Bitcoin As Payment Method For Daily Small Transactions
While the originally intended purpose of the Bitcoin was a peer-to-peer payment system without a need to a middleman, it has quickly became more fit as a store of value. Yes, it can be used for both and it is up to the people decide how they view and use their bitcoins.
Some of the obstacles for bitcoin to work as payment system for daily small purchases are the speed, fees, taxes. If I were to pay with bitcoin at the grocery store with bitcoin and have to wait longer than few seconds for the transaction to complete, transactions fee increase the cost of purchases, and also have to pay taxes as capital gains this would definitely make it difficult for me, the merchants to use bitcoin for such transactions.
However, these obstacles didn't stop bitcoin adoption. It continues growing as a network and in value. Over time it has demonstrated to be a great store of value. And the arguments for bitcoin as a store of value are very convincing. The simplest one is, if bitcoin keeps growing in value why would you want to spend it.
When there are problems, there are those who try to fix them. We have seen networks like Litecoin being created, Bitcoin Cash fork, and many other projects to address the same issue. Fast and cheap transactions.
There were two pieces of news today, that made me think that bitcoin as a payment system for daily small transactions in fact can become a reality one day. Lightning network has been also growing in adoption. Bitcoin becoming legal tender in El Salvador has brought a lot of attention to lightning network which makes it possible to transact with bitcoin for small daily purchases.
First news I saw was about Cash App integrating bitcoin's lightning network. Now users of Cash App can send quick bitcoin payments to other Cash App users. This is great. I can see more and more platforms integrating lightning network in the coming months and years. Why wouldn't they? Platforms usually follow where the money is. If the network continues to grow and there is more and more demand for it, they will have no choice but to integrate it.
Second news was more interesting. Apparently, there is a bipartisan bill being introduced in the US Congress, that will exempt bitcoin transaction from tax obligations if the associated capital gains are $200 or less. I don't think this bill will go anywhere and become a law. But the fact that there are efforts and ideas being discussed shows how far bitcoin has come.
If we are worried about tax obligations for every small transaction, chances are we probably fall back to fiat and continue holding bitcoin as store of value. At least that way tax obligations are less complicated. At the same time it makes no sense to tax an asset that is being used as a medium of exchange.
I personally utilize bitcoin as a store of value and tend to believe there is a strong case for that. Now after seeing these two pieces of news, I think we can't count out bitcoin as medium of exchange for daily small transactions either. At least not yet. It does seem like there is still room for a lot of progress and I can see how it can be possible. Things like speed, fees, and taxes may longer be the obstacles in the near future. If not globally, at least in certain jurisdictions.
The power of bitcoin is that it is just one thing. It can be many things, depending how people view and use it. I welcome all developments as net positive for the network overall.
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