Is Bitcoin a medium of exchange?

A common critique of Bitcoin is that it’s not “spendable” everywhere yet. This argument assumes that in order to be considered real money, Bitcoin must immediately compete with cash or credit cards for everyday purchases. But that misses the point entirely. No transformative technology becomes globally adopted overnight, especially one meant to replace a legacy system that dominates every corner of modern life.

What makes something a Medium of Exchange?

A medium of exchange is a tool people use to trade goods and services. For a currency to serve this role effectively, it should also function as a unit of account (a way to price things) and a store of value (a way to preserve purchasing power over time). Every widely adopted form of money balances these three qualities - though not always equally well.

For example, the U.S. dollar excels as a medium of exchange and unit of account, but it’s weak as a store of value due to inflation. Bitcoin, on the other hand, has already proven to be a powerful store of value, while its use in day-to-day commerce is still developing.

Bitcoin is already a Medium of Exchange

Bitcoin is far more than just an asset or a savings technology. It’s already being used in real-world transactions. In regions with unstable governments or collapsing fiat currencies, Bitcoin has become a vital alternative. People in countries like Nigeria, Belarus, and Venezuela have used it to protect their savings and support grassroots movements, bypassing state-controlled banking systems entirely.

In these environments, Bitcoin’s decentralized and censorship-resistant qualities are essential.

Why is Bitcoin not used more?

In politically stable countries with functioning payment rails, Bitcoin is rarely used for groceries or rent. In these countries, those choosing to pay with Bitcoin are typically Bitcoin Maximalists. Bitcoiners passionate about the technology. For them, using Bitcoin is more about personal conviction than necessity. But why aren’t more people using Bitcoin?

This isn’t because it’s a failure.It’s because it’s better money:

Gresham’s Law explains how people behave when presented with two types of money that have the same face value but differ in quality: they tend to spend the lower-quality money and hoard the better one. Historically, this was seen in the 16th century when coins made from precious metals like silver began to be debased. As the new, lower-quality coins entered circulation, people instinctively held onto the older, purer coins, leading to a decline in public trust in the currency issuer.

Fast-forward to today, and we can apply the same principle to modern fiat currencies. As fiat money gets devalued through inflation and aggressive monetary expansion, Bitcoin emerges as a higher-quality alternative — a form of money with fixed supply and no central issuer. Naturally, people are inclined to save their Bitcoin and spend their fiat, mirroring the same behavioral patterns Gresham described centuries ago.

Thanks to Gresham’s Law, people naturally spend “bad” money (like fiat, which loses value) and hold on to “good” money (like bitcoin, which retains or gains value). If you had both dollars and bitcoin in your wallet, which would you rather spend? Most people choose to spend the weaker currency and save the stronger one.

This behavior isn’t a sign that Bitcoin is flawed. It’s exactly what you’d expect for a form of money that’s still being monetized.

Network Effects

Money is a network, and like all networks, its usefulness grows as more people use it. But unlike social media, monetary networks are zero-sum: You can’t simultaneously invest the same dollar into two currencies. That means Bitcoin adoption requires people to actively switch from one system to another, which takes time and conviction.

The good news? When a legacy monetary system collapses, adoption of a new one can happen pretty fast. History has shown that when currencies fail, people scramble to find something better and those who act early benefit the most.

When will Bitcoin be spend everywhere?

Mainstream spending will come when people are forced to stop using their current money: Either because it’s failing or because merchants no longer accept it. Until then, the most rational thing to do is to save in bitcoin and spend fiat. Ironically, this hesitation to spend bitcoin shows that Bitcoin is already valued more than the currency that is spent.

Bitcoin will continue to evolve. As infrastructure improves and more people recognize its value, we’ll see an increase in use and acceptance. But we don’t need to wait for it to buy coffee to understand that it’s already doing what good money is meant to do: protect purchasing power and offer an exit from broken systems.

Final Thoughts

• Bitcoin already works as a medium of exchange.
• People save bitcoin and spend fiat because they expect bitcoin to gain value over time (Greshams Law)