[grinnbearit]

The primary function of bitcoin is as a store of value, its utility as medium of exchange comes after that.

The only reason people choose to store their labour in bitcoin today is that they predict the same amount of bitcoin will buy the same or greater labour in the future less the costs of converting to/from bitcoin (transaction costs). The only reason they'd store their labour in any other way is if they were getting a better deal.

Said another way, if bitcoin's primary use was as a currency the silkroad shutdown should have lowered the price of bitcoin proportionally. People using bitcoin as a currency could convert into it at the last possible minute instead of holding it. You need people treating it as a store of value for it to have a price tomorrow.

[dllthomas]

Over time, we've decided that focusing on something that works optimally as a medium of exchange and sufficiently as a store of value is better than the alternative. As I've said, I'm not convinced this is devastating, but it's a concern, and is orthogonal to divisibility.

[grinnbearit]

Who 'we'? And why do they feel its better than the alternative? I can see why the digital dollar trumps gold, the transaction costs are way lower but I don't think bitcoin has the same problem.

It will be interesting to see how this plays out, store-of-value > medium-of-exchange or the other way around. Darwinism in all its glory.

[dllthomas]

It's certainly the case that gold has problems that bitcoin does not.

It will indeed be interesting to see how things play out, though interesting isn't always good. It might also not be a very good experiment. Path dependence is huge, and the store-of-value role seems likely to play a bigger role in trying to shape expectations around an otherwise ephemeral digital currency while bootstrapping, yet a focus on it might nonetheless wind up ham-stringing us in the long run...

Which, to be sure, is very much like Darwinism has played out in many other contexts.