Bitcoin as Money?

Bitcoin as Money? Boston Fed 2014 paper—what still matters in 2025 + what to ignore

Is Bitcoin actually “money,” or just a volatile bet with a cool logo? If you’ve wondered that, you’re in good company. I read the Boston Fed’s 2014 paper “Bitcoin as Money?” so you don’t have to, and I’m going to show you what still holds up in 2025, what didn’t age well, and a simple way to answer this question for yourself without getting lost in jargon.

Think of this as your friendly, straight-talking guide on my Cryptolinks News blog. No fluffy theory. Just the key idea the Fed tested—does Bitcoin work as a medium of exchange, a store of value, and a unit of account?—and how that stacks up against today’s reality with Lightning, ETFs, El Salvador, and the rise of stablecoins.

Quick promise: By the end of this guide, you’ll know exactly how to judge “Is Bitcoin money?” in under two minutes—and how to explain it to anyone who asks.

What makes this hard (and why you might be stuck)

The paper is solid but it’s from 2014—pre-Lightning, pre-spot ETFs in the U.S., pre-El Salvador’s legal tender experiment, and before today’s stablecoin boom. If you Google around, you’ll hit three walls fast:

• Old data vs new reality: Early merchant anecdotes and clunky UX don’t reflect how people use Bitcoin (or stablecoins) now.


• Mixed incentives: Crypto Twitter hot takes, maximalist threads, and skeptical think pieces often cherry-pick facts.


• Scattered info: You shouldn’t need 30 tabs to answer a simple question about money’s three functions.

Meanwhile the real world kept moving—on-chain fees spiked and calmed, the Lightning Network matured, custodial services got boring (in a good way), and regulators tightened the screws. It’s easy to feel like you’re comparing apples to oranges.

Here’s what I’m going to do for you

I’m going to translate the Boston Fed’s framework into plain English and plug in 2025 facts. You’ll get a simple checklist to decide if Bitcoin behaves like money where you live and work. I’ll also pull the questions people actually type into Google (think: “Is Bitcoin legal tender?” “Can it replace cash?” “Why are fees so high?”) and answer them cleanly.

• Clear lens: Use the three classic money tests—pay, save, and price—without academic fluff.


• Today’s context: What changed with Lightning, regulation, ETFs, and stablecoins—and what didn’t.


• Practical tools: A quick checklist and credible sources you can trust.


• Shareable answers: A straight-talk FAQ you can send to friends, colleagues, or students.

Who this is for

• Curious investors who want signal over noise.


• Students and researchers who need a clean framework, not a rabbit hole.


• Policymakers and analysts who care about consumer protection, payments, and market structure.


• Entrepreneurs and merchants weighing Bitcoin vs. cards vs. local instant rails vs. stablecoins.

What I’ll cover

• What the Boston Fed paper asked and what it found (in plain English)


• Bitcoin vs. the three functions of money


• What aged well and what didn’t


• How to read the paper smartly in 2025 (and what to skip)


• Helpful resources and an FAQ worth sharing

Ready to see how the Fed framed the question—and why that lens still works today? Up next, I’ll break down the paper at a glance in one minute so you can judge for yourself. Curious what they actually tested and where Bitcoin stood in 2014? Let’s answer that now.

The Boston Fed’s “Bitcoin as Money?” at a glance

If you’ve ever felt stuck between early Bitcoin debates and today’s reality, this is the switch that clears the fog. Back in 2014, the Federal Reserve Bank of Boston published “Bitcoin as Money?” by Stephanie Lo and J. Christina Wang. It didn’t try to predict the price or push an agenda—it asked a clean question: does Bitcoin actually behave like money, and what does that mean for regular people and policymakers?

“I’m sure that in 20 years there will either be very large transaction volume or no volume.” — Satoshi Nakamoto

The paper’s goals and questions

The authors used a simple, timeless test—how money is supposed to work—and then checked Bitcoin against it in 2014’s conditions. They also flagged the consumer and policy headaches that come with something new and global.

• Three classic functions of money:
  
  
  
  • Medium of exchange — can people actually pay with it?
  
  
  • Store of value — can it hold purchasing power?
  
