Is the cryptocurrency suitable as a means of payment?

Editor David Scheider: “The Lightning network makes it possible”

As a digital currency, Bitcoin must have what it takes to become a means of payment. Otherwise the project has failed. Fortunately, BTC is already well-equipped to compete with established currencies. In many respects, digital gold is even better suited for payment than euros, US dollars and the like.

For example, if you want to transfer fiat money from a European to a US bank account, you have to rely on the SWIFT system. To describe that as sluggish would be a euphemism. It would be faster to withdraw 100 euros from the bank, get on the plane and bring the money to New York in cash than to use the SWIFT interbank system.

After all, we are talking about transfers from bank account to bank account between two industrialized nations. People who do not have a bank account due to discrimination, poverty, or other forms of financial deprivation typically rely on remittance services such as Western Union to receive money from abroad. They are expensive and unsafe. Already today, sending value over the Bitcoin peer-to-peer network is faster, cheaper, and more secure than remittance services. All you need is two smartphones and internet access: the Lightning network makes it possible. Incidentally, receiving money from abroad was one of the main reasons why El Salvador made BTC legal tender.

Of course, these use cases are less familiar to Central Europeans. Claiming that Bitcoin is therefore not at all suitable as a means of payment ignores one’s own financial privilege. It always depends on the viewing angle.

Editor-in-Chief Sven Wagenknecht: “BTC is miles away from a ‘payment currency'”

In the event of an absolute crisis, Bitcoin may be a great means of payment. Significantly more practical than cigarettes, liquor or chicken eggs. But then there are not many more reasons to pay with Bitcoin. After all, you don’t buy your rolls from the baker with gold.

Instead, fiat currencies have established themselves, which enable predictable prices for goods and services. If you were to rely on Bitcoin instead, you wouldn’t know whether tomorrow’s coffee would still cost 12,000 or 16,000 satoshi. In a developed economy there is no reason to bet on such a volatile “currency”. If you are afraid of inflation, you can invest your euros or US dollars that are not intended for immediate consumption – of course also in Bitcoin.

This is exactly where its actual value proposition comes into play. While a loss of purchasing power is guaranteed for fiat currencies over several years, Bitcoin offers an important alternative to the inflationary monetary system due to its scarcity of 21 million units. At this point, one should not confuse investment with currency. Even in countries without a stable fiat currency and a well-developed banking system, it makes more sense to use a US dollar stablecoin such as Tether or Circle than Bitcoin for everyday payments or international transfers.

The cryptocurrency Bitcoin may be the most important and influential investment of the 21st century. BTC, on the other hand, is miles away from being a “payment currency”. Especially since no developed state with its own currency will ever voluntarily give up its money monopoly for a decentralized cryptocurrency. Anyone who believes in Bitcoin as a complete euro or US dollar replacement also believes in the demise of our current economic and financial system.

Disclaimer: This article previously appeared in the October issue of BTC-ECHO Magazine. This way to the shop.