Will spending Bitcoin actually be bad for the price?

[thecodebear]

I thought of this a couple days ago. I saw the news that now you can spend Bitcoin at various big retail stores using the Spedn app, which I guess basically just uses a conversion service to let you use Bitcoin and exchange it for dollars and sends the dollars to the retailer. I started thinking that this is likely the standard model that will be followed at most retailers to spend Bitcoin.

Very few retailers can be expected to directly take Bitcoin, because it is volatile and they want exactly the amount of money they charge. They're not in the investment business, they're in the retail business, so when they sell something they don't want the amount of money the receive to go up and down. So given that, any time someone spends bitcoin that goes through such a conversion service, that means it is being sold for fiat (or probably eventually a state issued fiat stable cryptocurrency) on an exchange somewhere. If it becomes normal to spend bitcoin wouldn't that create huge downward pressure on the price?

Could the dream of using bitcoin to pay for things around the world actually be, paradoxically, detrimental to its price, and therefore bad for its adoption?

This makes me think that maybe store of value will be the major use case of bitcoin, rather than both store of value and means of payment. What do you think? Is the scenario I describe where spending makes bitcoin's price go down wrong in some way?

[Adriano2010]

Well maybe is complicated to accept it when price goes down, and spending it maybe not affect the price when buy something with but when the shops sell it for money then there can be a drop, but if we will have a higher price i think it can be adopted and accepted because maybe then the price will not have so much fluctuation. And if shops sell it people can buy it again and use again.

[dothebeats]

If you have a lot of merchants wanting to convert their bitcoins into fiat all at the same time, that, my friend, is what would cause the price to crash. But in a society and economy where bitcoin is basically accepted on par with fiat currencies as is, then we might be talking of something good in here and not something that could be detrimental for the price. Right now the main focus of people as to why they are buying bitcoins is because they wanted profit and earn more than what they initially bought for. When this focus is shifted towards just using bitcoin as is with the rest of the world, I don't think price would matter by then. Perhaps in time the whole world would accept bitcoin on par with fiat and never would the need for conversion be present again.

[exstasie]

In the shorter term, consumer usage probably equates to coins being dumped on the market. I think this is an inevitable stage in consumer/merchant adoption. We can't expect merchants to start holding such a volatile asset yet. Their vendors and supply lines are all paid in fiat money. They're not trying to speculate on currency appreciation.

So this is a middle ground that offers merchants better features (cheaper processing, no chargebacks?) until BTC gains more acceptance as a means for settlement. Bitpay has indicated a massive increased in B2B payments and I think over time that will continue.

Eventually I think these middlemen will be cut out, but it can't be expected to happen overnight.

[gentlemand]

I remember a Bitpay employee saying every single satoshi they were receiving at one point was going straight into the wallets of OTC buyers. Where else will you find a constant and steady supply with a very willing seller? There aren't many other places.

[jhongzjhong]

Well, the adoption of Bitcoin is not necessary to be accepted by all of the industry. The point is, for the bitcoin to be accepted by the general of the industries. But, I don't really see a vision where people will use bitcoin as their daily asset. Why? It is really hard to depend on a volatile thing. Due to my experiences, I believe that consistency is always a must to survive. In transactions, it would really give us a lot of hassle if bitcoin is the only option we have for our daily transactions. What I visualize is that people will be open for the option of having cryptocurrency. But fiat must always be there

[exstasie]

I remember a Bitpay employee saying every single satoshi they were receiving at one point was going straight into the wallets of OTC buyers. Where else will you find a constant and steady supply with a very willing seller? There aren't many other places.

That's a good point. I guess the fact that Gemini is engaged in such a big retail rollout says they're pretty confident about OTC market demand. I take that as a pretty bullish sign about the state of the market.

[jakelyson]

It will not crash the market. You are thinking that the flow of bitcoin will be all in one way - selling. But in order to continuously use the app, the user have to replenish his account with bitcoins. This will create a cycle and a demand. Users will either buy bitcoin from exchanges or work to earn bitcoin. Then they will spend by buying from merchants through the app. Both creates flow of bitcoin in the users side and will push the price up. While on the apps side, the bitcoin will remain in spedn's wallet and will add to bitcoins under hodl.This lessens the supply available in the market, pushing the price further up.

Of course this is only possible if the app can provide a better, faster and secure service than using fiat. Or If the app can provide incentives to users so they will choose to use crypto.

[Ipwich]

We are all spenders here but we also hold a little portion of the total supply.

I don't see anything wrong with spending as the purpose of bitcoin is to become a payment system or an internet money, which suppose to be spent.
The most important that should not be lost is the demand, I mean a continues demand, and then the price will just move up and have a stable movement.

Those dumpers of big amount are those that would affect the price in a bad way, not only because they move the market, but because they might cause panic which is a major problem in the crypto space ever since.

