While it’s true the cryptocurrency space has gone through drastic changes throughout its 10-year lifespan; the narratives that surround Bitcoin (BTC) and other cryptocurrencies along with their value proposition have been more or less steady. Over the years, the proponents of Bitcoin have fluctuated between the asset being a Medium of Exchange and a Store of Value. Both of these arguments have their pros and cons. As a result, a somewhat volatile dichotomy formed between researchers, analysts, commentators, and investors. Will digital cash replace fiat?
Dan Held, a former blockchain executive, and leading industry participant recently took to Twitter claiming that Satoshi Vision is a “silly endeavor”.
1/ Satoshi’s Vision™ is a silly endeavor, as it doesn’t matter what it was, we are where we are now. However, those pushing the “Bitcoin was first made for payments” narrative insist on cherry-picking sentences from the white paper and forum posts to champion their perspective.
— Dan Hedl (@danheld) January 14, 2019
Dan Held continues this rant for a while longer, making this a 47-part thread. Held, who goes by Hedl as a nod to HODL, one of crypto’s long-standing jokes. He says the MoE (Medium of Exchange) argument are mainly cherry-pickers. People who hand pick quotes from the BTC primer written by Satoshi as well as various nebulous form posts, all to tout a misdirected narrative.
Held simply claims that Bitcoin was purpose-built to be a Store of Value. Following his earnest start, the co-founder of the crypto asset manager interchange broke down what he believes to be Satoshi’s ‘intentions’. He states the timing of Satoshi’s actions – launching Bitcoin during the 2008 financial crisis – was no coincidence. Held claims there is a line between the pertinent events in Bitcoin’s history and key happenings in the brief global financial collapse. The former Blockchain product manager even brought to life the birth date of Satoshi, April 1975. This is noteworthy as this is when the U.S. gave it’s citizens permission to own gold again.
Bitcoin was made as an alternative to the banking system. This is most likely the reason for the iconic hidden message in the Bitcoin genesis block coinbase. To support his own claims, he draws attention to the cardinal rules of the network: 21 Million BTC supply cap, block size caps and ten-minute blocks. Held claims that there’s a possibility of Satoshi altering these values in order to push the ‘Digital Cash’ narrative.
However, he didn’t. During Satoshi’s active years as a developer, he was mostly against increasing the block capacities, being adamant that the BTC issuance should remain as it is. To this, held says:
What he was trying to accomplish was clear; he wanted to build a new backbone for the financial system. Bitcoin isn’t merely digital cash, but an alternative to banks… People pushing the MoE narrative at this moment in time are counterproductive to adoption. By creating these expectations, which are unattainable at the moment, many people will get burned or disillusioned.
The idea that Bitcoin is better off as gold 2.0 rather than the future of money isn’t just Held’s sentiment. In fact, the Winklevoss Twins, co-founders of the Gemini cryptocurrency exchange say Bitcoin does a better job at being gold than gold itself. Tyler (one of the twins) noted that while his industry develops, BTC will continue to take a chunk out of the market capitalization for gold. Until of course, the cryptocurrency overtakes its physical counterpart.
Be that as it may, it’s still uncertain that Bitcoin (BTC) will ever become a viable option for digital cash. Arthur Hayes, Chief Exec. at BitMEX stated that with digital cash becoming more common, Bitcoin could make a huge move; with platforms such as WeChat Pay and more quickly surmounting traditional fiat currency. Hayes claims that payment ecosystems (such as WeChat Pay) are highly centralized. Because of this, Bitcoin has the potential to establish itself as a private alternative. Plus, with the Lightning Network scaling for mainstream use, it’s only a matter of time before it reaches bonafide mainstream adoption.
Some people believe that once bitcoin reaches a level of ‘maturity’, the payment use case will be applicable. However, as it stands, the crypto market is simply too nascent and volatile for the Medium of Exchange narrative to get any support. Regardless, the cryptocurrency industry will continue to develop and mature at a rapid pace, despite the current bear market environment. What do you think of the current state of cryptocurrency? Do you think digital cash will take over fiat currency? If so, how long do you think it will take? Let us know your thoughts in the comments below!
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