by Some Bitcoin advocates say that the cryptocurrency has gotten away from its roots as a payment instrument and has become more akin to digital gold.
Bitcoin is seeing unprecedented adoption, with the US establishing a Strategic Bitcoin Reserve, but some prominent Bitcoin advocates believe the project is getting away from its roots.
Earlier this year, Jack Dorsey, a Bitcoin proponent and founder of Twitter, said that he believed if Bitcoin (BTC) becomes just a form of “digital gold,” then the project has failed. He said that a national Bitcoin reserve may be “good for the nation-state, but I don’t necessarily know if it’s good for Bitcoin.”
Dorsey contended that Bitcoin needs to return to the white paper and work on becoming a form of peer-to-peer cash that can be transacted globally if it wants to become a success.
Around the world, a number of “circular Bitcoin economies” have been working at just that: developing local economies that use Bitcoin as currency in an attempt to showcase its viability and what the future of BTC can look like.
Bitcoin circular economies and Wall Street
The Bitcoin Federation calls a Bitcoin circular economy a “local economic ecosystem where Bitcoin (BTC) is used increasingly
as a medium of exchange, a unit of account, and a store of value” — i.e., a place where Bitcoin fulfills the three roles of currency, as it is understood.
There are diverse Bitcoin communities and circular economies all over the world, but their goal is similar in that they all believe that Bitcoin is the superior form of money and that it should be used “as a means of payment for goods and services and for settlement of other financial obligations.”
This approach of using Bitcoin as a currency diverges from the prevailing attitude in the United States, where crypto advocates view it as a reserve asset to be hoarded — akin to digital gold. President Donald Trump told the Nashville Bitcoin conference in July 2024, “Never sell your Bitcoin.”
In a March 17 lecture at the Bitcoin Policy Institute, Strategy CEO and Bitcoin maximalist Michael Saylor likened the digital currency to an investment asset. A significant stake, per Saylor, would allow the holder — such as the US government — to exert control over the digital economy in another iteration of “manifest destiny.”
When asked whether mass adoption by a nation like the US takes Bitcoin away from its founding principles, Isa Santos, founder of the Bitcoin Isla project in Isla Mujeres, Mexico, said:
“Yes, but that’s the beauty of Bitcoin. It’s for your enemies, too.”
Stelios Rammos, founder of Bitcoin crowdfunding project Geyserfund, said that, good or bad, adoption by governments was “inevitable.”
“Bitcoin is for everyone, and its truest founding principle is being permissionless money.
The adoption of Bitcoin by governments was inevitable, and if there was a button we could press to say, ‘Governments are banned from Bitcoin,’ then it wouldn’t be Bitcoin anymore,” he told Cointelegraph.
Still, he believes that the Bitcoin community has a core set of values that promotes grassroots adoption of Bitcoin over government welfare, adding that Bitcoin is at a stage where Bitcoiners should be more concerned about how it’s adopted rather than whether it’s adopted.
“Circular economies will have a huge role to play in bringing about a future where Bitcoin is held and used by everyday people and not just held as a pure asset within digital vaults at large banks and governments,” said Rammos.
Both said that there were tangible benefits to government Bitcoin adoption. Santos said that adoption from a large country like the US could still be a positive in that many look to the US as a leader in the financial world.
Rammos said that the US adopting Bitcoin would raise awareness about the seminal cryptocurrency, which benefits the entire network and has knock-on effects for circular economies worldwide.
What does Bitcoin do for these communities?
Bitcoin circular economies are present all over the world. They have gained particular ground in developing economies where the local currency is unreliable as a store of value.
In Cuba, where inflation is runaway and salaries are at unlivable lows, Bitcoin and Bitcoin circular economies have allowed locals to protect their savings.
In rural Peru, where most people are unbanked — i.e., do not have a bank account or access to financial services — Bitcoin has provided a way for locals to save their money and pay for school and everyday expenses.
There are challenges, however. Namely, Bitcoin’s notorious volatility makes it difficult to sell as an instrument for savings to rural communities, according to Valentin Popescu, co-founder of Motiv — a Bitcoin education and advocacy group in Peru.
Bitcoin communities also face challenges of growing outside the group of Bitcoin expats and enthusiasts who are already present. Bitcoin advocates flocked to El Salvador, where Bitcoin Beach provided the first prototype for a Bitcoin circular economy. However, this did not translate into locals actually using Bitcoin.
