Many Bitcoiners who choose to spend their BTC despite having access to fiat (even if paying with bitcoin is more cumbersome in some scenarios) do so to propagate the “bitcoin circular economy.”
This vision of a world where we all choose to transact in bitcoin is the ultimate goal behind the technology for many people. If BTC were the chosen medium of exchange around the world, many people would realize brand new spending and value creation power. The world economy would become vastly more equal and the ingrained institutions that control wealth and power would be forced to adapt.
The bitcoin circular economy is the system in which users don’t have to exchange their bitcoin for any other asset in order to purchase goods or services. It is circular in the sense that bitcoin is the preferred medium of exchange back and forth between participants.
BTC has become a critical store of value for many people around the world, thanks to its freedom from third-party manipulation, borderless nature and other unique value propositions. As it continues to establish value among people around the world, it has become an in-demand asset that can be utilized as a sound form of money. Because people value bitcoin and want to hold it (or exchange it for fiat), they are willing to exchange goods and services for BTC.
Innovations like the Lightning Network are vastly improving the potential for a bitcoin circular economy to take hold in more places around the world. Through the Lightning Network, some barriers that have kept Bitcoin from naturally replacing mainstream payment processors like Visa — including transaction speed and settlement fees — are being iterated away.
This circular economy has already established itself in some places, including through events like Bitcoin Black Friday that enable bitcoin users to buy things directly from merchants with BTC. There are also projects like Carrot that reward users directly in micropayments of BTC for completing tasks. These could both be precursors to a truly circular bitcoin economy in which people earn BTC for work that they do and then pay out BTC for goods and services that they receive in kind.
One fundamental difference between today and the age of complete hyperbitcoinzation will be in the growth of the bitcoin circular economy, which would become simply “the economy.” When bitcoin becomes the world’s preferred currency, BTC will no longer be priced in any fiat equivalent (1 BTC will be worth 1 BTC) and BTC won’t regularly be exchanged (or sold) for any other currency. All goods and services will be available for BTC.
When this young technology becomes accessible to the majority of the world, it will inevitably replace the antiquated systems that protect the powerful few and enforce rampant inequality.