Bitcoins are not used

[5Ksana_HandMade]

2012

Quantitative Analysis of the Full Bitcoin Transaction Graph https://eprint.iacr.org/2012/584.pdf
______________________________________________________________________________
The published results help us make some conclusions. First, the bitcoin market is even smaller than people thought. Even if we look at the total number of bitcoins, the market is very small. And if we remember that 78% of bitcoins are not used, then the market becomes very tiny. Such a market is easy to change and control, and the price can go up and down very fast.

Second, we can think about why bitcoin owners do not use their coins. One reason is that very few shops accept bitcoin. Also, the shops that accept bitcoin do not have many products. Mostly, they sell digital products. Of course, you can always change bitcoin to dollars or another strong currency that all shops accept. So why do people not do it?

The main reason is that people think the price of bitcoin will grow in the future. There is no inflation in bitcoin. Some people even think the price will only go up. So bitcoin owners do not want to spend their coins. They want to save them. In this situation, bitcoin becomes an investment for saving money, not a real currency for everyday use.

2025

Bitcoin Dormant Supply and ETF Inflows Tighten Market Liquidity https://phemex.com/news/article/bitcoin-dormant-supply-and-etf-inflows-tighten-market-liquidity-24932
_______________________________________________________________________________ __
Over 61% of Bitcoin's supply has remained inactive for more than a year, constraining short-term sell-side liquidity, according to Coinotag.

Short: In 2012 and in 2025, most BTC does not move. So the liquid supply is small, and the market reacts strongly when demand goes up or down. The measures are different, but the result is the same: Bitcoin acts like a saving asset, not like money for daily use.

2012 - "Quantitative Analysis of the Full Bitcoin Transaction Graph" (PDF) by mathematicians Dorit Ron and Adi Shamir shows that 78% of earned BTC stay in wallets without movement and never enter the market. What is interesting: almost all transactions with 50,000+ BTC in Bitcoin’s history fit on one chart. Also, almost all of them are connected to each other and are “children” of one big 90,000 BTC transaction on November 8, 2010. The wallet owners tried to hide this by sending coins through many wallets, but the researchers still found the links.

2025 - the situation is still the same. This is true even with more shops that accept bitcoin and with laws that regulate crypto.

Maybe Bitcoin was not made for payments?

[pooya87]

Maybe Bitcoin was not made for payments?

Just because people tend to hold their coins rather than spend them, doesn't make bitcoin not-made-for-payment.

Being made for payment means it is designed in a way that can act as money and that's true about Bitcoin.

Apart from that you are forgetting that bitcoin is in its adoption phase, during this period the value keeps appreciating over time. So people who see something that was worth barely $0.01 16 years ago is now worth over $100,000 tend to be less willing to part with their coins.
But adoption is an S-curve and we are still in its middle stage where price rise is large. When mass adoption is reached (top of the S-curve) and price rises become slower and smaller, that willingness changes and we'll start seeing more people parting with their coins (spending them) rather than "Hodling" them.

[Donneski]

Personally, I don’t think Bitcoin’s limited spending use means it wasn’t meant for payments. What we’re seeing is the classic early phase of an S-curve adoption cycle – where holding dominates before spending becomes common.

Many people don’t “not spend” because Bitcoin can’t be used as money; they hold because it’s very good at preserving value for now. Once volatility reduces and confidence in Bitcoin as a stable store of wealth spreads globally, natural circulation will follow.

The gold you know today went through this same journey; first a collectible, then a store of value and finally, money. Bitcoin is just following the same playbook, just that it's faster and absolutely digital.

It’s easy to forget that we’re still early. Most people only recently started understanding what true financial independence feels like through Bitcoin. Give it time, when that mindset fully sinks in, everyday use will naturally follow.

[goldkingcoiner]

2012

Quantitative Analysis of the Full Bitcoin Transaction Graph https://eprint.iacr.org/2012/584.pdf
______________________________________________________________________________
The published results help us make some conclusions. First, the bitcoin market is even smaller than people thought. Even if we look at the total number of bitcoins, the market is very small. And if we remember that 78% of bitcoins are not used, then the market becomes very tiny. Such a market is easy to change and control, and the price can go up and down very fast.

