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Author Nejat Hakan
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Bitcoin - Criticism - Limited Utility as a Currency for Everyday Transactions

Introduction

Bitcoin, since its inception, has been hailed by proponents as a revolutionary digital currency poised to redefine global finance. One of the primary functions of any currency is to serve as a medium of exchange – a tool readily accepted for everyday transactions, from buying a coffee to paying bills. However, despite its technological innovation and growing recognition as a store of value (often dubbed "digital gold"), Bitcoin has faced significant criticism regarding its practical utility as a currency for daily commerce. This limitation stems from a confluence of factors, including inherent design characteristics, market dynamics, and practical adoption challenges.

For a currency to be effective in everyday transactions, it generally needs to exhibit several key properties:

  1. Stability of Value: Users must be confident that the currency's purchasing power will not fluctuate wildly in short periods.
  2. Low Transaction Costs: Fees associated with using the currency should be minimal, especially for small-value transactions.
  3. Speed and Efficiency: Transactions should be confirmed quickly to be practical for point-of-sale situations.
  4. Scalability: The system must be able to handle a large volume of transactions simultaneously, akin to traditional payment networks.
  5. Ease of Use: The general public should find it straightforward to acquire, store, and spend the currency.
  6. Wide Acceptance: A significant number of merchants and individuals must be willing to accept it as payment.

This section delves into the specific criticisms highlighting Bitcoin's shortcomings in fulfilling these criteria for everyday transactional use. We will explore the technical and economic hurdles that impede its widespread adoption as a common medium of exchange, examining issues such as scalability, transaction fees, price volatility, user experience, and merchant acceptance. Each sub-section will provide a detailed analysis of the problem, followed by a practical workshop designed to give readers hands-on experience in understanding these limitations.

1. Scalability Issues and Transaction Speed

One of the most persistent criticisms leveled against Bitcoin as an everyday currency is its inherent scalability problem, which directly impacts transaction processing speed and capacity. For a currency to be viable for daily purchases, it must be able to handle a high volume of transactions quickly and efficiently. Traditional payment systems like Visa or Mastercard can process tens of thousands of transactions per second (TPS). Bitcoin, by contrast, has a significantly lower throughput.

The Root of the Problem The Block Size Limit and Block Interval

Bitcoin's scalability constraints are rooted in its fundamental design:

  1. Block Size Limit:
    Bitcoin transactions are bundled together into "blocks" that are added to the blockchain. Satoshi Nakamoto, Bitcoin's pseudonymous creator, initially implemented a 1 Megabyte (MB) limit on the size of these blocks (though this has been effectively increased somewhat by Segregated Witness, or SegWit, which separates signature data from transaction data). This limit restricts the number of transactions that can be included in any given block.
  2. Block Interval:
    A new block is added to the Bitcoin blockchain approximately every 10 minutes. This interval is maintained by an algorithm that adjusts the "mining difficulty" – the computational effort required to find a new block.

Given these parameters, the Bitcoin network can only process a limited number of transactions. The theoretical maximum transaction throughput for Bitcoin is often cited as being between 3 to 7 transactions per second (TPS). This pales in comparison to the thousands of TPS handled by established financial networks.

Consequences of Limited Scalability

  • Transaction Delays:
    When the number of users trying to send transactions exceeds the capacity of the blocks being produced, a backlog forms. This backlog is known as the "mempool" (memory pool), which is essentially a waiting area for unconfirmed transactions. Transactions with lower fees might remain in the mempool for extended periods, from hours to even days during times of severe network congestion. Such delays are impractical for point-of-sale transactions where immediate confirmation is expected. Imagine waiting an hour for your coffee payment to confirm – it's simply not feasible.
  • Increased Competition for Block Space:
    Because block space is a scarce resource, users compete to have their transactions included in the next block. This competition primarily occurs through transaction fees, which miners prioritize. This leads directly to the issue of high and volatile transaction fees, discussed in the next section.

Attempted Solutions and Their Limitations
Several solutions have been proposed and implemented to address Bitcoin's scalability challenges:

  • Segregated Witness (SegWit):
    Implemented in 2017, SegWit was a soft fork (a backward-compatible protocol upgrade) that changed the way transaction data is stored. By separating the witness (signature) data from the transaction data, it effectively increased the amount of transaction information that could fit into a 1MB block, leading to an effective block size limit closer to 2-4MB depending on the transaction mix. While helpful, this was an incremental improvement and did not fundamentally solve the TPS limitation for a global scale payment system.
  • The Lightning Network:
    This is a "Layer 2" scaling solution built on top of the Bitcoin blockchain. It enables off-chain transactions by creating payment channels between users. Transactions within these channels are near-instantaneous and have very low fees. Only the opening and closing of these channels are recorded on the main Bitcoin blockchain.
    • Limitations of Lightning:
      While promising, the Lightning Network has its own set of challenges:
      • Adoption and Liquidity:
        It requires users to lock up Bitcoin in payment channels, and sufficient liquidity is needed across the network for routing payments effectively.
      • Complexity:
        Using the Lightning Network can be more complex for end-users than simple on-chain transactions.
      • Centralization Concerns:
        Large, well-connected "hubs" might emerge, potentially leading to centralization risks.
      • Still Developing:
        The technology is still evolving and not yet as robust or user-friendly as mainstream payment systems.

In essence, while Bitcoin's core blockchain is highly secure and decentralized, these very properties contribute to its limitations in processing a high volume of transactions quickly, a critical feature for any currency aspiring to widespread everyday use.

Workshop Analyzing Bitcoin's Mempool and Transaction Confirmation Times

Objective:
To provide students with a practical understanding of Bitcoin's mempool dynamics, how network congestion affects transaction confirmation times, and the role of transaction fees in prioritization.

Materials Needed:

  • A computer with internet access.
  • A web browser.

Estimated Time: 60-90 minutes

Background:

The Bitcoin mempool (memory pool) is the collection of all transaction data in a Bitcoin node's memory that has been verified but is not yet confirmed (i.e., not yet included in a block on the blockchain). When you send a Bitcoin transaction, it is broadcast to the network and sits in the mempool until a miner picks it up and includes it in a new block. During periods of high network activity, the mempool can grow significantly, leading to longer confirmation times and higher fees as users compete for limited block space.

Procedure:

Part 1: Exploring a Bitcoin Mempool Visualizer (30 minutes)

  1. Navigate to a Mempool Explorer:
    Open your web browser and go to a popular mempool visualization website. A widely used and visually intuitive one is mempool.space. Other explorers like Blockchain.com's explorer also show mempool statistics. 
    Action: Go to https://mempool.space
  2. Observe Key Mempool Metrics:
    Once the page loads, take a few minutes to identify and understand the key metrics displayed. These typically include:
    • Unconfirmed Transactions:
      The total number of transactions currently waiting in the mempool.
    • Mempool Size:
      The total size (in MB or vMB) of all unconfirmed transactions. Note how this relates to the ~1MB block size limit (or effective ~4MB virtual block size with SegWit).
    • Fee Rates:
      Usually displayed as a series of blocks or bands, showing the range of transaction fees (in satoshis per virtual byte, or sat/vB) currently being paid. The highest fee rates are typically prioritized for the next block.
    • Estimated Confirmation Times:
      Many explorers provide estimates of how long a transaction might take to confirm based on the fee rate paid.
    • Incoming Transactions:
      The rate at which new transactions are entering the mempool.
    • Projected Blocks:
      Visualizations of how future blocks might be filled based on current mempool data and fee rates. 
      Questions for reflection:
- What is the current size of the mempool?
- How many transactions are unconfirmed?
- What are the current recommended fee rates for high, medium, and low priority transactions?
- How do these fee rates correlate with the estimated confirmation times?
  3. Analyze Fee Rate Bands: Focus on the section that shows transactions grouped by fee rates. You'll typically see that transactions paying higher fees (higher sat/vB) are at the "front of the line" to be included in the next mined block. 
    Action: Hover over different fee rate bands or blocks in the visualizer. Observe how the estimated confirmation time changes.
    Notice the "cliff" – transactions below a certain fee threshold might have very long or unpredictable confirmation times, especially if the mempool is congested.

