Bitcoin Myths, Part 4
Bitcoin Is Designed to Be Saved, Not Spent.
Many people believe that Bitcoin’s a lousy currency and is therefore worthless. After all, Bitcoin’s use case is as a payment system. If it doesn’t work as payment infrastructure what’s the point?
They argue that since many Bitcoiners hoard Bitcoin instead of purchasing with it that it’s a bad currency. They also argue it’s not used for purchases because there are no stores that accept it. Therefore, if Bitcoiners don’t use it for payment there’s probably no way to do it and that proves Bitcoin has failed.
Bitcoin is Well Accepted
First, it is simply not true that Bitcoin cannot be used for purchases. According to Buy Bitcoin Worldwide, over 15,000 businesses worldwide accept Bitcoin. 1
And it is not just small or obscure merchants. Major corporations also accept Bitcoin, including 1800 Flowers, Airbnb, American Eagle, AutoZone, Best Buy, Gap, GameStop, Home Depot, Nintendo eShop, Papa John’s, and Ralph Lauren. That list alone covers retail, food, travel, entertainment, and home improvement. These are only a few examples that stood out to me, and there are many more. 2
Whether Bitcoin is accepted directly or through an intermediary does not change the core fact. Bitcoin is being used as payment. If a customer can exchange Bitcoin for goods and services at checkout, Bitcoin has functioned as a medium of exchange.
In practical terms, a Bitcoiner can make almost any purchase they need, with the main exceptions being taxes and direct transactions with the banking system such as mortgages.
So if Bitcoiners generally do not struggle to pay with Bitcoin, why do so many of them refuse to use it for everyday purchases?
People spend weak money first but save strong money.
Bad Money Drives Out Good Money
Five years ago I bought a nice suit and I have worn it maybe 3 times. Once to a funeral, once to a job interview and I think I wore it to a wedding once. This is my nicest suit. What do I wear everyday? My favorite hoodie with stains on it. So which is worth more to me? My suit or my hoodie? My suit of course. Value doesn’t equal use.
Humans are curious creatures. What we value most, we tend to hide and protect. I do not carry family heirlooms around with me. I store them in a place where I almost never see them. My favorite meal is something I might eat only a couple of times per year. Things that are worth the least are often used the most.
In economics this idea is called Gresham’s Law and bad money drives out good money. 3 This was discovered when the government of England started to run out of silver. So they made coins that had less silver in them but demanded that merchants accept them at the same value as the previous silver coins. When people figured out the new silver coins were worth less but had the same purchasing power they immediately hoarded the old coins and used the new coins to make purchases. In fact, the old coins quickly went out of circulation and could be found only in storage.
Why did this happen? Because everyone knew the old coins were worth more due to their higher silver content. They were superior money and a better store of value. Merchants, however, were required to accept the inferior coins, so those were the coins people used for everyday purchases.
The same logic applies today. Quite simply, Bitcoin is superior money to the US dollar. Bitcoin has a fixed maximum supply of 21 million coins, while the dollar is inflated every day at the whims of the banks. Since Bitcoin launched in 2009, it has risen in value from fractions of a cent to over 100,000 dollars.
There is a famous early Bitcoin transaction where someone purchased two Papa John’s pizzas for 10,000 Bitcoin. 4 At today’s prices, that amount would be worth roughly 880 million dollars. It can be argued that if Bitcoin had not been used for real purchases in its early days, it might not have reached its current level of adoption. That may be true. But it does not change the underlying lesson.
When you have sound money that tends to increase in value and bad money that consistently loses purchasing power, rational people spend the bad money first. That behavior does not mean the good money has failed. It means people understand which money is worth holding on to.
As a Bitcoiner myself, I would rather give an evil mega corporation their favorite devaluing money than give them my Bitcoin. I only give Bitcoin to people I respect. Otherwise, I spend my dollars and accumulate Bitcoin, which acts as a fantastic long term store of value.
Temporary Setbacks
None of this means that Bitcoin is a bad monetary system. Bitcoin functions extremely well as money, but the incentives around it currently encourage people to hold it rather than spend it.
One of the strongest incentives is taxation. In the United States, Bitcoin is taxed as property. That means every time Bitcoin is used to make a purchase, it triggers a capital gains tax event. If the Bitcoin has increased in value since it was acquired, the buyer owes capital gains tax on the difference. 5 This makes using Bitcoin more expensive than using dollars for everyday purchases.
As long as Bitcoin continues to appreciate and is taxed this way, Bitcoiners are rationally incentivized to save it rather than spend it. This behavior is temporary and incentive driven, not a flaw in Bitcoin’s monetary design and will likely change in the future.
Final Word
If you love someone pay them with Bitcoin. For everyone else there’s the dollar.
When depreciated, mutilated, or debased coinage (or currency) is in concurrent circulation with money of high value in terms of precious metals, the good money automatically disappears.
― Thomas Gresham
Disclaimer:
The information in this publication is for educational purposes only and does not constitute financial, investment, or legal advice. Always do your own research before making any financial decisions. Cryptocurrency investments carry risk, and past performance is not indicative of future results. I actively invest and trade in the crypto markets, and my personal portfolio and holdings change frequently. Nothing I share should be interpreted as a guarantee of performance or a recommendation to buy or sell any asset.
https://buybitcoinworldwide.com/how-many-businesses-accept-bitcoin/
https://www.bitpay.com/directory
https://www.investopedia.com/terms/g/greshams-law.asp
https://www.fintechweekly.com/magazine/articles/bitcoin-record-111k-bitcoin-pizza-day-2025
https://turbotax.intuit.com/tax-tips/investments-and-taxes/your-cryptocurrency-tax-guide/L4k3xiFjB
I’ve gained some knowledge here, thank you🥹
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