Bitcoin Will Not Be a Medium of Exchange

[electronicash]

This argument could be valid in future if Bitcoin failed to gain market share and people just decided to use it for store of value, another thing to look at is the lighting network, the success of lighting network is going to determine if BTC is going to be use for medium of exchange because the  transaction fees that people complained about that is high is going to be reduced significantly

Lightning network just solves one problem though (or two, if we count fees + speed of transaction). It doesn't help much with volatility however. Who wants to buy a TV for 1K today, when a month from now that same amount of BTC could be worth 2-5K? Nobody will use BTC as a medium of exchange... they would hold it for speculation.

An exception could be in 3rd world countries where their own fiat fluctuates more than BTC does. I suppose it could catch on as a medium of exchange there with the LN. But other cryptos are probably better suited to that task than BTC is, at least currently.

In my opinion, it takes a long time for Bitcoin to become a medium of exchange because of many factors that are obstacles. Until now, not everyone understands what bitcoin is and how it functions or they know about cryptocurrency. Maybe Bitcoin will become more practical if used as a digital asset, as an alternative investment or safe haven other than gold

right now its can be used to buy stuff online. its a medium of exchange. right now one way to buy altcoins like ETH is to have BTC first. cryptocurrencies are medium of exchange it functions like fiat. its even in the forex market now just like a real fiat. you may not spend it but some people do. we keep trading it like currencies buying USDT with BTC. there is no good and bad money here what we have are bloodmoney. 

[uray]

BTC dominance is far too high and I hardly doubt that an altcoin will replace BTC one day. I prefer to use altcoins, but the majority of investors still believes in Bitcoin and sells all their altcoins to get some extra BTC.

I understand you prefer altcoin but what coins you are using and what coin you trust more than bitcoin who is the legit coin in the market and the reason i am asking is because there are only a few coins in the market that can be trusted and the rest of the markets are filled with copy coins rather than any innovation.

[IvugeoEvolutionCoin]

Original Post: https://bitflate.org/post/2019/11/24/bitcoin-will-not-be-a-medium-of-exchange.html

Bitcoin is "good" money. It’s too good that "bad" money will crowd it out of circulation.

Bitcoin is digital gold. It’s the number one Store of Value in cryptocurrency. But it doesn’t do much for us besides Store of Value. Some Bitcoin supporters argue HODL is a use case. More use cases will come. There is a narrative: Store of Value first, then Medium of Exchange. In this narrative, it’ll take time for Bitcoin to gain widespread adoption. Once it reaches critical mass, possibly hundreds of trillions of dollars, people will then use it as a currency. This narrative is convenient and used to justify Bitcoin ever rising price.

Nobody knows exactly when Bitcoin will reach critical mass. I agree with Store of Value use case. But I don’t agree that Bitcoin will have other use cases. Bitcoin is currently worth more than 100 billion dollars. We see few indications that it is being used as a currency outside of crypto world. Bitcoin is a valuable commodity. It will not be used as a medium of exchange.

Gresham’s law: bad money drives out good money

This principle states that more valuable commodity (good money) will gradually disappear from circulation. It will be replaced by less valuable commodity (bad money). For example, if people are currently using silver coins as money, the government decides to switch to copper coins. Government decrees that both coins have same value. In this situation, people will hold on to silver coins and use copper coins. They will spend the bad money (copper coin) and keep the good money (silver coin).

Bitcoin supporters tout it as the good money, the "goodest" money. Hyperbitcoinization will eliminate all bad money. It is misleading to label money as good and bad. Any form of currency has some use if it is in circulation. Fiat money makes the good/bad distinction fuzzy. These bad currencies are in circulation because they are just easier to circulate. The good, sound, and hard money is simply harder to circulate.

We should classify money as the desirable (good) money and the less desirable (bad) money. There is a spectrum between desirable and not desirable. In this spectrum, Bitcoin is highly desirable, gold is desirable, USD is desirable, Euro is next, Venezuela bolivar is not desirable. Gresham’s law continues to apply to the spectrum. The less desirable money will drive out the highly desirable money.

Bitcoin world domination does not reduce price volatility

Bitcoin needs to reach critical mass for world domination. This is a future outcome that Bitcoin supporters often pitch. In this future, Bitcoin price will become less volatile. It will be suitable as a medium of exchange. This argument derives from micro view of Bitcoin economics. If Bitcoin market cap is hundreds of trillions of dollars, a few hundred billions exchange will not affect price. The flaw of the argument is it assumes Bitcoin is micro and local. Bitcoin is permissionless and global. It is accessible by everyone.