  
  • Unit of account — do people price goods in it?
  
  
  
  


• Consumer risks they cared about: big price swings, scams, hacks, irreversible transactions, and the learning curve of managing keys and wallets.


• Policy and legal context in 2014: US regulators were just setting the rules:
  
  
  
  • FinCEN’s 2013 guidance treated exchanges/administrators as money services businesses.
  
  
  • IRS Notice 2014-21 classified bitcoin as property for tax purposes.
  
  
  
  


• Tech limits at the time: slow confirmations for retail, clunky wallets, and thin merchant tools.

Key takeaways in one minute

The paper didn’t hate Bitcoin—it just measured what was real in 2014. Here’s the snapshot:

• Not broadly used for everyday pricing or payments. A few pioneers (think Overstock) accepted BTC, but many merchants used processors that instantly converted BTC to dollars—telling you prices still lived in fiat.


• Very volatile. That hurts both spending and saving decisions. It makes people hesitate to price items in BTC and complicates tax and accounting.


• Consumer protection risks were front and center. Irreversible payments sound great until you send to the wrong address. Custodial failure was not hypothetical—the Mt. Gox collapse in early 2014 shook confidence.


• Regulation and usability weren’t ready for prime time. The authors saw payments innovation potential but couldn’t call Bitcoin “money in practice” yet.

If you were around then, you remember the feeling: excitement mixed with “am I going to lose this if I click the wrong button?” That emotional friction is part of why the authors were cautious.

Why this still matters in 2025

The beauty of this paper isn’t the 2014 data—it’s the framework. You can use the same lens today without the hype:

• Is it used to pay? Check real merchant acceptance and the quality of payment rails (on-chain vs. things like the Lightning Network).


• Is it used to save? Look at custody norms, market behavior, and how institutions treat it post-spot ETF approvals.


• Is it used to price? See whether businesses actually post prices in BTC, and how accounting/tax rules push them toward local currency.

Yes, the world changed—Lightning matured, compliance tooling grew up, and some countries ran bold experiments (see El Salvador’s Bitcoin Law). But the question you and I care about hasn’t changed: does Bitcoin act like money where it counts?

That’s exactly what I’m about to test—head-on, with today’s facts. Ready to see how Bitcoin stacks up on the three functions now?

Is Bitcoin money? Breaking down the three functions

Here’s the clean, timeless test: medium of exchange, store of value, unit of account. I’m sticking to that lens while layering in what’s actually changed since 2014 and what still trips people up in 2025.

"Money is what people use without thinking about it." If you still have to think hard to spend or price in it, it isn’t money for most people—yet.

Medium of exchange: can you actually pay with it?

Back then, using Bitcoin at the checkout felt like sending a fax. Today it’s more like email—still not iMessage-simple everywhere, but progress is real.

What’s better now:

• On-chain for big, final payments. Think OTC trades, treasury moves, or international settlement where irreversibility and auditability matter. Confirmation times and fees vary, but the value prop is settlement finality without banking hours.


• Lightning for small and instant. Tipping creators, paying a dollar for a podcast episode, topping up gaming balances—these are now normal in Bitcoin circles. Public capacity sits in the thousands of BTC and routes get smarter; explore live stats on Amboss or mempool.space.


• Real pockets of usage. From El Zonte’s “Bitcoin Beach” in El Salvador to Podcasting 2.0 “value-for-value” payments, you can find communities where sats flow daily without the drama.

What still limits everyday spend:

• Merchant acceptance is niche vs cards. Crypto payment processors exist, but card rails dominate retail. Even crypto-friendly merchants often auto-convert to fiat to avoid volatility and tax headaches. See merchant data snapshots from providers like BitPay and industry trackers like Triple-A.


• Taxes create friction. In many countries, spending BTC is a taxable event. That’s a deal-breaker for coffee runs.


• Stablecoins often win for payments. For cross-border invoices and e‑commerce settlement, USD stablecoins took the lead on several chains. Reports from Chainalysis and programs like Visa’s USDC settlements show why: dollar unit, fast finality, less volatility.

Verdict: Better rails, clearer playbook. On-chain for big, final value; Lightning for small and instant. Still not mainstream cash—and stablecoins often steal the retail use case.

