The 70 Million Dollar Pizza and Why You Still Can’t Buy Groceries With Cryptocurrency
Disclaimer: This editorial has nothing to do with the Optimum Network, or the problems we are solving. I’m writing it purely because I think it’s interesting.
The list of companies that accept cryptocurrency (crypto) as payment is still fairly small.
Why? Putting all technical analysis aside, I believe this is due to something I affectionately call “The 70 million dollar pizza problem”, after the fellow that paid 10,000 BTC for a pizza in 2010.
I’m arguing that people don’t really want to pay with crypto, not that stores are reluctant to accept it.
See, nobody wants to be next person to pay a literal fortune for a bag of groceries. From what I’ve seen, crypto investors come in two flavors: traders and hodlers.
Traders are in it for the volatility, hodlers are in it for life. Traders enter and exit the market frequently, hodlers “set it and forget it”. Neither of them view their crypto assets as something remotely analogous to a checking account.
People still make payments with fiat currency because its value is stabilized by a central regulator.
This does not mean that crypto is fundamentally flawed. It just means we haven’t seen a currency (yet) that is feasible to pay with. Crypto as we know it is a different kind of value store. It’s not the same as cash.
How do we bridge the gap, start paying with crypto?
We need money that has a stable value while the market cap continues to grow. As people adopt a crypto currency payment system, the value of the payment currency must remain stable.
The BTC price chart illustrates how the USD price has exactly tracked USD market cap on a linear scale.
A crypto currency we can spend without fear of price increase would have a market cap that continues to go upwards with adoption, but a price that stays stable relative to other popular world currencies.
The chart below the price/market cap graph of USDT, issued by Tether. Notice how the market cap (blue) spikes upward but the value remains the same.
USDT doesn’t solve the problem though. People want a decentralized currency. USDT is backed by Tether, which stores USD in a bank for each token issued.
For crypto to be used as payments, someone needs to build a decentralized system that is value-stable by design.
The Federal Reserve manages the money supply in the United States. Maybe it’s possible for a cryptocurrency to implement a decentralized governance model that controls the money supply. Removing the central coordinator from issuance of money makes it hard to regulate stability of value.
