Earlier this week, coins.fyi writer Cole South published a post on why he no longer HODLs bitcoin that generated some animated Twitter discussion. So it seemed important to provide a quick walk through of some of South’s arguments from a Bitcoiner perspective. Of course, I’m not expecting to change South’s mind and get him to buy back in, but I believe a response is worthwhile so that onlookers can understand the difference in mindsets. South’s text will be in block quotes throughout.

“Productive assets vs Pet rock assets

In general, I try to own assets that have real end user demand/utility/cash flow over ones that are strictly reliant on market supply and demand.”

I think this is a category error. I view bitcoin in a separate category from say, stocks, bonds or physical real estate. They pay out dividends, coupons and rental income, whereas bitcoin should be assessed on its qualities as money. I view bitcoin as possessing monetary qualities that make it a superior money, in terms of things like scarcity, transportability and durability.

Viewing bitcoin as an “unproductive asset” is the wrong framing because really we have to think about why we hold money after all. For example, in “‘The Yield From Money Held’ Reconsidered” by Hans-Hermann Hoppe, the point made is that holding money allows us to reduce future uncertainty. The money itself is not meant to have a “yield,” but this does not preclude lending under a full reserve banking standard.

South acknowledges some of this here:

“Bitcoin has done a great job winning the ‘digital gold’ / store of value asset class.” 

But I’d say this isn’t giving bitcoin enough credit, as replacing money plus some of the world’s current value stores (bonds, stocks, property) gives it a huge…