For the last few years of Bitcoin’s existence the dominant narrative circulating in this ecosystem has been that of “digital scarcity” and “sound money.” While the narrative of censorship-resistant payments has by no means disappeared, in my opinion it has become slowly eclipsed over the last few years by the mantra of “digital gold” and “digital scarcity.” I believe this is putting the cart before the horse. Yes, scarcity in a world of constantly inflating currencies is very important, as evidenced by the dynamics of investing in real estate, equities and other types of assets that can outpace inflation in real terms. It becomes a necessity to expose yourself to such assets if you have any sizable amount of wealth, as without doing so means a constant loss of purchasing power. But what is the underlying support for such speculative activity? Utility value. Real estate is valuable because people live in homes, they open businesses, they extract resources. Equities are valuable because either directly through dividends, or indirectly through value appreciation correlated with growth, investors are able to share in the profit of a successful economic endeavor. While there is a speculative component in these markets the underlying value is based on some portion of the market subjectively finding actual utility value. Without that utility value underlying a market, speculation in that market is effectively no different than gambling. So what is Bitcoin’s utility value? Censorship-resistant payments.

By Antoni