The Utility of Saving

“Bitcoin has no utility!” The critics’ accusation of being useless is quickly followed by a declaration of worthlessness.

What the critics miss is that the utility of a monetary system is an inverse function of the uncertainty experienced by its users. Bitcoin is the least uncertain monetary system in human history as a result of its radical decentralization. By interacting with your own node and holding your own keys, as a user of the bitcoin system you can reduce your experienced uncertainty to the absolute minimum possible, within the limits of our current understanding of the laws of nature.

People hold money to hedge against future uncertainty. This is why it is so crucial for a monetary system to optimize for minimizing its own uncertainty. Bitcoin’s purchasing power is an external quantitative risk that can be insured against, not an internal qualitative uncertainty. Bitcoin’s monetary policy is an internal qualitative uncertainty that is minimized by the system’s halvings, difficulty adjustments, and proof-of-work. There is a tradeoff between exchange rate volatility and money supply certainty, bitcoin maximizes the latter.

Satoshi seems to have stumbled on to uncertainty minimization when he was parameterizing the system, in all likelihood the real intent was pragmatic engineering: simplicity and stability.

Yes, holding bitcoin is using bitcoin, but furthermore the only purpose of receiving bitcoin is to hold it and the only purpose of sending bitcoin is for someone else to hold it. All bitcoin are always held by someone, payments only change who is holding it. Fundamentally, bitcoin is only savings technology and transactions are just a feature within that product.

The reality is that bitcoin is the most useful asset in human history, and thus the most valuable.