Store of value: can it hold purchasing power?

Bitcoin’s scarcity story didn’t age—it hardened. The 2024 halving reinforced the 21 million cap, and infrastructure caught up to the “digital gold” narrative.

• Scarcity + time in market. Fixed supply, predictable issuance, and a growing base of long-term holders who treat BTC like savings rather than spending money.


• Institutional wrappers arrived. U.S. spot ETFs launched in 2024 and have attracted tens of billions of dollars in assets, making exposure “just a ticker” for retirement accounts and RIAs. Track flows via Bloomberg ETF dashboards.


• Custody is night-and-day better. Qualified custodians, multi-institution multisig, regulated brokers, and consumer-grade hardware wallets lowered the “oops, I lost my keys” risk.


• Treasury signals matter. Nation-state experiments (El Salvador) and corporate treasuries (see holdings on BitcoinTreasuries) give BTC a seat at the “reserve” table, even if it’s a small one.

But let’s keep it honest:

• Volatility is still real. Multi‑month drawdowns of 50–80% have happened. Anyone calling it a “stable savings account” is selling you a dream.


• Macro correlations come and go. BTC can behave like a risk asset in tightening cycles and a hedge in stress, sometimes both in the same year. Great for diversified portfolios, not for rent money.

Verdict: A maturing, high-beta store of value. Not low‑vol, but supported by stronger plumbing, broader access (ETFs), and a deeper holder base.

Unit of account: do people price in BTC?

This is where the needle barely moved. Most of the world still thinks, budgets, and files taxes in fiat. Even crypto-native companies report in local currency.

• Everyday pricing stays in dollars/euros/etc. You’ll see “pay in BTC,” but the sticker price is usually fiat with real-time conversion.


• Accounting/tax push fiat units. Businesses want clean reporting. The 2023 FASB update allowing fair‑value accounting for crypto assets helped presentation, but it didn’t flip anyone’s unit of account. Read the update at FASB.


• Where BTC units show up: sats-based tipping, Lightning-native apps, mining and node communities, and a few Bitcoin-only stores. That’s still subculture, not macroeconomy.

Verdict: Not a common unit of account. Until salaries, rents, and taxes are in BTC, this box stays mostly unchecked.

Quick answers to popular questions

• Is Bitcoin legal tender? Only in a few places (notably El Salvador). Elsewhere it’s legal to own (with rules) but not mandated for payments.


• Will it replace cash? Not soon. Expect parallel use: BTC for savings or specific payments, fiat and stablecoins for day‑to‑day spending.


• Is it anonymous? It’s pseudonymous. Blockchain analytics make most activity traceable. For privacy, users need extra tools and good habits.


• How fast and cheap are payments? On‑chain fees swing with demand; finality takes minutes. Lightning is near‑instant and usually very cheap, but it requires capable wallets and good channels. For typical retail, card rails and local instant bank transfers still win on simplicity and acceptance.

If you’re nodding along but wondering, “So what did the Boston Fed nail—and what aged poorly?” you’ll like what’s next. I’m about to pull apart the original claims and score them with 2025 facts—want the receipts?

What the paper got right—and where time proved it wrong

Reading the Boston Fed’s 2014 lens in 2025 feels like opening a time capsule: some calls were spot on, others were overtaken by technology, regulation, and real-world experiments. The trick is knowing which parts still guide good decisions—and which parts you should update in your head.

“Finality is freedom and responsibility in the same breath.”

What aged well

Plenty from 2014 still helps you stay safe and realistic today:

• Volatility is still a feature, not a bug. Bitcoin matured, but price swings remain large versus stocks, gold, and FX. Over recent years, BTC’s 30–90 day annualized volatility has often lived between roughly 40–100%—great for traders and long-term believers, tricky for payroll or pricing. If you’re saving, it can work over multi-year horizons. If you’re budgeting next month’s inventory, it’s risky. For a feel of the data, check long-run series from sources like Coin Metrics.


