You know how the dodo bird became extinct? It became too fat to fly. <\/p>\n
In fact, the name \u2018dodo\u2019 likely originated from the Portuguese word, \u2018simpleton\u2019. The dodo bird lived very comfortably for much of its existence on an isolated island that lacked any natural predators. Over time the dodo bird grew bigger, and its wings grew smaller. Growing larger while having no predators emboldened the mighty dodo bird to become increasingly fearless. <\/p>\n
And then humans showed up. And everything changed. Instantly. <\/p>\n
The rapid and dramatic environmental changes left the dodo bird helpless. Because it was flightless, it couldn\u2019t escape. It needed wings to survive but evolutionary processes don\u2019t occur overnight, they take thousands of years. From happy, fat, and thriving to extinction. In the blink of an eye. <\/p>\n
That\u2019s the harsh reality of evolutionary biology \u2013 it only optimizes based on the past and present, never the future. Evolution is a reactive process. Environments can increase a species\u2019 resiliency over time, or it can change so rapidly that it rids itself of them completely. <\/p>\n
The evolutionary checkpoints for money are universally understood as:<\/p>\n
1) Store of Value: you can preserve purchasing power with it<\/p>\n
2) Medium of Exchange: you can use it to buy and sell things<\/p>\n
3) Unit of Account: you can use it to measure the value of other things<\/p>\n
Bitcoin is firmly sitting on first base regardless of what its lazy critics claim. Price volatility does not negate the store of value property and there is no question that most current bitcoin adoption is related to saving. Bitcoin as a medium of exchange is a work in progress as the reality is very few users are engaging in any kind of commerce with it. <\/p>\n
If bitcoin is only capable of serving as a store of value and nothing more, then it cannot become money. Aspiring to be the best store of value is aspiring to be a fat flightless bird. Bitcoin is on a lonely island of less than 2% global adoption, emboldened by price appreciation, with no concern of outside predators as glowing endorsements roll in from Wall Street \u2013 flourishing and unbothered like the dodo bird.<\/p>\n
\u201cLike you said, evolution takes time! Bitcoin will become a medium of exchange and later a unit of account. It\u2019s just too early right now but it will happen eventually<\/em>.\u201d<\/p>\n Will it? Why is bitcoin as a medium of exchange a foregone conclusion?<\/p>\n Put down the orange pom poms and look around today. Bitcoin\u2019s current landscape has it waddling down a path that leads to nothing more than becoming a captured amorphous digital property token. The lack of situational awareness and adversarial thinking amongst bitcoiners is at embarrassingly all-time lows and seemingly getting worse the further bitcoin sleepwalks towards stasis. <\/p>\n If it\u2019s not clear to you, let me wake you from this slumber so you better see the signposts: <\/p>\n Remember the bitcoin rallying cry, \u2018separate money from state\u2019? If you\u2019ve forgotten it, then it\u2019s hard to blame you with the amount of self-described bitcoin maximalists head-scratchingly rallying behind stablecoins at worst and apologizing for them at best.<\/p>\n \u201cBitcoin is too volatile!\u201d <\/em><\/p>\n \u201cThe global south!\u201d <\/em><\/p>\n And my personal favorite, \u201cStablecoins are a gateway to bitcoin!\u201d<\/em>. Hard to say that with a straight face.<\/p>\n Here\u2019s the wakeup call. Stablecoins are fiat money. They are a gateway to fiat money. They are an adaptation of everything bitcoin was designed to escape from. They are bitcoin\u2019s biggest sheep in wolf\u2019s clothing competitor. Full stop. They mostly run on Ethereum and Tron. If people want to use them that\u2019s totally fine \u2013 but enough with pretending that stablecoins complement bitcoin in any constructive way. <\/p>\n Do you think the US Treasury is going to just idly sit by without sinking their talons into these stablecoins? The path of least resistance for the government to introduce a CBDC is to simply regulate stablecoin issuers with an iron fist. Their money, their rules. <\/p>\n What happens when we\u2019ve sleepily conceded bitcoin\u2019s medium-of-exchange evolution phase to heavily regulated stablecoins? Will people suddenly become enlightened and retreat to bitcoin overnight? It\u2019s a warm and fuzzy thought until you consider that the government would unquestionably restrict stablecoins being exchanged for bitcoin. Their money, their rules.