According to ex-BitMEX CEO Arthur Hayes, extreme HODLing could completely destroy Bitcoin (BTC).
The co-founder of embattled crypto exchange platform BitMEX warns that extreme HODLing could lead to the complete destruction of Bitcoin (BTC).
In a new blog post, Arthur Hayes notes that Bitcoin’s gargantuan gains over the past decade have created a culture of HODLing, which involves holding a coin for the long term rather than selling it.
However, the BitMEX co-founder notes that unlike gold, Bitcoin must be used to have value, as miners expend energy to maintain the BTC network.
“To cover their costs, miners must receive payment in the form of a socially valuable token. Bitcoin therefore needs to move, and movement between parties is the opposite of HODL culture. The HODL culture brought to its f(x): maxima would lead to the complete destruction of Bitcoin.
Once all bitcoin is minted and miners are no longer receiving sufficient revenue from network rewards in the form of newly minted bitcoin, they will have to rely on transaction fees instead. If no bitcoin changes hands as we all sit smugly clutching our thumb drives, then there will be no hash power to support the network. No network… no value.”
To avoid this scenario, according to Hayes, policymakers must develop a regulatory environment that “encourages a farm-to-table Bitcoin economy.”
In March, Hayes and BitMEX co-founders Benjamin Delo and Samuel Reed plead guilty to violating a law that requires financial institutions to help the government detect and combat money laundering schemes.
The U.S. Department of Justice (DOJ) claimed the trio willfully failed to comply with anti-money laundering protocols and profited from transactions made by U.S.-based customers, despite claiming that BitMEX does not serve U.S. individuals.
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