Breaking ChatGPT’s Bitcoin FUD #10: Mainstream Acceptance

According to ChatGPT, the fact that bitcoin still didn’t reach mainstream acceptance among businesses and individuals is a big issue. Presumably, this is a threat for the entire Bitcoin project. And while I agree that creating demand for the currency by offering products and services in exchange for it is an integral part of building an economy, I still believe that the AI model’s expectations are unrealistic and this piece of FUD is silly.

To better explain why I’m not taking ChatGPT’s FUD about mainstream acceptance too seriously at this point, I’m going to have to define mainstream acceptance (or adoption). A first definition concerns nation state adoption, which El Salvador and the Central African Republic pioneered. The second definition focuses on bottom-up grassroots adoption, which is more significant and ideologically aligned with the mission of the Bitcoin project. It includes businesses, individuals, and everything in between which concerns the private sector.

Is Bitcoin such a failure or disappointment in terms of nation state adoption? Well, let’s compare it with the two biggest fiat currencies in the world: the US dollar and the euro. The US dollar was first conceptualized on July 6th 1792, and it took another 6 years and 9 months until it became the United States of America’s official currency through the Coinage Act of 1792. However, it wasn’t until 1944 that the dollar became the world reserve currency – 152 years since launch and approximately 158 years since the first announcement.

In the case of the euro, it’s the result of decades of discussions about a single European currency to challenge the US dollar’s supremacy. It was first announced on February 7th 1992 as part of the Maastricht Treaty, and it became an official currency in 11 European countries at once on the first day of January 1999. Due to the fact that the German mark was already a reserve currency worldwide, the euro instantly inherited this property.

As of May 2023, Bitcoin has only been around for 14 years and 4 months. 12 years into its existence, it became an official currency in El Salvador. The Central African Republic also embraced bitcoin in April 2022, but gave up on it only a year later. Though this adoption happened in a top-down manner, the use of bitcoin is not enforced by the states – meaning that using bitcoin is legal for all types of payments, but the government won’t use its monopoly on violence to coerce merchants and banks to accept bitcoin. In the case of the euro, the Italians, Spaniards and Germans had no choice but to exchange their lira, pesetas and marks for the new currency that they were obligated to use in all transactions. In comparison, this first wave of nation state-level bitcoin adoption is much more voluntary.

But Bitcoin wasn’t created to serve governments of nation states. It exists as a way for individuals to opt out from tyranny and escape the consequences of central bank-driven inflation. The intended purpose of the project was made clear by creator Satoshi Nakamoto in the network’s first block: “Chancellor on the brink of second bailout for banks” – a direct quote from the front page of The Times, a British newspaper which made a headline out of Chancellor Alistair Darling’s decision to save the banks at the expense of all taxpayers on the same day that Bitcoin launched.

Bitcoin is not issued or controlled by any country, it functions according to a predictable monetary policy which is clear and transparent for all participants, and relies entirely on voluntary interactions. This type of digital currency can’t be confiscated, frozen, or taxed. Nobody can stop a certain user from installing, using, or else building their own wallet to participate in this economy. Furthermore, nobody can stop individuals from securing the ledger which contains the entire history of transactions and then broadcasting their own transactions to the network through their full node. And if users want to provide thermodynamic security to Bitcoin and also participate in the money issuance process, they can deploy their own solo or collaborative mining operations.

In many ways, any comparison with existing types of money is wrong – mostly because we put side by side metrics from a free, transparent and voluntary system, and data from a trust-based, military-enforced, and politically coercive apparatus. It’s a choice between freedom and submission to the big bully.

Nonetheless, it’s still useful to understand that Bitcoin has accomplished quite a lot during its existence of 14 years and will only become more accepted as a worldwide currency specifically because its competitors are dishonest and untransparent.

Free markets outlive elections, regime changes, and governments. Likewise, non-governmental and uncensorable internet money will outlive any type of financial central planning. Historically speaking, markets and neutral money tend to stick around for longer than empires, nations, and different waves of migration. The Silk Road consisted of Eurasian trade routes that lasted for about 1500 years, while gold and silver have been used as money since at least 550 BC. Bitcoin is relatively young, but it has already set a nice record of withstanding crises and navigating through chaos.

The most important part of Bitcoin’s mission is for it to be adopted by people who need it and provide more economic freedom to the world. For now, it mostly works as a blackmail against governments and central banks – they either agree to maintain a reasonable degree of accountability by not devaluing everyone’s savings, or else the people will refuse to use their currency and pay taxes. Bitcoin is the effective protest, a tool that works much better than marching in the streets and signing petitions. However, the main condition is that the people use it in a non-custodial and sovereign manner.

