Government regulations discourage Bitcoin payments

[Silverstonez]

The government is one of the reasons why people prefer to hold bitcoin in their wallets for longer periods of time instead of using it for payments.  Apart from the government, the dramatic fluctuation of bitcoin price is another reason why people don’t use bitcoin for their daily transactions.  Furthermore, people naturally prefer to hold bitcoin for longer periods of time than spend it, because it is a store of value with potential returns.

As for satoshi, I don’t know how he would feel or whether he would be happy or disappointed,  but that doesn’t matter. What matter is that the project is a successful one.

[Cryptomultiplier]

Regulations in most countries basically don't encourage Bitcoin payments... Most countries prefer regulations that emphasize Bitcoin as an investment asset rather than a digital currency to prevent more people from using Bitcoin as payment instead of their own currency... For example, in my country, it is prohibited to use other than the country's official currency for payments, and violating it can be subject to sanctions... These regulations somewhat hinder people from using Bitcoin for payments because they don't want to deal with potential legal issues just for using Bitcoin in their transactions.

The regulations against Bitcoin is just as it is and the only people who definitely stand to gain at the end is the government. So the heavy tax on spending Bitcoin for payments is just a punishment for even having it at all and ignoring the local fiat currency. That's why it's better off as a store of value than an everyday currency.
We should be glad though that the government even recognize the existence of Bitcoin as an asset of value and most countries like the U.S even go as far to promote it by owning a reserve bank for it.

We know the scare is majorly associated with malpractice and money laundering that is hard to trace but we shouldn't be worried with CEX platforms being like banks and making all transactions easily tracked and monitored.

[Antidote47k]

For example capital gains tax in some countries says that even if Bitcoin is used for payments Bitcoin can be taxed if Bitcoins value has gone up. So of encouraging people to spend Bitcoin these regulations seem to encourage people to hold Bitcoin.

Capital gains, simply means "profit on your capital". If you spend it then you have not made any profit off of your bitcoin, so there is no way you can pay capital gains tax from it.
You only pay tax when you have made a profit from your bitcoin holding. So you don't pay capital gains tax on Bitcoin you spend, except you've held it long enough to get profit.

Profit doesn’t necessarily have to come from coverting your coin to fiat, unrealized profit is still profit. You can still be taxed while spending your coin even if no fiat is involved. Depending on the jurisdiction where bitcoin is taxable, when you spend an apprentiated bitcoin, it can also realise a capital gain. Take for instance you bought your btc at $100 then it later appreciated to $150, you may have a capital gain of $50 even though you have not converted it to fiat although it depends on the tax laws of the country and the exemptions, but it’s a very possible scenario

[Ndabagi01]

For example capital gains tax in some countries says that even if Bitcoin is used for payments Bitcoin can be taxed if Bitcoins value has gone up. So of encouraging people to spend Bitcoin these regulations seem to encourage people to hold Bitcoin. Do you think Satoshi would be happy with Bitcoin today or would Satoshi be disappointed that Bitcoins original purpose as peer-, to-peer electronic cash is no longer the focus?

Part of Satoshi’s zeal for Bitcoin asides seeing it being used as a peer to peer electronic transaction is for it to also get acceptance worldwide. Having more people utilizing them and using it globally. The acceptance and use of it we are seeing today is more of its secondary advantage of using it, it doesn’t make it less valuable or make the zealot Satoshi to be unfulfilled.

We know the government, they’re against decentralization and that’s why Bitcoin will always find it hard to be used as an alternative to the fiat currency. With how far Bitcoin has come, it has at least achieved some uniqueness and will continue to be growing gradually. In the future we may see it more as a currency than a store of value but for now, we just have to embrace it for what it most provides for those that are utilizing it.

[Agbamoni]

For real, you can not force people to spend their Bitcoin when they don't want to and I don't think that government regulation is the only reason why people are not spending their Bitcoin in daily purchase of various need, I think the main reason is value appreciation, with the high inflation rate and devaluation of fiat money, people are transferring their money into a good asset which will not be affected by inflation and that's one big reason why people are holding their Bitcoin instead of using it for payment.

Bitcoin is decentralized, can still be used for p2p payment when both parties agrees, so Satoshi wouldn't be disappointed that people are holding Bitcoin, P2P transaction was not the only purpose of Bitcoin. One of the reasons for Bitcoin is so that individuals can have control of their money, so when you have a large percent of your money in Bitcoin, you are in total control of it, you don't need the bank to spend your money.