Part 2: Tracking a Transaction (Optional - if you can find a recent, low-fee transaction or use a testnet) (30 minutes)

This part is more illustrative. If you don't have a specific transaction to track, you can observe the general flow.

  1. Find a Transaction ID (TxID):
    • If you have recently made a Bitcoin transaction (especially one with a non-urgent fee), you can use its TxID.
    • Alternatively, look at the "Latest Transactions" feed on an explorer and pick one that has just entered the mempool, preferably one with a moderate or low fee. Copy its TxID.
  2. Search for the Transaction: Paste the TxID into the search bar of mempool.space or another block explorer (like blockchain.com or blockstream.info).
  3. Observe Transaction Status:
    • Note its initial status (e.g., "Unconfirmed").
    • Identify the fee rate it paid (sat/vB).
    • See where it is positioned in the mempool visualization if the explorer shows this.
  4. Monitor Confirmation: Keep the page open or refresh it periodically. Observe how long it takes for the transaction to get its first confirmation (i.e., be included in a block).
    • If it's a low-fee transaction during a busy period, it might take a considerable amount of time.
    • If it's a high-fee transaction, it should confirm in the next block or two (typically within 10-20 minutes). 
      Discussion:
- If you tracked a specific transaction, how long did it take to confirm? Did this align with the explorer's estimate based on its fee rate?
- What factors might cause a transaction to be delayed even if it paid a seemingly reasonable fee? (e.g., sudden surge in high-fee transactions, variance in block discovery times).

Part 3: Comparing Bitcoin's Throughput with Traditional Systems (15 minutes)

  1. Research Bitcoin's TPS: Note the widely accepted average TPS for Bitcoin (around 3-7 TPS).
  2. Research Visa/Mastercard's TPS: Perform a quick web search for "Visa transactions per second" or "Mastercard transactions per second." You'll find figures often cited in the range of 20,000-65,000 TPS (average and peak capacities).
  3. Calculate the Difference: Determine the order of magnitude difference between Bitcoin's TPS and that of a major card processor. 
    Example calculation:
If Visa handles 24,000 TPS (a commonly cited average) and Bitcoin handles 5 TPS:
Ratio = 24,000 / 5 = 4,800 times more transactions per second for Visa.
  4. Discussion:
    • Why is such a large difference in TPS significant for everyday transactions?
    • How does this limitation impact Bitcoin's potential to serve a global user base for daily purchases like buying groceries or paying for bus fare?
    • How do Layer 2 solutions like the Lightning Network aim to mitigate this, and what are their current limitations in terms of adoption and capacity?

Workshop Deliverables/Reflection:

  • A brief summary of your observations from mempool.space, including typical mempool size, unconfirmed transaction counts, and the range of fee rates observed.
  • An explanation of how transaction fees influence confirmation times, based on your observations.
  • A short paragraph discussing the implications of Bitcoin's relatively low TPS compared to traditional payment networks for its use as an everyday currency.
  • Consider the scenario: If Bitcoin were to be used for 10% of global retail transactions, what would need to change fundamentally about its transaction processing capabilities?

This workshop should help students visualize and understand the practical consequences of Bitcoin's scalability limits, which are a major hurdle for its adoption as a currency for everyday, time-sensitive transactions.

2. High and Volatile Transaction Fees

Beyond the speed of transactions, the cost associated with making them is another critical factor for any currency intended for everyday use. Bitcoin transactions are not free. Users must pay a "transaction fee" to miners, who are responsible for validating transactions and adding them to the blockchain. While these fees are essential for network security and incentivizing miners, their magnitude and volatility can render Bitcoin impractical for many common purchases, especially small-value ones.

How Bitcoin Transaction Fees Work
Unlike traditional banking fees that might be a fixed amount or a percentage of the transaction value, Bitcoin transaction fees are primarily determined by:

  1. Transaction Size (in bytes/virtual bytes): Transactions vary in data size depending on factors like the number of inputs (sources of bitcoin being spent) and outputs (destinations for the bitcoin). More complex transactions with many inputs/outputs are larger in size.
  2. Demand for Block Space: As discussed previously, block space is limited. When the network is congested (many users trying to transact simultaneously), users compete for this limited space by offering higher fees. Miners, being economically rational, prioritize transactions that pay higher fees per byte (or per virtual byte, often denoted as sat/vB).

The fee is not directly related to the monetary value of the Bitcoin being sent. Sending $1 worth of Bitcoin could, during periods of high congestion, cost $5, $10, or even more in fees, while sending $1,000,000 worth of Bitcoin might cost the exact same fee if the transaction data size is similar.

The Problem of High Fees for Everyday Transactions

  • Microtransactions Become Uneconomical:
    If the fee to send Bitcoin is, for example, $5, then using Bitcoin to buy a $3 coffee becomes nonsensical, as the fee would exceed the cost of the item itself. This effectively prices Bitcoin out of the market for small, everyday purchases.
  • Volatility of Fees:
    Bitcoin transaction fees are not stable. They can fluctuate dramatically based on network congestion. There have been periods where average transaction fees surged to over $50, and other times when they were less than a dollar. This unpredictability makes it difficult for users and businesses to budget for transaction costs.
    • A user might find a transaction affordable one day and prohibitively expensive the next.
    • A merchant might find it viable to accept Bitcoin when fees are low, but unviable when they spike.

Factors Contributing to Fee Volatility

  • Network Congestion:
    The primary driver. When demand for block space outstrips supply, fees rise. This can be caused by general increased usage, specific events driving up transaction volume (e.g., during sharp price movements when many people are moving funds to/from exchanges), or even spam attacks (though less common now due to the cost).
  • Bitcoin Price Fluctuations:
    Since fees are typically denominated in BTC (or satoshis) by wallets and users when constructing transactions, but their real-world cost is felt in fiat currency, a sharp increase in Bitcoin's price can make the same sat/vB fee much more expensive in USD terms.
  • Mining Profitability:
    Miners will always prioritize transactions that offer them the most revenue. Their decisions are influenced by the current Bitcoin price, mining difficulty, and electricity costs, all of which can indirectly affect the fee levels they are willing to accept.

Impact on User Experience
The need to manually consider and set appropriate transaction fees adds a layer of complexity for the average user. While many wallets offer fee estimation tools, users still face a trade-off:

  • Pay a high fee: For quicker confirmation.
  • Pay a low fee: And risk a very long delay or the transaction getting "stuck" in the mempool. This is a far cry from the simple, predictable fee structures (or often, no direct per-transaction fee for consumers) of credit cards or digital fiat payment apps.

While Layer 2 solutions like the Lightning Network aim to offer much lower fees for smaller, frequent transactions, their current adoption and usability are not yet at a level where they comprehensively solve this problem for the average Bitcoin user engaging in everyday commerce on the main chain. The base layer's fee structure remains a significant impediment.