<\/p>\n And what\u2019s to stop stablecoins from covering so much surface area as a medium of exchange that it never concedes any ground? Gresham\u2019s Law posits that \u201cbad money drives out good\u201d which means people tend to spend the bad money and save the good money. However, in absence of legal tender laws, Thiers\u2019 Law comes into play where \u201cgood money drives out bad\u201d as the superior form of money is naturally preferred. If we abdicate bitcoin as a medium-of-exchange to stablecoins, then what incentives will there ever be to scale bitcoin as a medium-of-exchange? Gresham\u2019s Law will take root and Thiers\u2019 Law will be little more than an idealist fantasy relegated to underground markets and fringe circular economies. <\/p>\n \u201cThe market is signaling they prefer stablecoins for spending.\u201d<\/p>\n This isn\u2019t pearl clutching over the market being wrong. It\u2019s an ominous warning that bitcoin\u2019s destiny is not written in stone. If it is never optimized to be used as a medium of exchange, it will never be used as a medium of exchange. If we are not relentless in our pursuit to advance bitcoin\u2019s monetary evolution, then it will not happen. <\/p>\n Wall Street\u2019s foray into bitcoin was an inevitability at some point in its life cycle. But what is striking is how quickly Wall Street arrived (less than 15 years of bitcoin\u2019s existence) and the velocity of their entrance (daily trading volume in the billions of dollars). While today many bitcoiners applaud the new Bitcoin ETFs as a welcomed milestone for the \u2018normalization\u2019 of bitcoin, down the road this likely plays out differently from what they hope.<\/p>\n \u201cNow that bitcoin is mainstream and in people\u2019s retirement accounts, the government will never be able to ban it. It will be too politically untenable.\u201d <\/p>\n A comment almost<\/em> as ridiculous as thinking stablecoins are a gateway to bitcoin. <\/p>\n There\u2019s not much debate that it is more convenient to purchase a Bitcoin ETF than it is to self-custody your own bitcoin. Market forces always compel people to seek the most convenient solution, especially when they have no consideration for the associated tradeoffs. <\/p>\n The hard pill to swallow is the fact that most people are not interested in self-sovereignty. They don\u2019t want to become their own bank. And no, they don\u2019t want to hear your long winded histrionic about fiat currency. <\/p>\n It boils down to: <\/p>\n 1) Click a few buttons in my retirement account?<\/p>\n or<\/p>\n 2) Go through a KYC\/AML process on an unfamiliar bitcoin exchange, buy an unfamiliar hardware device, research how self-custody works, safeguard and manage private keys, etc.<\/p>\n If self-sovereignty disinterests you and all you want is bitcoin exposure \u2013 it\u2019s a no brainer. You choose Option 1. And over time what this looks like is the next wave of adopters will seek exposure through ETFs \u2013 not taking direct custody of bitcoin themselves. Admittedly this concern doesn\u2019t exist for the parts of the world that lack access to US financial markets \u2013 however allow me to point back to Signpost #1: stablecoins. The global south will seek refuge in stablecoins before pursuing bitcoin. The dollar isn\u2019t hyperinflating any time soon and those who claim it will have been wrong on that call now for decades. <\/p>\n Now play this out. The next broad wave of adopters buying a financial product accelerating the amount of bitcoin held by the most regulated institutions on the planet. <\/p>\n The act of self-custodying bitcoin will be reduced to a suspicious and odd exercise. <\/p>\n \u201cThat\u2019s weird. Nobody uses it as money. What\u2019s the point of holding it yourself?\u201d <\/p>\n And as the coffers of regulated custodians fill up with bitcoin supply, the surface attack density for those who self-custody will increase. And increase. <\/p>\n Financial institutions will not rally behind the self-sovereign bitcoiner. They do not care that the entire purpose of bitcoin was to disintermediate trusted third parties (i.e. literally them). In fact, their financial incentives are such that they have minimal interest in supporting self-custody as they make money on you giving your bitcoin to them. When the time is right, they are more likely to lobby against self-custody than to support it. And that time is when there are enough bitcoiners whose sole exposure is through these ETF\u2019s and consequently wouldn\u2019t care about defending the right to self-custody. Remember, you\u2019re the weird one now doing it the wrong way<\/em>.