This, I believe, is the main barrier that still stands between Bitcoin and mass adoption – or, as ChatGPT calls it, mainstream acceptance. Even today, when the user interfaces are friendlier, there are quirks and frequent roadblocks that make the experience bumpy. Sometimes the on-chain transaction fees rise for a while and transactions get stuck in the mempool. Other times Lightning payments fail due to a communication error. There are times when managing UTXOs induces headaches. These issues can be tricky to identify even from an advanced user’s perspective.

Given how simple it is to use your debit card to set up an account with a centralized BTC exchange, it’s no wonder that most users are stuck in these bona fide banks. However, using a centralized, regulated, and ultimately government-compliant custodian defeats the purpose of using Bitcoin. Unless you use your own wallet, with your own full node, and with a certain degree of privacy against your government, you aren’t really free or able to peacefully protest.

The complexity of self-custody is definitely a roadblock on the way to mainstream acceptance. Because using Bitcoin in any other way than with sovereignty is nothing but speculation with a trusted third party in the middle. But those who truly need to use Bitcoin will find all the educational resources they need in order to set themselves free from tyranny of all kinds.

I can argue that the reason why Bitcoin didn’t gain too much mainstream acceptance is given by the relatively prosperous times that people have been living in the developed world, accompanied with a lack of technological means in the underdeveloped world. In between these two extremes, there were people who either decided to speculate or else secure a better future for themselves. The price also plays a major role, but on a long-term scale the volatility points to a massive appreciation against every fiat currency. Even when it’s losing 50% of market valuation against the US dollar, bitcoin still finds itself performing better than failing fiat currencies such as the Argentinian peso, the Turkish lira, and the Nigerian naira.

Education about money and Bitcoin’s place in the grand scheme of the global financial system is important. Having a good understanding of computer science and markets also helps a lot. But in the end, most people adopt Bitcoin because they need to – and if they haven’t yet, then they didn’t urgently need to up to this point.

As every price increase brings in a new wave of speculators, many of them will end up understanding the value proposition of Bitcoin and teaching others about it. As central banks print more money in this Bitcoin-educated environment, the adoption for the decentralized digital currency will grow. And as adoption grows, everything improves – from governments which become more accountable, and all the way to Bitcoin wallets that receive enough feedback to refine user-friendliness.

But let’s stop making excuses, ChatGPT can’t win this one. According to CoinATM Radar, there are 34100 Bitcoin ATMs around the world, spread across 75 countries. This means that people from 75 different nations can use their local fiat currency to buy bitcoin, or else sell the bitcoin that they have for instant cash. Except for the US dollar, name another currency that’s so easily accepted and transacted in 75 countries. The metric presented doesn’t even count the thousands of small businesses around the world that accept payments directly in BTC.

Try to travel to East Asia, South America, or Central Africa with euro, British pounds, and bitcoins. Talk to merchants in marketplaces, go to stores, and ask around to see which one of the three currencies is the fastest to exchange for the country’s official form of money (and therefore, which one is most likely to get accepted as means of payment). You’re going to be surprised to discover that the demand for bitcoin is second only to the US dollar.

In the West, most of the large retailers didn’t catch up. Which enables bitcoin-friendly third parties such as Bitrefill (who sell gift cards) and ShopInBit (who will sell any legal physical items) to fulfil the roles of Amazon, Steam, Spotify, eBay, PlayStation Store, and lots of other services. There’s definitely a parallel economy which is gradually intersecting with the mainstream one, but it’s probably too early for BTC to be just as omnipresent as the US dollar in commerce.

Sadly, the only two moments which bring spikes in Bitcoin adoption are the massive price pumps that attract speculators and the tragic events that attract people who need Bitcoin as a safety net. But as more time passes, the descentralized digital currency proves its resilience, and the grassroots demand for it increases, mainstream acceptance can only go up. The US dollar didn’t become the dominant currency in 14 years, and neither did gold turn into the world’s most important precious metal over night. It takes work, it takes persistence, and it takes education.

Nonetheless, given the circumstances, Bitcoin exceeded all expectations, defied the gloomy predictions of all Nobel prize-winning economists, and resisted pressure better than entire governments. In the process, it became more decentralized with every user who embraced sovereignty and it became better known with each person who spread the word about the magic internet money.

Mainstream acceptance is a marathon, not a sprint. And it’s steadily reaching the goal. Sorry, ChatGPT.