According to Strategy (previously MicroStrategy) creator Michael Saylor, purchasing Bitcoin (BTC) helps the Bitcoin network while selling hurts it. Bitcoiners jumped right on this contentious allegation.
Their first criticism is obvious: selling and purchasing always occur concurrently. Each BTC buy is also a sell; hence, there is always an equal amount of purchases and sales throughout the currency’s existence.
Giving Saylor the benefit of the doubt on this technicality, most opponents were willing to believe that he meant to argue that buying at gradually higher prices builds the network, and vice versa. However, even this sympathetic understanding of the real dynamics of a financial market could not dispel much doubt.
A famous Bitcoiner advised Saylor to reread its white paper to properly comprehend its security building design. Indeed, whether the price for a single transaction is higher or lower does not affect the network’s strength. Instead, the network merely sends, verifies, and secures transactions.
The Bitcoin whitepaper just proposes a peer-to-peer online payment system that does not require a trusted middleman. That network continues to handle each peer-to-peer transaction in the same way, regardless of the US dollar price at which the payments occur.
Critics also accused Saylor of downplaying the significance of BTC’s velocity. Dealing frequently—even at the same price—often amplifies its network effects. Increasing a commodity’s liquidity, independent of price, improves its day-to-day utility and promotes user adoption.
In Defence of Michael Saylor
A last group of detractors criticized Saylor on topics unrelated to his primary premise. For example, people chastised him for advocating MSTR, a paper contract backed by some BTC and numerous corporate assets.
Others thought it was his fault that he used words from Ponzi schemes to talk about Bitcoin. Of course, Saylor supporters flocked to his defense, pointing out that the price of BTC transactions influences its market capitalization. Miners chose to spend resources when their USD-projected BTC payouts outweighed their USD-projected operational expenses for energy, equipment, and overhead.
In this way, purchasing BTC at steadily rising rates encourages miners to utilize more hardware, expend more power, hash quicker, and raise more cash. This does, indeed, enhance the Bitcoin network.
Whether this most sympathetic interpretation of Saylor’s post absolves him of the numerous other faults is debatable on social media. The tweet received millions of impressions and thousands of generally heated responses.
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