A letter to Saylor: The true value of Bitcoin lies in its circulation

Bitcoin's role as a Medium of Exchange is twice that of its value storage function.

Written by: Bitcoin Magazine

Compiled by: Wuzhu, Golden Finance

Michael Saylor, you are forced to realize that all value storage assets are flawed, and it compels you to focus on the only asset that is not flawed. This does not mean you are immune to the situation of Medium of Exchange. When you look at the real estate market from one angle, you see how massive it is, while from another angle, you see how terrifying it is. But if you have experienced pain that forces you to maintain billions of dollars in purchasing power, then housing is a decent tool.

Your obsession with SoV is completely off target. The biggest aspect of Bitcoin is the medium of exchange. Although the fiat currency system is increasingly separating the functions of money, that doesn't mean it should. I understand that Bitcoin as a medium of exchange is a hornet's nest and that all other currency lords will try to stop Bitcoin. It would be nice if they joined instead of fighting against it. This will give all billionaires confidence that they can put their money into it, but simply using Bitcoin to store value is attacking it. This approach will turn it into digital gold 2.0, to be captured.

Without a Medium of Exchange, there is no value storage! The Medium of Exchange comes first. You receive a transaction and then store Bitcoin. If value storage is the focus, imagine announcing that you lost the keys to your Bitcoin stack – you can still perfectly store it, but without the Medium of Exchange function, the market will erase the top-level fictitious fiat value. This value exists precisely because it is liquid and can still be used as a Medium of Exchange.

Oxygen tanks are crucial for storage, but breathing is more important. Value storage is secondary and relies on medium of exchange. Without medium of exchange, value storage is meaningless. Michael, you experienced this firsthand when your million-dollar assets in Argentina were diluted by 90%. You struggle to preserve value not because you didn't foresee its arrival, but because you couldn't use it as a medium of exchange. Indeed, poor value storage undermines medium of exchange, but why is the latter prioritized? Because trading ability is key to your responsiveness.

So far, most people who have come into contact with Bitcoin are aware of the chart by Jesse Meyers that you promote. You claim there is no better idea than a clean value store of 9 trillion dollars, and then immediately call Bitcoin one of the most liquid markets in the world, operating around the clock. Guess what? Liquidity means Medium of Exchange.

Now, let's break down Jesse's chart, starting with the real estate market. Its value is $330 trillion, but it is a very poor Medium of Exchange, with an annual transaction volume of only $1.3 trillion. Regulations and taxes make real estate transactions more difficult. Nevertheless, because it is over 100 times better as a value storage medium, billionaires favor it, increasingly dominating the market and excluding the younger generation.

The house may be very valuable, but its value growth comes not only from itself but also from its connection to nearby utilities. Building a road to it will increase its value. Adding a supermarket or gas station, or connecting it to the power grid, will further elevate its value. The network creates opportunities for energy to flow into the area, increasing the chances of converting energy into economic value (such as money). Therefore, the transactions occurring in the network are factors that increase the value of the house. But I see another side: if you are a billionaire and everyone is coveting your resources, you wouldn't want a large network built around your house. You would prioritize privacy. The house may depreciate, but the goal would shift to increasing the cost for others to access you, thereby reducing the chances of being attacked.

So what about the bond market? Bonds, as a medium of exchange, have a value of 300 trillion dollars, with an annual trading volume of 140 trillion dollars and new bond issuances reaching 25 trillion dollars. This means that the value used as a medium of exchange accounts for about 50% of its total value each year. In this sense, it is better than houses, but the figures still indicate that people mainly use it as a store of value.

Next are stocks. Their value is 115 trillion dollars, with a trading volume of about 175 trillion dollars. This suggests that their advantages as a Medium of Exchange outweigh their value storage role. Taking MicroStrategy stock as an example—you know it better than anyone else. How much value did it store last year, and how much value was traded through it?

The next two sections are very interesting. The annual transaction volume in the art industry is very small, so small that it doesn't even show up on the chart. Meanwhile, the annual transaction volume in the automotive and collectibles industry approaches $4 trillion. This highlights that they are primarily viewed as a store of value each year, but it also reveals just how poorly the real estate market performs as a Medium of Exchange - even worse than the automotive market.