Workshop Calculating and Optimizing Bitcoin Transaction Fees

Objective:
To understand how Bitcoin transaction fees are determined, how to use fee estimation tools, and the impact of fee choices on transaction cost and confirmation time. This workshop will also explore the concept of satoshis per virtual byte (sat/vB).

Materials Needed:

  • A computer with internet access.
  • A web browser.
  • A calculator (optional, for manual checks).

Estimated Time: 60-75 minutes

Background:
Bitcoin transaction fees are crucial for getting your transaction confirmed by miners. Unlike a percentage-based fee, Bitcoin fees are based on the size of your transaction in virtual bytes (vBytes) and the current demand for block space. The fee rate is expressed in satoshis per virtual byte (sat/vB). A satoshi is the smallest unit of Bitcoin (1 BTC = 100,000,000 satoshis). Choosing an appropriate fee rate is a balance between cost and desired confirmation speed.

Procedure:

Part 1: Understanding Transaction Size (15 minutes)

  1. Components of a Bitcoin Transaction:
    Briefly discuss that a Bitcoin transaction is not just an amount. It consists of:
    • Inputs:
      References to previous unspent transaction outputs (UTXOs) that you own and are using as the source of funds. Each input adds to the transaction's size.
    • Outputs:
      The addresses and amounts where the Bitcoin is being sent (including a "change" output back to yourself, if applicable). Each output also adds to the size.
    • Overhead:
      Other data like version number, locktime, and for SegWit transactions, witness data. A typical single-input, two-output (one payment, one change) P2PKH transaction might be around 220-250 bytes, while a SegWit (P2WPKH) version might be around 140-160 virtual bytes (vBytes). More inputs or outputs will increase this size.
  2. Why Size Matters for Fees:
    Miners include transactions in blocks, which have a size limit (effectively around 4 million weight units, or ~4MB, with SegWit, roughly corresponding to 1MB of non-witness data). They want to maximize their fee earnings per block. Therefore, they prioritize transactions that pay more per unit of space (per vByte). 
    Analogy: Think of miners as shipping companies loading a truck (a block) with limited space. They'll prioritize packages (transactions) that pay the highest shipping fee per kilogram (per vByte).

Part 2: Using a Fee Estimation Tool (30 minutes)

  1. Navigate to a Fee Estimator:
    Go to a website that provides Bitcoin fee estimations. mempool.space (which we used in the previous workshop) is excellent for this. Other wallets and block explorers also offer fee estimates. 
    Action: Go to https://mempool.space
  2. Identify Fee Rate Tiers:
    Observe the fee rate suggestions, typically categorized by priority:
    • High Priority / Next Block:
      For urgent transactions where you want confirmation as soon as possible (usually within ~10 minutes).
    • Medium Priority / Within a few blocks:
      For transactions that can wait a bit longer (e.g., 30-60 minutes).
    • Low Priority / Economy:
      For non-urgent transactions where cost saving is more important than speed (can take hours or longer, especially if the network gets busy). These will be displayed in sat/vB. 
      Example from mempool.space (values are illustrative and change constantly):
- High Priority: 50 sat/vB (Next Block)
- Medium Priority: 30 sat/vB (~30 minutes)
- Low Priority: 10 sat/vB (~1 hour or more)
  3. Calculate Total Transaction Fee:
    Let's assume a common SegWit transaction size of approximately 140 vBytes (one input, two outputs). Using the example fee rates above:
    • High Priority Fee: 140 vBytes * 50 sat/vB = 7,000 satoshis
    • Medium Priority Fee: 140 vBytes * 30 sat/vB = 4,200 satoshis
    • Low Priority Fee: 140 vBytes * 10 sat/vB = 1,400 satoshis
  4. Convert to Fiat Currency:
    To understand the real-world cost, you need to convert these satoshi amounts to your local fiat currency (e.g., USD).
    • First, find the current price of 1 Bitcoin in USD (e.g., from CoinMarketCap, Coingecko, or the explorer itself). Let's assume 1 BTC = $30,000 for this example.
    • Remember: 1 satoshi = 0.00000001 BTC.
    • High Priority Fee in USD: 7,000 sat * (1 BTC / 100,000,000 sat) * ($30,000 / 1 BTC) = 0.00007 BTC * $30,000/BTC = $2.10
    • Medium Priority Fee in USD: 4,200 sat * (0.00000001 BTC/sat) * ($30,000/BTC) = $1.26
    • Low Priority Fee in USD: 1,400 sat * (0.00000001 BTC/sat) * ($30,000/BTC) = $0.42 
      Action:
- Find the current recommended sat/vB rates on mempool.space for high, medium, and low priority.
- Find the current price of BTC in USD.
- Calculate the estimated total fee in satoshis AND in USD for a 140 vByte transaction for each priority level.
  5. Impact of Transaction Complexity (More Inputs):
    Imagine you are consolidating many small Bitcoin amounts (many UTXOs) into one transaction. This means your transaction will have many inputs, making it larger.
    • Let's say a transaction has 5 inputs and 2 outputs, and its size is 500 vBytes.
    • Recalculate the fees in satoshis and USD for this larger transaction using the same sat/vB rates from step 4. 
      Example using High Priority (50 sat/vB) and 1 BTC = $30,000:
Fee = 500 vBytes * 50 sat/vB = 25,000 satoshis
Fee in USD = 25,000 sat * (0.00000001 BTC/sat) * ($30,000/BTC) = $7.50
      Discuss how "dust" (very small UTXOs) can make transactions expensive to spend because each input adds to the transaction size and thus the fee.

Part 3: Analyzing Historical Fee Data (15 minutes)

  1. Find Historical Fee Charts:
    Websites like mempool.space (often under "Graphs" or "Charts"), bitinfocharts.com (Bitcoin Average Transaction Fee), or blockchain.com/charts provide historical data on Bitcoin transaction fees. 
    Action: Go to mempool.space and look for historical fee charts, or visit https://bitinfocharts.com/comparison/bitcoin-transactionfees.html
  2. Observe Fee Volatility:
    Look at the chart over a period of 1 year or more.
    • Identify periods of very high average fees. What were the peak fee amounts in USD?
    • Identify periods of relatively low fees.
    • Note how rapidly fees can change. 
      Questions for reflection:
- During peak fee periods you identified, what would have been the cost to send a simple transaction (e.g., 140 vBytes)?
- How would these high fees impact the viability of using Bitcoin for a $5 purchase? A $50 purchase?
- What events in the Bitcoin ecosystem or market might correlate with these fee spikes? (e.g., bull runs with increased activity, specific popular applications creating many transactions).

Workshop Deliverables/Reflection:

  • A table showing your calculated transaction fees (in satoshis and USD) for a 140 vByte transaction at current high, medium, and low priority sat/vB rates.
  • The same calculation for a larger 500 vByte transaction.
  • A short paragraph describing your observations from the historical fee charts, focusing on the range and volatility of fees.
  • Discuss the implications of these fee levels and their volatility for Bitcoin's use as an everyday currency for small to medium-sized transactions. For instance, if you wanted to buy a $2 item, how would current and historical peak fees affect your decision to use Bitcoin?
  • How does the fee structure of Bitcoin compare to using a debit card or a service like PayPal for small online purchases (consider both domestic and international scenarios)?

This workshop aims to solidify the understanding that Bitcoin transaction fees are dynamic and can significantly impact the economic feasibility of using Bitcoin for routine purchases, contrasting sharply with the often fixed or negligible fees of traditional payment methods for consumers.