• Irreversibility cuts both ways. On Bitcoin, confirmed transactions don’t come with chargebacks. That’s powerful for sellers who hate fraud—and unforgiving when you fat-finger an address. Replace-by-Fee (RBF) can adjust an in-flight transaction’s fee, but after confirmations, there’s no “oops” button. That’s why we still see escrow, multisig, and tight operational controls for high-value payments. The Fed’s caution here holds—if you’ve ever hit send and wished you hadn’t, you know the feeling.


• Scams and consumer risk never left. Illicit activity is a small share of crypto volume but still huge in dollars. Chainalysis’ 2024 report shows illicit on-chain activity remains well under 1% of total volume, yet adds up to tens of billions annually—enough to hurt a lot of people. Add 2022’s FTX collapse as a stark reminder: custody risk is real, and “not your keys, not your coins” is more than a meme.


• Unit of account is still fiat-first. Outside crypto-native circles, prices are in dollars, euros, yen—the local money you pay taxes with. Even in El Salvador, where Bitcoin is legal tender, research found limited everyday BTC pricing and usage after initial wallet incentives faded.


• Governance is outside traditional institutions. That was true then and it’s clearer now. The block size battles (2015–2017), SegWit activation, and Taproot (2021) showed that code changes happen via rough consensus across developers, miners, and—crucially—full node operators. No central bank meeting. No emergency backstop. That independence is the point, and it also slows big changes.

What changed a lot

Other parts of the world moved fast—faster than any central bank paper could’ve predicted.

• Payments UX got a real upgrade.
  
  
  
  • Lightning Network took small, instant payments from clunky to practical. Think tipping creators, paying per-minute for content, or settling a coffee—when wallets are well set up. Try browsing public stats at Bitcoin Visuals or mempool.space.
  
  
  • Wallets like Phoenix and Breez simplified channels, LNURL reduced QR headaches, and even mainstream apps (e.g., Cash App) plugged into Lightning for faster sends.
  
  
  • Is it everywhere? No. But the “too slow, too expensive” critique for small payments is no longer fair across the board.
  
  
  
  


• Regulation got clearer (in many places).
  
  
  
  • The EU’s MiCA framework is rolling out, giving crypto firms rules to actually follow.
  
  
  • The U.S. approved spot Bitcoin ETFs in January 2024, pushing BTC into brokerage accounts and retirement conversations, with Hong Kong and others enabling their own versions.
  
  
  • Travel Rule, licensing regimes, and stablecoin frameworks tightened globally. You may not love the rules, but you can finally read them.
  
  
  
  


• “Anonymous money” turned into “traceable money.”
  
  
  
  • Firms like Chainalysis, Elliptic, and TRM Labs made blockchain forensics mainstream. Law enforcement regularly traces and seizes funds—remember the Colonial Pipeline ransomware recovery?
  
  
  • Pseudonymous isn’t private. For real privacy, users need extra tools—and those live under tighter scrutiny.
  
  
  
  


• Institutions showed up.
  
  
  
  • ETFs amassed hundreds of thousands of BTC, creating daily inflows/outflows you can track in real time .
  
  
  • Listed miners, hedge funds, and corporates (yes, MicroStrategy) made BTC part of public-market narratives.
  
  
  
  


• National experiments happened for real.
  
  
  
  • El Salvador made Bitcoin legal tender in 2021. Outcomes are mixed: tourism and mining initiatives grew, day-to-day retail BTC usage stayed modest. The early-data verdict: policy can push awareness, but behavior shifts only when UX, incentives, and needs align.
  
  
  
  


• Mining professionalized and moved.
  
  
  
  • After China’s 2021 ban, the U.S. became the top hash-rate destination.
  
  
  • Industrial miners now act like energy companies—selling demand response back to grids (Texas is the headline example) and hunting for stranded or renewable energy.
  
  
  
  


• Accounting rules eased for corporates.
  
  
  
  • In the U.S., the FASB’s 2023 update lets companies mark certain crypto at fair value, reducing the old impairment headache that scared CFOs. That doesn’t make BTC a unit of account—but it lowers friction for treasury exposure.
  
  
  
  

Why this helps your decision-making today

Here’s how I use the 2014 framework without getting stuck in 2014 facts:

• Ask where Bitcoin actually wins. For censorship-resistant savings, cross-border transfers, and hedging against local currency chaos, it’s hard to beat. If you live in a place with capital controls or high inflation (think Argentina, Nigeria), self-custody BTC can be life-changing. For everyday retail in stable economies, you may find cards or instant bank rails smoother.


