What exactly is hoarding Bitcoin?

I have been hoarding Bitcoin for a long time. Whenever I get my salary or bonus, I will not hesitate to set aside some money to buy some coins. I am often asked in the group, what is the use of hoarding it? I know that many people don’t understand why someone would hoard a "virtual" thing and never plan to cash it out.

However, this question is a long story, so I usually don’t answer it seriously. Of course, those who understand will understand, because the Bitcoin network itself has given the answer. If you look for it carefully, you will definitely find the answer.

Store of value is the biggest application of Bitcoin

There are always people who criticize Bitcoin for lacking killer applications, but in fact, storage of value is Bitcoin's killer application. According to the data of Bitcoin Blockchain (see figure below), the balance of Bitcoin addresses that have received but not spent in three years is about 3.21 million BTC, the balance of Bitcoin addresses that have received but not spent in two years is about 1.53 million BTC, and the balance of Bitcoin addresses that have received but not spent in one year is about 4.35 million BTC. In other words, about 9.09 million BTC have not been moved for more than a year. Considering that the total number of Bitcoins in circulation today is only 14.69 million BTC, about 62% of BTC have not been moved for a year or more.

The number of dormant Bitcoin addresses and their total balance ( data from 8btc blockchain )

Of course, you might say that some addresses may have been lost, so they are not used. Then, let's assume that all addresses with no income or expenditure for more than three years are lost, that is, 2.2 million BTC are permanently lost. In fact, this may be an overestimation of the lost coins, because a few days ago someone suddenly used the Bitcoin mined in February 2009, causing the community to exclaim that Satoshi Nakamoto came out to cash out (later proved not to be the case). Even if these lost coins are excluded, there are still about 51% of BTC that have not been moved for 1 year or more.

This shows that most Bitcoin holders have no intention to use their Bitcoin funds in the near future, but use it as a means of storing value for future use. You know, there are Bitcoin exchanges all over the world now, and it is very easy to cash out Bitcoin, but there are still so many coins that have not been moved for a long time. Note that this is different from the situation of altcoins. We know that some altcoins are nearly 100% untouched because there is no place to trade them, and some are even dead.

Therefore, most Bitcoins are used for storing value, and storing value itself is the biggest application of Bitcoin.

Why use Bitcoin for storing value?

Since Bitcoin price fluctuates greatly and is not a good medium for storing value, why do so many people use Bitcoin for storing value? There are several reasons:

(1) Huge space for imagination

There has never been a currency that can give people such a lot of room for imagination. Bitcoin supporters compare it to digital gold and believe that Bitcoin will definitely replace gold. The total market value of gold is 7 trillion US dollars. Even if it only reaches the current scale of gold, the market value of Bitcoin still has room for growth of 2,000 times. Even if the chance of success is only 1%, it is worth spending a little money to buy lottery tickets. In addition, some people believe that Bitcoin will become a payment network in the future, replacing existing payment networks such as VISA. In short, Bitcoin gives holders a huge space for imagination.

(2) Fixed total amount

Even if Bitcoin just maintains the status quo, it has a natural advantage over legal tender, namely, a fixed total amount. No one knows what the total amount of legal tender is. Therefore, in the long run, even if Bitcoin does not change (neither for the better nor for the worse), it will inevitably be more valuable than legal tender, because legal tender will become less and less valuable.

(3) Cannot be frozen

This does not require much discussion. The reason why a large amount of black money is saved in the form of Bitcoin is because it cannot be frozen by anyone. Unless the holder of the currency can hand over the private key, the flow of Bitcoin can never be controlled.

The price of Bitcoin will continue to fluctuate, and even the Bitcoin experiment may fail, but this still cannot stop a large amount of money from pouring into the Bitcoin network. Bitcoin has fallen from $1,150 on December 4, 2013 to around $240 today, and its price has shrunk by nearly 80%. Even so, considering the 3,600 BTC added every day, it means that about $860,000 (whether it is buying coins or investing in mining) still needs to flow into the Bitcoin network every day to maintain today's market value. How much money has flowed into the Bitcoin network from December 4, 2013 to now? The answer is a total of about $1.14 billion.

Therefore, even if the price drops to shit, there is still a lot of money flowing into the Bitcoin network, which shows how strong its value storage advantage is, so much money and so many people are willing to tolerate its short-term volatility.

What changes does Bitcoin store of value bring?

Today, I happened to see an article written by Li Xiaolai called "The earlier you start financial management, the better. So how do you start?" He urged everyone to start saving money as early as possible. Nowadays, people (especially those born in the 1980s and 1990s) generally don't like to save money. Li Xiaolai attributed the reason to their love of face. In fact, there is another important reason. The era of legal currency is not friendly to savers.

If we look back, we will find that in the era when gold was still a currency, there were too many people hoarding gold. There were even misers like Grandet who hoarded gold coins to the point of being addicted and forgetting that gold coins can be used for consumption. However, in the era of legal currency, anyone who saves is an idiot.

I am a person who is not good at saving, a typical moonlighter. However, after getting in touch with Bitcoin, I have developed a habit of saving. Every month, I will set aside a part of my money to buy some coins. You can call it fixed investment, but I prefer to call it savings. The difference is that fixed investment will eventually be cashed out, while savings are stored in cash and do not need to be cashed out. This process is also a step-by-step process:

The first step is to buy Bitcoin with spare money. Bitcoin is very risky. You can’t have 99% of your assets in Bitcoin like @星空, and you can’t sell your house to hoard Bitcoin like Dongshu. So you can only use your spare money to hoard Bitcoin.

The second step is to create spare money. Since you only use spare money to hoard coins, if you want to get more coins, you have to create some spare money. So, as Li Xiao said, reducing expenses by 5-10%, or even 20%, does not really affect the quality of life. And using the saved money to buy Bitcoin, the accumulated amount over time is quite considerable, this is the power of savings. At the same time, more importantly, the process of reducing expenses can help you develop good consumption habits. Only when you like something more than its equivalent in Bitcoin, then you really like it and it is worth buying. Because I like Bitcoin so much, I don’t have the desire to own many things in comparison.

The third step is to make it a habit. Thinking in a certain way for a long time will inevitably change your thinking habits. So, not only in economics, but in any aspect, I began to consider the opportunity cost. I always asked myself, if I don’t do this, is there a better choice? I even boldly gave up some things that I didn’t dare to give up before, but I felt that life was better and easier.

Bitcoin will change people's living habits, especially the habit of using money. Whether you admit it or not, as long as you hold Bitcoin, the change will happen more or less. It is foreseeable that in the future, Grandets will be reborn through Bitcoin.

There is a Bitcoin wallet that has a cool feature called "One-click Check Private Key". When you open the wallet and click "One-click Check Private Key", you will see that the private key is still there. It feels really good. Isn't it like Grandet opening his own small treasury and looking at the treasury full of gold coins? What a satisfying feeling! So, which Bitcoin wallet is the best?

Finally, let me use @熊小二萌大拿’s words to summarize:

Saving is a virtue and a driving force for economic growth, but our preferences have been distorted by fiat currency. We should consider whether it is worthwhile before making any consumption, and Bitcoin is just rebuilding virtue.