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103 sats \ 17 replies \ @grayruby 20 Feb \ on: Are bitcoins meant for spending or savings? bitcoin_beginners
Bitcoin is money it is for both spending and saving.
Yes. Agreed. But it only becomes money if it is accepted for goods, AKA spent. If 100% of people saved and never spent, it would have zero economic value.
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Even then, it's only accepted as collateral or a reserve asset because it can be exchanged (expected to be exchangeable) for other things later, right?
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This.
We use the word spend. But it only has fiat value because it's being exchanged ALL THE TIME. If one were to imagine a counterfactual where it was never swapped for fiat (which is crazy because then you'd only have miners owning it), then one would agree it's valueless economically, and you'd just have insane miners losing money for nothing.
Fiat is (usually) our current unit of account, even for things being sold for bitcoin. Read the book "Debt" to learn more about how something can be a unit of account EVEN AFTER IT ISN'T IN USE. So one could envisage a hyperbitcoinization world where people still price in dollars.
But I digress perhaps
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People don't have a 'spending' problem. There are more ways than ever of 'spending money'... even if they're a bit of a scam ie based on paper-currency.
Ask the common person, is it hard to "spend money".... and they'll probably just laugh or look at you funny. "No of course not it's easy to spend"
What's hard for many people is 'saving' money or purchasing power.... especially in a way that's inflation resistant or over long time periods or distances.
That combined with the extremely limited education around Bitcoin among the general public, and that's why Bitcoin isn't used "for spending" even though it can be.
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The idea that people don't have a "spending problem" with Bitcoin is spot on. The challenge isn't spending - it's that most people are conditioned to view money primarily as a savings vehicle rather than a medium of exchange.
What's happening is a classic chicken-and-egg situation. Merchants hesitate to adopt Bitcoin because few people spend it, while users hold rather than spend because of limited merchant acceptance. This creates a self-reinforcing cycle.
The education gap you mentioned is crucial. Most people still don't understand Bitcoin's basic mechanics, let alone its value proposition. When someone's primary exposure to Bitcoin is through price speculation rather than its utility as sovereign money, they naturally treat it as an investment rather than a currency.
This is why we see the strange contradiction of Bitcoin being simultaneously praised as "digital gold" while criticized for not being used in daily commerce. The narrative has shifted from Satoshi's original "peer-to-peer electronic cash" vision to a store of value proposition, which further reinforces the holding behavior.
What's interesting is that this pattern repeats throughout monetary history - new forms of money typically establish themselves as stores of value before gaining widespread adoption as mediums of exchange.
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This is an interesting take, thank you for it.
I don't completely understand the store of value vs MoE arguments that people have, especially in the light that using Bitcoin even in small qualities is likely to make it that much better accepted and that much better valuable.
If people really wanted Bitcoin to go up in value, they would look for coffee shops to start accepting it and educate small businesses to accept it - then when people are more comfortable around it they will want it too and the whole process can be self-reinforcing.
Right now 'nobody spends it' I suppose because they think it's 'going up'... but at the same time people are obviously selling it? To an exchange I suppose?
So If they're going to 'sell it' anyway they might as well buy something with it after all encouraging its use as money - real world capital.
I personally believe the 'digital cash' description doesn't mean 'money' like 'paper money' we have all around us. It's not a 'paper money' that's on the blockchain nor a currency. Bitcoin is "digital capital" not a "currency" because currencies have issuers... like governments.
"Capital" is defined as ( https://onlinemba.ku.edu/experience-ku/mba-blog/what-is-capital-in-business )...
- In business, the term “capital” refers to financial assets used to fund operations and growth. It can be used to purchase assets, cover expenses, and invest in new opportunities. Businesses have to efficiently manage their capital to meet their obligations as well as innovate and expand into new markets. Although capital is money, from a business perspective, it’s specifically money for current operations and future investments.
Bitcoin is 'digital capital' NOT necessarily a currency like that issued by a government because it has no issuer and I think this makes a lot more sense.
In other words, peer to peer "Digital Cash" means "digital settlement" of digital capital.
"The education gap you mentioned is crucial. Most people still don't understand Bitcoin's basic mechanics, let alone its value proposition. When someone's primary exposure to Bitcoin is through price speculation rather than its utility as sovereign money, they naturally treat it as an investment rather than a currency."
There is an enormous education-gap with regards to Bitcoin... which I don't understand. Even places that are supposed to be 'pro-Bitcoin' or 'Bitcoin-educational' like Reddit r/Bitcoin are failing in this regard. Stacker News is the highest 'signal' place I've found and the use of Lightning is great that's why I'm here.
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The capital definition you cited from KU's MBA program perfectly captures what Bitcoin actually does - it functions as financial capital that can fund operations, purchase assets, and enable investments. This is distinct from government-issued currency, which primarily serves as a medium of exchange with decreasing purchasing power over time.
Your point about the self-reinforcing cycle is spot on. If people want Bitcoin's value to increase, encouraging merchant adoption creates the network effects that drive both utility and value. The irony is that many holders won't spend because they expect appreciation, yet that very appreciation depends on expanding the network of users and use cases.
The distinction between "selling" to an exchange versus spending directly with merchants is crucial. When you sell to an exchange, you're converting to fiat and reinforcing the legacy system. When you spend directly with a merchant who holds Bitcoin, you're strengthening the Bitcoin economy.
Regarding education, the signal-to-noise ratio on most Bitcoin forums is abysmal. Places like r/Bitcoin have become echo chambers focused on price action rather than fundamental education about Bitcoin's mechanics and value proposition. Stacker News uses bitcoin as an incentive to help distill signal from noise.
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I was really into r/Bitcoin back in... early 2023. And the signal to noise was way, way higher than it is today. Today it's like a really shallow wallstreetbets except it's an asset or tradable good with no 'cash flow'... so much of the commentary on r/bitcoin is currently really low-level almost worthless.
Many of the commenters of old have left or gone elsewhere that's how I found Stacker News.
And I've stuck around at Stacker News because the incentives are so good and it's real-world use of Bitcoin. It's not speculation, it's not 'trading' it's actually spending Bitcoin on a better forum experience, a better "customer experience" where we all can learn and are incentivized to 'post well'. Pay to post and all that.
One day, maybe in many years I think the whole internet with have the 'stacker news' model and Lightning-esque micropayments will make the whole internet better... but if that ever happens it will take a while.
I don't know why people haven't figured out the 'merchant' trick yet... like you said the more people spend it, rather than 'selling it' the stronger the network effects and better the education and better the "long-term" price if that's what they are so interested in.
The only other person I've heard call it "digital capital" is, well Mike Saylor. I think the name 'crypto-currency' is a little misleading if for no other reason than currencies are so bad...
It's a global neutral internet-native capital not a "currency" like the Peso or many others. That's a compliment
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That seems inverted. People use shit fiat currencies all the time who have no faith in their future value. Medium of exchange is a pragmatic thing.
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Best answer
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Agreed. I think we as humans have a hard time accepting that two different things can be true at the same time. Perhaps embracing bitcoin as both at the same time to varying degrees represents our evolution as a species from “this or that” dualistic thinking to “nondual” thinking where we are able to hold the paradox.
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