Bitcoin supply is fixed. But its demand is unpredictable. Humans are fallible. We may go into wars and induce recession. We may achieve productivity breakthrough and grow fast. The future is unpredictable. Another factor is high fee. When Bitcoin no longer gives out block reward, miners will need to raise fee. When a transaction has high fee, bitcoin owner will need to have substantial gain to justify high fee. Otherwise, he/she will do better by HODLing. Bitcoin price will continue to be volatile.

Bitcoin will not be a medium of exchange because of price volatility.

"Bad" money always exists to prevent "good" Bitcoin circulation

Bitcoin is decentralized money. It exists because many of us believe it has value. It is unlikely that everyone on planet Earth will unify into one single belief. There will always be other kinds of money. These money won’t be as desirable as Bitcoin. Therefore, people will put them in circulation and keep their bitcoins.

Bitcoin will be a Store of Value. We will use other "bad" money as currency.

Bitflate is a cryptocurrency with constant inflation of 7% per year.

I think the major challenge presently retarding people using BTC in everyday real life is firstly laws forbidding it, and secondly volatility. The volatility aspect is the reason why many organizations or businesses might decide not to choose BTC if crypto ever gets adopted mainstream, instead they might consider using stable coins. Bitcoin has always remained store of value and will make much sense if it's use in everyday life increases in future.

[Ajaone]

To me Bitcoin being a store of value is enough. As we know that that the oldest store of value is gold and it is very hard to digitalized it, so a digital asset like Bitcoin will be a worthy store of value in the 21st century.

[Febo]

Bitcoin will not be a medium of exchange because of price volatility.

Volatility is because adoption is happening. Current Yearly supply is 3.5%. What is sort of high but price of Bitcoin still increases. Why? Because of adoption. More and more people uses Bitcoin.

Bitcoin will not be medium of exchange because it is not fungible.

[dnprock]

right now its can be used to buy stuff online. its a medium of exchange. right now one way to buy altcoins like ETH is to have BTC first. cryptocurrencies are medium of exchange it functions like fiat. its even in the forex market now just like a real fiat. you may not spend it but some people do. we keep trading it like currencies buying USDT with BTC. there is no good and bad money here what we have are bloodmoney. 

Bitcoin is blood money. I'm sure people losing sleep over it. People go to prison because of it. I personally like sweat money. I think Bitcoin is sweat money too. Why bleed for money? I want to enjoy life. Forcing narrative too hard makes me look like a scam. I don't preach Bitcoin as everything money.

[dnprock]

To me Bitcoin being a store of value is enough. As we know that that the oldest store of value is gold and it is very hard to digitalized it, so a digital asset like Bitcoin will be a worthy store of value in the 21st century.

That's enough for me too. It'll make a good return for Bitcoin holders. I think the Bitcoin community is trying too hard to sell the medium of exchange idea. It makes them look like a scam. The crypto story is incomplete. In order to cover the holes, people stretch their claims.

[letyouearn]

Bitcoin is like gold in crypto sphere. It won't be like dollar, and that's quite obvious. There are already some stable coins which play this role - Tether USD for example.

[efxtrader]

Bitcoin is like gold in crypto sphere. It won't be like dollar, and that's quite obvious. There are already some stable coins which play this role - Tether USD for example.

To become a medium of exchange like fiat money, government approval is needed and a central bank is needed and I don't think this will ever happen. As long as peer to peer transactions can still be done, Bitcoin might become a medium of exchange but it is very limited in its use and I think it will be better if Bitcoin is made a digital asset so everyone can access it

[starblocks]

You may be right about this and Bitcoin is becoming viewed more as a store of value and has received the classification of being "digital gold" and you may find stablecoins will be more suitable for payments and the lightening network will be set up for faster and more efficient transactions on the larger chain

[Mike Mayor]

This argument could be valid in future if Bitcoin failed to gain market share and people just decided to use it for store of value, another thing to look at is the lighting network, the success of lighting network is going to determine if BTC is going to be use for medium of exchange because the  transaction fees that people complained about that is high is going to be reduced significantly

Lightning network just solves one problem though (or two, if we count fees + speed of transaction). It doesn't help much with volatility however. Who wants to buy a TV for 1K today, when a month from now that same amount of BTC could be worth 2-5K? Nobody will use BTC as a medium of exchange... they would hold it for speculation.