Oh, gold! Gold enthusiasts fanatically claim that gold has been around for over 5,000 years, calling it the ultimate store of value, for whatever reason – but it only accounts for 1.78% of the store of value market. This suggests that once its medium of exchange role is stripped away, it can be easily captured and manipulated. I'm sorry, gold lovers, but the elf won't be back in the lamp. Gold has a value of $16 trillion, and gold enthusiasts claim that it can store $120 trillion worth of money in it. They are desperate to make a lot of money, but the market disagrees, believing that a flawed fiat currency is ten times higher than a shiny, lifeless rock. So, is gold a better medium of exchange? It trades $54 trillion annually and uses 3.5 times more of its medium of exchange, fueled by derivatives.

Money may not be dominant in terms of a store of asset value, but it is by far the leading medium of exchange. Other value store assets can't even compare. What if the U.S. dollar (the top currency) became a store of value? It will destroy the dollar network, and the value of non-US assets will rise as the network of non-US assets steps in to meet demand. Over time, their store of value assets will rise, while dollar assets will plummet. The total amount of global money is about $120 trillion, but look at the trading volume of the top central banks: Fedwire is about $1,182 trillion, TARGET2 is about $765 trillion, CHAPS is about $145 trillion, and others (partially) are about $500 trillion (conservative estimates due to incomplete data). So, while the store of value is $120 trillion (according to the Jesse chart), these networks are more than 20 times more effective as the medium of exchange, which is about $2.5 trillion. If 2 billion unbanked people were included, what would be the value of the medium of exchange? How many transactions will this trigger? What if microtransactions were possible?

Where does Bitcoin stand among all this? The mainstream narrative urges holders to never sell, positioning Bitcoin as a store of value. However, the market tells a different story. In 2024, Bitcoin's market capitalization reached $2 trillion, while the value traded on its first layer - the blockchain - reached $3.4 trillion. Considering the Lightning Network (although its exact figures are still elusive), the total could approach $4 trillion. This indicates that Bitcoin's role as a Medium of Exchange is twice that of its store of value function. So, what happens if the long-standing "HODL forever" narrative begins to fade?

Due to the flaws of fiat currency, bonds and stocks are financial "instruments" pretending to be money. This creates a market that prevents most people from protecting their wealth, further splitting the value storage function of currency. But how inclusive are these instruments? Or are they merely tools that siphon value from fiat Medium of Exchange, directing it into the hands of privileged individuals, billionaires, and others who need to hoard?

Globally, only 10-20% of people have access to bonds, primarily through pensions or investment funds indirectly, rather than directly. For stocks, 15-25% of the population can access them. This means that up to 80% of humanity lacks these tools to protect themselves, making them vulnerable to exploitation. Separating value storage from Medium of Exchange creates a dynamic of exploiters and the exploited. This amplifies the "Cantillon Effect": those who can print Medium of Exchange buy value storage assets, marginalizing 80% or more of the population. This is a feedback loop that weakens the system and widens the gap between the rich and the poor. The more money is printed, the weaker the value storage function of the currency.

Another very important part of the entire system is fees. Sending dollars through the banking system requires payment, which is a service, but what about the fees when you want to convert from a Medium of Exchange to a store of value? They are much higher. This creates so much friction in the entire system and prevents the poor from storing their value. At this point, the Medium of Exchange is increasingly becoming a withdrawal medium rather than a Medium of Exchange. This is also why the store of value case is more attractive in the fiat system.

Bitcoin does not pretend to be money like anything else; it is the first artificial currency that does not corrode like a melting ice cube and does not discriminate. It is the money of those who choose it. With no printers, no one wants to exchange it for a "better" store of value—there is no second best. Even those without Bitcoin can use it to shape the life they want. They are no longer chasing money to store something, but are building anything that can enrich their lives on the foundation of Bitcoin.