Second, we can think about why bitcoin owners do not use their coins. One reason is that very few shops accept bitcoin. Also, the shops that accept bitcoin do not have many products. Mostly, they sell digital products. Of course, you can always change bitcoin to dollars or another strong currency that all shops accept. So why do people not do it?

The main reason is that people think the price of bitcoin will grow in the future. There is no inflation in bitcoin. Some people even think the price will only go up. So bitcoin owners do not want to spend their coins. They want to save them. In this situation, bitcoin becomes an investment for saving money, not a real currency for everyday use.

2025

Bitcoin Dormant Supply and ETF Inflows Tighten Market Liquidity https://phemex.com/news/article/bitcoin-dormant-supply-and-etf-inflows-tighten-market-liquidity-24932
_______________________________________________________________________________ __
Over 61% of Bitcoin's supply has remained inactive for more than a year, constraining short-term sell-side liquidity, according to Coinotag.

Short: In 2012 and in 2025, most BTC does not move. So the liquid supply is small, and the market reacts strongly when demand goes up or down. The measures are different, but the result is the same: Bitcoin acts like a saving asset, not like money for daily use.

2012 - "Quantitative Analysis of the Full Bitcoin Transaction Graph" (PDF) by mathematicians Dorit Ron and Adi Shamir shows that 78% of earned BTC stay in wallets without movement and never enter the market. What is interesting: almost all transactions with 50,000+ BTC in Bitcoin’s history fit on one chart. Also, almost all of them are connected to each other and are “children” of one big 90,000 BTC transaction on November 8, 2010. The wallet owners tried to hide this by sending coins through many wallets, but the researchers still found the links.

2025 - the situation is still the same. This is true even with more shops that accept bitcoin and with laws that regulate crypto.

Maybe Bitcoin was not made for payments?

Bitcoin is hoarded I believe because most Bitcoiners know the potential explosion of value it will undergo in the future. Especially with historical price data considered.

But maybe it is a phase. At some point Bitcoin might be used more for payments rather than long term storage of value.

Although there are better payment options, which could easily be achieved by trading in Bitcoin for an altcoin with low transactional fees and fast transaction times. Monero for example can be traded in a decentralized, non-custodial fashion (atomic swap) for Bitcoin. But then again you could go a mile further and learn how to run a lightning node.

[5Ksana_HandMade]

Thank you for your opinion. You both talk about the S-curve of adoption. The S-curve works well for explaining adoption, but it does not explain price or how something becomes a payment system.

Here is the idea:

For something to become money, it does not need the government to say it is official money. What is important is that people choose to use it in trade when they are free to choose from many options. With Bitcoin, this free choice is not the same. Gold and silver became money because they won in a free market against many other goods. Bitcoin mostly competes only with fiat money that the government controls. Fiat money also did not become money in a natural way. Governments forced people to use it and made laws that stopped people from using gold as money first for payments and later even for measuring value.

[Ambatman]

For something to become money, it does not need the government to say it is official money. What is important is that people choose to use it in trade when they are free to choose from many options. With Bitcoin, this free choice is not the same. Gold and silver became money because they won in a free market against many other goods. Bitcoin mostly competes only with fiat money that the government controls. Fiat money also did not become money in a natural way. Governments forced people to use it and made laws that stopped people from using gold as money first for payments and later even for measuring value.

First what's Money?
Basics that comes to one's head is medium of exchange
Store of value
And unit of account.
Bitcoin competes with Gold as a store of value. Bitcoin is a currency, a digital currency and can be accepted as payment for service or goods.


One thing that Bitcoin is facing is same thing Gold also is facing. Been considered Good money
In respect to Gresham law of good and bad money.
People hoard Bitcoin and gold and spend Fiat because like money should be
They serve as a store of value.

I have a Gun and I use it as a decoration doesn't stop it from being a Gun

[d5000]

This is a topic worthy to discuss, but I think this thread belongs in the Economics section (where imo much more Bitcoin-related topics should be discussed ).

