Money is worth most when it's only money

Gold is the best money humans had for thousands of years. It also gets melted into rings, wired into phones and plated onto satellites. We think that makes it worse money, not better. And we think the same mistake nearly killed Bitcoin.

The case against side jobs

Every ounce of gold has two jobs. It can be held as savings, or it can be consumed: turned into jewelry, dentistry or electronics. That second job pulls supply away from the first and ties gold's price to fashion, industry and recessions that have nothing to do with saving. When chip makers need gold, savers compete with them. When jewelry demand drops, savers feel it.

Money's job is to hold value across time and move it across space. Every other use is a distraction that drags its value toward whatever the other use is worth.

Bitcoin was the first money with no side job

A bitcoin can't be worn, eaten or wired into anything. It does one thing. That's not a weakness. It's the whole design: an asset whose only demand is monetary demand.

Then the side jobs arrived. Images, tokens and arbitrary data started filling blocks and paying fees, turning block space into a general-purpose storage market. Defenders called it free-market demand for block space. We'd call it the gold problem: money competing with non-money uses for the same scarce resource, and starting to be priced like a commodity instead of money.

Why this matters for XBT

BIP-110 was an attempt to keep Bitcoin's block space for money. When it failed on the SHA-256 chain, the users who enforced it kept going on the chain that became XBT. Its rules are a bet that money is worth most when it's only money.

That bet could be wrong. Plenty of people argue the opposite: that more uses mean more demand, more fees for miners and a stronger network. Gold's industrial demand gives it a price floor that a pure money doesn't have. Those are real arguments. We just don't think a savings technology should have to win a fight with JPEG storage for the same space.

The test is simple. If pure money is better money, XBT's design should show it over the coming years. If side jobs make money stronger, the old chain will. Either way, we'll be watching the data at xbt.live.

How Bitcoin kept its rulesBitcoin's body and soul

Opinion. Not financial advice.