Time to call curtains on HODLing?

You could say HODL’ing is just plebs practicing their basic right to save the fruit of their labour in a money that doesn’t rob from them. Which is one of the most compelling value propositions for bitcoin. Many plebs think of bitcoin as one half of the oddly symbiotic relationship between bitcoin and fiat — spend in fiat, save in bitcoin.

This behaviour has become one of the leading signals of price. The ever increasing long-term HODL cohort, and the increasing proportion of existing coins moving out of active circulation establishes a relatively stable price floor, squeezing the active supply to a thin segment. With this, an uptick in demand and/or a slowdown in issuance due to halvings will dramatically skew the supply and demand balance and bitcoin will “go to the moon”. This is something content creators love to mention when forecasting price. Bitcoin’s Number Go Up technology is after all it’s tongue-in-cheek marketing strategy.

As a result, a positive feedback loop occurs.The more bitcoin plebs buy and HODL, the more money they save for their future, and the value of what they are holding increases. But the more profound effect of HODL’ing bitcoin is the positive mindset shifts that plebs often report they’ve unexpectedly taken on. They gravitate towards low time preference habits, delaying gratification to focus on their future. They adopt healthier habits and value more meaningful things like connection with their loved ones, and less the superficial short-term wants they’d typically strive to attain.

So bitcoiners get progressively more wealthy, and adopt better lifestyle choices, what can there be to criticise? But, like everything there is more nuance to it than that.A dogged commitment to never spend any sats can actually be detrimental for the person and slow down bitcoin adoption as whole.

In the excellent Parker Lewis appearance on the What Bitcoin Did podcast with Peter McCormack. Parker made the point that not spending money is actually high time preference. For a pleb to just HODL, and just watch the fiat denominated Number Go Up, whilst they do the same dead-end fiat-mining job will likely lead to a worse outcome than one who spends a small proportion of their stack to set them on a more meaningful career path or start a business that creates value in the local community. Likely promoting network effects and bitcoin adoption in the process.

Peter touched on this. He mused that he could sell sats to help fund his projects which have a positive impact on his local community, and the person on the other side of the trade can enter the bitcoin economy. When their own stack matures they could sell some to make their own impact. As peter puts it “Handing the time preference baton over” and flipping the debt-based fiat model of funding the present by borrowing from the future on its head —Bitcoin allows borrowing from the past to invest in the future.

It can be argued that HODL’ing and never selling is fiat maximalist thinking. Thinking of Bitcoin as nothing else but store of value gives off the signal that Bitcoin is just another instrument within the dominant supermassive fiat financial construct, rather than a disruptor of it.

The Bitcoin whitepaper is titledBitcoin: A Peer-to-Peer Electronic Cash System. The use-case Satoshi envisaged and the outcomes described above are only possible if plebs get comfortable with selling sats, and in doing so they support the bitcoin tech ecosystem which brings payment systems to the market, contribute to circular bitcoin economies and in turn answer the call in the mission to separate money from state.