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By Elaine Ou
Posted October 17, 2019
There’s a common myth that Bitcoin allows anyone to spend money anywhere. That’s incorrect — Very few merchants accept bitcoin. Bitcoin is useful because anyone can receive money, anywhere.
As consumers, we don’t often think about what it takes to receive payments from strangers on the internet. Wanna sell firearms, fireworks, pharmaceuticals, tobacco, vapes, or any other target of Operation Choke Point? Good luck finding a payment processor. That’s where Bitcoin comes in.
The distinction between spenders and receivers may seem trivial, but it’s literally how the protocol gets decided (see also: Economic Nodes). Bitcoin’s value comes from those willing to offer things in exchange for bitcoin. That’s true of any money: The US dollar is valuable because the government accepts it in exchange for a promise not to imprison you this fiscal year. Value comes from acceptance for value.
Americans sometimes have trouble with the idea of acceptance value. As the world’s biggest consumers, we believe that others value whatever we have to spend.
Nope, it took a lot of work for the USD to become the world’s reserve currency. After Bretton Woods, nobody wanted our unbacked dollars. With his brilliant negotiation skills, Henry Kissinger convinced Saudi Arabia to accept dollars for oil, and in return we would grant them billions worth of arms deals, our undying military support, and the souls of our children. Iraq tried to sell their oil for euros, but we set them straight with a good ol’ fashioned dose of Freedom and Democracy. They’re back to taking dollars only now.
Under ordinary circumstances, Gresham’s Law dictates that bad money drives out good — spenders always dump their most worthless asset. Americans don’t spend their bitcoins, or even their actual dollars. We pay for everything with credit, most often the credit card that gives us airline miles while sticking it to the merchant. Or maybe we spend that Starbucks gift card we got for filling out surveys on the internet. That’s why spenders don’t determine the value of money.
The lack of Bitcoin-Only services is perhaps the biggest obstacle to broader adoption. No one voluntarily spends bitcoin. As long as services still accept credit cards, bad money will always drive out good.