Speculation as the economic complement of Utility

I wanted to add to some thoughts I had in the post on Memetic Theory of Price I wrote a few days back.

Utility and speculation seem poles apart but viewing them as economic complements of each other has some interesting implications.

The theory of economic complements deals with the relationship between price and demand for goods that typically co-occur. For instance, a lot of people have their coffee with sugar and milk. Sugar and milk are economic complements to the main good, coffee.

The core statement in the theory is fairly simple to grasp. If the cost of coffee goes down and people begin to consume more coffee, they will need more milk and sugar, and so the demand for these goods increase and their prices rise. In other words an increase in demand for the primary good increases the price of the complementary good if their supply is constant.

That sounds good in this toy example, but how does it relate to speculation and utility as applied in crypto context?

From the theory outlined above, it follows that if the cost of speculation is driven down by low cost blockchains (e.g. Solana), the demand for exclusively utilitarian applications on these blockchains increases. This is especially true because the supply of utilitarian applications on a blockchain is relatively inelastic (i.e. the usage of the blockspace for 'productive' applications is limited by development time, adoption time and other constraints).

Enabling low cost speculation is then a net win for more useful applications on the blockchain.

The converse needs caveats but is generally true. Curbing the demand for speculation through high transaction costs on a blockchain curbs overall demand and price of utilitarian applications on the blockchain unless the blockchain explicitly penalizes exclusively speculative applications (which would go against the ethos of a permissionless system).

When viewed this way, it seems foolish to view speculation as net negative for the crypto space. There is enormous demand for speculative applications and crypto is uniquely suited to enable these applications. In turn, these applications stress test blockchain performance which ends up benefitting utilitarian applications on the blockchain.

I really wish people stopped ceaselessly bitching about speculation in crypto. There is of course a moral component to this - one cannot ban applications on a permissionless blockchain. If a blockchain is truly permissionless, people will build and use what they want.

But when speculation is viewed as an economic complement to utility it seems extremely counterproductive to try and reduce it on open blockchains by inflating the cost of speculation.