The devaluation of fiat money isn't enough reason why people want to hold Bitcoin in their wallet. Bitcoin is volatile that makes it not the best fit to hedge against inflation in the short term. As for long term, it could be possible because Bitcoin is known to break a new ATH after every halving cycle. Bitcoin value will hedge against inflation if the owner is ready to hold for a minimum of 10 years.

I also agree that government regulation has no direct effect on people wanting to spend their Bitcoin for daily purchases. It's more of a personal reason and more of a technical reason.

[Sanitough]

Now it seems that we are focusing more on Bitcoin as a store of value than on Bitcoin as a payment method. I feel that governments have ruined Bitcoins transaction side with their regulations.

I agree we focus more on store of value but I don't think government is responsible for it absolutely. Their regulations make it worse actually but what's happening now is bound to happen even without their regulations. Do you really think people will spend their coin back then at lower price if they know it would increase this higher later? Of course not, everyone will hold it and that's not on government. Government made the payment part inconvenient for people but most people won't just use it as a payment option either because of its potential.

You have a point there. While the government is imposing strict regulations with bitcoin as a payment mode, I think the people have already expected on it. The government does not favor bitcoin no matter how we look at it, but instead of banning it totally which they find it hard also, why not letting the people use it but add some tax on every payment transaction. That way, they are making revenues out from bitcoin.

Now on the side that bitcoin is now widely used as a store of value, what do you expect from an asset that continuously increasing its price? Of course, people will buy and hold more, and make profit in the future, and only spend fiat since its own value depreciates anyway.

[Joy- maker]

Now it seems that we are focusing more on Bitcoin as a store of value than on Bitcoin as a payment method. I feel that governments have ruined Bitcoins transaction side with their regulations.

Bitcoin transactions have been never ruined by governments and if you can see any ruin from this chart, please tell me.
https://bitinfocharts.com/comparison/bitcoin-transactions.html#alltime

Number of transactions in blockchain per day is almost x 4 since 2018, is it an indicator of ruin?

Governments did not succeed with their attempts to filter and censor Bitcoin transactions, together with increasing transactions number daily over years, there is no ruin by any reason, not only by governments.
https://b10c.me/projects/016-miningpool-observer/

I took a closer look at the chat, while it shows an increase of Bitcoin transactions over the years it doesn't tell us wether people are actually using Bitcoin to pay for their everything purchases. As far as I'm concerned, the data only shows the number of transactions on the blockchain not what those transactions were used for. OP was specifically talking about how people are not using Bitcoin for their daily spending, instead they prefer to hold it for the long term.

[Lexandroove]

Because Bitcoin was originally designed for peer-to-peer transactions I think that as more people use Bitcoin for payments demand will grow and Bitcoins value will rise and eventually people will see Bitcoin as a store of value.

Now it seems that we are focusing more on Bitcoin as a store of value than on Bitcoin as a payment method. I feel that governments have ruined Bitcoins transaction side with their regulations.

For example capital gains tax in some countries says that even if Bitcoin is used for payments Bitcoin can be taxed if Bitcoins value has gone up. So of encouraging people to spend Bitcoin these regulations seem to encourage people to hold Bitcoin. Do you think Satoshi would be happy with Bitcoin today or would Satoshi be disappointed that Bitcoins original purpose as peer-, to-peer electronic cash is no longer the focus?

In my books, Bitcoin can be more than a store of value without abandoning that role.

Its original purpose was peer-to-peer electronic cash, but the same properties that make it attractive for holding wealth (scarcity, security and independence from intermediaries (amplified further by the impact of protocols such as Babylon Labs' Trustless Bitcoin Vaults in facilitating self-custody)) can also make it useful and trusted for payments, particularly cross-border transfers and places where access to banking is limited.

Capital gains taxes can discourage everyday spending, since users may face a taxable gain when they spend BTC that has appreciated, depending on their jurisdiction. But regulation isn't the only obstacle, as volatility, merchant adoption and user experience matter too.

Truth is, the goal should be to build an ecosystem where people can hold Bitcoin for the long term and still use it when they need to transact.

[NotFuzzyWarm]

Truth is, the goal should be to build an ecosystem where people can hold Bitcoin for the long term and still use it when they need to transact.

that's exactly what I've done. I mined a bunch way back and have been holding most of it. That said, back in 2018 I cashed out a bit to pay off mortgage on my house. I retired in 2024 and last year bought a new house cashing out more BTC for the hefty down payment.

