The Price is Not the Point
It was a wild week in almost every sense of the word and seemingly sparing no quarters. Uncertainty was up but everything else was down. Bitcoin was way down. The naysayers and reactionaries pounced right away. This is the proof that Bitcoin is not a store of value. It’s dead. The death of Bitcoin is truly one of the most unoriginal claims against our young protocol. See here: https://99bitcoins.com/bitcoin-obituaries. At the time of this article we are at 380 Bitcoin obituaries. If you take a few minutes to click through some of the obits, you’ll notice a trend. They tend to gain steam around the time of precipitous price drops or in bear markets. In other words, people claim Bitcoin is dead when the price is (comparatively) low. Yet here we are on the other side of Bitcoin’s terrible, no good day, still alive, but far more importantly, blocks are still being mined, transactions still being processed, and value still being transferred securely; the blockchain humming dispassionately along like it has since the genesis block. In fact, the protocol was entirely unfazed by the panic, just as it was designed.
What I make of this, and what almost any Bitcoiner who has been around long enough to investigate beyond the hype and vitriol, is that the price is not the point. Satoshi didn’t write a white paper on how to generate non correlated alpha in your retirement portfolio. Bitcoin is a higher calling. It’s a fundamental change in money & accounting. It’s a manifestation of mistrust in institutions. It’s a hedge against centrality. It’s sovereignty for the individual. What it’s worth on a given day, while important, and arguably a factor in Nakamoto Consensus since it drives miner game theory, is not the point. We have something revolutionary in Bitcoin. Ignore the detractors. Saying that Bitcoin failed it’s store of value test this week is like scolding a three-year-old for not doing well on his SATs. Gold is literally an element in the Earth’s crust having been around forever and used as currency since well before even double entry accounting and it had a bad week too. I think we can cut Bitcoin some slack.
My takeaway from this week is that Bitcoin performed exceedingly well at its task. Not a single Sat was lost in transit, no coins were double spent, no block went unmined. What’s more, every Bitcoin that was liquidated or panic sold this week landed in strong hands. Imagine for a moment the type of person who, in the face of global markets melting down and Bitcoin falling off a cliff with no circuit breaker to save it, buys more. Every accepted offer has a bid as a counter party. While central banks were busy printing money as fast as the ink could dry on fresh pulp, true believers were buying Bitcoin. Those buyers are not going to be easily shaken out.
Alec Harris is Managing Director at Halo Privacy. He’s knows the CEO of Bitcoin personally and was told in private that all of the above is spot on.
