Bitcoin’s Monetization Path: Store of Value, Collateral, and Unit of Account

Summary

The January 12, 2026 episode of Bitcoin for Millennials features Vijay Boyapati arguing that many observers misread Bitcoin because they start with the wrong definition of money. Boyapati frames monetization as collectible → store of value → medium of exchange → unit of account, and he says Bitcoin remains in a long store-of-value phase where ownership is still thin. He links the next phase to institutionalization and Bitcoin’s usefulness as neutral collateral, while warning that rigid price models can drive costly decision mistakes.

Take-Home Messages

1. Stages of monetization: Bitcoin’s trajectory makes more sense when you treat money as a staged evolution, not just a payments tool.
2. Store-of-value reality check: Adoption remains early if “meaningful savings” ownership stays low, even after major price milestones.
3. Gold’s durability: Gold’s network effects and institutional role slow displacement, even if Bitcoin’s properties look superior.
4. Collateral as a catalyst: Bitcoin’s verifiability and portability may drive institutional demand through collateral and financial plumbing, not only savings narratives.
5. Model discipline: Over-commitment to stock-to-flow or power-law stories can amplify disappointment and churn during distribution-heavy phases.

Overview

Vijay Boyapati argues that defining money primarily as a medium of exchange leads people to misunderstand how new monetary goods mature. He frames money as a multi-function social technology that usually becomes widely held as a store of value before it becomes everyday spending money. He uses gold’s history to argue that the “store of value first” phase can dominate the timeline.

Boyapati places Bitcoin in an extended store-of-value adoption phase, emphasizing that broad, meaningful ownership remains limited. He says information spreads quickly while understanding spreads slowly, so superior properties do not automatically translate into rapid adoption. He also argues that gold’s entrenched status and network effects make displacement gradual, even if Bitcoin continues to outperform.

On institutionalization, Boyapati treats adoption by large financial actors as inevitable and consistent with neutral money rather than a betrayal of Bitcoin’s purpose. He argues Bitcoin’s strong verifiability and ease of possession make it attractive collateral, and he expects this utility to expand product design and market access over time. He also describes institutional integration as a “Trojan horse” dynamic in which Bitcoin reshapes incentives inside legacy finance. [see my Bitcoin Worlds paper for more in financialization].

Boyapati explains that Bitcoin’s price behavior can look psychologically driven because it lacks conventional valuation anchors like cash flows. He warns that treating any single price model as destiny can cause people to exit prematurely when reality diverges from the model’s timeline. He attributes sluggishness around 100K to distribution by early large holders, framing redistribution as a healthy but time-consuming phase of monetization.

Stakeholder Perspectives

1. Long-term savers: Likely to embrace the store-of-value framing while remaining sensitive to drawdowns that test conviction and time horizon.
2. Financial institutions: Likely to prioritize collateral design, liquidity depth, and product scalability while managing custody, reputational, and compliance risk.
3. Regulators: Likely to focus on consumer protection, market integrity, and leverage dynamics as Bitcoin-linked products expand.
4. Corporate treasurers: Likely to weigh reserve-asset strategy against balance-sheet volatility and the operational realities of custody and governance.
5. Cross-border households and firms: Likely to value portability and verifiability most where local financial access, property rights, or mobility is constrained.

Implications and Future Outlook

If Boyapati’s framework holds, the near-term story hinges less on “payments adoption” and more on whether Bitcoin continues to deepen as a broadly held store of value. The most decision-relevant signals become ownership penetration, custody norms, and whether Bitcoin’s verifiability translates into durable confidence during drawdowns. That shifts the research and policy focus toward adoption measurement rather than headline transaction counts.

Financialization will intensify debates over whether Bitcoin gets co-opted or instead changes incentives inside legacy finance. Boyapati’s collateral emphasis implies that demand may scale through financial infrastructure before unit-of-account usage appears in everyday pricing. That pathway would increase the importance of market structure, disclosure, and leverage management even if the core protocol remains unchanged.

