Store Of Value vs Payment System

One of the debates that has raged inside and outside of the Bitcoin community since I got involved back in 2012 is whether Bitcoin was a store of value vs a means of payment.

When I first started buying and owning Bitcoin, I would use it as a means of payment all the time.

I would whip out my phone and send Bitcoin to people instead of paying cash.

This was a Bitcoin t-shirt I bought in the summer of 2013:

At today’s prices, that t-shirt cost me $830. I love that t-shirt.


This was a payment I made that same summer for a golf caddie:


And this was a gift I made to the Bitcoin foundation in the spring of 2013:

That gift is almost $700k at today’s prices.


I share these three transactions with all of you to make a point.

And that point is that you can’t keep spending something that goes up as much as Bitcoin has.

So I don’t spend Bitcoin anymore.

I hold it.

It’s a store of value now.

That much is clear.


Comments (Archived):

  1. awaldstein

    Great post.Doesn’t this by definition challenge the idea that tokens as currency within any one of the multitude of new platforms are by definition ill defined?And that the endless checklists consultants are throwing around that think through the relationship of tokens to behavior and incentive and activity are an exercise not a reality?

    1. Alex Pedraza

      Depends on how useful the service/protocol is. If the platform offers something valuable/useful to a group of users, then they will transact even if the token is expected to appreciate. Even with bitcoin there are still users/companies that don’t necessarily see it as a store of value and more like a settlement mechanism (i.e. Bitpesa and Abra).

      1. awaldstein

        I’m sure that is true.An example pls of crypto based platform that is not based on value/usefulness.That gets to my puzzlement here as by definition marketplaces exchange value.Are you implying that you can tokenize something that is inherently not useful.Not being facetious but this has been troubling me as of course you can’t.Tokenization works on broadly distributed value based ownership like content or storage or energy. Not small or tangible or caused based by definition.Correct or no in your opinion?

        1. Alex Pedraza

          of course you can tokenize something that is inherintly not useful, that’s probably the case for 90% of these ICOs, purely speculative trading. Had a hard time understanding the rest of your comment though

          1. awaldstein

            Still puzzled how this works for hard goods.Easy to imagine a decentralized tokenized Uber, not so for Etsy.

          2. falicon

            I believe most (of the better) tokens are currently designed to drive an internal marketplace (you earn and spend within the closed system as much as possible).However – I believe the idea of having these things backed by something like ERC20 is so that “real world value” can be attached to each token (so theoretically anyone could cash out of the system at any point they really wanted/needed to).When you talk about systems like Etsy, I think right now you just have to think about crypto coins as being alternatives to basic currency (i.e. the U.S. dollar).Because the prices continue to go up, it’s to a seller’s benefit to accept something like BitCoin right now (even if the only thing they could do with it was ‘hold’ or ‘sell’). Complexity to implement/accept/cash out/convert is the only real downside right now (of course that’s a huge downside for most Etsy store owners though).It’s not to buyer’s benefit to use any of these coins to purchase *anything* right now. However, if/when the value stabilizes (or financial situation requires or product desire demands it) I believe they will be looking to use these things left and right.For a ‘hard goods’ or a ‘trade’ perspective, I’m not sure there is currently much of an advantage to crypto coins…however, there isn’t really a big downside either.If it was free or very cheap to accept visa/mastercard, why not do it? At what point of adoption or global transaction volume does it make sense to start accepting it? (for most, I think accepting crypto is prob. below the ‘to do’ list item of accepting American Express right now — and that’s OK. Not enough people *want* to *use* it yet.)Anyway, that’s sort of how I would think about crypto coins and many marketplaces right now…

          3. awaldstein

            Thanks for your thoughts.One of the advantages of crypto based markets is the ability to globalize support.Take an unscalable entity like artisanal wines, roughly $1B in the US and comprised of thousands of small vineyards worldwide as production in this approach can’t be scaled,And that lack of scalability threatens the vitality of the marketplace it self as supply is hardly economic for the producers unless they are generational and own the land,Could this be tokenized?

          4. falicon

            Really interesting problem. I will have to think about it more before I can fully answer.Scalability and sustainability (of quality) are two HUGE issues here (outside of anything crypto related).What I think you are thinking about is something very much like how the Green Bay Packers (an NFL team) ownership works…essentially figuring out a way for the community to ‘own’ it, to ensure it’s continued and stabilized future.So it seems like there *might* be a way a token could be creatively used as part of the solution here…but it also might be adding too much complexity/technology to an already complex problem to be worth it.I will noodle on it a bit more and follow up with you directly though, as I think it’s a fascinating, real world problem to think about…

          5. awaldstein

            Keep getting asked by the players in the community about this.Not a business but a passion for me obviously. But to the wine community I am their tech guy. To a fairly huge piece of the tech community i’m their wine guy,Odd but interesting.

          6. LE

            Keep getting asked by the players in the community aboutI wonder how that behavior has changed with younger people.What I mean is back in the day you had a friend who was into something so you relied on them to answer questions about things you didn’t know about. You for sure remember this growing up.However today with the availability of instant knowledge which is so abundant there is so much less need for that. No question. Sure certain questions are better asked of ‘that guy’ but in general you can get more a complete answer quickly online. (And now we have Quora as well which is a huge curiosity time sink..)

          7. awaldstein

            True of course but communities are by nature layered in stratas of people and leaders.That is human nature and still holds true,And in most things it takes people to turn information into knowledge or for wine, stories, so it can be digested,It is harder to build a brand today. It’s power is moreso than every though.