3. Price Volatility

Perhaps one of the most widely cited and easily observable criticisms of Bitcoin as an everyday currency is its extreme price volatility. For a monetary instrument to function effectively as a medium of exchange and a unit of account in daily commerce, a reasonable degree of stability in its purchasing power is essential. Bitcoin's price, however, is known for its dramatic and often unpredictable swings, sometimes by significant percentages within a single day or even hours.

Understanding Price Volatility
Price volatility refers to the degree of variation in the trading price of a financial instrument over time. It is typically measured by the standard deviation or variance of its returns. High volatility means that the price can change dramatically in either direction over short periods.

Bitcoin's Historical Volatility
A quick look at Bitcoin's price history reveals numerous instances of:

  • Rapid Bull Runs: Periods where the price increases exponentially in a relatively short time.
  • Sharp Corrections/Crashes: Periods where the price plummets significantly. For example, Bitcoin has experienced price surges that multiplied its value many times over, followed by corrections that saw its price fall by 50-80% or more from its peak. Even on a day-to-day basis, double-digit percentage changes are not uncommon.

Impact on Everyday Transactions

  1. As a Medium of Exchange:

    • For Consumers:
      Imagine wanting to buy a $50 item. If you hold Bitcoin, its value in USD could change between the time you decide to buy and the time you actually make the payment. If the price of Bitcoin drops by 10% in an hour, your $50 worth of Bitcoin is now only worth $45. Conversely, if it rises, you might feel like you overpaid in retrospect. This uncertainty makes financial planning difficult and transactions feel like a gamble.
    • For Merchants:
      Accepting Bitcoin directly exposes merchants to significant exchange rate risk. If a merchant sells a product for 0.001 BTC (equivalent to $50 at the time of sale) and the price of Bitcoin drops before they can convert that BTC to their local fiat currency (e.g., USD, EUR), they might incur a loss. To mitigate this, merchants often use payment processors that instantly convert BTC payments to fiat, but these services charge fees, adding to the cost of acceptance.

  2. As a Unit of Account:
    A unit of account is a standard monetary unit of measurement of the value/cost of goods, services, or assets. Prices in an economy are typically quoted in the local unit of account (e.g., dollars in the US, euros in the Eurozone).

    • Constantly Changing Prices:
      If goods and services were priced directly in Bitcoin, those prices would need to be updated almost continuously to reflect Bitcoin's fluctuating fiat value. A coffee might be 0.0001 BTC one hour and 0.00012 BTC the next. This is highly impractical for businesses and confusing for consumers.
    • Difficulty in Financial Reporting and Accounting:
      Businesses need stable units for accounting, budgeting, and financial reporting. Using a highly volatile asset like Bitcoin as the primary unit of account would make these tasks incredibly complex and financial statements difficult to interpret.

Why is Bitcoin So Volatile?
Several factors contribute to Bitcoin's high price volatility:

  • Speculative Asset:
    A significant portion of Bitcoin trading is driven by speculation on future price increases rather than its utility as a currency. Speculative bubbles and subsequent bursts are common.
  • Relatively Thin Market (Historically):
    Compared to established fiat currencies or major commodities like gold, the Bitcoin market, while growing, can be moved by large individual trades or news events.
  • News Sensitivity:
    Prices can react sharply to news related to regulations, security breaches, adoption by major companies, or macroeconomic factors.
  • Young Asset Class:
    Cryptocurrencies are still a relatively new asset class, and the market is still maturing and finding its equilibrium price discovery mechanisms.
  • Lack of Intrinsic Value Anchors:
    Unlike stocks (tied to company performance) or commodities (tied to industrial use), Bitcoin's value is primarily derived from supply/demand dynamics, network effects, and investor sentiment, which can be fickle.

While some argue that volatility will decrease as Bitcoin matures and adoption grows, its historical performance shows it behaving more like a high-risk speculative asset than a stable currency suitable for pricing everyday goods and services. This volatility forces most users and merchants to think of Bitcoin's value in terms of its equivalent in a more stable fiat currency, undermining its role as an independent unit of account.

Workshop Assessing the Impact of Bitcoin's Price Volatility on Everyday Purchases

Objective:
To demonstrate quantitatively how Bitcoin's price volatility affects its purchasing power for common goods, impacting both consumers and merchants if it were used as an everyday currency.

Materials Needed:

  • A computer with internet access.
  • A web browser.
  • A spreadsheet program (e.g., Google Sheets, Microsoft Excel) or a calculator.

Estimated Time: 60-75 minutes

Background:
For a currency to be practical for daily use, its value (and thus its purchasing power) should be relatively stable. If the price of a currency fluctuates wildly, it becomes difficult for consumers to budget and for merchants to price goods and services. This workshop will explore this by looking at how the Bitcoin price of a common item would have changed over time due to BTC's volatility against a fiat currency like the USD.

Procedure:

Part 1: Selecting an Item and Gathering Historical Bitcoin Prices (20 minutes)

  1. Choose a Common Item: Select a common, everyday item with a relatively stable price in your local fiat currency. For this workshop, let's choose a "Standard Coffee" with an assumed stable price of $4.00 USD. 
    Your chosen item: Standard Coffee
Fiat price of item: $4.00 USD
  2. Select Historical Dates: Choose at least 5 distinct historical dates over the past few years, plus today's date. Aim for a mix of dates, perhaps including some known for high or low Bitcoin prices, or simply spread out over time. Example dates (you should pick your own, including "Today"):
    • Date 1: January 1, 2021
    • Date 2: July 1, 2021
    • Date 3: January 1, 2022
    • Date 4: July 1, 2022
    • Date 5: January 1, 2023
    • Date 6: (Today's Date)
  3. Find Historical BTC/USD Prices: For each selected date, find the approximate closing price of Bitcoin (BTC) in USD. You can use websites like:
    • CoinMarketCap (search for Bitcoin, then look at "Historical Data")
    • CoinGecko (similar process)
    • TradingView (charting platform where you can select specific dates)
    • Financial news archives Record these prices carefully. 
      Example (These are illustrative prices, you MUST look up actual historical data):
- Jan 1, 2021:  1 BTC = $29,000 USD
- Jul 1, 2021:  1 BTC = $35,000 USD
- Jan 1, 2022:  1 BTC = $47,000 USD
- Jul 1, 2022:  1 BTC = $19,000 USD
- Jan 1, 2023:  1 BTC = $16,500 USD
- (Today's Date): 1 BTC = $ (current market price) USD
      Action:
      Create a table in your spreadsheet or on paper and fill in your chosen dates and the corresponding BTC/USD prices.

Part 2: Calculating the Item's Price in Bitcoin (25 minutes)

  1. The Calculation: For each date, calculate how much Bitcoin would have been needed to purchase the $4.00 coffee. The formula is: Price in BTC = (Price of Item in USD) / (Price of 1 BTC in USD)
  2. Perform Calculations: Using your historical BTC/USD prices and the $4.00 coffee price, calculate the BTC price for the coffee on each date. It's usually best to express this in satoshis as well (1 BTC = 100,000,000 satoshis) for easier comparison of small amounts. 
    Example Calculation for Jan 1, 2021 (1 BTC = $29,000):
Price in BTC = $4.00 / $29,000 USD/BTC ≈ 0.00013793 BTC
Price in satoshis = 0.00013793 * 100,000,000 = 13,793 satoshis

Example Calculation for Jul 1, 2022 (1 BTC = $19,000):
Price in BTC = $4.00 / $19,000 USD/BTC ≈ 0.00021053 BTC
Price in satoshis = 0.00021053 * 100,000,000 = 21,053 satoshis
    Action:
    Add columns to your table for "Price of Coffee in BTC" and "Price of Coffee in Satoshis" and fill them in for each date.

