It’s not when merchants start accepting Bitcoin, it’s when they stop accepting fiat.

When it comes to the “medium of exchange” value proposition of Bitcoin, many people are hoping for the day when merchants begin accepting Bitcoin as payment. However, every time I’ve had the option of paying in Bitcoin, I’ve opted to pay in fiat anyway. This is because human psychology and history teaches us that we will part ways with the softer money first and the harder money last. Bitcoin is harder than fiat, I expect it to go up in purchasing power over time, so I’ll opt to hold onto that and spend my fiat instead (of course, this situation is different for people who are already 100% in BTC and don’t hold fiat).

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Here’s an extreme example to show this principle in action. Let’s say you went to a vendor and they accept both USD or literal feces. Which would you pay with? Probably the feces! From a currency perspective, it’s super soft, won’t hold its value, and easy to obtain. USD is a harder currency than feces. I would pay with my feces and not with my USD. However, this is not possible in the real world because vendors choose not to accept feces as payment, so I’m forced to pay with the harder money option: USD.

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Now switch to USD vs BTC. As long as vendors accept payment in USD (or feces) then that’s what I will pay with. It’s not until vendors see fiat money on par with feces (which it is) and desire harder money, and accept payment ONLY in bitcoin that I will purchase goods with my Bitcoin. So when we see people saying USD is better because people transact with it, they simply don’t understand this concept. I would say that this proves USD is INFERIOR simply because people are much more willing to part with it than they are with Bitcoin.

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TLDR:

As long as vendors accept USD, humans will pay with USD (the softer money). The option to pay in BTC will not be used for the most part. It doesn’t matter if vendors start accepting bitcoin, it only matters that they choose to not accept fiat. Then we will see people actually transact in Bitcoin.