Yes both times I payed 20% capital gains but is well worth it and still a have good bit of coin left to help retirement if I need it later on.

[coupable]

Now it seems that we are focusing more on Bitcoin as a store of value than on Bitcoin as a payment method. I feel that governments have ruined Bitcoins transaction side with their regulations.

Bitcoin transactions have been never ruined by governments and if you can see any ruin from this chart, please tell me.
https://bitinfocharts.com/comparison/bitcoin-transactions.html#alltime

Number of transactions in blockchain per day is almost x 4 since 2018, is it an indicator of ruin?

Governments did not succeed with their attempts to filter and censor Bitcoin transactions, together with increasing transactions number daily over years, there is no ruin by any reason, not only by governments.
https://b10c.me/projects/016-miningpool-observer/

This is the fact that governments have realized recently after they missed the train to recap with technology. Today, they have no shelter to go in in the face of the widespread adoption. On the other hand, they are forced to deal with it even if they don't recognize it yet.

[freedomgo]

Do you think Satoshi would be happy with Bitcoin today or would Satoshi be disappointed that Bitcoins original purpose as peer-, to-peer electronic cash is no longer the focus?

Definitely he'll be sad knowing it. But if bitcoin is all about freedom, Satoshi should be the first to understand why people are still not using it as a peer-to-peer electronic cash but instead focus more on its growing store of value. Though he did anticipate it already that its value will grow along with growing  adoption, but he fail to see it coming that bitcoin adoption would grow first as a high investment value and later on a good and reliable currency in the market.

[Questat]

Now it seems that we are focusing more on Bitcoin as a store of value than on Bitcoin as a payment method. I feel that governments have ruined Bitcoins transaction side with their regulations.

I agree we focus more on store of value but I don't think government is responsible for it absolutely. Their regulations make it worse actually but what's happening now is bound to happen even without their regulations. Do you really think people will spend their coin back then at lower price if they know it would increase this higher later? Of course not, everyone will hold it and that's not on government. Government made the payment part inconvenient for people but most people won't just use it as a payment option either because of its potential.

The government just simply hate the fact that bitcoin exists, regardless if it serves as a currency or a store of value. They can't impose full control on bitcoin and manipulate us, so we can't blame the government if they will continue to hit on bitcoin.

Fortunately, that gives us more reason to accumulate more bitcoin and hold it for future usage. Though some spend it early for their personal reasons.

[bitbollo]

bitcoin is definetely the best coin that you can spend online. regulations can't block this kind of use - the classic onchain transaction.
excluding some specific use-cases, most of governements would just get advantage on the technology in real life (like collecting taxes or find a way for legal issues).

discourage payment? at maximum they want discourage people from using (like saving or hodling)
it's probably because you haven't use "in the real life". go in another country, try to exchange this for the local currency ...
first there are just few users that would accept it. secondly there are many rules if you are not residing in a specific country. third its full of scammers (or users that would ovrecharge you) that would keep any monetary advantage close to 0.

[Japinat]

Do you think Satoshi would be happy with Bitcoin today or would Satoshi be disappointed that Bitcoins original purpose as peer-, to-peer electronic cash is no longer the focus?

Satoshi would be disappointed for sure. But hey, bitcoin is still heading there. For now, let's just leave bitcoin as a hybrid asset, having it as a digital gold and at the same time a currency that creates borderless transactions.

With a technology like Lightning Network, the chances for bitcoin to become a future currency is high because of its fast, micro-cost bitcoin transactions that leads bitcoin spending more practical. Add to it is the niche peer-to-peer use of bitcoin especially in areas where local banking system fails.

[traderethereum]

The used of Bitcoin could change based on the situation. First time Bitcoin is indeed for peer-to-peer but with the regulation from the government, that change but that doesn't mean Bitcoin will not back on the previous track. If people use Bitcoin as a store of value, it will not be a problem because others will use Bitcoin as payment transaction. I don't know what Satoshi feels about this because no one know for sure but I think Satoshi will be okay with the situation that is not the same as he thought.

[Popkon6]

Although Bitcoin was created as a source of transaction, Bitcoin has gained the most popularity as a holding at present. Because Bitcoin is not legal in different countries, they are having problems with their transactions, but it is not a problem as a holding because the holding is very confidential. So I can definitely say that Bitcoin is currently the most popular holding for me because it basically protects against inflation.
The popularity of Bitcoin will increase more in the future because the more countries legalize Bitcoin, the more transactions and holdings will increase and Bitcoin will create more value.

