Summary:
The HODL culture is undermining Bitcoin’s potential as a global medium of exchange.
Dormant coins provide no value to the network and limit wealth creation.
A new class system has emerged within the Bitcoin ecosystem, favoring influencers and gatekeepers.
The toxic culture discourages innovation and promotes power struggles.
Bitcoin must prioritize commerce and real economic activity to fulfill its promise.
In the previous installments of this series, we explored how the HODL culture has undermined Bitcoin’s privacy and squandered its potential as a global medium of exchange.
The Economic Consequences of Dormancy
Now, in Part 3, we take a closer look at the long-term consequences of discouraging real economic activity on the blockchain. When Bitcoin’s network is locked in a state of dormancy, with small blocks designed to limit usage, it doesn’t just slow growth—it cultivates a toxic ecosystem driven by rent-seeking behavior and gatekeeping. With few opportunities to create new value, the network’s dominant players become more focused on controlling the narrative, extracting fees, and consolidating power, all while strangling the very innovation that Bitcoin was meant to unleash.
The New Blockchain Class System
The decision to artificially limit Bitcoin’s block size is not just a technical choice but an economic and cultural decision. By capping capacity, the network has deliberately suppressed opportunities for value creation, forcing stakeholders into a zero-sum game. Instead of fostering vibrant commerce, Bitcoin has become a battleground of middlemen.
- Influencers: Social media personalities who act as ideological gatekeepers, setting the tone for Bitcoin’s toxic purity tests.
- Exchanges and liquidity providers: These actors profit off retail traders, distorting Bitcoin’s value proposition.
- Full node operators and core devs: They have evolved into a de facto governance layer, undermining Bitcoin’s proof-of-work principles.
The Failure of Dormant Coins
At its core, Bitcoin was designed to be a dynamic, thriving system of commerce. Yet, the vast majority of BTC remains locked away in dormant unspent transaction outputs (UTXOs), providing no value to the network and no opportunity for wealth creation.
A Vicious Cycle of Rent-Seeking
The toxic culture that permeates BTC today is a direct result of the failed “Hodl” economic model. When productive business activity is stifled, power struggles emerge over who controls access to the shrinking pool of opportunities.
Proof of Work vs. Cheap Governance
The governance of Bitcoin has shifted towards a system where those with the most IP addresses influence protocol changes without the real-world energy required by miners.
A Call for Commerce, Not Custodians
If Bitcoin is to fulfill its original promise, it must be freed from the grip of rent-seekers and gatekeepers. The network must prioritize the creation of value and real economic activity, rather than the extraction of fees. The real power of Bitcoin lies in frictionless commerce, identity solutions, and data integrity systems.
Watch: CoinGeek Weekly Livestream w/ Kurt Wuckert Jr. – Untangling Bitcoin Mining
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