoE.
Example: Bitcoin is an MoE in El Salvador. He is not an MoE in the US or Brazil.
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I say it again: What defines something to be MoE is the consensus on using it as currency.
I think this is the central point of our discussion.
What defines whether something is MoE is the consensus on its use given a society.
I see. I was calling MoE whatever two parties decide to use to transact. This seems like moving the goalposts.
My thesis is that bitcoin's value is dependent on its ability to be used for transactions. If the Lightning network doesn't function and the base layer is clogged, then bitcoin cannot be used regardless of what the "consensus" is. "Consensus" is meaningless if the transaction cannot be concluded because of a technical problem.
But assuming that the whole society has to reach consensus:
Example: Bitcoin is an MoE in El Salvador.
No, it's not. Most merchants in El Salvador don't accept bitcoin. By your definition I can say that the US Dollar is the only MoE in El Salvador at this moment.
So my questions are:
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How is a society supposed to reach consensus on bitcoin as MoE? Gresham's Law dictates that people will choose the weaker currency as the MoE; therefore it is impossible that bitcoin ever becomes MoE.
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How is bitcoin supposed to ever be used as a MoE if nobody develops the necessary infrastructure (mining, software development, Lightning nodes, channel liquidity, merchant apps, wallets...) because the only thing that matters is HODLing?
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Do you even want bitcoin to become MoE?
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No, it's not. Most merchants in El Salvador don't accept bitcoin. By your definition I can say that the US Dollar is the only MoE in El Salvador at this moment.
Using the premise that most people use dollars instead of Bitcoin, then ok. Bitcoin is not MoE.
How is a society supposed to reach consensus on bitcoin as MoE? Gresham's Law dictates that people will choose the weaker currency as the MoE; therefore it is impossible that bitcoin ever becomes MoE.
First, we let people acquire bitcoin for its SoV power. Then, over time, people will slowly use it as a MoE. Currently, there are people and companies that use it, so it is purely a matter of time for the whole society to use it.
In truth no. During the days of gold, silver and copper were also used, but later, with the loss of their SoV, they all succumbed to the use of gold as MoE. As I said, it's a matter of calm and time.
How is bitcoin supposed to ever be used as a MoE if nobody develops the necessary infrastructure (mining, software development, Lightning nodes, channel liquidity, merchant apps, wallets...) because the only thing that matters is HODLing?
I didn't say the only thing that matters is Hodling. I'm saying we're in the SoV moment, that's all.
"Bitcoin is not yet a currency. It's in the store of value phase. It's no use forcing him to be a currency, if he's still at a level prior to that."
You creating solutions for it to be MoE does not mean you are forcing it, you are just anticipating an inevitable need that will appear. Currently, hodler solutions are more used than PoS solutions. This is a fact. Over time, this will reverse. My point, again, is to wait and let bitcoin transform from SoV to MoE.
Do you even want bitcoin to become MoE?
This is not up to me and yes, it will become like me or not. But I would really like it to become, especially with merchants using LN instead of onchain transactions.
The main post says: SPEND & REPLACE is what we need to be shouting in the fiat + bitcoin convoluted world we currently live in, imo.
I disagree. Swap "need" for "should" and the sentence gets a little better. There are people who want to rush bitcoin so that it becomes UaC soon, but it is not by forcing it to go to the next stages that we will achieve this. First, we need to get everyone on the platform, ensure that society has a consensus at each stage of the process. Gold took almost 2000 years, we won't make it in just 20 years and we shouldn't
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*should
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There is no such thing as Gresham's Law...
Nicholas Copernicus wrote his Law in 1526, when Thomas Gresham was just a young kid...
#128857
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