[m2017]

Because Bitcoin was originally designed for peer-to-peer transactions I think that as more people use Bitcoin for payments demand will grow and Bitcoins value will rise and eventually people will see Bitcoin as a store of value.

What is the reason why people would start using bitcoin more for payments? Over the more than seventeen years of its existence, this form of electronic digital money has failed to capture a significant share of the payment landscape.

What you have described has already taken place: bitcoin has transformed from a means of payment into a store of value.

Now it seems that we are focusing more on Bitcoin as a store of value than on Bitcoin as a payment method. I feel that governments have ruined Bitcoins transaction side with their regulations.

Undoubtedly, there is some influence from regulators, but what specific kind of state regulation are you referring to, given that many countries still lack a legal framework for bitcoin?

As a side note: the local currency is the only official legal tender in any given country, which effectively makes the use of bitcoin as a means of payment illegal - at least as long as this law remains in effect (unchanged).

Humanity itself "destroyed" the potential of bitcoin to function as a means of payment; after all, no one forced anyone to start "HODLing" this asset.

For example capital gains tax in some countries says that even if Bitcoin is used for payments Bitcoin can be taxed if Bitcoins value has gone up. So of encouraging people to spend Bitcoin these regulations seem to encourage people to hold Bitcoin.

Holding won’t save from taxes.

Do you think Satoshi would be happy with Bitcoin today or would Satoshi be disappointed that Bitcoins original purpose as peer-, to-peer electronic cash is no longer the focus?

Ask him about it when he gets back.

If the goal or intended purpose of bitcoin was clearly defined in the project plan but never realized, then the plan has failed. I imagine any creator would be disappointed by that. On the other hand, humanity has found a different use for bitcoin which might well make up for that disappointment.


The idea of ​​using bitcoin as a regulator-approved payment instrument is a pipe dream - the regulator would never allow it. However, don’t need the regulator’s permission to use bitcoin.

[cryptoaddictchie]

Now it seems that we are focusing more on Bitcoin as a store of value than on Bitcoin as a payment method. I feel that governments have ruined Bitcoins transaction side with their regulations.

I guess with that price of bitcoin we can definitely see holder than users. For every 100 men have bitcoin and see its value skyrocket I dont think they wanna use it for their daily needs instead swap some bitcoin to fiat or usd to spend on what they want. Cause the peer tonpeer usage utility somehow works slightly less compared to being a store of value and considered as volatile asset.

Do you think Satoshi would be happy with Bitcoin today or would Satoshi be disappointed that Bitcoins original purpose as peer-, to-peer electronic cash is no longer the focus?

This is hard to know but probably he expected this somehow when bitcoin value is highly appreciated. More or less he would be happy as what bitcoin had achieved since then.

[Hypnosis00]

Capital gains, simply means "profit on your capital". If you spend it then you have not made any profit off of your bitcoin, so there is no way you can pay capital gains tax from it.
You only pay tax when you have made a profit from your bitcoin holding. So you don't pay capital gains tax on Bitcoin you spend, except you've held it long enough to get profit.

That's not entirely true, in the US, even if you buy products directly with your Bitcoin and the value of Bitcoin has appreciated since your original purchase, you are still required to pay capital gains tax, you can verify that in the IRS Frequently Asked Questions on Virtual Currency Transactions.

[davis196]

Because Bitcoin was originally designed for peer-to-peer transactions I think that as more people use Bitcoin for payments demand will grow and Bitcoins value will rise and eventually people will see Bitcoin as a store of value.

Now it seems that we are focusing more on Bitcoin as a store of value than on Bitcoin as a payment method. I feel that governments have ruined Bitcoins transaction side with their regulations.

For example capital gains tax in some countries says that even if Bitcoin is used for payments Bitcoin can be taxed if Bitcoins value has gone up. So of encouraging people to spend Bitcoin these regulations seem to encourage people to hold Bitcoin. Do you think Satoshi would be happy with Bitcoin today or would Satoshi be disappointed that Bitcoins original purpose as peer-, to-peer electronic cash is no longer the focus?

The question "would Satoshi be happy or sad with the current state of Bitcoin" is asked a million times already. The only thing we could do is find the real Satoshi and ask him. Guessing what Satoshi would answer is pure speculation and it find it pointless.
Blaming the governments for discouraging BTC adoption is an easy option. I don't think that capital gains tax is what's stopping the crypto enthusiasts from spending their BTC. You just don't spend an asset, whose price is about to increase a lot tomorrow(or after several months).