Short- to mid-term volatility may persist while early holders distribute to newer buyers, but redistribution can also strengthen the holder base over time. Boyapati’s critique of rigid models such as the power law (also see my critique here) suggests that narrative risk becomes a governance problem for institutions, educators, and media alike, because miscalibrated certainty can trigger poor timing and public backlash. The key question is whether deeper liquidity and broader ownership reduce fragility or simply move it into more complex financial products.

Some Key Information Gaps

1. What empirical thresholds of population-level ownership would credibly mark Bitcoin as a “deeply established” store of value rather than an incipient one? Clear thresholds would improve risk framing for policymakers, institutions, and households evaluating adoption maturity.
2. What market structures and legal frameworks are required for Bitcoin-collateralized products to expand cross-border access without undermining possession and verification claims? Credible frameworks would shape whether collateral utility broadens access or concentrates counterparty risk.
3. How do large price drawdowns and rapid recoveries shape public beliefs about Bitcoin’s legitimacy when there is no cash-flow reference point? Behavioral evidence would help institutions and educators anticipate adoption setbacks driven by narrative shocks.
4. How should analysts evaluate adoption models for Bitcoin when hype cycles, crashes, and higher plateaus appear repeatedly but timing remains uncertain? Stronger evaluation standards would reduce overconfidence and improve decision-making under deep uncertainty.
5. How can on-chain and market data be used to quantify whale distribution effects around psychological price levels such as 100K? Better measurement would clarify whether price stagnation reflects temporary supply overhang or a deeper shift in demand.

Broader Implications for Bitcoin

A staged monetization lens reshapes policy debates

Treating Bitcoin as moving from store of value to unit of account reframes what “success” looks like over the next 3–5+ years, pushing institutions to measure adoption depth rather than retail payment volume. That shift can influence how regulators prioritize market integrity, custody standards, and leverage oversight relative to narrower payment-focused narratives. It also creates a clearer pathway for comparing Bitcoin’s trajectory across jurisdictions with different inflation histories, capital controls, and trust in institutions.

Collateralization pressures the financial system’s plumbing

If Bitcoin increasingly functions as high-quality collateral, it will pull questions about custody, rehypothecation, margining, and bankruptcy treatment into the center of public policy. The risk is not Bitcoin “changing,” but rather traditional leverage and opacity reappearing around Bitcoin in ways that create systemic fragility. Over time, jurisdictions that clarify collateral rules and enforce transparency can attract innovation while limiting the tail risks of hidden leverage.

Network effects and inertia slow displacement but increase strategic competition

Gold’s persistence highlights that superior properties do not automatically defeat entrenched monetary incumbents, which implies long transition periods where multiple stores of value coexist. That coexistence can motivate competition among states and institutions over reserve composition, market access, and narrative legitimacy, even if unit-of-account migration remains distant. Over a 3–5+ year horizon, the strategic question becomes whether adoption concentrates in a few financial centers or diffuses through diverse legal and cultural environments.

Narrative risk becomes an economic variable, not just a media problem

Boyapati’s critique of model fixation points to a broader issue: public forecasting narratives can shape capital flows, timing behavior, and institutional risk appetite. When models fail publicly, the resulting disappointment can trigger churn and political pressure, even if the underlying adoption trend remains intact. That makes measurement, communication discipline, and uncertainty literacy part of the governance toolkit for firms, educators, and policymakers engaging with Bitcoin.

Distribution dynamics may alter volatility regimes without removing volatility

Redistribution from early large holders to broader ownership can reduce some fragility by diversifying the holder base, but it can also create new regime shifts tied to liquidity depth and institutional product design. As Bitcoin-linked products expand, volatility may migrate from spot markets into derivatives and balance sheets, changing who bears the risk rather than eliminating it. Over time, the core question is whether transparency and conservative leverage norms become standard, or whether repeated leverage cycles create recurring political and financial stress.