• Pick the right rail for the job. On-chain for large, final settlement; Lightning for small and fast; stablecoins for dollar-like pricing; local rails like Pix/UPI for domestic speed. If fees spike, you’ll see it live on mempool.space and can route around it.


• Map your risk, then remove single points of failure. Self-custody with hardware wallets and backups for sovereignty; reputable custodians with proof-of-reserves for convenience; multisig for shared control. Good starting points: secure storage guides and your custodian’s latest audit.


• Check your jurisdiction’s rules before you act. Licensing, tax treatment, reporting, and Travel Rule requirements vary. Start with official resources and credible trackers (e.g., FATF standards), then zoom into your local regulator.


• Track real adoption, not vibes. Follow ETF flows, Lightning metrics, and credible usage studies instead of headlines. A few bookmarks: ETF flows, Lightning stats, global adoption reports.

If you’re thinking “okay, so how do I read the Boston Fed paper smartly without wasting time?” you’ll like what’s next—I’ll show you exactly what to focus on, what to skip, and a quick way to plug 2025 data into a 2014 framework. Ready to keep going?

How to read the paper like a pro (and not get stuck)

Reading a 2014 Bitcoin paper in 2025 can feel like looking through a rearview mirror in a car that keeps accelerating. The trick is to keep the timeless logic, swap in current data, and avoid getting hypnotized by old charts. Or as the old line goes:

“Money is what money does.”

That’s your compass. Here’s how I work through the Boston Fed paper so it actually helps me make decisions today.

What to focus on

I zero in on the parts that still map perfectly to 2025:

• The three functions of money. Keep asking: Is Bitcoin being used to pay (medium of exchange)? Does it hold value over time (store of value)? Do people price things in it (unit of account)? These questions don’t expire.


• The risk checklist. The paper’s lens on volatility, security, irreversibility, and consumer protection is gold. In practice, I translate it to: what can go wrong for a normal person trying to use or hold BTC today?


• The policy perspective. Look for how rules shape behavior: tax treatment, disclosures, refunds/chargebacks (or lack of them), KYC/AML, and how regulators classify crypto on balance sheets. That’s what nudges businesses to accept—or avoid—BTC.

Real-world examples help this click:

• Coffee on Lightning vs. corporate treasury. Paying at a café with Lightning shows medium-of-exchange potential, but if the café still sets prices in USD, unit of account hasn’t moved. Meanwhile, a company adding BTC to treasury tests the store-of-value story—and accounting rules.


• ETF flows vs. on-chain activity. If spot BTC ETFs attract steady inflows, that supports the store-of-value narrative. But it tells you little about everyday payments—that’s where Lightning and merchant tools matter.


• Refund friction. The paper flags irreversibility. In 2025, that’s still true on-chain. A good wallet or payment processor can layer refunds on top, but that’s policy and UX, not protocol.

What to skim

Some parts are useful context but shouldn’t anchor your view:

• Old price charts and early adoption anecdotes. They explain the authors’ 2014 read, not your 2025 decision. If you see a chart ending in 2014, nod and move on.


• Legacy UX limitations. Slow confirmations and clunky wallets were real then, but Lightning, better custody, hardware wallets, and modern exchanges changed the experience for many users.


• “Anonymous internet money” claims. Treat that as a myth checkpoint. Blockchain analytics and compliance tooling are miles ahead now.

I keep notes like this in the margin: “Good framework, outdated datapoint—replace with today’s numbers.” It stops me from arguing with 2014 and keeps me focused on what matters now.

Cross-check with today’s data

The paper says “limited use.” Your job is to ask: how limited now? I use a quick, repeatable playbook:

• Payments reality check.
  
  
  
  • Scan Lightning capacity and topology on explorers like Amboss. Capacity isn’t throughput, so pair it with real-world usage reports (e.g., River’s 2023 Lightning report).
  
  
  • Look at actual merchants or payment processors (e.g., BTCPay Server installs, Lightning POS vendors). Is pricing still fiat with auto-convert? That’s MoE without UoA.
  
