Hello friends,
Have you even wondered what it is that gives Bitcoin, and all other (crypto) currencies, it's value ?
Is it the amount of energy invested in mining the coin that gives rise to its value ?
Is it simply the open market that through price discovery (demand) determines the price ?
Is it the real world application, like being a payment system of smart-contract platform ?
Or is it a combination of some or all of the above ?
And as being a user, investor or participant/stakeholder, how can you add value to the coins that you have ? That question was on my mind for quite some time.
My thoughts
Taking Bitcoin as example. I own bitcoin, and im never eager to sell any of it. I'm here for the long run, and as i bought bitcoin i promised myself to hold on to it for at least 10 years. So, i took a percentage of Bitcoin, and put it away in cold storage. by doing this, i subtract X amount of coin from the active pool of coins that is available to the world to buy, sell or store. And since there will eventually be a limited amount of Bitcoin available, the combined coins in cold storage around the world, can really add up in percentages of the total.
Just imagine : If everybody did as i initially did, would or could bitcoin survive ? Any coin in cold-storage is simply gone, it's off-the-table. It's no longer part of the active eco-system supporting Bitcoin. Is that a bad thing ?
Payment-system
Bitcoin was presented to me as a payment system. Only later i discovered the blockchain technology behind it, and the future implications they could have. Since that time, and while seeing the price per bitcoin rise, i became reluctant to sell the bitcoin i'm gaining, since the same amount of Bitcoin would be worth more tomorrow. Holding on, seems like the best option. So, i decided to start earning Bitcoin, and joined initiatives like OpenBazaar, to gather more Bitcoin, in stead of ever decreasing FIAT.
But it started to dawn on me, that many people are not using their Bitcoin to pay for goods & services, but instead hold on to it, making it extremely hard for me to turn a profit selling good & services for Bitcoin. and you can see how i came back to the percentage in Bitcoin being in cold-storage, and are no longer part of the active eco-system to support the usage of the coin.
If you are a seller, and you hardly ever sell anything in Bitcoin, can you still get excited for it, or will it just feel like a non-returning effort ?
Taking it off the table, decreases supply, and that scarcity drives up the price
I've heard this many times, and i can see how that statement works, but will it still work when let's say 80% of coins are in cold-storage ? Will there be enough demand for bitcoin, as a payment system, to keep driving up the price, of will it literally flat-line and slowly die ? Transactions in bitcoin are currently rising, but that is too be expected with anything new, even transporting your coin to cold-storage generates a transaction, so the real question is : Will it be able to, on the long term, support growth ?
My personal solution
At this point, i have decided to take the best from both worlds. On one hand, i'm holding Bitcoin as a store of value, in cold-storage. In the other hand, i'm using bitcoin as a payment system ; any Bitcoin i earn for goods & services, i also spend for goods & services. I like to think that this is to keep the currency alive and thriving, and to make Bitcoin get accepted at more and more locations worldwide, by vendors that can actually see an influx in transactions in bitcoin. I love making personal gains, but i cant help but feel the need to contribute to the community of Bitcoin, supporting it, and keeping it alive.
What are your thoughts on this ? I'm no expert, and would love to read your comments on this subject. How do you use crypto on a day to day basis ? And what do you see as the best way forward ? Please upvote and subscribe for more. ;)