          8. JamesHRH

            a fairly huge piece….Trump rubbing off on you?

          9. Michael Brill

            There are some modest efforts for tokenizing individual vineyards (, but am working on a model to scale this up such that wine enthusiasts can manage a portfolio of small winery/vineyard investments where the primary returns are wine and a shared owner experience rather than direct financial returns. Supported by a set of necessary services (regulatory, aggregated logistics, secondary token marketplace, ecomm, reputation mgmt, escrow, dispute resolution, etc.).Tokenization is only maybe 5% of the challenge, but it’s an important 5%.Happy to chat offline and would love for you to review the white paper.

          10. awaldstein

            Hi Michael.I keep getting pinged on this most likely due to my place in the Nat community in NY.In SF next month so if interested, ping me offline and we could discuss over a glass potentially.Quite interested in this. And send the paper prior pls.

          11. Michael Brill

            Would be great… if for no other reason than to see if your speaking style resemblesyourwritingstyle.;-)

          12. awaldstein

            Ha!Brought up on ee cummings, William Carlos Williams and ten years of blogging would do it to anyone!

  2. OurielOhayon

    Fred, you don’t hold. you hodl 🙂

  3. Dr Washington Y. Sanchez

    Year to date, Bitcoin is up ~5X while Ethereum is up ~50X.Is Ethereum a store of value too?

    1. fredwilson

      It’s a generator of value!

      1. JamesHRH

        What does that mean?

        1. fredwilson

          People made a lot of money on it

          1. JamesHRH

            People make a lot of money HFT and that is not a generator of value – its a syphon of value.That statement would be perfect mid-Tulip Bulb Mania, etc.Its a distributed ledger for users, with near zero (or free), high trust, anonymous transactions, but the only transactions will be for ultra low value digital assets.Its digital gold for miners, but the miners will not make much money because the coins will drop to near zero because the value of transaction fees will be near zero and the only reason to mine is to power the ledgers….which generate almost no revenue.Its a unit of account for no one – the coins are not connected to the transactions.I will come to NYC in 2030 and buy you any beverage you want, anywhere if I am wrong.

    2. jason wright

      60% of ether’s cap is from South Korean won. Remember 1997?

  4. ewchaikin

    2 further points: 1) unless you are earning some form of income or offering goods or services in crypto, the only (legal) way to get it back is to buy it again. 2) Unless the blockchain-denominated currency is more liquid and stable than your home currency it is likely to be generally clunkier to spend it in your local economy. So: transfer of value between fiat currencies, store of value, and speculative asset seem to be the use cases for the foreseeable future. Which all add up to a nice collective market cap. But the canonical “pay for my Starbucks in BTC” use case is a long way off.

    1. ewchaikin

      oh, add “custom value denomination system” (e.g. ICO) to the use case list. Any others?

  5. Mike Cautillo

    Bitcoin is AWESOME and my love affair with it goes beyond being a “store of value” or any one specific thing. I imagine others fall in the same boat, hence the…….hmmmm!!

  6. Chimpwithcans

    Lucky golf caddy.

    1. kenberger

      Likely not.If he is like 98% of anyone at the time, he quickly cashed out for fiat right after he received the coins.

      1. Chimpwithcans

        The fact that he was accepting payment in bitcoin is remarkable to me. The caddies I have met are not generally thinking along those lines…but I live in Africa. Yes he probably cashed out 🙂

  7. John Pepper

    I went back to see where I sent bitcoin. In 2014 I spent a few hundred bucks on kitesurfing lessons down in the Grenadines. I tipped my instructor equivalent of $100.11 in Bitcoin at the time… now worth at least $1,400. Big tippa!!

    1. Pointsandfigures

      like the Dali Llama Big tipper the Llama is

  8. jason wright

    In its present form it is a store of value. Introduce demurrage and it begins to change, from a solid, to a liquid, and finally a gas. It just needs heat to be applied, which has to come from the outside, in the form of competitive innovation and progressive regulation.It’s programmable money. So reprogramme it. At the moment it’s ‘bad code’.My hope is that Bitcoin Cash is run by people with a vision for innovation beyond BTC. Not hard to have that. The bar is set knee high to a grasshopper.

  9. kidmercury

    What defines a store of value? I would argue:1. Price stability, or at least, wealth preservation (goes up with price inflation and declines less with price deflation)2. Ability to absorb large amounts of capitalI don’t see how btc meets these criteria.Even if we assume btc is a store of value in the making, the whole ico model is predicated on building transaction-oriented currencies, but the model necessitates rising currency values. Eventually new models that make more sense will arise. Till then, cash in if you can, I suppose…….

  10. Tom Labus

    This is some new variation of “Gresham’s Law” Bad money drives out Good (circulation).

    1. Girish Mehta

      The key point in Gresham’s Law is “in circulation”. Don’t think that argument applies here because Bitcoin has not been anywhere a fraction of the circulation of sovereign money.The Bad Money driving out Good Money money from circulation is when both are in circulation and can be used equally easily (Debased coins drive Undebased coins out of circulation).

      1. Tom Labus

        But the instincts are the same regardless of level of circulation.