  
  • Check current on-chain fees and mempool congestion at mempool.space. Then compare what your Lightning wallet quotes for a small payment.
  
  
  
  


• Store-of-value gut check.
  
  
  
  • Compare multi-year drawdowns and volatility to gold and broad equities using neutral sources (FRED for prices, or analytics like Coin Metrics). Don’t cherry-pick a bull month—use 3–5 year windows.
  
  
  • Track spot ETF flows for a reality read on institutional demand: Farside’s ETF flow tracker is a handy public dashboard.
  
  
  • Confirm custody quality: SOC 2 reports, segregation of assets, and proof-of-reserves disclosures from your chosen platform.
  
  
  
  


• Unit of account sanity check.
  
  
  
  • Scan whether salaries, invoices, or rents are denominated in BTC where you live. In crypto-native apps (think sats-priced content sites), sure; in mainstream commerce, it’s rare.
  
  
  • Accounting rules matter: in many jurisdictions, BTC sits as an intangible asset, not cash—this alone keeps most firms pricing in fiat.
  
  
  
  


• Policy and consumer protection.
  
  
  
  • Check current rules for your region: EU’s MiCA, FATF’s Travel Rule guidance, and your tax authority’s crypto treatment (e.g., IRS virtual currency page).
  
  
  • If you’re evaluating a wallet or exchange, look for clear dispute, refund, and security policies. The protocol is irreversible; the service layer is where consumer protection lives.
  
  
  
  

Two guardrails keep me honest:

• Time-box your view. “As of Q3 2025, Lightning capacity is X; ETF flows are net positive/negative; median on-chain fees are roughly Y.” Then set a reminder to re-check in six months.


• Balance sources. Pair industry dashboards with skeptical or neutral research. The Boston Fed paper gives you the filter; today’s metrics fill the frame.

One last mental trick I use: read a section, close the tab, and ask out loud, “So what?” If you can’t explain how that section affects payment adoption, savings behavior, or pricing habits today, it’s a history note—not a decision input.

Want the exact tools and trackers I keep bookmarked so you don’t open 30 tabs and burn an hour? I’m sharing the short list next—want me to send it to you or should we jump straight there?

Tools and resources to go deeper

You don’t need 50 tabs open to feel informed. Here are the handful of sources I actually use when I check whether claims about Bitcoin-as-money line up with reality right now.

Start with the source

Read the Boston Fed paper. Skim once to see the structure, then go straight to the sections on medium of exchange, store of value, and unit of account. On your second pass, jot a one-line verdict for each function using today’s facts. That becomes your living checklist for future updates.

Data, tech, and policy check-ins

When I sanity-check the 2014 claims with 2025 data, I pull from a short, balanced stack:

• Network and fees
  
  
  
  • mempool.space for real-time fees, mempool backlog, and block stats.
  
  
  • Clark Moody Bitcoin Dashboard for a clean macro snapshot (supply, fees, difficulty).
  
  
  • Bitcoinity fees for historical fee ranges across time.
  
  
  
  


• Lightning (small payments)
  
  
  
  • Amboss for public Lightning capacity, nodes, and channels. Public capacity is only a partial view, but trendlines help.
  
  
  • mempool.space Lightning for a second look at capacity and routing stats.
  
  
  • For wallet UX, test a few: Phoenix (ACINQ), Muun, Breez, and Wallet of Satoshi. You’ll feel the difference versus 2014-era UX in minutes.
  
  
  
  


• Core protocol and wallet releases
  
  
  
  • Bitcoin Core release notes to see what changed under the hood.
  
  
  • Bitcoin Optech Newsletter for practical dev-focused updates on fees, scaling, and new features.
  
  
  • LND releases, Core Lightning releases, and Eclair releases to track Lightning progress across implementations.
  
  
  
  


• Adoption, liquidity, and flows
  
  
  
  • Coin Metrics (community data) for transparent on-chain metrics, supply, and velocity proxies.
  
  
  • Kaiko Research for market liquidity and spreads (institutional-quality, many free briefs).
  