Part 3: Analyzing the Results and Discussion (30 minutes)

  1. Review Your Table:
    Examine how the price of the coffee in BTC (and satoshis) changes across the different dates. 
    Your table should look something like this (fill with your actual data):
| Date          | BTC/USD Price | Coffee Price (USD) | Coffee Price (BTC) | Coffee Price (Satoshis) |
|---------------|---------------|--------------------|--------------------|-------------------------|
| Jan 1, 2021   | $29,000       | $4.00              | 0.00013793         | 13,793                  |
| Jul 1, 2021   | $35,000       | $4.00              | ...                | ...                     |
| ...           | ...           | $4.00              | ...                | ...                     |
| (Today's Date)| $ (current)   | $4.00              | ...                | ...                     |
  2. Identify Extremes:
    What was the highest price in satoshis for the coffee? What was the lowest? By what percentage did the BTC cost of the coffee vary between its most expensive and least expensive points in your dataset?
  3. Implications for a Consumer:
    Imagine a consumer who receives their salary in Bitcoin or holds their savings in Bitcoin with the intent to use it for daily expenses.
    • How would this volatility affect their ability to budget?
    • If they bought the coffee on the date it was "most expensive" in BTC terms, and then saw Bitcoin's price rise significantly later, how might they feel? (Regret, "should have held").
    • If they held off buying when Bitcoin's price was low, hoping it would rise (to make their BTC "go further"), they are essentially speculating, not just transacting.
  4. Implications for a Merchant:
    Imagine a merchant who prices their goods in USD but accepts Bitcoin as payment.
    • If they accept BTC for the coffee and hold it, what risk do they face? (Bitcoin's price could drop before they convert it to USD to pay their rent, suppliers, etc.).
    • If they use a payment processor that instantly converts BTC to USD, this processor takes on the volatility risk (for a fee). How does this still impact the "Bitcoin economy"? (The processor likely sells the BTC immediately, contributing to selling pressure).
    • What if the merchant tried to price their coffee directly in BTC (e.g., always 15,000 satoshis)? How would its USD equivalent fluctuate, and what problems would this cause for them and their customers?
  5. Comparison with Stablecoins:
    Briefly discuss how stablecoins (cryptocurrencies pegged to fiat currencies like USDC, USDT) aim to solve this volatility problem for transactions within the crypto ecosystem. Their value is designed to remain constant (e.g., 1 USDC ≈ $1 USD). How would this change the scenario for buying the coffee?

Workshop Deliverables/Reflection:

  • Your completed table showing the historical BTC/USD prices and the corresponding price of the coffee in BTC and satoshis.
  • A calculation of the percentage change between the highest and lowest BTC cost for the coffee in your data.
  • A short essay (300-500 words) discussing:
    • How Bitcoin's price volatility, as demonstrated by your findings, makes it challenging to use as an everyday currency from both a consumer's and a merchant's perspective.
    • Whether you believe this volatility is a temporary issue for Bitcoin or a more fundamental characteristic.
    • How this volatility impacts Bitcoin's function as a "unit of account."

This workshop highlights that while one might transact with Bitcoin, the constant reference back to its fiat value due to volatility undermines its ability to function as a standalone, stable currency for routine economic activities.

4. User Experience and Adoption Barriers

Beyond the technical and economic challenges like scalability, fees, and volatility, Bitcoin faces significant hurdles related to user experience (UX) and the overall complexity of its ecosystem. For any technology, especially one intended for broad public use as a currency, ease of use and a gentle learning curve are paramount. Compared to established payment methods, using Bitcoin can be intimidating and cumbersome for the average, non-technical individual.

The Complexity of Getting Started

  1. Wallet Setup and Management:

    • Choosing a Wallet:
      New users are immediately confronted with a bewildering array of wallet types: desktop, mobile, web, hardware, and paper wallets. Each has different security trade-offs and usability features. Understanding the difference between custodial (where a third party holds your keys) and non-custodial (where you control your keys) wallets is a critical first step, yet often poorly understood.
    • Seed Phrases (Mnemonic Recovery Phrases):
      Non-custodial wallets require users to securely back up a seed phrase (typically 12 or 24 random words). This phrase is the master key to all their funds. The responsibility of safeguarding this phrase – protecting it from loss, theft, or damage – is entirely on the user. This is a stark contrast to traditional banking where forgotten passwords can be reset through customer service. Losing a seed phrase means losing access to the Bitcoin forever.
    • Security Practices:
      Users need to learn about best practices for securing their wallets, such as using strong passwords, enabling two-factor authentication (where applicable), being wary of phishing scams, and keeping software updated. This level of personal responsibility for security is higher than what most people are accustomed to.

  2. Understanding Bitcoin Addresses:
    Bitcoin transactions are sent to and from alphanumeric addresses (e.g., 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa for legacy addresses, or bc1q...... for SegWit addresses). These are long, case-sensitive strings that are difficult to memorize and prone to typos. Sending Bitcoin to an incorrect address is often irreversible, meaning the funds are lost. While QR codes and copy-pasting help, the underlying concept can be alien.

  3. Transaction Irreversibility:
    Unlike credit card payments that often come with chargeback mechanisms or fraud protection, Bitcoin transactions are, by design, largely irreversible once confirmed on the blockchain. While this is a feature for preventing censorship and ensuring finality, it can be a drawback for everyday commerce where consumers are used to recourse in case of disputes, scams, or errors. A mistaken payment or a fraudulent transaction with Bitcoin generally means the funds are gone for good.

The Learning Curve for Everyday Use

  • Grasping Core Concepts:
    Terms like "blockchain," "miners," "confirmations," "UTXOs" (Unspent Transaction Outputs), and "mempool" are fundamental to understanding how Bitcoin works, but they are technical and abstract for the average person.
  • Fee Management:
    As discussed earlier, users often need to manually consider transaction fees, balancing cost against confirmation speed. This is an added cognitive load not present in most conventional payment systems.
  • Privacy Concerns:
    While Bitcoin transactions are pseudonymous (tied to addresses, not directly to real-world identities), the public nature of the blockchain means all transactions are visible. Achieving true privacy requires additional effort and understanding of tools like coin mixers or privacy-focused wallets, which adds another layer of complexity.

Comparison with Traditional Payment Systems
Consider the ease of using a credit/debit card or a mobile payment app like Apple Pay or Google Pay:

  • Onboarding:
    Usually straightforward, often integrated with existing bank accounts.
  • Usage:
    Tap-to-pay, simple PIN entry, or biometric authentication. Minimal technical knowledge required.
  • Security:
    Banks and payment processors handle much of the backend security, and users are often protected against unauthorized transactions.
  • Error Correction:
    Established customer support channels for disputes and errors.

Bitcoin, in its current state, generally offers a steeper learning curve and places a greater burden of technical understanding and security responsibility on the end-user. This friction significantly hinders its adoption by the wider public as a tool for everyday purchases. While some third-party services and more user-friendly wallets are emerging, the core protocol's intricacies remain a barrier.

Workshop Evaluating Bitcoin Wallet User Experience for a Novice User

Objective:
To critically assess the onboarding process, daily usability, and potential pain points of a common Bitcoin wallet from the perspective of a new, non-technical user. This workshop will ideally use a Bitcoin testnet wallet to avoid risking real funds.

