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Written by OliMaster
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This small article is inspired by a recent discussion in OliCrypto's Telegram group. The group members are mostly experienced & dedicated Bitcoin Cash users who opted to support an innovative project based on BCH / SLP platforms (what is OliCrypto?). Therefore, our discussion, arguments and conclusions may be interesting for a wider Bitcoin Cash audience.
So the questions were following:
Is our intention to invest 65% of the Bitcoin Cash community-backed project reserves into other chains' crypto assets is correct?
Is it loyal and moral to the Bitcoin Cash community?
Is buying outside crypto assets "a betrayal" of BCH idea & principles?
Currency or asset?
To give a short answer on the 3 questions above, let me ask another 3:
Do we see Bitcoin Cash as a crypto asset ("utility", "crypto stock" or "store of value")?
Or Bitcoin Cash is a cryptocurrency, p2p electronic cash system - first?
Or... realistically both?
If we see Bitcoin Cash as a crypto asset then the "isolation" approach may take place. Assumed that a person or a project has a fiat currency income and then buys an asset by this currency.
Mary Doe gets her salary in USD, then puts some money apart for spendings, bills & other necessities, and invests the rest into Bitcoin Cash.
This example looks great - in general, Mary made the smart choice (though a bit of diversification would be useful even here). Mary enjoys both price appreciation & lots of usage cases of Bitcoin Cash, while covering her daily spendings with USD's earned from her employer and hold aside (on her banking card, in the safebox, secret sock under her bed etc.)
The only problem is: Mary actually does not use Bitcoin Cash as a cryptocurrency. She is hodling a crypto asset, while still relying on fiat dollars as a means of payment.
John's choice
John Doe (being a private person or a project) gets his payment in Bitcoin Cash (or immediately & fully convert his fiat salary into BCH). He makes all his regular spendings in Bitcoin Cash - through direct payments to merchants or a connected debit card. In other words, he does use BCH as his primary (crypto) currency.
Will his commitment to "diamond-handing" Bitcoin Cash be rational in this case?
The answer is definitely - NO.
Because in this case John completely avoids the process of maximizing the efficiency of value he possesses - this is one of the key powers of money (and yes, BCH is digital money!).
Naturally, John keeps some of his savings in Bitcoin Cash - because he believes in a bright future, further adoption & price appreciation of BCH.
But - again, if Bitcoin Cash is a currency - it is completely OK to differentiate his investment portfolio, adding some outsider assets to initial BCH (as an asset).
What he buys is his personal decision. The more important that he can buy all this by BCH!
"But we sell BCH"
It is one of the most frequent worries I have heard during the discussion. Will we make a negative impact selling BCH for other crypto assets - if we invest?
The answer is NO - until we use BCH as our base currency!
Not because John is a small player (he can be a business entity or wealthy individual).
But because if he invests his Bitcoin Cash, he will eventually take his profits and buy back more BCH from the market!
Final paragraph(s)
If we want Bitcoin Cash to be a "magic internet money" we must avoid isolationism in any of its appearances, from "diamond hand hodling" to tabooing external use cases and investments.
The uniqueness of BCH is that we have already moved - and still moving - to the goal of being the real money of Internet much further than any other crypto.
The main feature of money is being a universal equivalent, voluntarily accepted by all market participants for goods, services, investment opportunities etc.
So - dear BCH friends, do not be afraid & let Bitcoin Cash swim through the open waters of a wide market. BCH is strong enough to come back soon with some trophies (profit, extra value etc.) on board.
I don't understand your point. People using BCH as money should not save in BCH but in other assets, with lesser use? like BTC? what's the logic? With BCH you have a store of value AND medium of exchange. It's a deflationary currency. It has all properties of store of value (like they call) BTC and more. I see no reason to diversify a portion of BCH into other assets "just because".