A couple of weeks ago, a friend of mine received threats against his family for jokingly offering to sell masonry masks at sky-high prices. The hordes of anti-price gouging Bitcoin fans were swift and merciless, threatening real-world consequences for what was intended to be a conversation-starter on the principles of the free market. Which is strange, because last I checked, the entire modern raison d'être for Bitcoin involves price gouging.
Now I'm not out here to call Bitcoiners bad people. Price gouging, believe it or not, is an essential component of the economy, and a net good in times of crisis. I would recommend this article if you want more detail than the basic rundown I'm about to give. Simply put, when the demand for a certain good passes the existing supply at a certain price, that price will go up until the demand and supply equalize. This also works in reverse in the case of a sale, where not enough people want to buy something at the current price, so a discount is applied until they will. Gouging is just radically adjusting prices to respond to crisis-triggered supply shortages.
The problem with price gouging isn't that it isn't good, it's that it's unsightly. Seeing basic goods marked up to a previously-unfathomable level puts a hard number on the severity of a tragedy. It doesn't matter that higher prices discourage hoarders from emptying the shelves, or that most people would gladly pay exorbitant prices for a good rather than do without. Or that higher prices create a strong profit incentive for the entrepreneurial to bring those goods to the needy at great trouble and expense, helping to solve the shortage. None of this matters to the optics of the situation, where people see a real number and are forced to come to terms with human suffering that otherwise remained a much foggier concept. They choose to get angry at the merchant setting the prices rather than at the calamity itself.
Coincidentally, the main value proposition for Bitcoin in the store-of-value era is the same: buy up as much of the supply as possible at lower prices (hoard), sell some at some future date at incredibly inflated prices (price gouge). While many investors in other cryptocurrencies can have similar expectations, as is common in any initial adoption phase of a new technology or industry, most still have some expectation of present and future use. Dash and Bitcoin Cash are intended to be used for purchases, LBRY credits pay for decentralized content hosting and reward creators, Basic Attention Token similarly rewards both creators and regular users, etc. Present-day users may benefit from being early adopters more than future users, but this is counterbalanced by the risk associated with going all-in on a new and unproven technology. Both sets of users still benefit, however.
The same can't be said for Bitcoin anymore. Using it today gives few benefits outside of some cost and efficiency savings with particularly large transfers, resistance to confiscation, and access to the speculative crypto-asset markets (an advantage that is fast dwindling as more coins acquire fiat trading pairs). Most aggressively advertised, however, is the simple act of buying and holding, with waiting longer to get in decreasing its benefits. The Bitcoin proposition is a game of hot potato, and no one wants to be the last sucker holding fiat.
The parallels between price gouging in a disaster and hoarding Bitcoin are a lot more similar than their pure economics. Recent marketing slogans have included a great sense of urgency, including the ultimately ill-fated "last chance to buy Bitcoin under $10,000!", eerily reminiscent of calls to stock up on essentials before the store shelves are barren. The ultimate Bitcoin success fantasy is, in fact, the total collapse of the current financial system, with its last desperate adherents fleeing last-minute to digital safe haven assets at great upcharge. Not only is this practically the same situation as a toilet paper hoarder reselling at an insane markup during the quarantine, it's cosmetically the same as well.
Despite this, we see plenty of Bitcoin fans loudly, angrily, condemning any instances of price gouging they come across from social media. Why? Well to be honest, many are likely hypocrites, decrying others' acts of gouging while plotting to do the same. As for the others, they probably haven't thought through their financial plan and its consequences yet. They may simply believe in buying Bitcoin today to secure against a future full of fiat currency devaluation. They may not have realized that this will eventually result in selling to a desperate person who has no other choice. Price gouging is slammed because the buyer has a forlorn human face. The last few to exit the fiat system won't be any different.
So go ahead, Bitcoiners: hodl as long as you can, and sell some minor fractions of your hoard to some poor sucker in exchange for what's left of their life savings. Just don't virtue signal against price gougers, because not only are you wrong, but you're one of them.
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