Materials Needed:

  • A computer or smartphone with internet access.
  • A chosen Bitcoin wallet software that supports testnet (e.g., Electrum for desktop, BlueWallet for mobile/desktop, Muun Wallet for mobile). Ensure you are using a TESTNET version or mode to avoid any interaction with real Bitcoin.
  • A notebook or digital document for taking notes.

Estimated Time: 90-120 minutes

Background:
The user experience (UX) of Bitcoin wallets is a critical factor for mass adoption. If wallets are difficult to set up, understand, or use, most people will shy away from using Bitcoin for everyday transactions. This workshop simulates the journey of a new user. Using Bitcoin's testnet is crucial here: it's an alternative Bitcoin blockchain, to be used for testing. Testnet coins are separate and have no real-world value, so you can experiment freely.

Procedure:

Part 1: Wallet Selection and Installation (Testnet Focus) (20 minutes)

  1. Select a Wallet:
    Choose a reputable, non-custodial Bitcoin wallet that explicitly supports Testnet.
    • Desktop Example:
      Electrum (available at electrum.org). During setup, it allows choosing the network.
    • Mobile Example:
      BlueWallet (bluewallet.io). It allows adding a Bitcoin Testnet wallet. Muun Wallet also has excellent UX and often a testnet mode. 
      Action: Research and select one wallet. For this guide, we'll assume Electrum on desktop as an example path, but adapt if you choose another.
IMPORTANT: If using real Bitcoin wallets, ensure you are in a TESTNET mode. If this is not possible or clear, simulate the steps conceptually or use a dedicated testnet-only wallet.

  2. Download and Install:
    Go to the official website of the chosen wallet (BEWARE OF FAKE WEBSITES AND SCAMS - always double-check URLs). Download the appropriate version for your operating system and install it. 

    Action: Download and install your chosen wallet software.

    • UX Note 1:
      How easy was it to find the official download? Were there clear instructions? Any security warnings during download/install?

Part 2: Wallet Creation and Seed Phrase Management (30 minutes)

  1. Create a New Wallet:
    Launch the wallet. You'll typically be prompted to create a new wallet.

    • In Electrum: Give your wallet a name, choose "Standard wallet," then "Create a new seed." Select "Segwit" or "Legacy" (Segwit is generally preferred).
    • In BlueWallet: Tap "Add a wallet," choose "Bitcoin," select "Testnet" if prompted (or ensure network settings are for Testnet later), then "Create."

    • The Seed Phrase (Mnemonic):
      The wallet will generate a seed phrase (usually 12 or 24 words). This is the MOST IMPORTANT step. 

      Action: Carefully write down the seed phrase on a piece of paper. Some wallets will ask you to confirm it by re-typing it.

    • UX Note 2:
      How clear was the explanation of the seed phrase's importance? Was the warning about losing it/keeping it secret prominent?

    • UX Note 3 (Security Responsibility):
      Reflect on the responsibility. If this were real money, where would you store this paper? What are the risks (fire, theft, damage, misplacement)? Compare this to resetting a bank password.
    • Optional Passphrase/Password:
      Some wallets allow you to add an additional passphrase (sometimes called a "13th/25th word" or password) to encrypt the wallet file or seed. This adds another layer of security.
    • In Electrum, after confirming the seed, it will ask if you want to encrypt your wallet file with a password.
    • UX Note 4:
      Was the option for a password clear? Was the difference between the seed phrase and this password explained?

Part 3: Receiving Testnet Bitcoin (25 minutes)

  1. Find Your Receiving Address:
    Once the wallet is set up, navigate to the "Receive" tab or section. The wallet will display a Bitcoin (testnet) address. This is where you will send funds. It will likely be a long string of characters and possibly a QR code. 
    Action: Copy one of your testnet receiving addresses.
    • UX Note 5:
      How easy was it to find a receiving address? Were multiple addresses offered? Was the concept of generating new addresses for privacy mentioned/clear?

  2. Get Testnet Bitcoin from a Faucet:
    A "faucet" is a website that gives away free testnet coins for development and testing purposes. Search online for "Bitcoin testnet faucet." Common faucets (availability can vary):

    • https://coinfaucet.eu/en/btc-testnet/
    • https://bitcoinfaucet.uo1.net/

    • https://testnet-faucet.com/btc-testnet/ Go to one of these sites, paste your testnet receiving address, complete any CAPTCHA, and request coins. 

      Action: Obtain some testnet BTC from a faucet to your wallet address. This might take a few minutes to appear in your wallet as an unconfirmed transaction.

    • UX Note 6:
      How was the experience of using a faucet? Was it straightforward or confusing for a new user?

Part 4: Sending Testnet Bitcoin and Checking History (25 minutes)

  1. Wait for Confirmation (Optional but good practice):
    Wait for the incoming testnet transaction to get a few confirmations in your wallet. This helps understand the concept of transaction confirmation.

  2. Prepare to Send:
    Navigate to the "Send" tab in your wallet. You'll typically see fields for:

    • Pay to (Recipient Address):
      You'll need another testnet address. You can generate a new receiving address in your own wallet and send it back to yourself, or get an address from a friend who is also doing the workshop with a testnet wallet. For simplicity, you can often send to another address within your own wallet.
    • Amount:
      The quantity of testnet BTC to send.

    • Fee:
      The wallet will likely estimate a fee or allow you to adjust it (e.g., low, medium, high priority).
      Action:

      1. Get a second testnet address (either another from your wallet, or a friend's).
      2. In the "Send" tab, paste this recipient address.
      3. Enter a small amount of testnet BTC to send (e.g., 0.0001 tBTC).
      4. Observe the fee settings. Try to adjust it if possible (e.g., from 'normal' to 'low' or vice-versa). Note the fee in sat/vB or total satoshis.

    • UX Note 7: How intuitive was the sending interface? Was the fee setting clear? Did it explain the trade-off between fee and confirmation time? Was there a warning about the irreversibility of transactions?

    • Send the Transaction:
      Click "Send" or "Pay." You might need to enter your wallet password if you set one.
    • Check Transaction History:
      Go to the "History" or "Transactions" tab. You should see your outgoing transaction, initially as "unconfirmed" or "pending," and then eventually confirmed.
    • UX Note 8:
      Was the transaction history clear and easy to understand? Did it show confirmations, fees, and other relevant details?

Part 5: Reflection and Documentation (20 minutes)

Based on all your "UX Notes":

  1. Identify Pain Points:
    List at least 3-5 specific aspects of the wallet setup or usage that a novice user might find confusing, difficult, or intimidating.
  2. Security Concerns for Novices:
    What are the biggest security risks a new user might face based on this experience (e.g., mishandling seed phrase, phishing, sending to wrong address)?
  3. Suggested Improvements:
    For each pain point, suggest a potential improvement to the wallet's UX or the educational material provided.
  4. Overall Impression:
    How does this experience compare to using a traditional payment app (e.g., PayPal, Venmo, Apple Pay)? Is Bitcoin (via this wallet) ready for mass adoption for everyday payments from a UX perspective?

Workshop Deliverables/Reflection:

  • A list of your "UX Notes" taken during the process.
  • A summary of the identified pain points for a novice user.
  • A list of potential security concerns for new users.
  • Your suggestions for UX improvements.
  • A concluding paragraph on whether Bitcoin, based on this wallet experience, is user-friendly enough for widespread daily use, comparing it to traditional digital payment methods.

This hands-on exercise should give students a much clearer appreciation of the practical usability challenges that complement the more abstract economic and technical criticisms of Bitcoin as an everyday currency.