There is however an important technical aspect: the scalability question. While fees are low currently, perhaps the Ordinals wave with their associated high fees damaged the "spending habits" of Bitcoiners, highlighting the "Store of Value" use case even more.

Of course massive spending habits would again rise the fees. To a certain extent that wouldn't be bad but massive adoption would be impossible and this would even harm Lightning adoption because the creation of a channel would be expensive too.

So my expectation is mostly centered on two technologies: sidechains and Ark, as these do not need a on-chain transaction to onboard new users and are thus scalable more rapidly to hundreds of millions or billions of users. As both would massively benefit from covenants, this is the technology that should be considered the next big step in Bitcoin development, even if it is controversial and could lead to another "war" after the OP_RETURN discussion calms down ...

There is another aspect which wasn't mentioned here: taxes. As BTC spending in some countries is a "taxable event" like it would be to simply sell the coins, some refrain to spend the coins due to the obligation to document these events. This means that either really good, open source, usable transaction tracking solutions must emerge (most good solutions currently are centralized and not free, e.g. Cointracking), or countries should adapt their legislation after pressure of Bitcoiners, at least establishing a threshold for tracking (much harder).

[Ruttoshi]

With Bitcoin, this free choice is not the same

It's still the same. There are places where you can spend your bitcoin like normal cash. The problem is that only 4% of the world population have adopted bitcoin and majority of them are using it as a store of value since fiat loses its purchasing power overtime. It wouldn't be wise for you to spend your bitcoin and keep fiat. I only spend bitcoin when I don't have fiat. This means that if majority of those bitcoin holders don't have fiat on them, they will spend part of their bitcoin. Look at the blockchain and see how many transactions are going on daily.

Let me give you a thread where you can see places that accepts bitcoin especially, hotels where you can lodge and pay with bitcoin.
https://bitcointalk.org/index.php?topic=5548042.msg65524737#msg65524737

[5Ksana_HandMade]

This is a topic worthy to discuss, but I think this thread belongs in the Economics section (where imo much more Bitcoin-related topics should be discussed ).

There is however an important technical aspect: the scalability question. While fees are low currently, perhaps the Ordinals wave with their associated high fees damaged the "spending habits" of Bitcoiners, highlighting the "Store of Value" use case even more.

Of course massive spending habits would again rise the fees. To a certain extent that wouldn't be bad but massive adoption would be impossible and this would even harm Lightning adoption because the creation of a channel would be expensive too.

So my expectation is mostly centered on two technologies: sidechains and Ark, as these do not need a on-chain transaction to onboard new users and are thus scalable more rapidly to hundreds of millions or billions of users. As both would massively benefit from covenants, this is the technology that should be considered the next big step in Bitcoin development, even if it is controversial and could lead to another "war" after the OP_RETURN discussion calms down ...

There is another aspect which wasn't mentioned here: taxes. As BTC spending in some countries is a "taxable event" like it would be to simply sell the coins, some refrain to spend the coins due to the obligation to document these events. This means that either really good, open source, usable transaction tracking solutions must emerge (most good solutions currently are centralized and not free, e.g. Cointracking), or countries should adapt their legislation after pressure of Bitcoiners, at least establishing a threshold for tracking (much harder).

Yes, I agree. But any technical talk still becomes about economics.  

Do we really need more technical upgrades for Bitcoin, if normal people want to use it every day?

About taxes , this is what I mean. Why do governments want to control Bitcoin and make rules? Only to take more taxes from people?

With Bitcoin, this free choice is not the same

It's still the same. There are places where you can spend your bitcoin like normal cash. The problem is that only 4% of the world population have adopted bitcoin and majority of them are using it as a store of value since fiat loses its purchasing power overtime. It wouldn't be wise for you to spend your bitcoin and keep fiat. I only spend bitcoin when I don't have fiat. This means that if majority of those bitcoin holders don't have fiat on them, they will spend part of their bitcoin. Look at the blockchain and see how many transactions are going on daily.

