Bitcoin Paradox

Bitcoin is leading the industry for its breaking trough of design. Most of the infra follow Bitcoin's tokenomic: Pay transaction fee with BTC.

Bitcoin’s economic model presents an inherent paradox: since Bitcoin (BTC) itself is used to pay for transaction fees (Gas Fees), an increase in its price leads to a decrease in on-chain activity. This dynamic discourages frequent transactions and circulation, instead incentivizing people to hoard Bitcoin as a store of value rather than use it for on-chain transactions.

When BTC price rises:

1. Higher Transaction Costs – Since miners prioritize transactions with higher fees and fees are denominated in BTC, users must pay more to get their transactions confirmed.

2. Decline in On-Chain Activity – The increasing cost of transactions makes small payments uneconomical, leading to reduced on-chain usage and circulation.

3. Stronger Hoarding Effect – Bitcoin is widely considered "digital gold," encouraging people to hold rather than spend, further diminishing its use as a medium of exchange.

This phenomenon creates a feedback loop: Bitcoin price increases → transaction fees rise → on-chain activity decreases → people hoard more → Bitcoin's store-of-value narrative strengthens while its payment utility weakens.

In the long run, this paradox challenges Bitcoin’s original vision as a “peer-to-peer electronic cash system,” making it function more like digital gold or a value storage mechanism rather than a widely used transactional currency.