        1. Girish Mehta

          I think the instincts are slightly different, but I might be splitting hairs.Nobel Prize winning Canadian economist Robert Mundell suggested a slight addition to the end of Gresham’s law suggesting it could be expressed as Bad money drives out Good money “if they exchange for the same price (face value)”. That addition at the end is non-trivial.Gresham’s law is of a time when debased and undebased coins would have the same face value. People would hold onto the undebased coins, and pass on the debased ones to others.What Fred is referring to here is nothing new – people holding onto an asset which is rising in value and which they expect to do so in the future (and have remorse about having got rid of some portion of it too early while it was still yet to rise much further).The flip side of it is that people tend to spend tomorrow’s purchases today when their money is dropping in value (inflation).At the height of inflation in the US in 1979/80, people spent inspite of inflation because they pulled in their spends of the following year – they did not expect wage increases to keep up with inflation. The opposite is the reason Yellen and the central bankers are terrified of the spectre of deflation – it leads to people postponing spends and holding onto money instead.So, I think the instincts are close but may be slightly different.Gresham’s law is referring to two things with the same face value, one driving out the other from circulation.While this is more about holding an asset that is appreciating dramatically and its future expectations.

          1. Tom Labus

            Great response, thanks.

  11. William Mougayar

    Well, to be more comprehensive, I like to refer to Vitalik’s point when he observed that we need to think along the 3 dimensions:SoV – Store of ValueMoE – Medium of ExchangeUoA – Unit of Accounting

    1. JamesHRH

      You know more about this than anyone and can’t tell us what BTC does.That’s not reassuring.

      1. William Mougayar

        BTC does all 3, as some other cryptocurrencies do as well. But that’s just one aspect of they do.

        1. markslater

          Its absolutely all 3. depending on my mood i think about BTC as an asset, a medium of exchange and most definitely a unit of accounting….it absolutely can be and is all 3

          1. JamesHRH

            Depending on my mood is not what I want to hear in a financial instrument.

    2. Richard

      If bitcoin is not first a currency, it is just greater good asset. As a currency, it important to note that most currencies fail. https://uploads.disquscdn.c

    3. @mikeriddell62

      Yeah but what’s it all worth?

  12. Rob Underwood

    I did a tweet storm after this week’s earlier post as I tried in my head to work this through:…I think I get the basis of the store of value to be that if there was large scale, yet not quite the end of times – war that seriously degraded the integrity of the global financial system (perhaps due to operational issues; perhaps due to collapsing asset prices), the decentralized BTC demonicated blockchain might become the only game in town for a public ledger. Hence its value as a hedge.How much I believe it would and could function as that after a war is a different question I explore in the tweet storm but in the abstract I understand the idea of owning fractional shares in the ledger of the cockroaches and why that would/could function as gold historically has.

  13. Girish Mehta

    Sigh.Fred, in the three accepted functions of money -“Unit of Account”, “Medium of Exchange” and “Store of Value”,Something that goes up 10X or 50X or 100X or 500X – does not make it a Store of Value.I know that your position on Bitcoin has changed from 2014 when you wrote that it should be considered a medium of exchange like a currency rather than as a asset, to the beginning of this year when you called it the best performing asset of 2016.If you now consider it as a Store of Value, thats fine.But the rationale you are giving in your post – viz. its fantastic appreciation in price since 2013 – is not what defines or identifies a Store of Value. A fantastic financial return (regardless of whether it is a investment return or speculative return) is not the litmus test of a Store of Value.

    1. JamesHRH

      Observing and deciding later always worked in the past fro Fred, its his personality.I am with you – I think he is wrong here though.

    2. Rob Larson

      Agreed – Bitcoin is a speculative investment, NOT a store of value. Looking at the below (slightly dated) chart, at no point was value “stored” for more than a short period of time. It has always been either rising or falling.The first cryptocurrency that can be a store of value will be the one that figures out how to match supply with demand so that the price stays relatively flat. https://uploads.disquscdn.c

      1. SubstrateUndertow

        At that rate of appreciation with no substantive link to some proportional under lying production of goods or services it is simply a pyramid scheme and plays almost no relationship to a “Medium of Exchange” or its complementary function “Store of Value”.With no “Medium of Exchange” or its complementary function “Store of Value” bitcoin has no valid social or economic foundation.The great hope of bitcoin as a watershed change in “Medium of Exchange” and its complementary function “Store of Value” resides in it ability to play the global role of reserve-currency backed by nothing less than the sum total of all human productivity while blocking the power of interloping authorities/banks/governments/currency-speculators to manipulate the established exchange value as they presently do with gold/US-paper-dollars or any other narrow-band commodity backed currency/store-of-value.

