In the spirit of argument, I could have put an end to this series at previous chapter. Indeed, this cliché of the uselessness of Bitcoin is intrinsically fallacious. It emanates from illogical reasoning since estimating the usefulness and value of an object can only be subjective. People who affirm this myth are making what is called an invalid generalization.
However, while the usefulness cannot be estimated at the individual level, the use can well be observed. However, each use proves that the individual using this object has found some form of use for it. So in this part, I want to highlight some of the uses of Bitcoin on a collective scale. For each example, I am trying to identify what characteristics of the peer-to-peer payment system allowed the individuals concerned to identify a form of marginal utility.
Bitcoin and reduced transaction fees
To begin with, it is obviously impossible not to mention the case of El Salvador, where bitcoin has been legal tender since 2022. In this country, a very large part of the gross domestic product comes from international transfers from expatriates to their families. “Las remesas”, as they call them, represented 26.1% of GDP Salvadoran in 2021.
In the past, expatriates used international transfer services like Western Union to send this money. They had to pay very significant service fees for these transactions. The use of Bitcoin as an international currency allows Salvadorans to greatly reduce the fees associated with these transfers. According to Nayib Bukele, the country's president, his fellow citizens will save every year 400 million US dollars only through the use of Bitcoin.
More generally, in the West, electronic payments often seem free to us. However, the payment industry is one of the most lucrative sectors in the world. It is constantly disputed between traditional players, banks, FinTechs or even digital giants. Indeed, when you make a payment with your bank card, there are up to 12 different actors who participate in the delivery of your payment. Each person takes a portion of the amount sent. These fees are often paid by the merchant, and the merchant transfers this charge to the price of the product. It is therefore the consumer who, in the end, pays all the costs associated with electronic payments.
With Bitcoin, the fee model is completely different. The payer is responsible for the transaction fees. These are not fixed, but can be arbitrarily chosen by the user. It is an auction market that determines which transactions take priority. Since there is no central player on Bitcoin, transaction fees are generally much lower than for a traditional payment. Since the invention of the Lightning Network, this difference in fees has become even more pronounced.
The Lightning Network is a payment system built on top of the basic Bitcoin system, which allows everyone to make micropayments in bitcoins on the internet with ridiculous fees.
In The previous chapter, we mentioned the concept of substitute in estimating the usefulness of an object. Bitcoin is obviously an excellent substitute for government currencies. When they no longer play their role as money, individuals sometimes prefer to use bitcoin. The qualities of his system then become obvious.
For example, Bitcoin can be useful for evading capital controls. When state money becomes a political instrument, it allows each individual, regardless of moral judgment, to be able to save their savings. Thanks to its unique characteristics, Bitcoin allows everyone to enforce their fundamental right to private property. For example, many Lebanese were able to escape the restrictions imposed on the movement of capital following the collapse of their financial system.
Capital controls are a set of measures taken by a government to restrict the movement of money. This process is achieved by imposing limits on fund transfers, withdrawals from cash machines, foreign currency exchanges or even the purchase of financial assets. The aim of these types of measures is often to avoid a bankruptcy in the banking sector.
As Europeans, this example may seem remote to us. Nobody would imagine that this could happen in our country. However, in 2015, Greece has put in place a capital control. This has deprived millions of small savers of the ownership of their currency, by way of derogating from Article 17 of the Charter of Fundamental Rights of the European Union. The use of Bitcoin could have allowed each individual to escape these liberticidal measures.
Even though Bitcoin is still volatile in the short term, its scarcity makes it an excellent safe haven asset to preserve your savings over the long term, especially when state currencies lose value.
In Lebanon, in addition to its incensurability and elusiveness, bitcoin was also praised for its ability to protect savings when the Lebanese pound lost 95% of its value in two years against the American Dollar. This use of bitcoin to preserve savings has been observed in many other countries where the state currency no longer plays its role. It can be seen at Venezuela, in argentina, in Turkey, at zimbabwe, at vietnam or even in indonesia...
Today, the majority of people in the world live in countries that have fragile and unstable currencies. Bitcoin allows them free access to a currency that maintains its value much better than their state currencies.
More generally, Bitcoin is a very popular tool for populations living under authoritarian regimes. In Afghanistan, some women working for foreign companies in the digital sector use Bitcoin to bypass the obstacles imposed by the Taliban, allowing them to continue to practice their profession and receive the associated remuneration.
