It is both, but "not enough merchants/vendors who are willing to accept Bitcoin payments" is the current leading cause.
Demand often influences supply, and in this case, the merchants are the demand. The moment businesses across various industries, especially retail businesses, start demanding payment in Bitcoin, people will eventually begin to view it as a viable payment option. But then the problem of "unwillingness to spend Bitcoin will arise," because Bitcoin is viewed largely as a store of value, even by most core Bitcoiners, and I will tell you why.
Oftentimes, on the timelines, under posts that advocate for the need to spend Sats, you'll see subtle comments like "why'd I spend the better money? I'd rather spend the bad money and keep the better money", and you see this from acclaimed Bitcoiners. You then begin to ask, when do you then spend Bitcoin if we claim it is money?
Another subtle pointer to the fact that even we Bitcoiners do not necessarily regard Bitcoin as money is the continuous wrong application of the popular mantra "Stack Sats, HODL, never sell".
This is a good mantra that served its purpose in the early days when there was a need to have faith in this technology, hence the advocacy that people who believed in Bitcoin should hold on to it, which would probably convince others to do the same, growing faith and adoption, and strengthening the network. However, at this time and now, that mantra often sounds like "Hold your Bitcoin because the price will increase." You also realize that it certainly shifted the talk from Bitcoin being money to people, including many Bitcoiners, speculating on Bitcoin's fiat price, the same Fiat we are hoping Bitcoin replaces as money.
The question then is, "If we are holding Bitcoin because we hope that it'd hit another fiat ATH, does it suggest that there's a price it may get to and we can then liquidate (cash out), or does it suggest that we do not actually believe in our claims of Bitcoin eventually replacing the traditional financial money?"
Merchants/vendors are mostly not willing to accept Bitcoin as payment, and even users are rarely willing to pay with Bitcoin. On the merchant side, it is partly due to the not-so-clear regulatory borders of Bitcoin (but regulation clarity can always be improved as adoption increases), so we can say that it is largely because Bitcoin is volatile against Fiat money, and a lot of businesses run on the Fiat system. Accepting Bitcoin for payments means accepting volatility on any business capital kept in Bitcoin, and a majority of small and medium-scale businesses (the actual supposed catalysts) may not have the capacity to run such risks. Those who manage to accept Bitcoin for payments end up liquidating them instantly, which results in exchange fees and sometimes rigorous processes.
So if there's no immediate economic incentive to accept Bitcoin for payments (except for speculation that the fiat value may increase), why would a merchant that runs their business on the Fiat system do that, especially when they stand the risk of having unstable business capital, or paying extra fees to liquidate back to Fiat?
The same way a Bitcoin user would ask, "Why'd I spend Bitcoins that could potentially increase in Fiat value?"
So maybe the Fiat system will not necessarily be replaced by Bitcoin, but it could become the basis/standard/foundation on which fiat money runs, and perhaps that is when Bitcoin wins. Legendary Hal Finney of blessed memory also envisioned this when he opined that "in the future, there'll be banks running full Bitcoin reserves and issuing their own currencies backed by verifiable Bitcoin".
Eric Yakes and the Epoch team have largely also covered this in several of their reports on Bitcoin banking, explaining how this may unfold. Albeit predictions, a critical review will show that they're pointing in the right direction.
For Bitcoin to dominate everyday payment, it'd have to be much less volatile against Fiat or, say, stable. This will happen in the long run. Maybe in tens or hundreds of decades, but the process starts now. It starts by building products on Bitcoin money.
To enable merchants to comfortably accept Bitcoin for payments without worrying about volatility, we designed Fiat channels, a Lightning implementation that enables the creation of Bitcoin derivatives.
Fiat channels were coined from the original protocol, Hosted channels. It is a custodial lightning solution with a cryptographic fraud-proof.
It is both, but "not enough merchants/vendors who are willing to accept Bitcoin payments" is the current leading cause.
Demand often influences supply, and in this case, the merchants are the demand. The moment businesses across various industries, especially retail businesses, start demanding payment in Bitcoin, people will eventually begin to view it as a viable payment option. But then the problem of "unwillingness to spend Bitcoin will arise," because Bitcoin is viewed largely as a store of value, even by most core Bitcoiners, and I will tell you why.
Oftentimes, on the timelines, under posts that advocate for the need to spend Sats, you'll see subtle comments like "why'd I spend the better money? I'd rather spend the bad money and keep the better money", and you see this from acclaimed Bitcoiners. You then begin to ask, when do you then spend Bitcoin if we claim it is money?
Another subtle pointer to the fact that even we Bitcoiners do not necessarily regard Bitcoin as money is the continuous wrong application of the popular mantra "Stack Sats, HODL, never sell".
This is a good mantra that served its purpose in the early days when there was a need to have faith in this technology, hence the advocacy that people who believed in Bitcoin should hold on to it, which would probably convince others to do the same, growing faith and adoption, and strengthening the network.
However, at this time and now, that mantra often sounds like "Hold your Bitcoin because the price will increase." You also realize that it certainly shifted the talk from Bitcoin being money to people, including many Bitcoiners, speculating on Bitcoin's fiat price, the same Fiat we are hoping Bitcoin replaces as money.
The question then is, "If we are holding Bitcoin because we hope that it'd hit another fiat ATH, does it suggest that there's a price it may get to and we can then liquidate (cash out), or does it suggest that we do not actually believe in our claims of Bitcoin eventually replacing the traditional financial money?"
Merchants/vendors are mostly not willing to accept Bitcoin as payment, and even users are rarely willing to pay with Bitcoin.
On the merchant side, it is partly due to the not-so-clear regulatory borders of Bitcoin (but regulation clarity can always be improved as adoption increases), so we can say that it is largely because Bitcoin is volatile against Fiat money, and a lot of businesses run on the Fiat system. Accepting Bitcoin for payments means accepting volatility on any business capital kept in Bitcoin, and a majority of small and medium-scale businesses (the actual supposed catalysts) may not have the capacity to run such risks. Those who manage to accept Bitcoin for payments end up liquidating them instantly, which results in exchange fees and sometimes rigorous processes.
So if there's no immediate economic incentive to accept Bitcoin for payments (except for speculation that the fiat value may increase), why would a merchant that runs their business on the Fiat system do that, especially when they stand the risk of having unstable business capital, or paying extra fees to liquidate back to Fiat?
The same way a Bitcoin user would ask, "Why'd I spend Bitcoins that could potentially increase in Fiat value?"
So maybe the Fiat system will not necessarily be replaced by Bitcoin, but it could become the basis/standard/foundation on which fiat money runs, and perhaps that is when Bitcoin wins. Legendary Hal Finney of blessed memory also envisioned this when he opined that "in the future, there'll be banks running full Bitcoin reserves and issuing their own currencies backed by verifiable Bitcoin".
Eric Yakes and the Epoch team have largely also covered this in several of their reports on Bitcoin banking, explaining how this may unfold. Albeit predictions, a critical review will show that they're pointing in the right direction.
For Bitcoin to dominate everyday payment, it'd have to be much less volatile against Fiat or, say, stable. This will happen in the long run. Maybe in tens or hundreds of decades, but the process starts now. It starts by building products on Bitcoin money.
To enable merchants to comfortably accept Bitcoin for payments without worrying about volatility, we designed Fiat channels, a Lightning implementation that enables the creation of Bitcoin derivatives.
Fiat channels were coined from the original protocol, Hosted channels. It is a custodial lightning solution with a cryptographic fraud-proof.
Here are more resources:
https://standardsats.github.io/
https://github.com/standardsats/fiat-channels-rfc