You wouldn't expect the American media to discuss and amplify a technology that could likely and significantly jeopardize the dollar's hegemony, would you?
On the other hand, we have consistently overlooked a crucial factor that impacts the use of Bitcoin as a medium of exchange, particularly for day-to-day transactions. Bitcoin's adoption by merchants will continue to be slow until we recognize this problem and embrace a solution to it.
Just as Gold cannot be used as money because you can't scrape out a little portion of Gold to weigh and pay, Bitcoin has a temporary economic challenge, which is "its fluctuating Fiat valuation. It is temporary because it is a problem that can be solved and will be solved over time.
You wouldn't see many merchants display "Bitcoin is accepted here" signs because these merchants, unlike Steak n Shake, may not have the large customer base that could ensure that all their Bitcoin sales could be a percentage of their profits, removing the need to constantly liquidate their Bitcoin sales to Fiat.
Literally every business in the world is still Fiat-run, and must balance its books in Fiat, pay suppliers in Fiat, pay employees in Fiat, and stay in business. If you check very well, a majority of businesses that currently accept Bitcoin for payments are proper Bitcoiners. For Bitcoin to thrive as a medium of exchange, people who are not necessarily Bitcoiners should be willing and able to accept it as payment.
Now, accepting Bitcoin for payment is wonderful for large businesses (like Steak n Shake in the US and Pick n Pay in SA) because the percentage of Bitcoin sales they make would likely fall within their daily profit margin. These large businesses can comfortably keep these Bitcoins and still be able to run smoothly. (This is based on the assumption that they actually keep these Bitcoins.)
However, smaller businesses in your street may not have this capacity, so they would need to constantly exchange the Bitcoins they collected in sales to Fiat to either re-stock, pay bills, or do other things. This ultimately results in extra fees.
Now, giant POS providers like "Square", which offer Bitcoin payment options to their merchants, currently do not charge fees for exchanging Bitcoin to Fiat, but eventually they would (as they already mentioned), because it is not sustainable.
So, if a merchant requires paying extra fees to liquidate the Bitcoins they accepted as payment to balance their books in fiat and run their businesses, then will they not be better off just accepting Fiat (where they will still pay fees anyway)?
So, the issue that slows Bitcoin's acceptance by merchants is an economic one, and not necessarily unpopularity or technological issues. It is the fact that the world still runs on Fiat, and you can't change that overnight.
However, we can find a way to integrate Bitcoin as the base money that the Fiat world runs on, and from there we can easily switch fully to pricing everything in Bitcoin.
Now, how is this possible?
"FIAT CHANNELS" - This is a Lightning implementation that enables the creation of Bitcoin derivatives on the Lightning Network. With this technology, and a hedging mechanism, we can create any Fiat currency IOU's, where Bitcoin is the underlying asset being transferred to and fro. It uses a Host/client mechanism where the Host is any entity running a Lightning node with the Fiat channels plugin, and the client is any wallet client (custodial or non-custodial) that has enabled this technology, e.g., Valet (https://github.com/standardsats/valet)
You don't have to trust us; this protocol is completely open-sourced. Anyone can review it, contribute to it, and tweak it as they like.
Fiat channels enable merchants to accept Bitcoin payments on Lightning without worrying about volatility. This ensures that they can run their businesses, balance their books, and pay bills without any need to convert from Bitcoin to Fiat, and hence no extra fees.
Interestingly, in Valet (our wallet software) application, where we already have this technology demonstrated, users can at any time exit from Fiat channels back to self-custodial Lightning usage by draining their balances back to their normal Lightning channel. This ensures that merchants can always move their profits to self-custody after balancing the books.
There are other implementations of this idea through differrent approach by other people, such as "The Money socket" by JD (https://socket.money/leatherpaper).
The conclusion is that we need to first integrate Bitcoin as the base money while fronting Fiat as the actual value. With time, when Sats hit parity with even a Cent or the dollar, following a wide understanding of Bitcoin and constant use as base money, then we can easily ditch the dollar and price squarely in Bitcoin.
Unfortunately, the mainstream Bitcoin community has given little attention to this protocol that could completely change the game.
And yes, there's also something of this nature implemented by Galoy, and currently available in the Blink wallet.
This is the future, and the earlier we look at it, the better.
