How can Bitcoin be a mode of payment if people HODL
Personality of Bitcoin creator Satoshi Nakamoto is anonymous, the only thing which is unquestionable is his heritage, namely BTC coding, whitepaper, Satoshi’s letters, and Bitcointalk forum posts.
This way, we can assume Bitcoin’s original idea was to serve as a medium of exchange, what Satoshi called a “version of electronic cash.”
How come that BTC has became a store of value, with people more eager to hold it rather than exchange?
1) Bitcoin emission is limited in quantity
As the Bitcoin supply is capped at 21 million, investors follow the supply and demand lay and expect that with the growth of demand for BTC, its price will go up.
2) Highly volatility
High volatile doesn’t make an asset a store of value; however, it is what makes investors hold and wait for the price to grow more. That’s because people do not have the motivation to use Bitcoin as a medium of exchange if its value is growing. For example, BTC price skyrocketed from $1,000 to $20,000 in 2017 and then dropped to $3,000 a year later. Last summer, BTC grew over $10,000 again, and then plummeted to $6,000 in March. Currently, Bitcoin sits at around $12k.
Sure, there is no guarantee that Bitcoin will increase in value within time, but past trends and the underlying supply-demand trends imply that it’s a reasonable long-term prediction.
3) There are fewer Bitcoins in circulation within the time
Bitcoins are irreversibly lost due to shipping errors, lost private keys, unclaimed rewards by miners, death of their holders, or other causes.
According to Cane Island Digital Research, since 2010, about 4% of the BTC in circulation is lost annually. Considering this, the currently available Bitcoins would be 13.9 million. However, other investigations have reported significantly lower Bitcoin losses. However, it is almost impossible to identify the number of Bitcoins lost because there are holders who haven’t moved in years.
In conclusion, we can say that Bitcoin is neither a store of value yet nor a medium of exchange already. With the new altcoins, there have appeared cheaper and faster alternatives to transfer and be used as a medium of exchange. However, to become a store of value, Bitcoin must mature and get unified legal status and regulations.
On the other hand, Bitcoin’s narrative changes over time. First, Bitcoin appeared to bank the unbanked and serve as a medium of exchange, and today it is moving toward being the store of value. I truly believe that Bitcoin has just started its journey, and it still has lots of tricks up its sleeve
