Why More People Need To Start Spending Bitcoin

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Don McAlister is a technologist and has made several video tutorials on Bitcoin.

While primarily viewed as a store of value, and considered by many as a fantastic savings technology, bitcoin has yet to reach mass adoption. There are many reasons why this is so, but I will be focusing on one aspect that could be holding bitcoin back.

People are reluctant to spend bitcoin.

Why is this a bad thing?

One of the obstacles to adoption is that many people are unfamiliar with bitcoin’s concepts. They don’t see the value of bitcoin and are unable to recognize that it is sound money. What good is money if it can’t be spent? Bitcoin has historically been difficult to use due to its nature and lack of support for businesses or individuals accepting it. It will be harder to get widespread adoption of bitcoin if people don’t see it being used as real money in a frictionless manner and with tangible benefits. Bitcoin is not being used widely as a means of exchange.

In order for bitcoin to be considered a medium to exchange, it must be possible to exchange bitcoin for goods or services. The Bitcoin whitepaper describes bitcoin as “A Peer to-Peer electronic cash system,” and was originally promoted as digital money.

However, because it is such a great store of value, people who own bitcoin are looking forward to the days when the price has multiplied by 10, or even 100, as bitcoin becomes more widely adopted. Why would you spend money that is likely to grow in value over time?

This article examines the barriers that prevent people from spending bitcoin and reviews the rapidly changing landscape of bitcoin spending.

Saving Versus Spending

You may have heard of the meme “stacking sats.” This is a common term among Bitcoiners who want to accumulate bitcoin for future gains. “Sat” stands for “satoshi,” the smallest bitcoin denomination. Each bitcoin can be divided into 100,000,000 sats. I prefer use “bits ““, which is another way to subdivide a single bitcoin. There are 1,000,000 bits in a single bitcoin. The truth is that we cannot “stack bitcoins” forever. We can’t convert every cent of the fiat currency we make into sats (or bits) and HODL (hold) it forever. Everybody needs to spend money in order to live a normal life. The approach I advocate for is that as bitcoin becomes easier and more affordable, we should convert a portion of our fiat (currently allotted for daily spending) on either a monthly, weekly, or daily basis, and then use that money to pay our expenses. Now that we have established the basic idea, let’s look at some of reasons why bitcoin has not been adopted as a payment system and how it might change.

Costs Of Acquiring Bitcoin

We are still in the early days of bitcoin adoption, and there are fees and other costs associated with purchasing bitcoin from an exchange.

However, these costs are starting to diminish. Strike, a U.S.-based company is a great example. They have made it clear that they will set the lowest possible fees for bitcoin purchases through their app. Swan and other companies also have very low fees, and they are working to lower them further.

You don’t have to buy bitcoin every time. earn Bitcoin with zero fees.

At the recent Bitcoin 2022 conference, Cash App announced that it will be possible to auto-convert your paycheck into bitcoin for free. You can easily convert your fiat income into Bitcoin and build a bitcoin stash to HODL for long-term savings and have some for immediate purchases.

You can also get paid in bitcoin for the goods and services you provide. You can now receive bitcoin instantly and in some cases with no fees thanks to the Lightning Network and Lightning Network Addresses.

Transaction Speed And Costs

Bitcoin transactions are recorded on a distributed, decentralized blockchain. Bitcoin’s decentralized, permissionless nature is one of its main advantages over fiat money. A typical bitcoin transaction that gets posted to the blockchain is commonly referred to as “on-chain.”

On-chain bitcoin transactions are often perceived as being slow. The Bitcoin blockchain was not developed for rapid transaction-processing, and by design, is extremely limited in terms of throughput. Transactions are batched into blocks which are processed approximately every 10 minutes, resulting in delays to seeing the transaction on the blockchain. It is best to wait several blocks before deciding whether a transaction is final due to the possibility of block reorganizations. This could be a single confirmation for transactions with low value, but it is recommended to wait for at least four to six confirmations for larger transactions.

Depending on conditions at the time, on-chain bitcoin transactions can also be expensive. Transaction fees are usually very low for high-value transactions. However, they can be significant for smaller transactions. This can vary depending on the transaction’s value. Transaction fees were negligible in fiat terms when bitcoin was first introduced. The fees have increased as bitcoin’s value has increased. It is just not practical to use on-chain bitcoin transactions for minor purchase. The transaction speed is too slow and the fees are prohibitively high.

The issues of speed and cost were largely addressed with the introduction of Lightning Network. The Lightning Network, a Layer 2 protocol that sits on the Bitcoin network, allows for almost instantaneous settlement at virtually zero cost. It scales well, allowing for transactions that exceed current payment systems like Visa and Mastercard.

