Holding Bitcoins Vs Spending

Often when the topic of spending your bitcoins comes up there are several people who post something like “But what if the price goes up after I spend my bitcoins!?! I’d rather hold because the price will go up.”.

This is some rather short-sighted thinking. Does that mean that you are converting all of your fiats into bitcoins and not spending anything? Most likely not. Many people buy some bitcoins and use their fiat currency for their day to day spending.

If you spend your fiat instead of bitcoins on an item, what is the difference? You could have used that fiat to buy bitcoins before the price goes up.

Bitcoin is a currency, you can treat it just as if you lived in another country and had to convert your money to that country’s currency. As suggested by different trading groups you can spend your bitcoins on most things you would regularly spend your money on. Sure, it might cost up to 1% to convert your fiat to bitcoins but considering the average gain year over year tends to be in the tens and hundreds of percentage gains, over time that initial 1% will be nothing. Especially since most websites offer discounts for using bitcoin from 3% to 30% depending on the site.

In the end, bitcoin is a deflationary currency as opposed to an inflationary currency. The dollar has inflation built into it as a feature, it is meant to lose value over time. The more you get used to having more of your money in bitcoins, the more value you will get as the price rises over time. Even if that means buying it then spending it a week later, that means that over time your money will gain value even if just for that small amount of time that you held it. Those one weeks add up.

And you can use bitcoin’s volatility to your advantage. I get paid in bitcoins every two weeks through Bitwage. Sometimes during the following two weeks, the price will be lower than when I got paid, sometimes the price will be higher. What I do is, if the price is lower than what I paid on payday, I hold off on as much spending as I possibly can. I put it off until payday. If the price is up I try to pay most of my month’s bills that need to be paid and purchase anything I’ve been looking to buy. This means that over time I will always have more money than I am paid for my paycheck.

Bitcoin is not about going back and forth between bitcoin and fiat. If you look at all of the drama of exchanges losing peoples’ money or money transmitter regulations or any other complications in the Bitcoin world it usually involves the troubles of the fiat world bleeding into Bitcoin. Avoid all of that, make bitcoin your main currency, and leave fiat behind for those who don’t yet understand the realities of their inflationary currency.