Why 'Spend and Replace' is Crucial for Bitcoin's Success?

Last modified on September 8, 2023

‘Never sell your Bitcoin’ is one of the most prominent memes in the Bitcoin ecosystem. Over the years, it has grown from being just a meme into a proper movement.

Bitcoin has survived so many near-death experiences that it is quite hard to keep track of them. Exchange hacks, bugs and crashes, critical bugs during the earlier days of Bitcoin should have meant a complete loss in confidence in the system and an exodus of users, developers and market participants.

Yet, as mainstream media outlets and critics from the ‘fiat’ and ‘crypto’ ecosystem have been proven to be embarrassingly wrong time and again, Bitcoin has continued to survive and thrive, showcasing the network’s resilience. One of the main reasons for this is an almost religious dedication that we have as Bitcoin’s proponents and early adopters to hold it despite 80-90% drawdowns in its price and to stay in the ecosystem during long, dreary bear markets that follow them.

It’s reasonable to believe in different stories about why we have this tendency and belief to never sell our Bitcoin, but things like this emerge organically from multiple places at the same time.

This goes for spending as well. Somehow, it has gotten to a point where people who grok Bitcoin never spend it in exchange for goods and services. Instead, they tend to restrict themselves to accumulating more of it. ‘Fiat is for spending’ and ‘Bitcoin is for saving’ is the widely held belief. If one wants to spend their Bitcoin, they end up converting their Bitcoin into a traditional currency first in order to buy something with it.

As a result of this, there is no real economic activity happening with Bitcoin where people use it to buy goods and services, except in a few places around the world where there are grassroots initiatives to build circular economies that run on Bitcoin.

‘Spend and replace’ is a way to address this issue. ‌‌

Spend and Replace‌‌

Spending and replacing your Bitcoin is an act of buying goods and services by spending Bitcoin in your wallet and then replacing it immediately with the same amount by buying it on an exchange or a Bitcoin on-ramp and topping up your wallet balance again.

Your total Bitcoin balance doesn’t change, but you would have bought something ‘real’ using the coins in your wallet and distributed it to someone else.

It’s an extra step that you take to distribute your Bitcoin in the economy you are a part of to make it adopted by more people. In other words, it is a way of improving Bitcoin’s ‘saleability’.

Saleability‌‌

Carl Menger, one of the most prominent economists to have ever lived, defined saleability of a monetary good as the “facility with which they can be disposed of at a market at any convenient time at current purchasing prices.”

The ease with which a market participant can spend a form of money to buy or sell something is one of the core determinants of how saleable it is.

In the simplest sense, the more saleable Bitcoin gets, the easier it will be for people to use it as a widely accepted form of money.

One can expect to walk into a coffee shop on a street in Amsterdam and expect them to accept Euros in exchange for a Coffee and a Sandwich, but an equivalent amount in Bitcoin will not get them anything but a polite no.

This is because Bitcoin cannot be used by the Coffee shop owner to buy bread, milk, vegetables and coffee beans from the market, where sellers would only accept Euros.

In order for Bitcoin to become to become widely accepted by everyone, it has to be easy for people that hold Bitcoin to find someone who is ready to accept it in exchange for a good or service that they produce.

Bringin's Genesis‌‌

We aren’t arguing about whether or not this position is valid or true. We are simply building tools that solve the problems we faced as Bitcoin users owing to it not being saleable.

Prashanth, our founder, was living in Estonia a year ago and had just got his salary in Bitcoin. Due to certain issues with his bank, he didn’t have access to Euros at that time.

He couldn’t sell his Bitcoin on an exchange because of the same banking issues. Even if exchanges were working well, the settlement transactions took multiple days and exchanges had complex user interfaces and unnecessary features that weren’t necessary for someone who just wanted to use Bitcoin as money.

He had Bitcoin in his wallet that he wanted to spend, but there was no shop or restaurant that accepted it, which is a very difficult position to be in. There was no product or service that made it easy for people to spend their Bitcoin. This is one of the main factors that contributed to the genesis of Bringin.

The bottlenecks for Spend and Replace‌‌

There is an inertia that exists for individuals to spend and replace their coins. This can be attributed to two key issues:

Bitcoin transactions are slow and expensive to perform.

User experience on exchanges is inadequate.

Users have to deal with the burden of the on-chain transaction fee and the subsequent wait for transaction confirmations. After that, they have to deal with exchanges, which means wading through the sea of yield products, NFT promotions and shitcoin listings built with complex interfaces. On top of this, they need to understand how limit and market orders work, and the difference between spot and derivative markets. Moreover, these services impose an exorbitant amount of withdrawal fees, notwithstanding the regulatory uncertainty around them, which can mean censorship of transactions associated with Bitcoin as banks may block access to exchanges.

All of this contributes to users being hesitant to spend and replace their coins. We decided to fix that.

Making Spend and Replace viable ‌‌

This is where the Lightning Network comes in to save the day. With Lightning, it becomes incredibly easy for people to spend and replace their coins.

Fees are low and transactions happen in an instant, making the experience of Spend and Replace a lot more easier.

We’ve built an app that lets you spend your Bitcoin anywhere you want, and seamlessly top it up with the same amount of coins right away with very minimal effort and cost. All of this built on an interface that is intuitive and simple.

Alternatively, you can use this app to receive Bitcoin and get it immediately converted to Euros. This would be very useful for merchants who want to accept Bitcoin from those who are willing to spend it, but don’t necessarily want to hold it in any capacity.

Building towards Bitcoin's success‌‌

We measure Bitcoin’s success not by multiplying its price with its supply and arriving at a ‘market cap’, but by measuring the number of places listed in BTC Map that accept Bitcoin.

Spending and Replacing is a great way of increasing this number. The more that Bitcoin gets distributed among the global economy, the more likely it is that they find places where they can use it as money, leading to Bitcoin becoming more saleable.

And the more saleable Bitcoin is, the higher the chances of it succeeding.

If you are looking for the most reliable solution to easily liquidate, sell Bitcoin to instantly receive Euros into bank account, get access to you Bringin IBAN account today.