An exception could be in 3rd world countries where their own fiat fluctuates more than BTC does. I suppose it could catch on as a medium of exchange there with the LN. But other cryptos are probably better suited to that task than BTC is, at least currently.

In my opinion, it takes a long time for Bitcoin to become a medium of exchange because of many factors that are obstacles. Until now, not everyone understands what bitcoin is and how it functions or they know about cryptocurrency. Maybe Bitcoin will become more practical if used as a digital asset, as an alternative investment or safe haven other than gold

right now its can be used to buy stuff online. its a medium of exchange. right now one way to buy altcoins like ETH is to have BTC first. cryptocurrencies are medium of exchange it functions like fiat. its even in the forex market now just like a real fiat. you may not spend it but some people do. we keep trading it like currencies buying USDT with BTC. there is no good and bad money here what we have are bloodmoney. 

Yep, the OP is talking shit. I just bought some games on steam with a gift card I bought with crypto. I just ordered some seeds for my garden using eth. I bought some spray paint for my crafting with bitcoin. Whats this OP on about? Does the OP even come to reply back? Nope....

This argument could be valid in future if Bitcoin failed to gain market share and people just decided to use it for store of value, another thing to look at is the lighting network, the success of lighting network is going to determine if BTC is going to be use for medium of exchange because the  transaction fees that people complained about that is high is going to be reduced significantly

Lightning network just solves one problem though (or two, if we count fees + speed of transaction). It doesn't help much with volatility however. Who wants to buy a TV for 1K today, when a month from now that same amount of BTC could be worth 2-5K? Nobody will use BTC as a medium of exchange... they would hold it for speculation.

An exception could be in 3rd world countries where their own fiat fluctuates more than BTC does. I suppose it could catch on as a medium of exchange there with the LN. But other cryptos are probably better suited to that task than BTC is, at least currently.

Another person talking shit. I spend bitcoin all the time. Stop lying and spreading misinformation. Which third world countries are you talking about that have money that fluctuates like that?
You say you won't spend bitcoin because it will be worth more in the future? Then convert all your fiat into bitcoin because using fiat to buy something is the same as buying bitcoin with the fiat beforehand the only exception is that you are using a superior payment method instead of crappy fiat.

[poornamelessme]

Another person talking shit. I spend bitcoin all the time. Stop lying and spreading misinformation. Which third world countries are you talking about that have money that fluctuates like that?
You say you won't spend bitcoin because it will be worth more in the future? Then convert all your fiat into bitcoin because using fiat to buy something is the same as buying bitcoin with the fiat beforehand the only exception is that you are using a superior payment method instead of crappy fiat.

The fact that BTC can be used as a currency doesn't mean it'll ever be used as a widespread medium of exchange. That is what I took the OP's message as, that it won't catch on and be widespread. Of course BTC could buy 'something'. LTC can buy stuff too, and I expect Doge as well. I recall Beancash could be used to buy stuff if willing to jump through some payment hoops -- but I wouldn't exactly say it's going to be an everyday currency used by most people.

If you feel otherwise, that's fine. I simply don't think the volatility issue will really ever be fixed. BTC as 'digital gold' is still good enough, that's at least a real world use.

As for countries with currency issues, Venuzuela comes to mind.

[dnprock]

Another person talking shit. I spend bitcoin all the time. Stop lying and spreading misinformation. Which third world countries are you talking about that have money that fluctuates like that?
You say you won't spend bitcoin because it will be worth more in the future? Then convert all your fiat into bitcoin because using fiat to buy something is the same as buying bitcoin with the fiat beforehand the only exception is that you are using a superior payment method instead of crappy fiat.

The fact that BTC can be used as a currency doesn't mean it'll ever be used as a widespread medium of exchange. That is what I took the OP's message as, that it won't catch on and be widespread. Of course BTC could buy 'something'. LTC can buy stuff too, and I expect Doge as well. I recall Beancash could be used to buy stuff if willing to jump through some payment hoops -- but I wouldn't exactly say it's going to be an everyday currency used by most people.

If you feel otherwise, that's fine. I simply don't think the volatility issue will really ever be fixed. BTC as 'digital gold' is still good enough, that's at least a real world use.

As for countries with currency issues, Venuzuela comes to mind.

This is a clear explanation. I don't use Bitcoin for everyday transactions. I think the current transaction data is not showing signs of Bitcoin becoming a widespread medium of exchange. Conflating the medium of exchange story with store of value is either hype or spreading misinformation.

[jagaban]

BTC dominance is far too high and I hardly doubt that an altcoin will replace BTC one day. I prefer to use altcoins, but the majority of investors still believes in Bitcoin and sells all their altcoins to get some extra BTC.

