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How will Bitcoin scale as a medium of exchange? If it’s so good, won’t everyone just save it and spend their dollars instead? That’s the classic argument. This is absolutely happening and will continue for a while. That view only sees one side of the transaction: the consumer. image At the beginning, just as only the most committed Bitcoiners will spend it, only the best businesses will be able to demand Bitcoin. As those two ends of the spectrum grow, people who want to spend dollars and save Bitcoin will start to run out of options. Especially for quality goods. This transition starts with shop owners upcharging for fiat. At first, it will look like today’s cash vs credit pricing, simply covering card fees. As Bitcoin becomes more obvious, that spread will grow. Adoption will take time. Not every producer will switch quickly. The ones who do will outcompete. They will escape margin decay from fiat debasement. They will not need to cut corners. Good money chases quality goods, and these businesses will be positioned to thrive. High-quality producers steer the next marginal transaction. Over time, they will steer it toward Bitcoin. If a business wants to earn the hardest money, they will have to produce a top-quality good. Just like if a consumer wants a top-quality good, they will increasingly have to pay with Bitcoin. Orange pilling the world begins at the margins. There are two sides to every transaction. The margins are on both ends.

Replies (46)

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The two sides to every transaction is missed on people fixated in the fiat system. The people who do well in that system are wired to save because fiat currency does not give them the ability to save. Someone invested in Mara said she invested in that because she was afraid to lose a password. It occured to me that she is accustom to losing in that system. She said she was afraid of losing her password and mentioned the guy who bought pizza for 10,000 bitcoin, but there was another side to that transaction. Someone earned 10,000 bitcoin to deliver two pizzas. That's the story I wish more people would tell.
My only issue is how to price in bitcoin. When Bitcoin continues to rise in value you’ll have to continually adjust your prices, unless you just price in dollars and they pay the Bitcoin equivalent that day. But if you price in dollars you are reinforcing the fiat system.
↩ replying to Jason High
I price in fiat still as I am in an area where there is very little knowledge or use. My underlying preference for bitcoin lies less in angling for personal future wealth and more in creating a fair and stable market unlike our current chaos. Decisions about pricing therefore are based on incentivising Bitcoin use, building local knowledge and trust. But, as you say that will change. If we continue using it as a store of value and not for exchange, so much is lost. Its function as a better tool of exchange is lost and it becomes about the political manoeuvres of the whales and not the bottom up, intentional shift it offers us.
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↩ replying to Jason High
A merchant could price the product at the fiat price of the product. Example, a bag of potatoes is priced at $5.99 in fiat at the grocery store, so simply convert the satoshi price to its equivalent. Only adjust the satoshi price when the grocer adjusts the fiat price such as before or after a sale discount that week. No need for constant price fluctuations by the minute.
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somebody please explain to me what the market force is that enables producers to upcharge for fiat. fiat, with a larger payment network and lower barrier to entry, is going to be MORE expensive to use? why? "because Bitcoiners want Bitcoin" is not a compelling market reason.
It's really not happening in Sweden atm. The only place I'm using my sats is via nostr. Friends and collegues still think BTC is toy money. I'm really happy to see the evolution elsewhere, but sad it's it's not happening here.
I think a good hook at the beginning is saving small local business the exorbitant credit card processing fee. the only way I've thought of so far is a little clunky: a local tap-to-pay "gift card" that you can top up with fiat at any participating merchant, and using it in stores gets you a 2% (a bit lower than credit card fee) discount. no-brainer for locals who shop a lot. behind the scenes it's cashu with a mint run by a local maxi. he would likely have to take a bit of a risk - he'd want to fiat-back every dollar deposited so if the price drops customers don't lose. on the upside... if the price zooms he might be able to kick back a reward to the merchants that month.
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If I want to buy something and satoshi payment is an option, I will sometimes choose it. However, when satoshi payment is the only option, I have only the choice of buy or not buy much as the way it is in the fiat system. In both scenarios, if I decide to make a purchase, I buy fresh satoshis deposited directly into my Lightning Network wallet to then be spent. I won't touch my long-term satoshis as long as fiat exists to fund my short-term satoshi holdings.