    3. LE

      Exactly.My thoughts that follow are not sour grapes on my part. I make money from all of this activity. It’s been very very good. Really. Hope it keeps up. Just being honest (as always) with my thoughts. Not making fun either of people that are involved in this. It does seem to be a business model and hopefully it will be a long term one. But we have to be real about it as well.So… at least by definition a store of value is:A store of value is the function of an asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved. More generally, a store of value is anything that retains purchasing power into the future.(My emphasis)We don’t know that bitcoin is a store of value simply because it hasn’t been around long enough to really prove anything. Plus, and importantly, it can definitely go down in value. A great deal. The US dollar can but won’t. Less likely if you bought at $18 than at $3000 though. If it’s such a great store of value, and if you believe it won’t go down, then buy more of it today. At the price it is today. Of course that is not going to happen.Gold on the other hand is way way way more predictable as a store of value even though that value varies with world conditions and the market. Has been proven over time (even if it is a gamble it’s a much safer gamble). But nobody is thinking gold is the key to the kingdom and will rise greatly. Therefore it doesn’t satisfy the gambling instinct that drives a great deal of bitcoin activity if not most of it.Noting now that the page that I got that quote from has crypto added to it which just goes to show how wikipedia can be problematic.The most common store of value in modern times has been money, currency, or a commodity like a precious metal, cryptocurrency or financial capital. For real? Look at the way crypto was added to that page. It’s as if someone decides there is a new legit luxury brand to compete with the established luxury brands that have stood the test of time. Crypto has not. 3 or 4 years is nothing.…From that same page (showing my point about wikipedia) is this:While these items may be inconvenient to trade daily or store, and may vary in value quite significantly, they rarely lose all value. IFor real? Wiki page compares crypto to the other items on that list with regards to ‘loose all value’ like real estate and so on. Real estate of course can lose most of it’s value for various reasons. Casino in AC built for 2 billion sells for $82 million or real estate burns down when not insured properly with flood insurance. Or the area or neighborhood has an environmental disaster or flood that impacts everyone. In other words desirable elements of the neighborhood or area are destroyed and the real estate loses a great amount of value. But that is a corner case and atypical based on, once again, history.Currency, although it is often derided as losing purchasing power because of inflation, is probably the ‘gold standard’ store of value. In the US at least if it drops it drops slowly and predictably. Also there is a long history and confidence in the US dollar. So it is the defacto store of value.

    4. PhilipSugar

      On this we are the same page 100% When people started thinking Tulip bulbs were a store of value and to just hold them….

    5. Gregory Magarshak

      I disagree with you guys.Anything could be a store of value, if its value on a market stays stable or goes up. The *use value* of the item (in Marxist terms) is irrelevant, only the *exchange value*.A study just came out that the majority of defaults in the Housing crisis were by speculators, and people flipping houses etc. They thought real estate was a great store of value. All a commodity needs to be a store of value is that its price keeps holding steady or going up.Gresham’s law and common sense says that inflationary currencie are much more readily spent than deflationary ones.

  14. Vendita Auto

    The system is of course inevitable and welcome under institutional / legal governance. My concern is cyber security and that is before D-Wave v D-wave algos fight it out without mortal intervention. “What we take to be true is our reality” or perhaps the king is in the altogether ?

  15. falicon

    It’s a store of value through this cycle of hype and as the general public wakes/warms up to the idea (which also continues to drive the value up).At some point, the prices will stabilize though (because the majority that wants in will basically be in at the amount they feel comfortable with)…and then the *real* fun can begin again as it will flip back to mostly a payment system.In the meantime, it’s all “buy and hold” or “buy and trade for other coin types” (which are all pretty much going through the same cycles right now).

    1. JamesHRH

      How do you use an electrical outlet that is AC sometime and DC at others, with no schedule of when it is one or the other?

      1. falicon

        It’s not akin to switching from AC to DC, it’s more akin to switching ON/OFF…you use *that* by leaving your stuff plugged in and waiting (or forcing) the switch to be on.If you’re not plugged in, then the outlet is useless to you regardless. 😉

        1. JamesHRH

          If its not on, its not of much value either?Sovereign currencies are a store of value for only the smallest slice of people – basically currency traders.I get the hype – its a genius technical system.I just see a product searching for a market and that works out about 0.01% of the time.

          1. falicon

            I’m with you and understand/appreciate your healthy dose of skepticism (honestly I still go in and out of this argument in my own head a lot too).The more I think about it though, the more I don’t really think of it as a product searching for a market.Yes, there is a technology component to it all and so I started with the thought process/mode of ‘technology looking for a problem to solve’.However, the technology is really the blockchain and *one of* the products is BitCoin.BitCoin, the product, is a currency. More or less the same as the U.S. Dollar, the Yen, the Euro.So the market is *the market*.What drives the price, value, and acceptance behind any of these currencies? How stable are any of them really (and why)?I would say government, and to a lesser extent geography, has mostly been the ‘technology’ behind currency as a product (in the modern world).So I think you could argue that the removal of ‘government’ and ‘geography’ as the driving force behind any one of these things *should* make it more stable and useful (and that’s the *real* bet I’m making here).Side note: I keep my lights plugged in and off through the day…the value comes when the darkness hits.

  16. JamesHRH

    This is the perfect argument for total implosion.

    1. falicon

      Implosion is an absolute option.However – it’s not as likely in my book, simply because there are options for actually using these coins.So while the price *might* fall out from underneath everyone (i.e. don’t risk the farm buying in)…even if it does, you won’t be completely stuck with worthless/useless assets that you can’t sell or spend (i.e. stock of a defunct company).Just my humble opinion of course (and I *still* reserve the right to cry about the crash should it ever come) 🙂

  17. kenberger

    I am moderating a (large attendance- gulp!) panel at DLD Tel Aviv next week entitled “The New Payments Industry”. Panelists are new outlier online banks, Visa, nasdaq.Today’s AVC post’s title is a big part of what I’m thinking we’ll address, and how the encumbents are thinking through this and more.

  18. kenberger

    Our Crypto Explorers trips allow people to pay in BTC, ETH (or paypal reluctantly), partly as an eat-your-dogfood step. It’s very interesting to see how our “Genesis Block” attendees (all advanced and mostly long-time “hodlers”) choose to pay.I personally already see that while it’s super easy to agree with Fred’s conclusion today (given current ETH and BTC charts), there will be more and more sources that require or practically require crypto, and then more and more, people (some of which don’t hold any coin) will need to simply make a spot purchase from their fiat into the required coin amount. So it won’t matter as much to them– they’ll just decide on the spot whether the current translated price is worth paying. The “more and more” part might somewhat stabilize prices since it mixes in non-speculators, but increase the price by bringing in more aggregate demand (I am much less sure about this last sentence).

