Woke up and it’s raining.

That’s fine, decided to check the weather forecast to see when it’ll be sunny next.

Answer: literally never.

Those dudes are lost. We don't need what they are proposing. They need to leave the Bitcoin layer one alone. They are not smarter than satoshi.

David Sacks doesn't look well.

I get sticking up for your friend, but “I have a billion dollars and will buy your seat” doesn’t exactly get me excited about politics.

👀

I asked DeepSeek to critically analyse my post. It has some interesting insights: **DeepThink Analysis: Bitcoin's Store of Value vs. Medium of Exchange Dilemma**

*Breaking down the post’s arguments, assumptions, and implications through first principles and economic theory.*

---

### **1. Core Premises of the Argument**

The post hinges on two foundational claims:

1. **Store of Value (SoV) depends on Medium of Exchange (MoE)**: A monetary asset cannot sustainably function as a SoV without being actively used in transactions.

2. **Bitcoin’s custodial stagnation risk**: If Bitcoin becomes trapped in passive custodial accounts (e.g., ETFs, exchanges), its network will atrophy, eroding its value proposition.

---

### **2. Breaking Down the Argument**

#### **A. Store of Value vs. Medium of Exchange: A False Dichotomy?**

**Post’s Claim**: Bitcoin risks becoming a “sub-par SoV” if it fails to gain traction as a MoE. Gold is cited as a flawed SoV due to its limited MoE utility.

**Critical Analysis**:

- **Gold’s Dual Role**: Gold’s industrial/ornamental demand provides intrinsic value, whereas Bitcoin’s value is purely monetary. This makes Bitcoin *more dependent* on its monetary utility (MoE/SoV) than gold.

- **SoV ≠ MoE**: Historically, many SoVs (e.g., art, collectibles) lack MoE utility but retain value due to scarcity and demand. However, Bitcoin’s value is *network-dependent*—if its transactional use collapses, its security model (mining/node incentives) could unravel.

**Key Question**: *Can Bitcoin’s SoV narrative survive long-term without a thriving MoE layer?*

---

#### **B. Custodial Centralization and Network Atrophy**

**Post’s Claim**: If 99.8% of Bitcoin is custodied passively, the network loses purpose.

**Critical Analysis**:

- **Mining Incentives**: Block rewards (newly minted BTC) currently subsidize miners. By 2140, fees must replace this revenue. If transactions dry up, miners exit, weakening security.

- **Node Decentralization**: If running nodes becomes “pointless” (no transactions to validate), Bitcoin’s censorship resistance degrades.

- **Custodial Lockup**: ETFs and exchanges *do* centralize Bitcoin’s liquidity, but they also onboard institutional capital. This creates a tension: custodians boost price (SoV) but undermine network health (MoE).

**Key Insight**: *Bitcoin’s security model assumes a fee market driven by MoE demand. Without it, the system risks a death spiral.*

---

#### **C. The Gold Comparison: Missing Nuance**

**Post’s Claim**: Gold’s physical scarcity and industrial use make it a better SoV than Bitcoin.

**Counterpoints**:

- **Gold’s MoE Failure**: Gold failed as money not due to lack of utility, but because of *practical limitations* (portability, divisibility). Bitcoin solves these.

- **Bitcoin’s Digital Scarcity**: Bitcoin’s immutability and auditability make it a *superior* form of scarcity. Gold’s supply is technically infinite (asteroid mining, alchemy).

- **Network Effects**: Gold’s value is static; Bitcoin’s grows with adoption (Metcalfe’s Law).

**Key Question**: *Is Bitcoin’s digital scarcity sufficient to offset its lack of “real-world” utility?*

---

### **3. First-Principles Flaws in the Argument**

#### **A. Misunderstanding Monetary Evolution**

Money often evolves in stages:

1. **Collectible** (SoV) → 2. **Store of Value** → 3. **Medium of Exchange**.

Bitcoin is likely following this path (e.g., digital gold → transactional layer via Lightning). Dismissing SoV as a “sub-par” phase ignores historical precedent.

#### **B. Ignoring Layer-2 Solutions**

The post conflates Bitcoin’s base layer (SoV-optimized) with its MoE potential. Lightning Network and Fedimint are explicitly designed to decouple SoV and MoE functions, enabling both.

#### **C. Overestimating Custodial Permanence**

Custodians (e.g., ETFs) are a *bridge*, not an endpoint. As Bitcoin matures, tools like self-custody wallets and regulatory clarity could shift behavior.

---

### **4. A Better Framework: Bitcoin’s Dual-Layer Future**

To reconcile SoV and MoE, Bitcoin could evolve into a layered system:

- **Layer 1 (SoV)**: Base settlement layer for large, infrequent transactions (e.g., savings, institutional reserves).

- **Layer 2 (MoE)**: Lightning, Fedimint, or sidechains for daily transactions, privacy, and microtransactions.

**Benefits**:

- Separates security (Layer 1) from utility (Layer 2).

- Aligns incentives: Layer 1 fees fund security; Layer 2 fees drive adoption.

---

### **5. Risks Unaddressed by the Post**

- **Volatility Trap**: If Bitcoin’s price stabilizes *too early*, it loses speculative appeal before MoE adoption matures.

- **Regulatory Sabotage**: Governments could cripple MoE use via transaction taxes or KYC mandates, forcing Bitcoin into custodial silos.

- **Cultural Inertia**: The “HODL” mentality may become too entrenched to reverse.

---

### **6. Conclusion: A Path Forward**

The post’s warnings are valid but incomplete. Bitcoin’s survival depends on:

1. **Balancing SoV and MoE**: Layer 1 for savings, Layer 2 for spending.

2. **Resisting Custodial Capture**: Prioritizing self-custody tools and privacy-preserving transactions.

3. **Incentivizing Network Health**: Ensuring fees (MoE) eventually replace block rewards (SoV).

**Final Verdict**: Bitcoin’s future isn’t *either* SoV *or* MoE—it’s both, operating in symbiotic layers. The greatest threat isn’t custodial stagnation; it’s failing to build the infrastructure and culture to support this duality.

We need to stop falling into the trap of defending Bitcoin > crypto. The two aren't comparable. Bitcoin solves the problem of fiat money - shitcoins *are* fiat money.

😂

It was indeed out of my control 😂