The Big Picture
In my years advising clients, I've seen few financial debates as persistent as the one between spending Bitcoin versus holding it. A recent panel at Bitcoin 2026 featuring Jack Mallers (Strike) and Miles Suter (Block) highlighted this tension with remarkable clarity. The core question: Is Bitcoin primarily a store of value to be hoarded, or a medium of exchange to be spent?
The data consistently shows that in the United States, less than 5% of Bitcoin transactions are for actual goods and services. The overwhelming majority are speculative trades or long-term holds. Yet in emerging markets like Nigeria, El Salvador, and Turkey, Bitcoin payments for everyday items are growing at 30-40% annually. This geographic divide reveals something crucial about human behavior and monetary incentives.
Breaking It Down
Jack Mallers offered a definition of money that cuts through the noise: "Money is uniquely the market good that you don't consume." You can't wear Bitcoin in a rap video, eat it, or live in it. This makes it "perfect money" for saving value across time and space. But as Miles Suter pointed out, Bitcoin's original whitepaper was titled "Peer-to-Peer Electronic Cash" — not "Peer-to-Peer Electronic Store of Value."
The practical challenge comes down to Gresham's Law: bad money drives out good. When given a choice, people will spend depreciating dollars and hoard appreciating Bitcoin. This is why Cash App's data shows that users overwhelmingly choose to pay with their dollar balance rather than Bitcoin — there's no taxable event, and they keep their appreciating asset intact.
Here's how this plays out in numbers. If you bought $10,000 of Bitcoin in January 2023 and it's now worth $30,000, spending any of it triggers capital gains tax. At a 20% long-term rate, you'd owe $4,000 on a $20,000 gain. Paying with dollars avoids that entirely. The merchant, meanwhile, receives Bitcoin with 0% processing fees — a massive saving compared to the 2-3% charged by Visa or Mastercard.
How Creators Can Apply This
For YouTube creators and digital entrepreneurs, the Bitcoin payments debate has direct financial implications. If you're earning in dollars and holding Bitcoin as an investment, the smartest strategy is to use a line of credit against your Bitcoin rather than selling it. Platforms like BlockFi and Nexo offer loans at 8-12% interest, allowing you to access liquidity without triggering a taxable event.
Consider a creator earning $100,000 annually from YouTube ad revenue and sponsorships. If they've accumulated $50,000 in Bitcoin over three years, borrowing $20,000 against it for a business expense — like new camera equipment or hiring an editor — costs them roughly $1,600 in interest annually. Selling that same $20,000 in Bitcoin would trigger a tax bill of $4,000 assuming a 100% gain. The loan saves $2,400 in taxes alone.
For creators in countries with high inflation, the math shifts dramatically. A creator in Argentina earning $2,000 monthly in YouTube revenue might immediately convert to Bitcoin to preserve purchasing power. Spending that Bitcoin directly at merchants accepting it avoids both currency devaluation and banking fees. The trade-off is volatility — Bitcoin can drop 20% in a week, wiping out months of savings.
Risk Factors & What to Watch For
The biggest risk in spending Bitcoin is opportunity cost. Since 2015, Bitcoin has returned an average of 130% annually. Every satoshi spent today could be worth multiples more in five years. This is why the HODL mentality dominates — it's been financially optimal.
Regulatory risk is another factor. The IRS treats every Bitcoin transaction as a taxable event, requiring meticulous record-keeping. For creators who spend Bitcoin frequently, the accounting burden can be substantial. A single coffee purchase requires tracking cost basis, fair market value at time of transaction, and calculating gain or loss.
There's also the risk of infrastructure failure. Lightning Network, while fast, is still relatively new. In 2023, a routing node issue caused a 24-hour outage for some users. If you're relying on Bitcoin payments for business operations, a technical glitch could cost you real revenue.
Finally, consumer behavior is stubborn. As Mallers noted, people are hooked on credit card rewards — free flights, airport lounge access, cash back. These perks are funded by merchant fees of 3-5%. For Bitcoin payments to compete, the savings to merchants must outweigh the loss of consumer rewards. That's a tough sell when most consumers don't see the merchant fee directly.
Expert Take
In my opinion, the Bitcoin-as-payments narrative is years ahead of its time for Western economies. The infrastructure is improving — tap-to-pay, Lightning Network, and integrations like Cash App's are making the experience seamless. But the tax code and consumer behavior are moving much slower.
I advise my creator clients to take a hybrid approach. Hold 80-90% of your Bitcoin as long-term savings. For the remaining 10-20%, use it for small, everyday purchases where the tax impact is minimal — think coffee, lunch, or subscriptions under $50. This keeps you engaged with the technology and supports the ecosystem without sacrificing your long-term gains.
For those ready to level up, consider using a Bitcoin-backed credit card like the Fold Card, which gives you 1-2% back in Bitcoin on every purchase. You spend dollars, earn Bitcoin, and never trigger a taxable event. It's the best of both worlds — you get the convenience of fiat with the upside of crypto.
Action Plan
1. **Audit your Bitcoin holdings** — Calculate your average cost basis and current unrealized gains. Know exactly what you'd owe in taxes if you sold.
2. **Set up a Bitcoin wallet with Lightning support** — Try Cash App or Strike for seamless integration with merchants.
3. **Start small** — Use Bitcoin for one recurring purchase (like a monthly subscription) to understand the workflow and tax implications.
4. **Consider a Bitcoin-backed loan** — If you need liquidity for a business expense, compare loan rates against the tax cost of selling.
5. **Track everything** — Use a tool like CoinTracker or Koinly to automatically log transactions and calculate tax liability. Don't rely on memory.