<\/p>\n This isn\u2019t conjecture; self-custody is already under attack. The self-sovereign bitcoiner will become low hanging fruit. And saying you lost your bitcoin in a \u201cboating accident\u201d when you\u2019ve purchased all your bitcoin on a KYC exchange is going to do you as much good as the dodo bird\u2019s stubby wings. <\/p>\n The race for monetary supremacy is in full force. Where are we at? Stablecoins are dominating bitcoin as a medium of exchange and ETFs already hold close to 5% of total bitcoin supply in less than three months of trading.<\/p>\n Cool. So what are we doing about it? The price of bitcoin as a representation of purchasing power is paramount but it has become a sedative for adversarial thinking. Don\u2019t get it twisted \u2013 the bitcoin price is a magnet, not a shield. As the price climbs so will the insatiable desire from governments to capture it. Do you think they will just let you opt out and ride into the sunset so easily? Oh, you sweet, summer child. <\/p>\n Sedated by paper gains, a non-insignificant amount of drawbridge bitcoiners are advocating for bitcoin\u2019s ossification. Bitcoin, which *checks notes*<\/em> is supposed to be money, is still not yet a medium of exchange, but is now somehow good enough as-is?<\/p>\n I\u2019m willing to acknowledge that there are probably well-intentioned bitcoiners in the ossification camp who simply believe bitcoin can only be destroyed from within via protocol changes and that the battles to come can be won with bitcoin as it exists today. I\u2019d respond to such line of reasoning with a quote from Sun Tzu, <\/p>\n \u201cVictorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.”<\/em> <\/p>\n Put simply \u2013 you do not win battles without preparation. Failing to plan is planning to fail. Bitcoin has not won. There\u2019s less than 2% adoption globally and the wolves are at the door. Bitcoin hasn\u2019t even surpassed the market cap of Amazon and you want to spike the football? <\/p>\n And for those in the pro-ossification camp purely out of selfish motivations because you got your bag and you\u2019re just biding time to dump it later \u2013 are you certain it will be that easy? Wouldn\u2019t your motivations be better served if bitcoin didn\u2019t become low hanging fruit for government capture? Do you think in an increasingly adversarial environment, with no vibrant bitcoin circular economy, you will just be able to unload your stack on Coinbase sight unseen, no questions asked? Woof. <\/p>\n Scaling and enhancing bitcoin in a judicious manner so that it can mature into a medium of exchange should be paramount to bitcoiners. No, this is not a torn page from the big block, \u201cbuy a coffee with bitcoin\u201d because \u201cbabies are dying\u201d, playbook. The security and decentralization of the base layer is a non-negotiable primitive. You cannot have sturdy money on a wobbly base. However, we cannot be complacent with settling on bitcoin as just a store of value and then idly hope it becomes a medium of exchange when there is a dearth of layer two solutions beyond the Lightning Network which isn\u2019t without its own limitations. <\/p>\n The introduction of ordinals has been a hotly contested cultural topic amongst different factions in bitcoin. The entire debate can be synthesized down to monetary maximalism (money only) vs platform maximalism (anything within consensus rules is okay). The debate is held at the margins and the overwhelmingly silent majority doesn\u2019t really care for three main reasons:<\/p>\n 1) they hardly know what ordinals are because it is such a niche subsection within bitcoin\u2019s ecosystem<\/p>\n 2) ordinals in their current format is just repackaged tech for people to gamble and engage in financial nihilism<\/p>\n 3) bitcoin is still working just fine<\/p>\n The silent majority reaches the appropriate logical conclusion that expending mental bandwidth fretting over something that cannot be stopped and that doesn\u2019t even hinder their ability to use bitcoin, is an utterly meaningless exercise in futility and virtue signaling.<\/p>\n The blind spot for the anti-ordinals crowd is the severe lack of introspection regarding the available block space due to a lack of \u2018honest\u2019 financial transactions. The pro-ordinals crowd doesn\u2019t even dispute that all use cases other than bitcoin as money are unquestionably subordinate. People are inscribing nonsense because the barrier to entry is low enough to do so. <\/p>\n Every bitcoiner needs to eat this slice of humble pie: the apex use case for bitcoin is currently competing for block space with digital beanie babies. <\/p>\n Philosopher Epictetus said, \u201cIf you wish to be a writer, write.\u201d The question we need to be asking is not \u201cHow do we stop the digital beanie babies?\u201d it should be, \u201cWhat are we doing to propagate more financial transactions?