The True Path to Bitcoin Cash

This opinion editorial is by Scott Worden, an engineer and attorney, who is also the founder of BTC Trusts. “I have been working on an electronic cash system that is completely peer-to-peer and has no trusted third party. Satoshi NakamotoIt is a perfect fall day in Colorado and I am sitting outside a pub in the afternoon. I am meeting with a fellow Bitcoiner, a man that I met in Austin at end of summer. The sun set behind the mountains and the sky turned orange. This made for a great backdrop for lively bitcoin conversation. “Well, I don’t know why you would want to part with my sats.” He replied. This is a clear indication that a true Bitcoiner values Satoshis more than any other currency in the world. Why would you trade them to get groceries, t-shirts, or beer? Laslo Hanyecz is a famous name. This fool traded 10,000 bitcoin to buy a few pizzas. I won’t repeat that mistake. Talk to me when bitcoin reaches $200k. Then maybe it would make sense. This is not a new way of thinking. This sentiment is shared by people like Michael Saylor and others from the HODL community. They will proclaim that Bitcoin is the most valuable asset in the world. It’s digital gold. “Buying bitcoin is like buying Manhattan property 100 years ago.” And “Don’t sell bitcoin!” However, it is also obvious that bitcoin cannot be traded for a service or good, so it is worthless. This is the HODLer’s dilemma. But is this really a problem? These mantras, as prolific and consistent as they are, are they compatible with Satoshi’s spirit of innovation? Is it necessary to improve our understanding of Bitcoin’s value proposition, given the rapid growth of the Lightning Network? I believe it is time to stop viewing bitcoin as a store of value. Instead, we should see it as a medium for exchange. It also has the advantage of storing value better than any other asset on Earth. Here are a few reasons why you should pay attention. Privacy “Bitcoin would make it easy for people who don’t have credit cards or don’t want to use their existing cards.” Satoshi Nakamoto It’s time to exit the system. The signal is stronger than ever. Today we live in a world where the fiat system can: Close your bank account for politically incorrect viewpoints.Report your gun purchases to law enforcement.Implement fines for speech they don’t like.Confiscate your money if you donate to a cause they don’t like.All of this is happening today, and it is likely just the tip of the iceberg. The majority of large banks, credit agencies, and payment systems have given in to demands from a government that wants to control our behavior. Canadian Trucker Protest demonstrated that a government that is determined to suppress the voice of its citizens will go to any lengths to do so. It also showed us how licensed exchanges and chain analysis can be very effective in blacklisting addresses or identifying donors. These vulnerabilities will need to be overcome in order to provide a more censorship-free currency-of-exchange. By transacting in bitcoin as often as possible with our peers and merchants, we encourage others to accept and transact in bitcoin. We can make the bitcoin economy more robust, decentralized, and harder to censor by simply using numbers. A community that values privacy will choose to use non-custodial wallets, participate in collaborative transactions, and avoid KYC exchanges. Growing and educating this community has never been more important.Convenience And Autonomy”With e-currency based on cryptographic proof, without the need to trust a third-party middleman, money can be secure and transactions effortless.” Satoshi Nakamoto. A common argument against bitcoin transactions is that they are too complex or slow when compared to swiping a credit cards. This is no longer true. Anyone can download Muun Wallet today and send Lightning invoices to clients within minutes for payment via QR Code. Coinkite offers an NFC device that allows users sign for transactions by tapping their card. There are many more examples and more to come. These solutions are completely non-custodial. That is, no central third party has access to your coins. The software merely allows transactions to be broadcast to a network. Lightning transactions are instantaneous and fees are a factor of several orders of magnitude lower than Visa’s or Mastercards’ traditional 2-3%. It cost me $.60 to send $700 USD to Wrich Ranches for beef last week, a total of about $.60. If I had used Visa, the same transaction would have cost me around $20. These transactions encourage autonomy on both ends. Lightning transactions, like all other transactions backed by Bitcoin’s proof-of work, are free from counterparty risk. The risk that a consumer will not pay his bill, dispute a charge or have insufficient funds in his account to file for bankruptcy later on is eliminated. Merchants and consumers absorb the transactional inefficiency and all of these risks. A trustless system such as bitcoin is more efficient, which reduces risk for merchants and makes goods and services cheaper for responsible consumers. “I am certain that there will be either a large volume of transactions or none in 20 years.” Satoshi NakamotoWe’d be wise to think about all our transactions in terms bitcoin. Money is a store of value. We should take a measured approach when spending money and consider the future potential value. This logic applies regardless of whether you are spending dollars or sats. This point is clearly illustrated by bitcoinorshit.com. Laszlo Hanyecz was a famous pizza-buyer who bought two pizzas for 10,000 BTC in 2010. Laszlo spent a few billion dollars on pizza, when we consider BTC’s current market value a decade later. It is surprising to me that Bitcoiners jump on Laszlo because he is economically naive and use this example as evidence that bitcoin should not be spent. It is simple: everyone who bought pizza in 2010, spent thousands of bitcoin on it. This can be avoided by eating less expensive food or going hungry. Every fiat transaction is a trade for potential stack growth. The public debate about spending bitcoin on products and services is dead once we realize this. To survive in today’s society, the overwhelming majority of us will need to trade monetary currency for goods or services. There is only one question: Which products or services are more important than the chance to acquire more sats? Each person will make their own decision. It is important to think about the answer independently, regardless of whether the monetary energy was spent in sats or dollars. It is only the monetary savings — that which is left — that matters when it comes down to the HODLer’s dilemma. We are all likely to save more BTC if you start transacting more BTC. One thing is that we are more likely to make judicious purchases when we are dealing in sound money that has a proven value store. We want the iPhone. But is it worth 5,000,000 sats? If you expect a sat worth a penny one day, then yes. We might wait another year to upgrade and keep those sats for future use. However, we all need food and shelter. Although the number of bitcoin-accepting merchants is small, it is steadily growing. Bitcoiners will be more open to merchants that accept bitcoin as payment as they realize that the “spend dollars, save money” theory is counterproductive. This will lead to merchant adoption and potentially shift the timeline for a bitcoin economy in the right direction. More exchange equals more value” As the number of users increases, the coin’s value also increases. It can create a positive feedback loop: as more users use the coin, the value increases, which could attract even more people to take advantage of its increasing value. This is where we are today. There are a growing number bitcoin enthusiasts and speculators who believe that Bitcoin is a legitimate store of value. The community believes that Bitcoin’s scarcity will lead to a supply squeeze, which will cause the price of the asset to rise. It’s possible for this to happen by HODLing. However, Satoshi Nakamoto points it out that the value of an asset goes up when there are more users. Is it considered use to buy and hold an asset? Is it considered use if an asset is bought and held? Value is not created from scarcity. Demand is the key to bitcoin’s price. If bitcoin’s utility is the driving force behind its demand, then its true potential as an asset store of value will be realized. The current political and economic environment might be just what we need. However, bitcoin will continue to be an integral part of our daily economic activities until it is valued alongside other speculative asset and subject to the whims the same fiat system. This is Scott Worden’s guest post. These opinions are completely theirs and do not necessarily reflect the views of Bitcoin Magazine or BTC Inc.

 

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