It is not going to happen. I can't see any altcoin outpricing Bitcoin in terms of value right now unless it has to be a new and more secure cryptographic currency that has none of the disadvantages bitcoin currently faces

[Mike Mayor]

Another person talking shit. I spend bitcoin all the time. Stop lying and spreading misinformation. Which third world countries are you talking about that have money that fluctuates like that?
You say you won't spend bitcoin because it will be worth more in the future? Then convert all your fiat into bitcoin because using fiat to buy something is the same as buying bitcoin with the fiat beforehand the only exception is that you are using a superior payment method instead of crappy fiat.

The fact that BTC can be used as a currency doesn't mean it'll ever be used as a widespread medium of exchange. That is what I took the OP's message as, that it won't catch on and be widespread. Of course BTC could buy 'something'. LTC can buy stuff too, and I expect Doge as well. I recall Beancash could be used to buy stuff if willing to jump through some payment hoops -- but I wouldn't exactly say it's going to be an everyday currency used by most people.

If you feel otherwise, that's fine. I simply don't think the volatility issue will really ever be fixed. BTC as 'digital gold' is still good enough, that's at least a real world use.

As for countries with currency issues, Venuzuela comes to mind.

I can buy almost anything I want in my country with bitcoin aside from pay bills and buy food. I use bitcoin more then I use cash or the bank. It is already widespread. You can pay for many things online from many differnt countries. Everything digital I have paid with crypto. That means it is wide spread. The fact it is in africa being used means it is widespread. I have bought so many things with crypto from seeds and garndeing supplies to entire pc setups tables laptops. Shoes, stuff for the kitchen, curtains, eating utensils and everything in between. So there you go there are thousands of real world uses. So stop talking shit. Look at this web site bidorbuy.co.za eeverything there can be paid with bitcoin. Thats an entire market place like Amazon and you tell me it is not widespread. 

[sockpuppet1911]

Every single argument against Bitcoin in this Bitflate advertisement is flawed and i wouldn't invest a penny in this money printing constantly rising inflation scheme.

[dnprock]

Every single argument against Bitcoin in this Bitflate advertisement is flawed and i wouldn't invest a penny in this money printing constantly rising inflation scheme.

Bitflate is in an early stage of development. I think it has a chance. It departs from the SoV narrative. But I have not been able to convince many people about Bitflate. I do not recommend treating Bitflate as an investment. It'd be very risky. Early adopters get more coin rewards. Do your own research.

There's a chance that Bitcoin will become a medium of exchange. But there's no indication. My argument could be flawed. You can keep pitching Bitcoin as MoE. That's either delusional or scamming others.

[Google+]

Bitcoin is like gold in crypto sphere. It won't be like dollar, and that's quite obvious. There are already some stable coins which play this role - Tether USD for example.

bitcoin is not like gold, bitcoin and gold have very different physical and supply, i think bitcoin can be used for faster and safer transactions while gold can only be used for exchanges in the same location, cannot conduct transactions between countries with fast processing.

[sockpuppet1911]

Bitflate is in an early stage of development. I think it has a chance. It departs from the SoV narrative. But I have not been able to convince many people about Bitflate. I do not recommend treating Bitflate as an investment. It'd be very risky. Early adopters get more coin rewards. Do your own research.

There's a chance that Bitcoin will become a medium of exchange. But there's no indication. My argument could be flawed. You can keep pitching Bitcoin as MoE. That's either delusional or scamming others.

I literally just ordered pizza with bitcoin, i buy food almost every day with it. I have bought my laptop, desktop, 2 monitors and tv with bitcoin and i have lived in hotels with bitcoin so i can't see where the problem is. Maybe you just want there to be a problem to make Bitflate to seem more useful which i can guarantee that it's not.

[joshua123]

BTC dominance is far too high and I hardly doubt that an altcoin will replace BTC one day. I prefer to use altcoins, but the majority of investors still believes in Bitcoin and sells all their altcoins to get some extra BTC.

It is not going to happen. I can't see any altcoin outpricing Bitcoin in terms of value right now unless it has to be a new and more secure cryptographic currency that has none of the disadvantages bitcoin currently faces

How about eth and xrp? Somehow thesee two are primary contender for the btc. Well the marketcap seems to be not marching towards btc but when it comes to different aspect I think technically these two are way better than btc. I'm not saying they can overwhelm btc price that much but the tech itself are proven useful. Especially eth network.