Let me give you a thread where you can see places that accepts bitcoin especially, hotels where you can lodge and pay with bitcoin.
https://bitcointalk.org/index.php?topic=5548042.msg65524737#msg65524737

About Bitcoin for paying in hotels. I recommend reading here https://windingtree.com/

[Ambatman]

About taxes , this is what I mean. Why do governments want to control Bitcoin and make rules? Only to take more taxes from people?

Government wants to tax people from Bitcoin because it's another Gold mine
They have seen the returns and capital that flows into the market and they want a piece of it.

Do we really need more technical upgrades for Bitcoin, if normal people want to use it every day?

The issue is the cost of such upgrade. I'm not talking about financial cost but sacrifice that would be made to bring about such upgrade.

or countries should adapt their legislation after pressure of Bitcoiners, at least establishing a threshold for tracking (much harder).

They don't really have to do anything. Many people consider using a third party as a normal way of using Bitcoin. Subtle but easiest to track and implement tax.

[EluguHcman]

So bitcoin owners do not want to spend their coins. They want to save them. In this situation, bitcoin becomes an investment for saving money, not a real currency for everyday use.

Bitcoin value is trajectory and so the market is in volatile system.
Yes Bitcoin investment may be profitable in the long term and then when you hold it is an asset which when hold for long term is the more profits you makes giving you more values ahead of inflations.

Normally when you have other sources of incomes that can afford your needs, it will be very encouraging to keep holding your coins in the long term. Definitely it will yield you mega profits.

That is why some investors buys Bitcoin and forget it. An epic act of saving for retirement. That also keep you more healthy safe because you will be far from the short term market sentiments.

[5Ksana_HandMade]

So bitcoin owners do not want to spend their coins. They want to save them. In this situation, bitcoin becomes an investment for saving money, not a real currency for everyday use.

Bitcoin value is trajectory and so the market is in volatile system.
Yes Bitcoin investment may be profitable in the long term and then when you hold it is an asset which when hold for long term is the more profits you makes giving you more values ahead of inflations.

Normally when you have other sources of incomes that can afford your needs, it will be very encouraging to keep holding your coins in the long term. Definitely it will yield you mega profits.

That is why some investors buys Bitcoin and forget it. An epic act of saving for retirement. That also keep you more healthy safe because you will be far from the short term market sentiments.

Yes, Bitcoin is an asset, and many people hold it for a long time. But I was talking about Bitcoin as a payment method. I mean using Bitcoin to pay for things, not only to save it for the future.

[r_victory]

Bitcoin was created with the intention of being a cheaper and more accessible form of payment, to make people their own "bank." To give access to financial instruments to those who don't have them, in a way "democratizing" money. But, over time, Bitcoin, and cryptocurrencies in general have taken a different turn, becoming assets for investment and speculation, perhaps even manipulation and power. With its appreciation, people prefer to hold it rather than spend it!

[Richbased]

Maybe Bitcoin was not made for payments?[/b]

It was made for payment okay; besides we have seen people who confirmed in the past that they actually used bitcoins to purchase real life things. You just have to know that the volatile nature of bitcoin cannot allow people to use it more as a means of payment for now but it is still used regardless. Let's take the forum as a case study, many people who are running services in the forum accepts payments in bitcoins even those that do promotions for casinos in the forum are mostly paid it bitcoins so it is to tell you that bitcoin is still used as a means of payment, so it's not only when you use it to buy real life stuffs that you will count it that it has been used for payments. A time will come when bitcoin will become less volatile, though it won't be stable but it won't be adding much value or experience much depreciation, people will then prefer to use it more as a method payments instead of storing it as a means of investment.

[Hispo]

Bitcoin was created with the intention of being a cheaper and more accessible form of payment, to make people their own "bank." To give access to financial instruments to those who don't have them, in a way "democratizing" money. But, over time, Bitcoin, and cryptocurrencies in general have taken a different turn, becoming assets for investment and speculation, perhaps even manipulation and power. With its appreciation, people prefer to hold it rather than spend it!

