Ending Value Store vs Exchange Medium Debate Once and For All

Both sides are wrong!

Of course, the approximately true answer is the SoV camp is correct and MOE camp is deeply wrong, but the block size wars did happen and some people still are in the MOE camp. I found myself randomly inclined toward writing a brief essay on twitter explaining why the SoV camp is technically also wrong, in a subtle way. It is my premise that the actual true answer provides a better means of compellingly quashing MOE nonsense i.e. you might actually be able to convince the MOE fools! This is all downstream from things I have previously written, but I don’t think I have previously provided a comprehensive explanation within the framework of a frequent dispute, which may make it easier to engage with than more abstract theoretical approaches around monetary functions. I may finally be making some inroads with people on appreciating the significance of these concepts, but it could very easily continue to be ignored for years.

I don’t have strong opinions or enough of a technical background to comment on ideas around various scaling solutions, but that is where I see this debate coming up, and what I am confident in is that developers who do know a lot about scaling concepts cannot reliably debate and come to correct solutions if they have large errors in their understanding of hyperbitcoinization dynamics, and the nature of non-cryptographic contracts (including the notion of relational contracts in addition to the more standard via positiva, violence-enforced contracts).

The Tweet:

https://x.com/DiracDel/status/1851142933850046479

There are fundamental flaws in the frameworks that most bitcoiners use when talking about these things that reduce to absurdity. You say "first prove itself" and while this does not explicitly indicate a totality of one thing before the other, that is how it is often spoken of.

In considering the simpler error that MOE maxis make, by definition, we know that a store of value implicitly must operate as a medium of exchange for no value can be said to be stored without a way to liquidate at a later time.

Similarly, when considering the question of the sequence of events for standard of value vs store, one must consider the totality of the different ways that value is stored. An individual may own some property, which may be converted to bitcoin and this might be called a store, but the fundamental nature of human life extends beyond the individual.

Social scaling is achieved by willing encumbrance on one's future actions, a codified promise (sometimes becoming a "contract") for the sake of not atomizing exchange and negotiations to only occur in a present moment, for this is intractable. In fact, even in the time someone may request that a burrito be prepared for them, they are exposed to currency volatility risk, and who is to say whether they are short in that moment?

More generally, that which one's counterparty for future exchange encumbers, is a thing in which one could equally say to be storing your value. So standard of value is in fact a store of value. Of course, again by definition, if all store of value is in some thing that is considered to be used as money and nothing else is, it must be used as the standard of value (as we will assume it impossible for the market to pass back through bartering).

But how can it be that the standard of value occurs after the store of value if we show that complete store of value implies standard *to have already occurred*? This is a paradox I see virtually all bitcoiners ignore.

The resolution to the paradox is found in considering the nature of bitcoinization applied to store of value, and then realizing it can apply equally to standard of value. So an individual, or any other sort of entity may begin with an assortment of things that they possess and at some moment decide to acquire and hold some bitcoin as well. It is theoretically possible one could sell everything one owns including clothing being worn in one lump sum, but it seems ~100% of people operate in a more gradual fashion. In considering a distribution of assets over time a very important thing to remember is that mathematically, the properties of the total portfolio are NOT equal to the portfolio of the properties of the constituent elements. Distributive property does not apply here.

Anyway, back to standard of value, the point is that ANYTHING can be a standard of value... including a portfolio itself. And we explained how standard of value is really a sort of (often periodically resetting) illiquid store held by a counterparty. Then within this "portfolio" there is continuity whereby bitcoin can eat an ever greater share while enabling acceptable levels of volatility.

As soon as these notions are more widely understood, and especially once the first software products that make such contracts practical for businesses, the fallacious meme where some people fixate on payments/exchange as their definition of "using bitcoin" there will be a far more exciting and substantive way to "use" bitcoin, one rife with all sorts of challenges to integrate into human econ-behavioral patterns, drawing in a surge of developers and entrepreneurs who will finally have a path to do more interesting things. That is the end game and the actual path of hyperbitcoinization.

NGU forever will happen in parallel, but thinking about that alone is frankly intellectually lazy, and if no one joins me in considering the actual singularity dynamics, we can be sure the transition will be more tumultuous than it need be, for I did not get into bitcoin nearly early enough to get this taken care of on my own.