5. Limited Merchant Acceptance and Regulatory Hurdles

Even if Bitcoin were to hypothetically overcome its technical limitations (scalability, fees) and its price were to stabilize, two significant external factors would still impede its widespread use as an everyday currency: limited acceptance by merchants and an uncertain or unfavorable regulatory environment. These two aspects are often intertwined, as regulatory clarity can influence merchant willingness to adopt new payment technologies.

Limited Merchant Acceptance

For a currency to be useful for everyday transactions, a critical mass of businesses – from large retailers to small local shops – must be willing to accept it as payment for goods and services. Despite Bitcoin's decade-plus existence, the number of merchants directly accepting it remains relatively small compared to traditional payment methods.

Reasons for Low Merchant Adoption:

  1. Price Volatility Risk:
    As discussed previously, merchants accepting Bitcoin directly face the risk that its value could decline significantly between the time of sale and when they convert it to fiat currency. While payment processors can offer instant conversion, they charge fees for this service, which can eat into profit margins.
  2. Transaction Fees and Speed:
    For merchants, especially those dealing with high volumes of small transactions (e.g., coffee shops, convenience stores), Bitcoin's potentially high fees and slow confirmation times (on-chain) are impractical for point-of-sale scenarios. Even if a customer is willing to pay the fee, the wait time for confirmation is often unacceptable.
  3. Complexity of Integration:
    Integrating Bitcoin payment systems into existing point-of-sale (POS) and accounting software can be technically challenging and costly for businesses. Staff also need to be trained on how to handle Bitcoin transactions and address customer queries.
  4. Taxation and Accounting Complexity:
    The tax treatment of Bitcoin varies by jurisdiction. In many countries (like the U.S.), Bitcoin is treated as property, not currency. This means every transaction (both for the consumer spending it and the merchant receiving it) can be a taxable event, creating a significant accounting burden. Merchants must track the fiat value of Bitcoin at the time of each transaction for tax reporting.
  5. Low Customer Demand:
    For many businesses, there simply isn't enough demand from customers wishing to pay in Bitcoin to justify the costs and complexities of accepting it. If only a tiny fraction of customers ask to pay with Bitcoin, the incentive for merchants to adopt it is low.
  6. Perceived Association with Illicit Activities:
    Despite increased legitimate use, Bitcoin still battles a lingering public perception, sometimes fueled by media, of being associated with illicit markets or activities. Some mainstream businesses may be hesitant to adopt it due to these reputational concerns, however unfounded they may be for their specific context.
  7. Preference for Simpler Alternatives:
    With the rise of user-friendly digital fiat payment apps, contactless payments, and even stablecoins (which some merchants are beginning to explore), Bitcoin as a payment method often seems overly complicated for both merchants and customers.

While some niche markets, online businesses, or tech-savvy retailers do accept Bitcoin, it is far from being a ubiquitously accepted payment method for everyday goods and services.

Regulatory Hurdles and Uncertainty

The regulatory landscape for Bitcoin and other cryptocurrencies is fragmented, constantly evolving, and varies significantly from country to country. This uncertainty creates risks and disincentives for both individuals and businesses considering using Bitcoin for regular transactions.

Key Regulatory Challenges:

  1. Legal Status:
    Is Bitcoin considered a currency, a commodity, a security, or something else? This classification has major implications for taxation, consumer protection, and anti-money laundering (AML) / know your customer (KYC) requirements.
    • Some countries (e.g., El Salvador) have made Bitcoin legal tender.
    • Many others treat it as an asset or property (e.g., USA, Canada, Australia).
    • A few have banned or severely restricted its use (e.g., China, Bolivia).
  2. Taxation:
    As mentioned, treating Bitcoin as property means capital gains taxes may apply when it's sold, traded, or even spent if its value has appreciated since acquisition. This is a major disincentive for using it in everyday transactions, as each purchase could trigger a complex tax calculation. Clear and simple tax guidance for small, everyday transactions is often lacking.
  3. Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Regulations:
    Governments are increasingly applying AML/CTF regulations to cryptocurrency exchanges and wallet providers. While crucial for preventing illicit use, these regulations can add compliance burdens and costs for businesses involved in crypto transactions, and may require extensive data collection from users, diminishing the privacy aspect some users seek.
  4. Consumer Protection:
    Traditional financial systems have well-established consumer protection laws (e.g., regarding fraud, unauthorized transactions, deposit insurance). The extent to which these apply to Bitcoin transactions is often unclear. The irreversible nature of Bitcoin transactions, combined with the risk of scams and theft, leaves consumers with less recourse than they might have with conventional payment methods.
  5. Lack of Global Coordination:
    The disparate approaches to regulation across different countries create complexity for international businesses and users. What is permissible in one country might be restricted in another.
  6. Fear of Future Crackdowns:
    The potential for future, more stringent regulations, or even outright bans in certain jurisdictions, can deter long-term investment in Bitcoin-related payment infrastructure by businesses.

This lack of a stable, predictable, and globally harmonized regulatory framework makes it difficult for Bitcoin to mature into a mainstream payment system. Businesses and individuals need legal clarity and certainty to confidently adopt and use any financial instrument for daily commerce. Until such clarity emerges and addresses the practical pain points (especially around taxation for small transactions), regulatory hurdles will continue to limit Bitcoin's utility as an everyday currency.

Workshop Investigating Local Bitcoin Merchant Adoption and Regulatory Climate

Objective:
To research and assess the practical extent of Bitcoin acceptance by local merchants in a specific geographical area, and to gain an understanding of the prevailing national/regional regulatory stance concerning Bitcoin as a payment method.

Materials Needed:

  • A computer with internet access.
  • Web browser for research.
  • A defined geographical area for investigation (e.g., your city, a specific district, or your university town).
  • Optional: A phone or email access if (ethically and safely) attempting to contact businesses.

Estimated Time:
120-150 minutes (can be split into research sessions)

Background:
The real-world utility of Bitcoin as an everyday currency heavily depends on two factors: whether you can actually spend it at local businesses, and whether the legal environment supports or hinders its use. This workshop combines online research with potential (careful) local inquiries to paint a picture of Bitcoin's practical transactional use in a chosen area.

Procedure:

Part 1: Investigating Local Merchant Adoption (60 minutes)

  1. Define Your Geographical Scope:
    Clearly define the local area you will be investigating. Be specific (e.g., "Downtown [Your City Name]," or "Businesses within a 2-mile radius of [Your University Campus]"). 
    Action: Write down your defined geographical scope.
  2. Use Online Merchant Directories:
    Several websites attempt to list businesses that accept Bitcoin or other cryptocurrencies. Explore these:
    • Coinmap.org:
      An open-source map showing venues that accept Bitcoin.
    • Spendabit.co or spendbitcoins.com:
      Search engines for products that can be bought with Bitcoin (often online, but can give clues).
    • Local Bitcoin/Cryptocurrency Facebook groups or forums: These may have user-compiled lists or discussions about local businesses.
    • General search engines: Use queries like "businesses accepting Bitcoin [Your City Name]" or "pay with Bitcoin [Your Local Area]". 
      Action: Use at least two different online resources to search for Bitcoin-accepting merchants within your defined scope. List any businesses you find.
  3. Categorize Found Merchants:
    For each merchant identified (if any):
    • Note the name and type of business (e.g., cafe, restaurant, electronics store, online service, professional service).
    • Note the source where you found this information.
    • If possible, try to verify if the information is current (e.g., does the merchant's own website mention Bitcoin acceptance? Sometimes directory listings are outdated). 
      Action: Create a list or table of merchants, their type, and the source of information.
  4. Analyze the Findings:
    • How many businesses did you find in your defined area?
    • What types of businesses are most represented? Are they predominantly niche/tech-focused, or are there any "everyday" stores (e.g., grocery, pharmacy)?
    • How easy or difficult was it to find this information? Does this suggest widespread adoption or a very niche market?