You wouldn't expect the American media to discuss and amplify a technology that could likely and significantly jeopardize the dollar's hegemony, would you?
On the other hand, we have consistently overlooked a crucial factor that impacts the use of Bitcoin as a medium of exchange, particularly for day-to-day transactions. Bitcoin's adoption by merchants will continue to be slow until we recognize this problem and embrace a solution to it.
Just as Gold cannot be used as money because you can't scrape out a little portion of Gold to weigh and pay, Bitcoin has a temporary economic challenge, which is "its fluctuating Fiat valuation. It is temporary because it is a problem that can be solved and will be solved over time.
You wouldn't see many merchants display "Bitcoin is accepted here" signs because these merchants, unlike Steak n Shake, may not have the large customer base that could ensure that all their Bitcoin sales could be a percentage of their profits, removing the need to constantly liquidate their Bitcoin sales to Fiat.
Literally every business in the world is still Fiat-run, and must balance its books in Fiat, pay suppliers in Fiat, pay employees in Fiat, and stay in business. If you check very well, a majority of businesses that currently accept Bitcoin for payments are proper Bitcoiners. For Bitcoin to thrive as a medium of exchange, people who are not necessarily Bitcoiners should be willing and able to accept it as payment.
Now, accepting Bitcoin for payment is wonderful for large businesses (like Steak n Shake in the US and Pick n Pay in SA) because the percentage of Bitcoin sales they make would likely fall within their daily profit margin. These large businesses can comfortably keep these Bitcoins and still be able to run smoothly. (This is based on the assumption that they actually keep these Bitcoins.) However, smaller businesses in your street may not have this capacity, so they would need to constantly exchange the Bitcoins they collected in sales to Fiat to either re-stock, pay bills, or do other things. This ultimately results in extra fees.
Now, giant POS providers like "Square", which offer Bitcoin payment options to their merchants, currently do not charge fees for exchanging Bitcoin to Fiat, but eventually they would (as they already mentioned), because it is not sustainable.
So, if a merchant requires paying extra fees to liquidate the Bitcoins they accepted as payment to balance their books in fiat and run their businesses, then will they not be better off just accepting Fiat (where they will still pay fees anyway)?
So, the issue that slows Bitcoin's acceptance by merchants is an economic one, and not necessarily unpopularity or technological issues. It is the fact that the world still runs on Fiat, and you can't change that overnight. However, we can find a way to integrate Bitcoin as the base money that the Fiat world runs on, and from there we can easily switch fully to pricing everything in Bitcoin.
Now, how is this possible?
"FIAT CHANNELS" - This is a Lightning implementation that enables the creation of Bitcoin derivatives on the Lightning Network. With this technology, and a hedging mechanism, we can create any Fiat currency IOU's, where Bitcoin is the underlying asset being transferred to and fro. It uses a Host/client mechanism where the Host is any entity running a Lightning node with the Fiat channels plugin, and the client is any wallet client (custodial or non-custodial) that has enabled this technology, e.g., Valet (https://github.com/standardsats/valet)
You don't have to trust us; this protocol is completely open-sourced. Anyone can review it, contribute to it, and tweak it as they like.
GITHUB - https://github.com/standardsats/fiat-channels-rfc CONCEPT - https://standardsats.github.io/
Fiat channels enable merchants to accept Bitcoin payments on Lightning without worrying about volatility. This ensures that they can run their businesses, balance their books, and pay bills without any need to convert from Bitcoin to Fiat, and hence no extra fees.
Interestingly, in Valet (our wallet software) application, where we already have this technology demonstrated, users can at any time exit from Fiat channels back to self-custodial Lightning usage by draining their balances back to their normal Lightning channel. This ensures that merchants can always move their profits to self-custody after balancing the books.
There are other implementations of this idea through differrent approach by other people, such as "The Money socket" by JD (https://socket.money/leatherpaper).
The conclusion is that we need to first integrate Bitcoin as the base money while fronting Fiat as the actual value. With time, when Sats hit parity with even a Cent or the dollar, following a wide understanding of Bitcoin and constant use as base money, then we can easily ditch the dollar and price squarely in Bitcoin.
Unfortunately, the mainstream Bitcoin community has given little attention to this protocol that could completely change the game.
And yes, there's also something of this nature implemented by Galoy, and currently available in the Blink wallet.
This is the future, and the earlier we look at it, the better.