  19. Daniel Olshansky

    It is thanks to the early adopters like yourself, who invested and experimented with the currency, that Bitcoin is where it is today.

  20. Scott

    All of these transactions had zero fees. Is that because Coinbase waived fees in 2013?

    1. markslater


  21. William Mougayar

    BTC (and ETH) are commonly used as Spot Payment currencies for getting into ICOs who fix the exchange rate at a given point in time, and receive transactions accordingly. So, they are also a Payment vehicle.

  22. Lawrence Brass

    This happens also when the metal value or collector value of coins exceed the represented value.

  23. Dana Hoffer

    So then capital gains taxes will apply, yes?

  24. Value and Gold

    Nice post Fred. Curious, what your thoughts are on BTC in regards to fungibility and anonymity. How does BTC get over those hurdles?

  25. howardlindzon


    1. fredwilson

      Caddy fees baby!!!!

  26. Evan Van Ness


    1. fredwilson

      How so?

  27. Richard

    When you first introduced the community to bitcoin, your hypothesis was that it was a currency. Many of us challenged your forecast that bitcoin would be a mainstream currency within the decade, and we were correct. if only you came out with the hypothethis that it was a store of value with enough momentum to generate a tremendous 5 years trade, many of us would have been forever grateful.

    1. creative group

      Richard:Hindsight is twenty twenty.The increase in value of BTC forced the store of value. Fred had no control (directly) to fluctuations of BTC value.

      1. Richard

        Of course not? It was a tongue and check comment.For those simple minds, It is better to be lucky than right.

  28. Matthew S LaCrosse

    Great stuff! We need more people to share this mentality!

  29. Ken Fried

    Given how much this has run, I think you now need to switch aggressively and use it as “means of payment”!

  30. LE

    And that point is that you can’t keep spending something that goes up as much as Bitcoin has.Likewise let’s talk about the person who receives the bitcoins. Say you attend Moish’s son’s bar mitzvah and give him bitcoins instead of cash or a bond.In 5 years he wants to use the money for college.But bitcoin isn’t stable and it keeps going up so he doesn’t want to cash it in. Or maybe he held and much of the value disappeared. This year it’s up, year two it tanks. Sure same could happen with GE Stock but…Now what if everyone gave him bitcoins instead of US Savings bonds or checks for multiples of ‘chai’ ($18)? How does he pay for his college? Can he borrow against his bitcoin holdings? (Joking to make a point about giving something as payment or gift to someone instead of cash or an item with a predictable and more stable value).

    1. creative group

      LE:How about the giver of BTC relieve the entire burden off the recipient and exchange BTC or crypto to currency. Problem solved.

  31. atmssg

    Thanks for sharing. I was doing the math on the TShirt screenshot, before I realized this was the point of the post.Is the store of value vs. transaction issue paradoxical? The consensus for the price rise, seems to be that in the future, more exchange will happen with cryptos. But that increase in usage/liquidity won’t happen if the price keeps rising and people choose to treat bitcoin as an asset. Does this force bubble-like dynamics?

  32. Stefano Vettorazzi

    I don’t agree with this: “And that point is that you can’t keep spending something that goes up as much as Bitcoin has.”. Let’s say you have 2,000 dollars and you keep 1,000 as fiat money and 1,000 as bitcoin. So, you are going to spend the 1,000 dollars as fiat but you are going to keep the 1,000 in bitcoin. Why don’t just keep 2,000 in bitcoin? You are going to spend 1,000 anyway.

  33. Jonathan Williams

    There is lots of wealth built up in Bitcoin (speculative or not). That’s a lot of pent-up potential. And it seems it’s now flowing to ICOs rather than other more traditional systems.

  34. Druce

    A good store of value is a stable store of value. The takeaway from your post is that you can’t have a payments ecosystem unless the value is relatively stable.Ultimately, a financial asset has no value unless it’s linked to the real economy of goods and services. Without that strong link to the real world economy, the sky-high value of Bitcoin is built on sand and speculation.The functions of money and banking are multifaceted, to maintain the purchasing power of the currency, to maintain an efficient and reliable payments system, to foster a safe and reliable financial system for capital accumulation and intermediation, macroeconomic stabilization. If the financial system does an OK job, not much need for Bitcoin. If central banks and banks do a crappy job and get involved with politics, like cutting off people they don’t like from the financial system, Bitcoin is a pretty good hedge. But Bitcoin is certainly not going to usurp fiat currencies unless it does an acceptable job on all dimensions of money.A speculative asset disconnected from the real economy is just a disaster waiting to happen.

  35. jer979

    I’m a huge fan, Fred, as you know, but I think this approach is damaging to the eco-system.I’m definitely with you on the “store of value”/digital gold idea…HOWEVER, I think there’s a value to a certain amount of transaction velocity.You wrote a post a few years ago about your shares in public companies (I couldn’t find it after a quick search) that said something to the effect of “I sell 10%” (or some amount like that) every year.I think the same could/should be true of BTC (and maybe others). In order for the whole system to have value, there needs to be some transactions.Maybe you take a small percentage of your holdings each year (x%) and spend that. If we all (or most of us do that), then the value of the entire eco-system (as more ppl come in and see the potential) will increase by a far greater amount.I’m sure there’s a multivariate calculation at some point about the optimal amount and there is the free rider problem, but if you spend X% of your holdings, and y% of the network does the same, then the value of the coin goes up by z% which more than compensates you for what you have spent in terms of total value/purchasing power.Another way to look at it is that the 142 BTC you spent at $35 per was one factor in getting BTC to near $5k today. Without it, we wouldn’t be having this conversation. And we won’t be having a conversation about this when BTC should be at $50k.If you stop (and the rest of us do as well), it all falls apart. A store of value that is never tapped isn’t really a store of value.