The most important idea is not to store value, but to transfer value. But to transfer value, you first need to store some. Once again, to store some, you need someone to transfer some in your way first. This is why the wealthy prefer assets that won’t dissipate like melting ice. Meanwhile, those just starting their careers focus more on acquiring value rather than storing what they do not yet have.

Why does the value storage case attract so much attention? One reason may be the effort involved. With value storage, you can buy and hold - no work is needed to improve your life. With a Medium of Exchange, you have to work to increase your savings and persuade others to pay for your goods or services with Bitcoin. Another factor: for most people, their fiat investment portfolio still exceeds their Bitcoin portfolio. They will only consider using it to improve their lives when Bitcoin surpasses their fiat holdings. This shift is not difficult for much of the world’s population that lacks savings or assets. This may explain why the current system refuses to let them exit, instead promoting dependence by offering Bitcoin custody - exchanging one dependence for another.

Even rigidity is related to the demand for more Medium of Exchange. Michael, you strongly support rigidity, but if Bitcoin is not used to reach more people, you are delaying it. Unlike you, the United States knows that to make the dollar the world's reserve currency, they must distribute it widely to lock in the network effect. They believe that the network is key to rigidity, and because the cost of printing and sharing bills is very low, it works easily. For Bitcoin, its absolute scarcity requires a balance between the amount of spread and storage. However, this does not mean you should not spend a penny.

The metaphor of storing fat in the body is key to long-term survival. That's true, but it overlooks the need for a stable food income to sustain life before storing fat. Without income, there’s nothing to store – so trading comes first. However, for someone who is not worried about hunger, the focus shifts to storing food to prevent spoilage. I have emphasized this to highlight your bias towards value storage, which can distort your judgment and mislead others.

At this stage of my Bitcoin journey, I am certain of this: chasing money will corrupt you. Bitcoin changed that—it prevents you from endlessly pursuing money and allows you to live the life you want with it. What happens when you have enough of what you want? Then what? With Bitcoin, this is entirely possible, and every Bitcoin user should be prepared with an answer to this situation. However, chasing money is an endless pit that you cannot fill. The Bible says that the love of money is the root of all evil. I agree, but how does it work? What is the mechanism? Chasing money—making it the priority and relegating everything else to secondary status—is a mechanism.

You are not establishing a Bitcoin standard – you are stacking a deck of cards. Just like gold in the past, this time you are hoarding Bitcoin from individuals and institutions, further solidifying the fiat standard. Saylor, you are not attacking the dollar as some might think – you are supporting it by elevating your stock and its ecosystem. On the contrary, you are speculatively striking against those who fund your Bitcoin purchases. You are not only hurting them; by strengthening the dollar, you are also exacerbating the pain of other currency holders. Hoarding Bitcoin under the watchful eyes of the world? This is not a cyber city – but a closed estate funded by their own money.

I want to know if people are willing to invest their Bitcoin in your securities. How many people would actually do that? I'm sure that real Bitcoin extremists wouldn't exchange their perfect store of value assets for fiat "instruments." Ask yourself: at this point, would you buy Apple stock with your Bitcoin? After all, you did invest in them before. It makes no sense – I'm giving you Bitcoin just so you can turn it into some kind of fiat thing, pay fiat fees, support fiat custodians and third parties, just so you can buy Bitcoin again on the other end.

Finally, I have no evidence, but I am quite sure you already know everything I said in this article/message. Although this is written for you, Michael, it is aimed at those who see you as the new Bitcoin Jesus and blindly follow you without questioning your actions. They make reckless bets in their own lives—bets that could cause their Bitcoin to vanish—lacking the financial security and interest rates you possess. The message they convey does not apply to most people.

Bitcoin is not just another asset or financial tool - it is a borderless, permissionless currency. Treating it otherwise diminishes its true value. Simply storing it will not bring freedom. Letting Sats flow can build networks. Letting Sats flow can promote collaboration and co-create a better future. Letting Sats flow can strengthen the ecosystem. Save some for tomorrow, but do not become the richest person in the grave - leave them as a plan for continued use later.