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@ Stelios
2024-10-24 20:09:01That is true for the rate of growth of addresses, of hashrate, and even of price.
None follow an exponential curve.
And that is fantastic news, because it’s a reality check on where we are today with Bitcoin adoption, and how to actually make it happen faster. Let us collectively break the culture that has formed around the S curve. The very idea that adoption is exponential.
It’s the hopium that keeps some going, waiting on the #OmegaCandle chanting NGU and hodling onto their Bitcoin like it’s their “precious”.
So much of Bitcoin’s narrative is centered around an imminent inflection point, a face-melting exponential curve. We will wake up one day (soon!), Bitcoin will be over 1m per coin, the Federal Reserve will be blown into pieces, and all Bitcoiners around the world will come together to sing Kumbaya.
Then one more year passes, then one more year passes, then one… Just one more! It’s around the corner guys! Just hold on to your Bitcoin, and everyone else can have fun staying poor.
Don’t get me wrong, Bitcoin is a marvellous savings technology. Once you see it, you understand it’s the best way to safeguard your financial future.
But this is not a game measured in weeks, or months. It’s a game measured in years, decades. And I am starting to believe that the reason so many Bitcoiners still have an unrealistic expectation of the short term adoption rate of Bitcoin, is exactly because so many still believe Bitcoin growth follows an exponential.
But that mentality is actually harming Bitcoin adoption. When you ground your belief system into an exponential, it also becomes very easy to believe the path is set. That you can sit back, and wait. That it’s “any day now”.
And you’re wrong! The path is not set, the path is still being written, and at the moment it’s being increasingly written by some suits at BlackRock. So extend your time horizon.
Stop believing hyper-Bitcoinisation is around the corner, and start asking yourself: what can I do to make Bitcoin adoption happen?
The truth is, if you want Bitcoin adoption, hodling Bitcoin won’t get you there. Spending it, and getting more people to use it will.
No, I’m not trying to psy-op you into selling your Bitcoin. And the idea that spreading Bitcoin promotes adoption is not just theory.
Let’s go over some data.
If you’re allergic to charts and data, maybe stop reading here, and ponder on the above question for a little while.
But if you’re not, take a look at this chart:
This is what it looks like when you chart the ratio of Bitcoin’s hashrate, price and number of addresses. Bitcoin is a beautiful combination of power laws.
We’re not making any predictions here. This is what is, and what has been since Bitcoin’s Genesis Block. It’s Bitcoin’s DNA. And what it tells us is that there is a known, quantifiable, symbiotic relationship between Bitcoin’s number of participants (\~addresses), Bitcoin’s security (hashrate) and Bitcoin’s price.
What else do we know?
Bitcoin’s address count (\~ participants) grows at a rate of x³, where x is time. That’s the growth rate of viruses, it’s the growth rate of social networks. Metcalfe’s Law says that the value of a network is approximatly equal to the square of its participants. And with Bitcoin that checks out. Bitcoin’s price grows at a rate of x⁶, which is x³ (participants) squared (again refer to Giovanni’s work for the in-depth data analysis).
That’s pretty solid data to say that:
Bitcoin’s price is not exponential The number of participants in the network has a quantifiable impact on its price So, Bitcoin growth follows a power law. And that’s fast! But compared to an exponential, that’s slooooow.
“But ETFs are here! NgU!! Scarcity!! Bitcoin will break all your models to the upside!!!”
It get’s tiring, and you know it.
Before you get all excited about ETFs buying up all the Bitcoin, leading to the mother of all supply squeezes and sending Bitcoin to the moon, realise this: the number of people owning Bitcoin has a bigger impact on price than supply and scarcity.
Sorry Stock2Flow fanatics, I’ll say that again. The number of people owning Bitcoin has a bigger impact on price than supply and scarcity.
And, to be fair, ETFs are bringing a lot of new network participants. But HODLING isn’t. And a lot of the Bitcoin that is going into the ETFs, is on a one way street to be hodled forever.
So going back to the big question: What can I do to accelerate Bitcoin adoption?
The answer is simple: get more people using Bitcoin.
Ok, that sounds obvious, and you already knew that. So this post was pointless.
But what is the pre-dominant narrative for getting more people to use Bitcoin today? It’s NgU, it’s scarcity, in other words, it’s all the wrong things. You won’t bring more network participants by buying up as much Bitcoin as you can to stash it away for the next 20 years.
Oh, and you won’t retire in 2 years for hodling that 0.1BTC either.
You’ll beat inflation, by a healthy margin, and you will get more purchasing power over time.
But the truth is, from Bitcoin’s adoption perspective, you’re a rent seeker.
You’re living off the work of those that are actually doing something to push Bitcoin’s adoption, ultimately having a real impact on its demand, and thus its price.
Who are they?
The educators teaching Bitcoin to new people. The meetup organisers bringing people together to talk about Bitcoin. * Those building circular economies. The protocol devs working on improvements to scale Bitcoin. The app devs working on making Bitcoin usable in every day life. The people spending Bitcoin on their everyday expenses. Those are the people pushing forward Bitcoin adoption.
Heck, even the wall street guy that orange pilled Larry Funk has done more for adoption than the perpetual holder waiting on the day he’ll be a citadel king.
I’ll end this rant here, and if there’s only one thing you remember from it let it be this:
Stop hodling Bitcoin to your death. Spend it, spread it, replace it. Support circular economies and Bitcoin educators, find local stores that accept it, get more people actually using the thing and you might just get to enjoy hyper-Bitcoinisation in your lifetime.
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Bitcoin Power Law refs:
[Modelling Bitcoin Growth with Network Theory] https://bitposeidon.com/f/modeling-bitcoin-growth-with-network-theory…
[Intro to the Power Law] https://bitposeidon.com/f/simple-introduction-to-the-power-law-theory