  36. B Tenneson

    Fred-Here’s a Seattle company you probably have seen-https://www.geekwire.c…

  37. Curious

    It certainly is crass of me to ask, but I’m burningly curious: approximately how many are you left holding now Fred?

  38. @mikeriddell62

    It doesn’t create much value though, does it?It doesn’t for example, help ordinary people build and access wealth. Neither does it reduce resource consumption and nor does it reweave the social fabric of society.That’s because it’s shite. On a plate.

  39. paulrg1

    Fred, the last time I posted a reply to you on this blog was in mid 2012 when you popped up on /r/bitcoin (when there were <1000 members) asking the community for their thoughts on the current state of Bitcoin.I posted a reply regarding how, for bitcoin to gain broader acceptance, there would need to be a trusted equivalent to a bitcoin “bank” as, despite the prevailing meme that everyone could “be their own bank”, I just couldn’t see how this would fly at a larger scale. Human nature is what it is and, especially where large sums of value are concerned (and even more especially where “tech” knowhow is required), people would rather trust someone else to do the job for them – if for no other reason than that they will have someone else to blame when things go wrong.You then went and invested in Coinbase and I was quietly glad we were on the same page even though I also had strong doubts about this “currency of the internet” story being pitched at the time.Back then Bitpay was only a fledgling and unfunded company so I also proposed that there might also need to be a mechanism for merchants to hedge their risk if they were going to accept bitcoin for payments (I proposed some form of put-options – ridiculous!) because, as much as I was inspired by bitcoin, I simply couldn’t see how it could perform as a “currency” until a time when it had a requisite global density of acceptance that would enable it to act as a unit of account and therefore become stable enough for broader use (if that might ever become possible at all).It was just way too volatile and it struck me that the (parallel) meme that it could/should replace either CB issued currency or a Visa-esque payment network was nothing more than a perfect example of “group-think”.Nevertheless, I got positive responses to that post from Jim Burton and Gary Rowe from MultiBit as well as Eric Vorhees and was inspired to attend the first ever Bitcoin Meetup in London (to become Coinscrum) on September 17th 2012.I’ve had the pleasure of organising that group ever since, something that has led me to meet the craziest and inspiringest people I could have ever imagined and, quite frankly, has changed my life by orders of magnitude for the better.Jim and Gary wanted to explore my posted idea of establishing a “bitcoin economy” in Shoreditch but, in doing so, it also taught me that even the smartest technologist are fallible, and that their arcane expertise might not be enough to fully comprehend a far more complex and broader debate – the tech was off the scale but bitcoin was NOT a currency in my eyes.That was probably the most valuable lesson I’ve learned in the past 5 years – that we are all sometimes guilty of placing people who are (undoubtedly) on the far end of the “smart-spectrum” on too high a pedestal.I quickly put the “local economy” idea to bed whilst picturing, in my non-technical mind, the essential necessity to be able to abstract the “feature” from the “value” components of this incredible network.Within a week or so I’d happened upon the “Colored Coin” proposal on Yoni Assia’s blog – and that was it.It clicked.More so than the lightbulb that had finally gone off having spent 6 months+ trying to get my head around Bitcoin in the first place.I’d already smashed my head against a wall trying to convince gold-bugs on forums that this “thing” was going to do a much better job than their shiny stone in the long run – but by now I’d begun to understand why.As, over the next few months, I started to get a grasp of Multi-Sig and then nLockTime and then Side Chains (plus everything else since) I started to comprehend the truly unique attribute that bitcoin possessed.Conditionality.It took thousands of years for the world to subliminally work out that gold held the 7 or 8 arbitrary “qualities” of money that we, as fucked-up humans, desire our money to maintain.Bitcoin always had the potential to achieve (and in most cased supersede) those same qualities – over time – but gold could NEVER deliver “conditionality”.Bang. Uber-lightbulb. Job done.So, to finally get to my point, I’m very glad to see that you have come to the same conclusion and that we’re still on the same page some 5 ludicrous years later.You were one of the people that inspired me to pursue this incredible journey.I thank you very kindly Sir:)

  40. Brad Lindenberg

    Fred, at these levels are you still a buyer? Would you be dollar cost averaging to gain exposure?

  41. Brad Lindenberg

    If every American millionaire invested minimum 3% of net worth ($30k) into Bitcoin, market cap would be $480bn vs $74bn today – 6.5x upside.There are 16 million millionaires.Just the beginning.

  42. endmathabusenow

    If it did not have fancy technology attached to it, Bitcoin would be just another pyramid scheme. Instead of a letter saying “forward this to 10 more people and get them to send you $100”, you rely on the media to bring in people to bid up your unspent transaction outputs.You have all but admitted this in stating it is not a payment system.

  43. Pointsandfigures

    Agree, no turnover, what’s the value? Fiat currency has more value when there is velocity though the system. I like trees and ice cream too. What’s your fav tree, fav ice cream flavor?

