This is NOT investment advice.
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Bitcoin As Medium of Exchange
Easily lost in the shuffle among all of the other issues and concepts tied to Bitcoin is the use of Bitcoin as a Medium of Exchange. $19T crossed across the network in 2024. Bitcoin already is very heavily used as a Medium of Exchange.
Data from Pierre Rochard and published in Cointelegraph:
There seems to be a brewing battle underway in the Bitcoin community. Some prominent participants have made statements about Bitcoin failing since “it’s not a medium of exchange” or comments along those lines.
There also seems to be a disconnect somewhere as well in terms of how we as a community judge success or failure as a Medium of Exchange. Apparently ‘success’ can only be present if we all are literally watching each other transact with Bitcoin and of course it must happen “at the coffee shop”. There are many other instances where humans and businesses transact using various mediums of exchange.
Here’s my take. Anything I’ve ever said or written about a tertiary subject (such as ‘possible’ Bitcoin L2 and sidechain hype/movement) does not mean in any way I don’t see BTC as a MOE nor have I ‘given up’ that BTC will be a MOE. It also doesn’t mean that I am shrugging off any core Bitcoin ethos. Bitcoin already is a Medium of Exchange. Just look at the trillions annually sent over the network. The focus tends to shift to microeconomics however in this debate. Unless everyone on planet Earth “pays for their coffee” with Bitcoin then it will ultimately be a failure . . . . . so they say.
I disagree. It already is a MOE and it will further penetrate the micro world of MOE as well. Again - to go back to my piece on Hyperbitcoinization – I just don’t see it as a binary outcome. I don’t see Bitcoin being the ONLY Medium of Exchange in the world. I see Bitcoin being an option as a Medium of Exchange alongside what I expect to be Taproot enabled local fiat stablecoins among other things. Something else could emerge as well. I’m not the one who decides but I do my best to keep my mind open to all possibilities.
My projection is that individuals and business will use both BTC via the Lightning Network and stablecoins as a Medium of Exchange as time goes on. At this precise moment in time on planet Earth, there is no consensus or super charged growing momentum that says, at the point of sale, Bitcoin must and needs to be used. People transact just fine with credit cards and cash.
However – what can make the world merge towards my projection mentioned above is when the merchants AND the users are both pushing in the same direction. The Steak n Shake CEO briefed the conference about how much savings they are seeing with Lightning. He also said the customers like it and more want it. Chicken and Egg.
I wrote in article in 2014 about Bitcoin and the event tickets industry. For online sales, Bitcoin is perfect because fraud and charge-backs are a huge issue for ticket sales as well as porn and travel (people spend a lot and regret it or need to change their mind because of spouse, etc. and they try to get a fraud charge-back). Seemed like a no brainer. Chicken and Egg.
As merchants see the benefits and users like having it, then for sure I see a future where users can transact on Lightning and/or use a stablecoin or credit/debit card. Users can still vehemently hold BTC as a Store of Value and use it as a MOE. Over time, if the SOV holds (number go up technology) and the Lightning Network further expands, then people can still be accepted as a true HODLer and send sats back and forth over Lightning. In my view it doesn’t have to be one or the other.
But . . . . . . . there’s one other thing. A Wild Card. AI. AI Agents might accelerate this and help drive up Bitcoin transactions dramatically by transacting over the Lightning Network. Who knows? The AI Agents might just logically look at transacting over Lightning as simply the most logical and least costly way of going about doing it. If an AI Agent has Bitcoin and/or can get it, it may just completely ignore ideology, politics, feeling, emotions, and sentiment and select the Lightning Network.
In the interim, remind me again why you would want to tell users that Bitcoin is an incredible Store of Value but also tell them to spend it all?
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