Introduction to Bitcoin Adoption
The concept of “Hodl” has been a rallying cry for the Bitcoin community, with many believing that it’s essential to hold onto their Bitcoin as its value appreciates over time. However, Carel van Wyk, CEO of Moneybadger, argues that this approach has a fundamental problem, particularly in countries where the local fiat currency is under siege, such as South Africa. According to van Wyk, the law of Gresham states that “bad money drives out good money,” and with no reason to hold onto bad money, people and governments are starting to see Bitcoin as a long-term transaction currency.
This perspective is in direct contrast to Satoshi Nakamoto’s original white paper, which described Bitcoin as “an electronic cash system from peer-to-peer.” Van Wyk believes that the lack of Bitcoin adoption and use is a direct result of this “Hodl” approach, and that it’s essential to start spending Bitcoin to build its usefulness and acceptance.
Saving vs. Spending
Saving, also known as “Hodling,” serves a specific purpose: to accumulate enough money to purchase a house, a car, or to retire early. However, even if you save your “good money,” you still need to convert it to fiat to pay for these expenses. In contrast, market demand for merchants creates an incentive to accept Bitcoin, strengthening its usefulness and acceptance. This, in turn, makes it easier for people and regulatory authorities to consider Bitcoin as a practical form of money.
Van Wyk suggests that having two wallets, one for savings and one for expenses, can help with tax calculations and make it easier to start spending Bitcoin. This approach can also help to build the Bitcoin ecosystem, as more merchants begin to accept Bitcoin, and more people start using it for daily purchases.
Expenditures Build the System
Spending Bitcoin for regular purchases, such as food or coffee, increases its use as intended as a cash system. As more Bitcoin owners use their Bitcoin for daily purchases, merchants have an incentive to offer it as a payment option, opening up new opportunities for Bitcoin adoption. Implementation providers can start incentive programs, offering discounts for expenses, and driving additional sales for merchants.
For example, a South African provider offered 10% in Sats to shop at Pick’n Pay, and Binance currently offers 50% back for every QR code-based payment to a South African business. The use of Bitcoin can also save time and reduce costs, as users avoid replacement fees, bank delays, and conversion problems.
The Personal is Political
Many people and crypto influencers focus on becoming rich in fiat terms, forgetting the original purpose of Bitcoin. Bitcoin was developed as a neutral, open-source form of money that is global, censorship-resistant, and permissionless. The physical issue of Bitcoin in a food dealer or café teaches people how fast, simple, and authorizing it is compared to fiat.
However, regulatory authorities are still struggling to understand Bitcoin, and its classification as a “financial instrument” rather than a currency has created confusion. Van Wyk believes that dealer activation projects can change the narrative by enabling the use of Bitcoin in the real world, making it a form of activism for monetary freedom.
Conclusion
In conclusion, van Wyk argues that Bitcoin’s future usefulness depends on its adoption as a form of money, rather than just a speculative asset. By using Bitcoin as money, saving it, and spending it, individuals can contribute to its growth and development. The concept of “Hodl” may have been a rallying cry for the Bitcoin community, but it’s essential to start spending Bitcoin to build its ecosystem and increase its adoption.
As van Wyk notes, “Adoption does not arise from hoarding. It happens through expenses.” By taking a more nuanced approach to Bitcoin, individuals can help to create a more robust and widely accepted form of money. For more information, visit https://cointelegraph.com/news/spend-your-bitcoin-don-t-just-hoard-it?utm_source=rss_feed&utm_medium=rss_tag_regulation&utm_campaign=rss_partner_inbound
