Why the Medium of Exchange Still Matters

The recent Coldcard situation compelled me to write this. I want to be clear up front: disagreeing with someone doesn't mean I invalidate them or dislike them. This isn't personal.

I've seen a wave of people moving toward ETFs lately, a lot of it coming from voices like British Hodl. I don't think there's any malice there — he doesn't appear to be paid to say it, and I take him in good faith. But I do think he holds a few significant misconceptions about how Bitcoin works, and when they get raised, the conversation tends to get waved away rather than addressed. I'd like to address them directly, especially for people who listen to him.

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The Nodes Are the Adults

Bitcoin's security rests with the nodes — not any single person. Not Larry Fink, not Michael Saylor, not any institution. The network is governed by the people running it. That's foundational, and it's worth sitting with.

Here's the part I think gets missed: Bitcoin's value comes from its ability to function as a medium of exchange. This ties everything together. If Bitcoin doesn't succeed as a decentralized, secure medium of exchange, it ultimately loses its store of value too. It's not only about the finite supply. If Bitcoin simply gets scooped up by Saylor, institutions, and ETFs and absorbed into the existing fiat system without ever becoming a medium of exchange, it loses what makes it valuable in the first place.

They Will Enter — And Then Face a Choice

Now, the obvious retort: "there's no world where institutions don't enter." I completely agree — they will. But they'll face the same choice everyone faces: provide real value, or eventually part ways with the coin. Bitcoin isn't designed to support long-term rent-seeking or perpetual yield. It's designed to eliminate that. These are two systems where only one can win — and one has to lose.

Play the scenarios out. We all expect inflation to climb as the printing continues. Imagine inflation at 25%. Who is going to care about Saylor's ~12.5% STRC yield — or any yield derived from Bitcoin's growth — when you can just own the Bitcoin itself? As Parker Lewis puts it plainly: people will just buy Bitcoin. (Watch him make the case here.) The same logic applies to stablecoins. Holding a coin that guarantees a loss doesn't work forever when moving to something better is one step away.

The Pull Back to Fiat

This may feel like a long way off, especially in light of Coldcard, a soft fork where much of the community underestimates the game theory, and yet another hard lesson — the kind Bitcoin seems to deliver every five years or so. But the danger is letting those moments keep pulling us back toward fiat for the illusion of safety. That pull will only get stronger, because the incumbent system has all the money it needs to attack Bitcoin. And yet Bitcoin behaves like a black hole — it absorbs everything. Saylor and British Hodl both sense this, but I don't think they've fully connected the dots: once Bitcoin absorbs everything, it becomes the medium of exchange. It was never built to farm yield. It was built to end yield.

So I'll say it plainly: if Bitcoin doesn't become the medium of exchange, it becomes just another centralized crypto coin. At that point the fixed supply matters about as much as gold's does — gold is also finite, and it got captured. This is the same trap I wrote about in The Pac-Man Box of Fiat: accumulation inside the fiat machine doesn't change Bitcoin's physics. And even if I'm wrong about that — even if they own all the coin and it somehow retains value — congratulations, you've just created a new 1% at the expense of everyone else. Look in the mirror and ask what you actually want for your family and your kids. The network effect is the ultimate source of Bitcoin's power. Please let that sink in.

The Lessons We Keep Learning

One thing that doesn't get discussed enough. Yes, Coldcard holders have been hurt, and yes, Bitcoin teaches hard lessons through trial and error. We've been through it before — Mt. Gox, Celsius, BlockFi, Voyager, FTX. I understand the appeal of believing that now that BlackRock is here, everything will go smoothly.

But consider where that path actually leads. In the end, I don't think there's a real difference — maybe some new laws, some proof-of-custody requirements, the reassurance that regulation has your back. But that's an illusion. When inflation runs at rates the U.S. has never seen — as boomers keep exiting the workforce, Social Security obligations balloon, and the dollar debases to meet them — that illusion crumbles fast and hard. Do you really want to be in a position where BlackRock has to liquidate its coins and pay you out in paper that's losing value by the day — paper you'll then likely rush to convert back into Bitcoin anyway?

So here's my honest challenge, and I mean it sincerely: play out the scenario for me where Bitcoin and traditional finance coexist forever and Bitcoin still holds any real value. I've tried to, and I can't find one that holds together. If you can, I genuinely want to hear it.

Bitcoin was never built to farm yield. It was built to end yield.

— Mike