Part 2: (Optional and Advanced) Inquiring with Local Businesses (Ethical Considerations Paramount) (30 minutes)

IMPORTANT:
This part requires utmost care, politeness, and respect for business owners' time. It should only be undertaken if you feel comfortable and can do so without being intrusive. Do not pressure businesses. A simple, polite email inquiry is often best. If a business is very busy, do not attempt an in-person or phone inquiry about this topic unless they clearly advertise crypto acceptance and seem open to discussion.

  1. Select 1-2 Businesses (If Any Found and Appropriate):
    If you found local businesses that seem to accept Bitcoin, and you wish to (and can ethically) inquire further, select one or two.
  2. Formulate Polite Questions:
    If you choose to contact them (email is preferred), your questions could be:
    • "We are university students researching the use of Bitcoin for everyday payments. We noticed [from X source] that your business may accept Bitcoin. Is this still the case?"
    • (If yes) "If you are open to sharing, we'd be interested to know, generally, what has been your experience? For example, do many customers use it? What are the main benefits or challenges you've found?"
    • DO NOT ask for sensitive financial details, sales figures, or take up too much of their time. Make it clear this is for academic research.
  3. Summarize any Responses (or Lack Thereof):
    Note any information gathered. A lack of response, or a response indicating they no longer accept Bitcoin, is also useful data.

Part 3: Researching the Regulatory and Tax Climate (60 minutes)

  1. Identify Your Jurisdiction:
    Determine the country (and if applicable, state/province) your chosen geographical area falls under for regulatory purposes.
  2. Research Legal Status of Bitcoin:
    Use search engines to find information from government sources, reputable financial news outlets, and legal publications regarding:
    • How Bitcoin is legally classified in your jurisdiction (e.g., currency, property, commodity, asset). Search for "[Your Country] legal status of Bitcoin."
    • Are there any specific laws or official statements from the central bank or financial regulatory authorities about Bitcoin and cryptocurrencies?
  3. Research Taxation of Bitcoin Transactions:
    This is crucial for everyday use. Search for:
    • "[Your Country] taxation of Bitcoin spending" or "[Your Country] cryptocurrency capital gains tax."
    • Specifically, what happens when someone buys a coffee with Bitcoin? Is it a taxable event for the consumer if the Bitcoin has appreciated in value since they acquired it? How are merchants expected to account for Bitcoin sales?
    • Look for official tax agency websites (e.g., IRS in the US, HMRC in the UK, CRA in Canada).
  4. Research AML/KYC Requirements:
    Are businesses that deal with Bitcoin (even just accepting it for payment) subject to specific Anti-Money Laundering or Know Your Customer regulations? This might impact their willingness or ability to accept it.
  5. Consumer Protection:
    Are there any specific consumer protection guidelines or warnings issued by authorities regarding Bitcoin use?

Action:
Summarize your findings for each regulatory aspect: legal status, taxation, AML/KYC, and consumer protection in your jurisdiction. Cite your sources.

Part 4: Synthesis and Conclusion

  1. Combine Findings:
    Relate your findings from Part 1 (merchant adoption) with Part 3 (regulatory climate).
    • Does the level of merchant adoption (or lack thereof) seem consistent with the regulatory environment? For example, if taxes are complex and burdensome for small transactions, does that align with low merchant adoption for everyday items?
    • Are there any clear regulatory signals (positive or negative) that might be influencing merchant decisions?
  2. Overall Assessment:
    Based on your combined research:
    • How practical is it to use Bitcoin for everyday transactions in your chosen local area?
    • What are the primary barriers: lack of merchant interest, regulatory complexity, tax burdens, or a combination?
    • From a merchant's perspective in your area, what would be the main pros and cons of accepting Bitcoin, considering both the local market and the regulatory/tax framework?

Workshop Deliverables/Reflection:

  • A list of Bitcoin-accepting merchants (or a statement on the lack thereof) in your defined geographical area, with business types and sources.
  • (If Part 2 was undertaken) A brief summary of any interactions or responses from businesses.
  • A detailed summary of the regulatory and tax climate for Bitcoin in your jurisdiction, covering legal status, taxation of transactions, AML/KYC considerations, and consumer protection.
  • A concluding analysis (300-500 words) discussing the overall viability of Bitcoin as an everyday currency in your chosen area, synthesizing the merchant adoption and regulatory findings. Identify what you believe are the most significant hurdles (merchant-side or regulatory-side) to its broader use for daily commerce in that context.

This workshop encourages students to connect theoretical criticisms with on-the-ground realities and the complexities of the legal frameworks governing financial technologies.

Conclusion

The journey of Bitcoin from a niche cryptographic experiment to a globally recognized digital asset has been remarkable. However, when evaluated against the fundamental requirements of an everyday currency – a stable medium of exchange, an accessible unit of account, and a low-friction transactional tool – Bitcoin faces substantial and multifaceted criticisms.

We have explored several key limitations:

  1. Scalability and Transaction Speed:
    The inherent design of the Bitcoin blockchain, with its limited block size and ~10-minute block interval, restricts transaction throughput to a level far below that of conventional payment networks. This leads to network congestion and delays, especially problematic for time-sensitive retail purchases.
  2. High and Volatile Transaction Fees:
    Competition for scarce block space results in transaction fees that can be both prohibitively high for small purchases and extremely volatile, making budgeting and cost-effectiveness a challenge for everyday use.
  3. Price Volatility: Bitcoin's significant price fluctuations render it a risky asset for both consumers and merchants to use in daily transactions. It complicates pricing, budgeting, and makes financial planning difficult, pushing its perception more towards a speculative investment than a stable currency.
  4. User Experience and Adoption Barriers:
    The complexity of wallet management, seed phrases, address handling, and the irreversible nature of transactions present a steep learning curve and a higher burden of responsibility for users compared to familiar, user-friendly traditional payment systems.
  5. Limited Merchant Acceptance and Regulatory Hurdles:
    The practical ability to spend Bitcoin is constrained by low merchant adoption, driven by concerns over volatility, fees, integration complexity, and low customer demand. Furthermore, the evolving, often uncertain, and complex regulatory and tax landscape in many jurisdictions adds significant friction and disincentives for using Bitcoin in routine commerce.

While initiatives like the Lightning Network aim to address some of these issues, particularly scalability and fees for smaller transactions, their adoption is still growing, and they introduce their own complexities. Similarly, improvements in wallet UX are ongoing, but the fundamental nature of Bitcoin's protocol presents inherent challenges.

In its current state, Bitcoin excels for certain use cases: as a censorship-resistant store of value ("digital gold"), for large value transfers where speed is less critical than security and finality, or in regions with hyperinflation or capital controls. However, for the mundane reality of buying a coffee, paying for groceries, or managing day-to-day expenses, the criticisms regarding its limited utility as an everyday currency remain potent. Its path to becoming a ubiquitous medium of exchange for daily transactions is fraught with technical, economic, usability, and regulatory obstacles that are yet to be comprehensively overcome. The dream of Bitcoin as the people's everyday digital cash is, for now, largely unfulfilled.