  44. falicon

    A river without water is a mecca simply waiting for the rain to come in.Of course there is A LOT of risk involved in crypto coins, but I believe the big difference between something like this and say the tulip mania is that the underlying driver of this economy is not “the wealthy” or their whims.There are *real* things that can be done with coins once you own them…it’s just that no one really wants use it for those things *until* the price stabilizes (or your financial situation requires it).Consider this:1. Most transaction systems aren’t reliant on these coins yet, but the ‘value store’ aspect of the coins right now is a big incentive for them at least make it an option now (preemptive of price stabilization).2. If/when price stabilization happens, there will already be many many transaction systems that you can start to use these coins with.3. Essentially the network effect kicks in and the rest of the transaction systems feel obligated to eventually accept/use these coins too.

  45. Salt Shaker

    Hoffa indeed was tokenized. “Here’s a token of our appreciation,” said the man w/ the crooked nose before turning on the cement mixer.

  46. JamesHRH

    We are getting turned on to Blue Bell here in TX.Your river analogy is bang on.

  47. Pointsandfigures

    So hard when it comes to both. My grandfather was in the US Forest Service, so I have a pretty good knowledge of trees. I love a Serviceberry, because they are so pretty in the spring and fall, and birds love them. Tamaracks and Bald Cypress are cool too. But, I really like White Pines (Pinus Strobus). They are majestic when they get old. Eagles roost in the dead ones on our lake. A few winters ago, one cracked and fell across the road. It has to be 3 feet in diameter.When it comes to ice cream, I like a good chocolate. If someone wants to put some fresh raspberries or blueberries on it, I wouldn’t mind. My wife likes Mint Chocolate Chip.

  48. Dan Epstein

    Like Breyer’s vanilla as well. Ben and Jerry’s sometimes (the marshmallow and caramel in Phish Food is great).Give Graeter’s a try. Rich, but worth it sometimes.

  49. awaldstein

    Non dairy ice cream for me please.Still really hard to get and impossible even in NY to get soft cones of it.

  50. Rob Underwood

    Bluemarble is indeed a Brooklyn company but I think I think in Brooklyn itself Ample Hills is still better known. The latter has been named as the best ice cream in America on at least one of those food mag listicles.It’s interesting as the neighborhood in which Ample Hills (Gowanus) is made there is fretting about the loss of light manufacturing and it takes great effort to demonstrate how companies like Ample Hills both create jobs and in fact a form of light (process) manufacturing.In the search for industry sectors of the old our political leaders fail to see the industry sectors popping up around them creating all sorts of economic activity.

  51. Lawrence Brass

    one scoop of milk caramel ice cream and an espresso.. finish with sparkling water, here.trees optional.

  52. LE

    is that the underlying driver of this economy is not “the wealthy”How much does that matter? In this case we have everyone and their chinese barber driving up the price. A comparison might be the stock runup in the 20’s then the crash.

  53. LE

    Grim reaper time.You need to get back to work figuring out what you are going to do after Whole Foods squeezes you and cuts your margins. Really. The employees think everything is fine. “Nothing is going to change for now, time for my smoke break…” But they laughed when I said that Bezos would make this work (like Sam Walton) off the backs of the vendors. [1] No question that is going to happen. Back to work Charlie. The fish guy then told me the pecan crusted tilapia that I get had dropped in price. You know I never cared about the price in the first place actually. So great.[1] This is, by the way, exactly why my dad back in the day resisted selling to Sears (he could have) and stuck with the small gift shops and small stores. Keep the (insert that word here) out of the vise. This is exactly the type of shit that happens in traditional businesses.

  54. awaldstein

    Too cool.Standing deadwood Tamarack was what I used to cut (25 chords a winter) when living in the mountains of BC a lifetime ago.Today the trees that touch me more than any others as a New York are of course the Elms in Central Park. There are a zillion pics of them in my Instagram feed.

  55. falicon

    Possible.Still the difference here (in my mind) is that one was stock and the other is currency we are talking about.But yes, if there is a system-wide failure of confidence in the technology behind the currency…it will go to worthless pretty fast I would think.Same as if/when a government fails.

  56. Pointsandfigures

    Cool post! Here are a couple of shots of where I am right now. The lake is exactly 17 ft from my back door. (No waterskiing or jetskis allowed on it. It’s a wilderness lake)… There are two white pines on either side of our dock. Everyone in the family selected a baby white pine on the property and we have to take care of them.

  57. Vendita Auto

    God I am sooooo envious

  58. JamesHRH

    Ok, where – looks terrific.

  59. Vasudev Ram

    Pretty cool place.I once stayed in a beach hut about 10 ft from the ocean’s edge, for about a month. On the West coast of India. It was great to hear the roar of the waves at night (and of course a bit scary).

  60. awaldstein

    Do you really think margins are what is going to get squeezed by the new WF?They already are a squeeze with marketing support.The issue is more that whenever they will control the supply chain which includes bread btw, they will.They eradicated the juice market that way and they will wherever they can cause its good business.The trick is reduce the % of your revenue that comes through them.

  61. JamesHRH

    Your lifetime carbon footprint is enormous.

  62. Pointsandfigures

    Tamarack is extremely dense wood! I’d love to see your forearms after chopping that stuff. It will dull a chain saw.