  
  • Farside Investors: Bitcoin ETF flows to gauge mainstream demand post-ETFs.
  
  
  • CoinShares Weekly Fund Flows for broader institutional flow context.
  
  
  
  


• Policy, law, and consumer protection
  
  
  
  • FATF VA/ VASP guidance to see how global AML standards hit crypto businesses.
  
  
  • EU MiCA implementation pages for EU licensing, stablecoin rules, and timelines.
  
  
  • Coin Center for U.S. policy analysis (civil liberties angle, readable).
  
  
  • BIS publications on crypto and payments for skeptical, data-heavy reads from central bank researchers.
  
  
  • U.S. FTC data spotlights on crypto scams to keep consumer risk in view.
  
  
  
  


• Illicit activity, surveillance, and safety
  
  
  
  • Chainalysis Crypto Crime Report for the share of illicit volume (consistently a small fraction of overall activity, but still large in dollars).
  
  
  • TRM Labs reports as a second source on illicit trends and typologies.
  
  
  
  


• Mining and security
  
  
  
  • Cambridge Bitcoin Electricity Consumption Index (CBECI) for geography and energy estimates.
  
  
  • Hashrate Index for fee revenue, hashprice, and miner economics.
  
  
  
  


• Real-world usage research
  
  
  
  • NBER: “Are Cryptocurrencies Currencies? Bitcoin as Money in El Salvador” for on-the-ground evidence about legal tender vs actual usage.
  
  
  
  

Tip: Mix industry sources (faster, sometimes optimistic) with neutral or skeptical ones (slower, more conservative). The overlap is where truth usually lives.

More resources worth checking

These are the extras I referenced or queued up for this guide—bookmark them so you can cross-verify adoption, regulation, security, and market behavior without getting lost in noise:

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How I sanity-check a claim in two minutes

• “Bitcoin payments are expensive.” Open mempool.space and check current “high/medium/low” fee in sats/vB. For small payments, test a Lightning wallet (Phoenix or Breez) and send $5 to see the real fee. Compare that to your local card or instant bank fees.


• “Nobody uses Lightning.” Peek at public capacity on Amboss and the number of public nodes. It’s not the whole picture, but if capacity and routing nodes are rising over months, usage is trending up.


• “Bitcoin is mostly used by criminals.” Read the latest Chainalysis Crime Report and cross-check with TRM Labs. The share of illicit volume is small relative to total activity, even though absolute dollars can look scary in headlines.


• “Institutions don’t care.” Look at Bitcoin ETF net flows and weekly fund flows. Sustained inflows signal interest beyond retail hype cycles.


• “Nothing has changed since 2014.” Scan the latest Bitcoin Core release notes and Optech newsletters. You’ll see improvements in policy, fees, wallet tooling, and payment UX that didn’t exist back then.

If you want quick, plain-English answers to the most searched questions—legal tender, speed, fees, privacy—shall we tackle those next?

FAQ: straight answers to the questions people ask

Is Bitcoin money or just an asset?

It’s both, but it behaves mostly like an asset today. It’s strongest as a speculative store of value with long-term holders and ETFs behind it, it’s usable as a payment rail (especially with Lightning), and it’s rarely used as a unit of account. If you’re thinking “digital gold with payment options,” you’re on the right track.

Is Bitcoin legal, and is it legal tender?

Legal to hold and trade in many countries, regulated in most. It’s legal tender in a few places (famously El Salvador). Elsewhere, businesses are usually not required to accept it. Some jurisdictions restrict crypto heavily (for example, China bans most crypto trading). Always check your local rules.

How fast and cheap are Bitcoin payments?

On-chain: variable. When the network is busy, fees can spike; when it’s quiet, fees can be low. Confirmation finality typically takes minutes.

Lightning: built for small, instant, low-fee payments. It’s great for tipping, pay-per-article, or coffee-level transactions if both sides have Lightning-enabled wallets. Real-world example: Cash App supports sending via Lightning in many regions, and merchants can accept with tools like BTCPay Server or OpenNode.

• Track on-chain fee pressure: mempool.space


• Explore Lightning public capacity: Amboss

Can Bitcoin replace cash or cards any time soon?

