Market News

BY  David Okoya

• Block CEO Jack Dorsey has offered his thoughts on how Bitcoin could fail.

• Dorsey’s thoughts go against the current prevailing narrative.

• The Block CEO’s statements have unsurprisingly sparked pushback.

Is Bitcoin meant to be a medium of exchange, a store of value, or maybe both? This question continues to be the subject of serious debate, especially in core Bitcoin circles.

The debate has now been rehashed by statements from Twitter co-founder and Block Inc. (NYSE:XYZ) CEO Jack Dorsey.

A Debate On Relevance

Dorsey has asserted that Bitcoin will fail if it becomes nothing more than a store of value. He said this while speaking with Haley Berkoe, product marketing manager of Block subsidiary and Bitcoin-focused development firm Spiral, on a "Presidio Bitcoin" podcast episode last week. According to him, Bitcoin succeeds through payments.

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Dorsey’s statements come at a time when the leading narrative for Bitcoin is that it has the potential to become a store of value on par with gold due to its limited supply. This thesis has left many unwilling to spend their coins in hopes that the asset’s value will continue to grow.

But in Dorsey’s telling, the current store of value focus presents a path to “irrelevance.”

“I think it has to be payments for it to be relevant on the every day. Otherwise, it’s just something you kind of buy and forget and only use in emergency situations or when you want to get liquid again. So I think if it doesn’t transition to payments and find that everyday use case, it just gets increasingly irrelevant. And that’s failure to me,” he told Berkoe.

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Addressing scaling and volatility concerns, Dorsey advocated for a focus on creating simple and accessible payment solutions that prioritize speed, privacy, and security. He argued that with time, greater accessibility, and a renewed focus on the ideals that birthed the cryptocurrency, the issue of volatility will also eventually be addressed.

Dorsey appeared to hold the view that Bitcoin had currently veered away from its original vision.

“There’s tons of stuff we need to do to really get back to the white paper, which is, you know, a system for electronic peer-to-peer digital cash like we have not seen that yet,” he asserted.

For example, Bitcoin Keeper Lead Developer Ben Kaufman contended that contrary to Dorsey’s statements, Bitcoin was more needed as a store of value than a means of payment.

“Bitcoin has value because it is needed. It is needed to store value as governments erode the value of their currencies. It is needed for payments to circumvent financial censorship. Currency devaluation affects everyone, while payment censorship affects small groups,” he wrote.

Interestingly, “Satoshi Nakamoto,” the pseudonymous creator of the cryptocurrency, did appear to envision a future for Bitcoin as a store of value, widely quoted as saying, “It might make sense just to get some in case it catches on.”

Time will tell which narrative will prevail or whether both can coexist. In the meantime, however, speculators appear to have the upper hand as the asset trades like a tech stock.