Support to the Lightning Network is now available in almost all bitcoin wallets, and even some exchanges like CoinCorner, Bitfinex, and Kraken. We are also seeing Lightning support in some of the most popular digital currency apps like Cash App.

Bitcoin Price Volatility

The bitcoin price is notorious for its volatility, and this has historically caused concern for merchants and vendors (as well as consumers). There are many options for merchants that allow them to receive bitcoin payments over the Lightning Network. These can then be stored in bitcoin or, if volatility concerns you, can be exchanged immediately for fiat currency. This exchange is fast and removes the risk of bitcoin price volatility.

Solutions can be built using BTCPay Server — an open-source project that allows merchants to accept Lightning payments directly — or third-party services such as BitPay or CoinCorner, allowing merchants to accept both Lightning and on-chain payments, with the option of near-instant conversion to fiat.

Some merchants may want to keep their bitcoins or convert a small amount to fiat currency. The current systems can accommodate all these scenarios and are very flexible.

Price volatility can also be a concern. A consumer does not want to have to convert a fiat amount for a mortgage payment three week in advance, and then see the relative value of the payment drop due to price volatility. The solution to this problem will come when bitcoin becomes more stable. However, until then, it is best to convert to bitcoin immediately after you spend the funds to reduce the volatility.

Benefits To The Retailer

While payment in bitcoin is relatively easy to set up for online merchants, there needs to be a physical solution in place to allow brick and mortar stores to accept payment in bitcoin.

Recently, Strike announced some ground-breaking partnerships with Shopify and point-of-sale (POS) device manufacturers, such as NCR, that will bring Lightning integration directly into many retailers in the U.S. and eventually around the globe. Paying in bitcoin with the Lightning Network will be as simple as scanning a QR code.

Both the consumer and retailer will benefit from these developments.

The retailer will be able process transactions quickly at very low costs. The current payments technology is not able to settle transactions immediately and can attract a lot of fees from the financial institutions. Transaction fees can reach up to 3% or more. The Lightning Network will allow retailers to accept bitcoin payments immediately and potentially save as much as 3%.

In addition to the elimination or significant reduction of fees, the retailer will also have final settlement that is almost instantaneous. They will have immediate access to the funds they transferred during the transaction and can reverse credit card payments. This does however remove some consumer protections, as chargebacks and refunds cannot be processed externally. A merchant can still refund a customer’s payment if they are requested by the customer.

Benefits To The Consumer

The consumer could benefit in a similar fashion. The consumer could benefit from the lower transaction fees by receiving a discount to encourage them to use the new payment technology. It would be a win/win situation.

In addition, frictionless transactions are extremely fast and can be done by scanning a QR code. To make it easier to purchase goods and services with bitcoin cards, further developments are being made using RFID chips. This is speculation only, but it is possible that Apple will soon start to integrate a bitcoin/lightning wallet into every iPhone or Apple Watch.

The consumer will also be able to be fully self-governing and self-banked. Although this is not something that will be widely adopted, it is possible for you to set up your own Bitcoin node at your home and connect your Lightning wallet with your home node. This removes any reliance on trusted third parties.

Person-To-Person Transfers

There is still some work to do on improving the user experience of paying using bitcoin. Although it is easy to scan a QR code and send bitcoin between people remotely, it can be complicated. This is usually due to the creation of Lightning invoices, long multidigit addresses, and awkward screenshotting and emails.

The introduction of the Lightning Address, or LNURL, is a recent development. This mechanism is just as easy to use as email. In fact, it looks just like an email address: name@service.io

Once you have an account on an exchange that supports Lightning Addresses (e.g., CoinCorner) or a wallet that supports them (e.g., Wallet of Satoshi), you’ll be issued with a personalized Lightning Address.

Using this address is as simple as sending someone an email, but instead you send bitcoin over the Lightning Network.

The Bolt Card

Just as I had submitted this article for publication, a brand new innovative way to spend your bitcoin has been launched in the U.K.: The Bolt Card by CoinCorner.

Bolt Card. Bitcoin hasn’t reached mass adoption because it isn’t being used as a medium of exchange. By spending bitcoin, we can demonstrate its usefulness as money.

The Bolt Card image options (source)

In the U.K., contactless payments are pretty much the norm using either the Visa or MasterCard networks. There are no apps required. All you need is a near field communication card (NFC) that allows you to tap on a point of sale device to make a payment. The downsides of using Visa or MasterCard to pay for payments are high fees and delayed settlement.