Not soon. Cards and local instant-payment systems (like PIX in Brazil or UPI in India) dominate retail because of ubiquity, consumer protections, and reversibility. Bitcoin thrives more in cross-border, censorship-resistance, and savings use cases than at the supermarket checkout.

Is Bitcoin anonymous?

No. It’s pseudonymous. Transactions are public, and analytics firms routinely identify flows. If you need financial privacy, you need to learn safe practices, and even then, assume visibility. If someone told you Bitcoin is “untraceable,” they’re wrong—law enforcement and forensic firms have shown otherwise.

• Background reading: Chainalysis Crypto Crime Report

Do I pay taxes on Bitcoin?

In many countries, yes. Buying, selling, spending, and sometimes even swapping can be taxable events. In the U.S., it’s treated as property; gains are reportable.

• U.S. guidance: IRS virtual currency FAQ

Are Bitcoin transactions reversible? What if I get scammed?

They’re final. That’s a feature for merchants (no chargebacks) but a risk for you. Double-check addresses and amounts. If someone promises guaranteed returns, it’s a scam. Sadly, once funds move, there’s usually no getting them back.

• Crypto scam trends: FTC scam warnings

Is Bitcoin a good store of value?

Long-term holders have been rewarded, but expect volatility. It’s not a steady savings account. Over multi-year horizons, many see it as “digital gold” with higher risk and higher potential return. If short-term stability matters, this isn’t the right bucket.

• Volatility context: CME Group on Bitcoin volatility

What did spot Bitcoin ETFs change?

Access. In 2024, U.S. spot ETFs opened the door for retirement accounts, institutions, and people who don’t want to self-custody. That boosted liquidity and made Bitcoin more “investable” without changing the underlying network. ETFs don’t let you spend on-chain, but they help the store-of-value story.

• SEC approval news: SEC statements on spot Bitcoin ETFs


• Flow snapshots: CoinShares fund flow reports

Is Bitcoin bad for the environment?

Mining uses energy—no way around it. The debate is about what kind of energy and how much. The most credible tracker is Cambridge’s index. You’ll find arguments on both sides: critics cite total consumption; supporters point to growing use of stranded/renewable energy and demand-response programs. Expect this topic to keep evolving.

• Data: Cambridge Bitcoin Electricity Consumption Index

Why do some places that made Bitcoin legal tender see little everyday use?

Because habits, UX, and incentives matter. A well-cited field study in El Salvador found that after initial airdrops, sustained usage dropped, with most businesses still pricing and settling in dollars.

• Study: NBER: Are Cryptocurrencies Currencies? Evidence from El Salvador

Stablecoins vs Bitcoin: when should I use which?

Stablecoins (USDC, USDT, PYUSD) track fiat and shine for pricing and everyday payments on crypto rails. Bitcoin shines as a long-term, non-sovereign asset with censorship-resistant settlement. Many crypto-native payments today happen in stablecoins, while people accumulate BTC for the long game.

Can governments ban Bitcoin?

They can restrict exchanges, custody, and merchant acceptance, which slows adoption. They can’t shut down the protocol globally. After China’s 2021 crackdown, hash power shifted to other countries. Policy matters, but Bitcoin tends to route around chokepoints over time.

How do I keep Bitcoin safe?

• Beginner: Use a reputable exchange with strong security, then move to a trusted wallet when ready.


• Intermediate: Hardware wallets with backups (seed phrase stored offline). Practice small sends first.


• Advanced: Multisig setups (e.g., 2-of-3) to reduce single points of failure.

Never share your seed phrase. Test recovery before you go all-in.

What risks do people overlook?

• Unit-of-account friction: Your rent and taxes aren’t priced in BTC.


• Fee spikes: Popular times (airdrops, inscriptions, bull runs) can make on-chain usage pricey.


• Legal/tax surprises: Spending BTC can create taxable events.


• Complacency: A single screenshot of your seed phrase can cost you everything.

Bottom line in one sentence

Bitcoin works best today as a long-term, scarce digital asset with decent payment options when you need them, not as everyday pricing money—and understanding that split will save you headaches.

Want the next update when rules, fees, and adoption shift? I post the important stuff without fluff: cryptolinks.com.