[yohananaomi]

Is there no obstacle when bitcoin can be used for direct transactions, because I see there are still many countries that are not financially ready for the implementation. indeed with this, of course there will be convenience and prices can not go down and rise but according to that time, different if we first change into fiat. maybe a dream for this matter still needs more time.

[malikusama]

I thought of this a couple days ago. I saw the news that now you can spend Bitcoin at various big retail stores using the Spedn app, which I guess basically just uses a conversion service to let you use Bitcoin and exchange it for dollars and sends the dollars to the retailer. I started thinking that this is likely the standard model that will be followed at most retailers to spend Bitcoin.

Very few retailers can be expected to directly take Bitcoin, because it is volatile and they want exactly the amount of money they charge. They're not in the investment business, they're in the retail business, so when they sell something they don't want the amount of money the receive to go up and down. So given that, any time someone spends bitcoin that goes through such a conversion service, that means it is being sold for fiat (or probably eventually a state issued fiat stable cryptocurrency) on an exchange somewhere. If it becomes normal to spend bitcoin wouldn't that create huge downward pressure on the price?

Could the dream of using bitcoin to pay for things around the world actually be, paradoxically, detrimental to its price, and therefore bad for its adoption?

This makes me think that maybe store of value will be the major use case of bitcoin, rather than both store of value and means of payment. What do you think? Is the scenario I describe where spending makes bitcoin's price go down wrong in some way?

Valid point but you should need to understand some of the points. I will try to make it simple so you can understand it easily.
Until the global adoption of bitcoin, spending will be bad because even the retailers who are accepting bitcoins will cash out as there is no other option they have. However, if the bitcoin is fully adopted around the world then spending bitcoin will be beneficial because retailers and shops will use bitcoin as payment not only to cash out for fiat.

[Indrawan77]

Theoretically the mass adoption will create less volatility, because it will balance the supply and demand, but decentralised currency wont be as stable as fiat, but it still can be used as a payment especially when the payment is converted directly to fiat, the store owner won't loss anything due to the fluctuations

[marcbitcoins]

I think it is not because the more people will use Bitcoin for their actual spending is the more the people will keep Bitcoin for their future spending. The owners of the sold commodities will replace their stocks using Bitcoin too so it will be a never ending economic cycles therefore it is ok to use our Bitcoin in spending.

[Caladonian]

I think it is not because the more people will use Bitcoin for their actual spending is the more the people will keep Bitcoin for their future spending. The owners of the commodities will replace their stocks using Bitcoin too so it will be a never ending economic cycles therefore it is ok to use our Bitcoin in spending.

With different types of people's points of views, using bitcoin with your merchants only gives ideas to others how this payment currency works, it will adds interest and possible to bring more people to actually using this system, the only thing that will affect the price is when every holders from the business sectors who will cash it out altogether after seeing good value amount.

The real essence is to be useful and being adopted, the volume will define the actual value after.

[davis196]

It depends of the current price and the quantity of people that are spending bitcoin.
It also depends for what you they actually spending bitcoin-for fiat money,for altcoins/tokens or for goods and services?
If many people start selling btc for USD at a very low price,off course it will affect the global bitcoin price.

[perla]

If we see it from other side, when people like to use it they will need bitcoin to purchase it. So it meand demands will come. Actually anything in this world will have pros and cons. So it is not always be bad thing.

[Seeker#9]

If people continue to spend bitcoin then demand will also continue to go up and this will also help in rising the price. But if someone or a whale, sold a big amount of bitcoin, this will surely affect the price of bitcoin. Spending bitcoin to buy some producfs will not affect its price because spending will cause a demand for more bitcoins which can also boost the price up eventually.

[klaaas]

Not if the volumes are high enough. The amount counts, when it becomes to big to fast it will crash.

If it becomes normal to spend bitcoin wouldn't that create huge downward pressure on the price?

Its the user who makes the price therefor it would go up since supply is scares.

[adzino]

Why would it be bad for the price? You are spending your Bitcoin, you are not selling it. So it won't directly affect the price of the bitcoin. Spending it is like moving your coins from one hand to another. You are not selling it for cheaper or for more. You are spending it for the exact price it is.
In fact, spending bitcoin like you would spend a fiat currency might actually bring some good to the market.

[STT]

This question is really old but still valid to ask I guess, Bitcoin has to be used spent and circulated to really be of worth.   I think this is known as monetary velocity and it helps to create value.   The very origins of Bitcoin were a token which until exchanged for a pizza had no idea of worth exactly only potential in that secure transaction.

We've come a long way and the price rose alot but I still go back to the usage, if people didnt spend and agree to an exchange and price then its not accumulating into this little eco system we have.  Nothing wrong with spending, buy on the lows as well and its all good.    I hold a little bit of worth in many asset types and I dont see using any of them to fund a bill as bad really