Pretty much people have realized that there is more potential to win money with Bitcoin in the future, so they choose to hold it and not to use it as a payment method.
The market is already full with stablecoins and tokens which are pegged to the value of dollar anyways, so there is at least some Blockchain technology being used already to record payments in a decentralized way. It does not mean those tokens are decentralized by their own, but the use case is there.

People can still use Bitcoin as a medium of exchange, there is nothing preventing people from doing it, but as it becomes scarcer, more people will value their satoshis.

[slapper]

When silver was demonetized in the 1870s, it did not happen because people no longer trusted it.It occurred as something else did the payment job better as silver went upmarket. This is being done in reverse and in real time by Bitcoin, which is crazy to observe

What no one is discussing: the amount of energy used does not make any sense unless you are earning a high price settlement, not purchasing a coffee. Mining expenses form a floor price, and that floor is only maintained when the asset is worth the cost. Gold mining consumes similar energy in other parts of the world and no one complains since we accepted that gold is no longer transactional. Bitcoin is also facing the same criticism since we are still pretending that it will one day become Visa

The Ron-Shamir graph is of less concern to the concentration angle and more to what it suggests about coordination. The early mega-holders would have been able to crash the market whenever they wanted but they have not. Either that is extraordinary restraint or they know something about liquidity that goes against the normal economic behavior. Perhaps, when you are sitting on 90,000 BTC, you are no longer thinking in dollars. You are thinking in percentage of total supply. That is a different psychology altogether, more like the way sovereign wealth funds work than the way currencies circulate

[shinratensei_]

It was made for payment but since the value appreciate, some people just prefer to hold it. People are free to choose how they utilize their bitcoin.
Holding it as an investment is also not wrong. Ultimately I think this is because there's no sufficient infrastructure that can integrate to big company directly because they are too afraid to accept it.

Things change though, some company starting to accept bitcoin,.

[KiaKia]

Thank you for your opinion. You both talk about the S-curve of adoption. The S-curve works well for explaining adoption, but it does not explain price or how something becomes a payment system.

Here is the idea:

For something to become money, it does not need the government to say it is official money. What is important is that people choose to use it in trade when they are free to choose from many options. With Bitcoin, this free choice is not the same. Gold and silver became money because they won in a free market against many other goods. Bitcoin mostly competes only with fiat money that the government controls. Fiat money also did not become money in a natural way. Governments forced people to use it and made laws that stopped people from using gold as money first for payments and later even for measuring value.

Bitcoin competes with everything, that's why banks can't keep their eyes off Bitcoin too, don't worry, screenshot your point and wait for a while, I wonder what the likes of you will way when Bitcoin takes over Gold, it is always impossible until it is not.

Gold was here since the beginning and yet no leaders of a country ever think about using Gold as a reserve to escape heavy debt on the country, Bitcoin seem like the only thing that's capable of doing this.

Payment system is in progress, it will happen and I have been using Bitcoin to buy things on electronic stores online, I know it is very limited but it is coming, many companies are already working on it, even mastercard and few others.

[ZeroVinsonN]

Bitcoin was designed to serve as a better substitute for our everyday currencies with all their regulations, it was made to be done kind of a free currency without any countries having any kind of control over it which also means that anyone can access and own it without having to experience any form of limitations due to maybe where they are from and what global sanctions that might have been imposed on them for whatever reason, so bitcoin was made to be spent if the holder wants to spend it but they can more or less also decide to just hold it as an investment so that it's value will appreciate and they can get more value from it than what they put in themselves.

[Iranus]

Gold was here since the beginning and yet no leaders of a country ever think about using Gold as a reserve to escape heavy debt on the country, Bitcoin seem like the only thing that's capable of doing this.

Are you referring to Trump's idea of ​​using Bitcoin to pay off the US's $37 trillion debt? How will it work? I mean how will Bitcoin help the US pay off that massive debt? I've heard him ramble on about it a few times, I really don’t understand how he’s actually going to do that.

Bitcoin's market cap is currently just 2 trillion, while their debt is approaching 40 trillion and they hold over 300kBTC. How will they pay off the debt and balance that deficit?