BTC transaction fees are reasonable again, network latency is back to its original (comfortable) range, and confidence in the Lightning Network is growing. LitePal is positioned to open a window for seamless & effortless cryptocurrency integration to the everyday internet purchaser.
Hope that was on the horizon is turning into something we can hold, and even better, that we can spend freely. Bitcoin is turning into a bread and butter currency and we are witnessing this transition right now.
It’s back to basics for bitcoin. The market cap is enjoying a modest upswing in anticipation of the massive network appreciation we’ll likely see as a result of actual BTC use. What I’m talking about is people actually spending BTC for commerce, as opposed to simply buying BTC and then selling it back to fiat. So if you’ve been HODLing, biting your nails, wiping sweat from your brow and checking coinmarketcap at 2am, it’s time to buy a nice frothy latte with your Bitcoin, celebrate your patience and plan the next 3 months of your trading.
BTC went through an unsustainable and unhealthy phase of speculative value. It was appreciating so fast that people became incentivized to buy the dips, HODL, and “sell high”. Simply, during this rapid appreciation phase, it made no sense for a person to spend their cryptocurrency. It made more sense to do commerce in fiat.
That speculative phase got away from the utility value of BTC. Actual commerce in BTC is it’s utility value, which is foundational to its sustained network value. Hyper speculation destabilizes collective confidence in the network by inducing some untenable network characteristics (high latency, high transaction fees) while simultaneously reducing its actual utility value (read: use case). During this time, if you bought a latte with your BTC, the guilt would be crushing and the regret of a spending bitcoin on a five dollar coffee would sit on your brain for days.
When merchants are accepting BTC and people are using it as an instrument of commerce, then (and only then) BTC is operating in a way that can be compared to real money. During a hyper speculative moment BTC becomes more akin to a casino chip (or other gambling asset); an instrument rarely used in regular commerce.
The whole point of Bitcoin is that people will buy into the network and never sell out of it (read: regress into fiat). If we’re all buying bitcoin only so that we can sell it for the same currency we bought it with (ostensibly for a greater quantity of same-said), the bottom falls out pretty quickly.
Back to Basics for BTC means a robust and vastly diversified marketplace is choosing to do crypto commerce. Cryptocurrencies are toe-to-toe with the world of state sponsored fiat. In order to compete with fiat, cryptos must be used in the same way fiat is used. So if you want to do this, seek out the stores you want to use who accept bitcoin. Encourage your friends to get onboard with crypto, and offer to pay vendors in bitcoin even if they don’t accept it yet. It will benefit yourself, crypto and in the long term; the entire world.
It becomes a matter of economic preference. Do you prefer to accept BTC as a vendor, or accept fiat as a vendor? Likewise, do you prefer to us BTC as a spender, or spend inflationary fiat instead? I think the trend would logically favour the former. Vendors accepting BTC enjoy a very efficient acquisition strategy. Meanwhile, spenders using BTC might miss out on a period of rapid appreciation … rationally, it’d be preferable to unload the inflationary fiat instead.
Spenders are only (truly) incentivized to use BTC in cases where the use of fiat would induce high transfer costs (significantly higher than the same transfer in crypto). Low hanging fruit through the life of BTC to date has included international remittances. Canadian immigrants used to bear the burden of remittance fees near 10% once every middle man meddler had extracted their pound of flesh.
Much of the network value for BTC (looking only at its real use-case value) can be attributed to international remittances. That was an easy industry for BTC to compete with. Ten percent is a lot to pay for a simple currency transfer! Add in the time value of money (read: latency) and the value proposition tilts even further in favour of crypto. While BTC transfers complete quickly, international fiat remittances often take 5 business days, which can sometimes be experienced as 8 or 9 actual days if statutory holidays happen to occur during the transfer. For example, a friend of mine ordered a product from Japan recently, paid in Bitcoin, had the product sent by fedex priority and it arrived at his home 2 days later. (This was me Jason. I ordered Satori Coins. I will give you one! Great souvenir) Low financial cost, High efficiency. It’s almost provocative what Bitcoin is doing and it can get you excited in your mind, your heart or even your pants. (But keep that to yourself)
Three major competitive metrics that every industry competes with are “Now, Perfect, and Free”. BTC competes with fiat on all those dimensions. The “now” refers to transfer time, “free” refers to the costs of doing a transfer, and (perhaps most interesting) “perfect” refers to currency stability. While many may point to the volatility of BTC and identify it as less preferable (less perfect) than their state sponsored fiat, others might point to the longer term horizon of inflation vs. appreciation, and declare BTC as the preferable (perfect) option.
Now that we’re more advanced in the realm of crypto, every government and institution and industry has become familiar with it, and naturally the competitive playing field has intensified. The network appreciation we can expect from the proverbial low hanging fruit has (mostly) already been realized. Now, BTC must compete for the higher hanging fruit: 3% merchant fees on PayPal & credit cards.
So Bitcoin is entering round 2 against FIAT. The gloves are off and everyone has an opinion on what will happen. What corner are you in? Crypto? FIAT? Both? If you truly support one currency or both, you will be spending money in that currency. For all of us crypto enthusiasts, we tip our hat to you for treating yourself to that latte and paying with BTC.
Written by Jason Mckee – 2018 CryptoCulture Magazine