Payment with bitcoin virtually eliminates fees and allows instant cash settlement. However, it always requires the use a bitcoin wallet, which is usually on your mobile device. You will need a decent phone to open your wallet app, scan a QR code, and then tap a button for the transaction to be confirmed. To complete the transaction, you will need a stable internet connection.

Not very user-friendly.

The Bolt Card solves this problem. The Bolt Card fixes this problem. The Bolt card uses NFC to communicate directly with the POS device (or websites on NFC-enabled smartphones) to initiate the transaction. The Bolt Card is compatible with industry standard LNURL mechanisms, which means it can be used without the need for proprietary mechanisms. You can set the Bolt Card up to use your CoinCorner GBP or euro account. The Bolt Card will instantly convert the amount into bitcoin using the Lightning Network and send the payment to the recipient. This eliminates capital gains tax. You can also set the card to use bitcoin.

The Bolt Card can be used multiple times and can also function as a gift card by allowing you to load it up with bitcoin to give to family and friends. Once the sats have been loaded with a certain amount of bitcoin, they can be used to make payments or transfer money to any mobile wallet.

The simple act of tapping a card against a POS terminal mimics the contactless technology most people are already familiar with. It eliminates the need to use a mobile app to make Lightning payments. This dramatically reduces transaction times and allows for higher vendor throughput. Customers also have a much simpler payment experience.

The Bolt Card is perfect for all bitcoin payments and could make a significant impact in countries with limited internet access or poor mobile phone ownership. Bolt cards can be preloaded and could be used quickly and effectively to provide financial tools for the poor. This payment technology can be used in areas where traditional banking infrastructure is not available.

Currently, the Bolt Card is only available in the Isle of Man and the U.K., but it is anticipated this payment solution will be rolled out globally over the next 12 months.


Bitcoin is programmable money. You can now use micropayments to purchase low-value services by adding the Lightning Network. How many times have there been times when you came across an interesting article on the internet only to find it behind a paywall. There may be a free trial, but you will need to sign up for an online subscription. Even if an article is extremely interesting, I don’t have the time or energy to sign up for a trial and cancel to access it. I wouldn’t even consider signing up for a full subscription to access one article.

But, what if you could pay a small fee to access one article? That’s exactly what the Lightning Network allows you to do.

In this live example, the article can be accessed for the equivalent of $0. 25 (635 sats, or 6. 35 bits, when I paid). The transaction is smooth and effortless. After clicking the button to Pay, your Lightning wallet will be opened and the amount ready for you to pay. One tap and the payment is complete. The article can be accessed immediately.

Capital Gains Tax

In some countries, the selling or transfer of bitcoin can trigger a capital gains tax event. It is hoped that bitcoin will eventually be reclassified to a currency. However, until then, capital gains tax must be considered. This is more likely to happen if you have bitcoin for a longer period.

In the case where you use bitcoin to pay bills and buy stuff, you would purchase the bitcoin you need for the week then spend it. If the bitcoin price falls, it is likely that there will be little capital gains or even a loss over the course of the week. Capital gains are theoretically negligible if you replenish the bitcoin you use weekly. Any bitcoin left over can be stored in cold storage to be used for long-term HODLing. Then you can replenish your daily bitcoin stash by making a new purchase.

Bill Payments

A new service (initially available only in the U.S.) which was recently introduced is the new Pay Bill service by Bitrefill. This allows you search for the service provider of your choice (e.g., utility company, mortgage provider, etc.). Complete your information and then pay with bitcoin. Although this service is currently only available to invited guests, it gives a glimpse into the future.


There are now many ways to start spending your bitcoin, and many more places will start to accept it soon. Although there are some inconveniences in converting fiat into bitcoin, Bitcoiners should make every effort to begin spending bitcoin as soon as possible.

Pre-coiners won’t be able to fully appreciate the benefits of bitcoin until it is accepted as a reliable, frictionless way to pay. The more people who get into bitcoin and start saving it, the easier it will become to understand and appreciate its true value.

As the Lightning Network becomes more popular, it will allow bitcoin to be used as a unit for account. We should see bitcoin, bits, and satoshis being priced. The Lightning Network and Bitcoin network are both global in their reach so bitcoin is well-positioned to become a global account unit. Imagine being able move around the globe with one Lightning wallet and be able to pay for goods or services based on a global currency standard. There are no currency conversions, local pricing, or currency exchanges. Just one global currency.

Download a Lightning wallet or, if you are in the U.K. get a Bolt Card, load up some sats, and start spending.

This is a guest post by Don McAllister. Opinions expressed are entirely their own and do not necessarily

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