\u201d<\/p>\n Unfortunately, the emotional response to ordinals comes with a call for ossification. Rather than harness the courage of a stoic competitor, some would rather take the ball and go home. For them, the specter of unforeseen consequences outweighs the benefits of bitcoin becoming money. The irony is that ossification kneecaps bitcoin such that it will become ensnared as only a store of value. No medium of exchange just means more available block space to incubate other arbitrary use cases. <\/p>\n Don\u2019t like ordinals? Use bitcoin.<\/p>\n There is a steadily repeating mantra amongst the bitcoin intelligentsia that you should not spend your bitcoin. \u201cSavings technology\u201d, \u201cpristine asset\u201d, \u201cBuying land in Manhattan 100 years ago\u201d, \u201cstore of value\u201d, \u201cBuy it and don\u2019t touch it for 10 years\u201d, etc. These are the prevailing bitcoinisms indoctrinating the latest waves of bitcoin adopters. The introductory value system individuals adopt when first arriving to bitcoin is demonstrably impermeable. Each cultural skirmish in bitcoin\u2019s chronology is heavily influenced by whatever prevailing narrative surrounded bitcoin at the time they first became a user. It\u2019s no coincidence that the existing ordinals squabble is a divide comprised mostly of longtime versus newer bitcoiners. People\u2019s understanding of bitcoin is heavily influenced at the onset. If what they hear is \u201cdon\u2019t spend your bitcoin\u201d it reinforces the notion that bitcoin isn\u2019t really money. Paring this with an explanation that bitcoin as a medium of exchange will happen at some point in the distant future, only perpetuates the falsehood that bitcoin is inevitable so there is no motivation for any change. Secure your bag and let some faceless future generation figure it out, eh?<\/p>\n Bitcoiners can agree to be disagreeable but can we at least agree to stop telling people what to do with their bitcoin? It\u2019s supposed to be money. Do whatever you want with it. Don\u2019t allow your actions to be enslaved by dogmatic rhetoric. Freedom money does not come with instructions. <\/p>\n This isn\u2019t a thesis to advocate for any specific BIP or scaling solution. It is a bucket of cold water to implore bitcoiners to have some self-awareness of the current path bitcoin is taking. Bitcoin is just software. What it eventually becomes is based on how users interact with the software. There is nothing inherent within the software that preordains bitcoin to become money. That outcome is completely dependent on the users \u2013 if they want it. <\/p>\n The dodo bird didn\u2019t need wings \u2013 until it did. We can submit ourselves to the laws of evolutionary biology, do nothing, and see how this all plays out. Or we can do what the dodo bird couldn\u2019t \u2013 adapt with foresight. Bitcoin does not win or reach escape velocity as solely a store of value. It is the foundation, not the destination. In the race for monetary supremacy, there is nothing the competition would want more than for bitcoin to stagnate as a store of value. <\/p>\n Because it\u2019s at that point bitcoin will have become too fat to fly.\u00a0<\/p>","protected":false},"excerpt":{"rendered":" You know how the dodo bird became extinct? It became too fat to fly. In fact, the name \u2018dodo\u2019 likely originated from the Portuguese word, \u2018simpleton\u2019. The dodo bird lived very comfortably for much of its existence on an isolated island that lacked any natural predators. Over time the dodo bird grew bigger, and its […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-24910","post","type-post","status-publish","format-standard","hentry","category-crypto-news"],"_links":{"self":[{"href":"https:\/\/bitcoins-101.com\/wp-json\/wp\/v2\/posts\/24910"}],"collection":[{"href":"https:\/\/bitcoins-101.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoins-101.com\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoins-101.com\/wp-json\/wp\/v2\/comments?post=24910"}],"version-history":[{"count":0,"href":"https:\/\/bitcoins-101.com\/wp-json\/wp\/v2\/posts\/24910\/revisions"}],"wp:attachment":[{"href":"https:\/\/bitcoins-101.com\/wp-json\/wp\/v2\/media?parent=24910"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoins-101.com\/wp-json\/wp\/v2\/categories?post=24910"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoins-101.com\/wp-json\/wp\/v2\/tags?post=24910"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Signpost #1: Stablecoins<\/h2>\n
Signpost #2: Bitcoin ETFs<\/h2>\n
Signpost #3: Ossification<\/h2>\n
Sign Post #4: \u201cDon\u2019t spend your bitcoin\u201d<\/h2>\n
Now what?<\/h2>\n