Bitcoin is also useful for individuals who are victims of bank account freezes. For example, it is used by some Iranian women since the theocratic government announced that it wanted to freeze the bank accounts of women who did not wear the veil in that country. In addition, Bitcoin has also been massively used by The freedom convoy demonstrators in Canada, which are also victims of bank blockages.
Bitcoin, a means of financing for charities
Since it is primarily an electronic cash system, Bitcoin is obviously used in many charities to receive donations.
To give you just one example, in 2019 UNICEF launched the initiative” CryptoFund ”, an operation for the association to receive and use donations in bitcoin. In their article announcing this event, they discuss the unique characteristics of Bitcoin allowing them to provide more transparency to their donors, while optimizing financial flows to beneficiaries.
Since it is an open system, Bitcoin also allows the financing of smaller charitable campaigns. For example, The Kiveclair project, led by the media Chainglob, helps disadvantaged people in Congo. In particular, they were able to help victims following a volcanic eruption thanks to a donation campaign conducted with the Lightning Network.
Bitcoin, a solution to stabilize the electricity value chain
Bitcoin mining makes it possible to valorize fatal energies. These are the energies that, if not used immediately, dissipate and are lost. Thus, mining can be used to make energy production sites profitable while waiting for the deployment of the distribution network. It can also serve as the ultimate customer for power plants in order to make surpluses profitable.
This use of Bitcoin is in particular highly developed in Texas. Previously, the population often experienced load shedding during the hottest and coldest days. Thanks to Bitcoin, electricity producers have been able to increase their production capacity in order to cope with these sharp increases in demand, while making installations profitable on the lowest days with mining.
Moreover, in the most remote areas of the world, where populations do not necessarily have access to electricity, Bitcoin mining represents an incentive for energy producers. They can set up small power plants for these villages, while making profitable the excess production not consumed via mining.
For example, this use could be observed at Virunga National Park in the Democratic Republic of Congo. The director of this national park, the oldest in Africa, uses mining to monetize the abundant natural resources present on site. The device made it possible to make the three hydroelectric power plants located profitable. Not only does this make it possible to supply electricity to nearby cities, but the money raised has also ensured the preservation of this natural park. In particular, it made it possible to act to protect 44 endangered species, such as the mountain gorilla, or to facilitate access to drinking water for more than 90,000 people in this region.
For the most disadvantaged populations, Bitcoin mining can be an incredible opportunity.
Bitcoin, a boon for ecology
At first glance, Bitcoin seems to be an environmental disaster. The proof-of-work mechanism used on its protocol requires a certain amount of electricity. However, when we study this subject of ecology and Bitcoin in more depth, we realize that it could be a real breakthrough solution to stem global warming.
There are a lot of reasons for this. First of all, mining is an excellent financing tool and a way to make money for renewable energy producers. It encourages the transition to cleaner energies through a spontaneous market process. In addition, the use of Bitcoin as a currency by the population could naturally stem the phenomena of overconsumption.
If you are interested in the subject of ecology and Bitcoin, I advise you to read our demystification article on this topic. You will find all the main arguments invalidating this received idea, in a developed and documented text.
Obviously, Bitcoin is an essential tool for whistleblowers. It allows them to be financed and to continue to be able to live despite the state pressures to which they may be subject. Sometimes, bitcoin even plays a central role in their operations.
For example, Bitcoin was used by Edward Snowden during the revelations about the actions of the NSA, to pay for servers in order to disseminate this information.
In addition, Bitcoin was used by the NGO (non-governmental organization) WikiLeaks, an organization whose aim is to give an audience to whistleblowers and information leaks, while maintaining the anonymity of sources. Starting in the 2010s, in particular following the publication of confidential documents related to the American army, the various ways of accepting donations for WikiLeaks were gradually blocked. The NGO therefore turned to Bitcoin as early as 2011 in order to be able to continue to receive donations in an incensurable way.
Conclusion
Bitcoin is much more than just a “speculative gimmick.” It is a peer-to-peer payment system that does not require trusting any central player. Thanks to this, Bitcoin has some interesting qualities that may generate in some individuals the need to use it: incensurability, elusiveness, confidentiality, scarcity, low fees, irreversibility...
Obviously, this list of examples of the use of Bitcoin is not exhaustive. We can see Bitcoin use cases when they are in the news, but surely there are many more out there.
This article is the second chapter in our series of demystifications on the topic of the usefulness of Bitcoin. In the first chapter, we explain to you why the statement “Bitcoin is useless” is based on fallacious reasoning and is not valid in the sense of logic. To do this, we rely on the various theories of the usefulness and value of an object.