  63. Salt Shaker

    WF dropped prices to drive volume, attract new users and be more on par with other grocers. Short term: Margins be damned and aggregate data/market share. WF couldn’t pursue that strat independently. Who’s possibly better than AMZN w/ CRM? Logistics and efficiencies will primarily drive volume/inventory and secondarily margins. Sure they’ll squeeze suppliers, but you can’t squeeze blood from a stone, right? I think they’ll test til they get it right and then bam. Curious to see overtime how WF is reported in AMZN’s financials–broken out separately or veiled w/ other stuff.

  64. Pointsandfigures

    Grand Marais, MN. Come for the woods and lake but stay for World’s Best Donuts.

  65. Pointsandfigures

    Don’t be. This summer when I wasn’t working on my real job we were demo’ing and rehabbing. I have only been on that lake 3-4 times the entire summer! Too tired at the end of the day. But now, fiber internet, electricity (water comes from a spring on a hill) an actual bathroom and a kitchen. Next summer will be sweet.

  66. LE

    Noting how the near end scene in “Hoffa” the movie (Danny Devito character can’t find his gun) is similar in theme to the Italian Restaurant scene in Godfather where they didn’t want Michael to leave the bathroom (because the gun wasn’t hidden correctly) with his (insert the correct word) in his hands.

  67. LE

    Sure they’ll squeeze suppliers, but you can’t squeeze blood from a stone, right?I have been close enough to this ‘small business’ thing over the years to say you can. Because if you are important enough to someone’s business what will happen is they will figure out a way to cut costs even if they have to start to cheat in some way or take advantage of employees whatever. Have you ever seen the kids of chinese restaurant owners working at a young age? That is an example. Have you ever seen all those immigrant run bodegas and dunkin donuts? That is another example. Things a franchise can and does do that a corporation could never do (for fear of laws, lawsuits and because they have a big target on their back).Another example is construction where you make your money on the backs of the subcontractors. My first lesson with that came when we did a project (graphics let’s say) for a man doing a casino. He made as if money were no issue just get the job done. He was a pretty big developer and decided to try to do a casino. Edit: The punch line is after we sent him the bill he then picked it apart and we came close to suing him. He stuttered it was actually funny to hear him complain about it. We made fun of that for years.The ‘price no object’ was not unusual and proved to be a good business model with respectable corporations (because it was no bid). But in the construction industry it was naive and a lesson was learned (and the concept was backed up with some other knowledge I obtained).Everyone is expecting Amazon to lose money he has already proven that before don’t see any issue with that.Maybe he will also change payment terms or drag out payment to suppliers. Maybe not immediately ‘nothing to see here move along’ but certainly over time.Look back in the day my Dad bought a building from me where the tenant cried they couldn’t pay any more rent they weren’t doing that well. He immediately on lease renewal jacked up he rent. They stayed. I will cry if I tell you how long that was for and even after the building was sold twice and worth like 10 times what I paid for it.

  68. awaldstein

    Agree super interested in this outcome as it impacts my food chain.Amazon, Whole Foods and our food supply

  69. awaldstein

    in perishable food distribution this will hit the wall fast and break.

  70. LE

    If I understand what you are saying (and I may not) this is interesting. Because while I have loyalty to spence and sons smoked salmon which I buy (as one example) I really don’t know where the pecan crusted tilapia or trout is coming from. Or the patagonia toothfish.So with brands that people are loyal to they may have more leverage and can win at the game of chicken. Assuming WF isn’t a large part of their revenue. If so they will be to scared to stand their ground.

  71. awaldstein

    Deft you are to do this and yes, the sure slide to ruin is to service Whole Foods and not branch out.Many a business and some of mine have failed cause we never smacked ourselves to have that large customer who when they hiccup you die.

  72. awaldstein

    You are a smart guy and your instincts are good.Not having too much dependence on WF is what artisanal brands must do but the Indies ain’t a cup of tea with skuing costs and the like.Just a tough biz that requires a mountain of capital to play in.And we will see if WF stays to its local artisanal roots at all.Some peripheral thoughts here:

  73. Salt Shaker

    That’s a really good read, Arnold. Artisanal and local is def part of WF’s DNA and it would be foolish for AMZN to abandon. Otherwise, they become just another commodity seller. They’ll find the right mix and balance. Your point on AMZN potentially owning or reinventing the supply chain makes a lot of sense too.

  74. awaldstein

    Thanks.I’m a retail watcher, a long-term student and thinker of the artisanal food and beverage world and unfortunately very intimate with the vagaries of dealing with distribution.I still think the greatest question of all is how to solve world hunger without destroying the planet. I seriously do.

  75. falicon

    I say yes. Many countries have a inflationary and volatile currency…may not be something you want to buy into because of that…but still a currency non-the-less (at least until it completely crashes). 🙂

  76. Vendita Auto

    my timeline is longer than yours every last summer was sweet : )

  77. PhilipSugar

    You know burning wood produces the same amount of CO2 as letting it rot. Look it up.

  78. PhilipSugar

    You know I want to do that sometime. Please suggest a place.

  79. JamesHRH

    I do , but I am betting The Cold Pressed Juice Man doesn’t, although he’s blocked me.I am starting an anti-blocking campaign, for kicks. It would be great if a bunch of regulars started ending posts with something like:It’s a shame that some regular AVC commenters won’t see this post, as they prioritize a selfish need to ‘curate their online experience’ over their commitment to the broader AVC community.

  80. @mikeriddell62

    Really? Cool fact! x

  81. Vasudev Ram

    Sure. Please email me at my id: firstname lastname (as one word, lowercase) at gmail? Don’t want to clutter up this post for the other readers. I have a few points to say in reply to your question, if it was just a line or two, would do it here.