Bitcoin is witnessing an unprecedented wave of adoption, with notable developments such as the United States establishing a ‘strategic Bitcoin reserve.’ However, many prominent Bitcoin advocates, including co-founder of Twitter, Jack Dorsey, express concerns that this trajectory diverges from Bitcoin’s foundational principles. Earlier this year, Dorsey stated, “if Bitcoin becomes just a form of ‘digital gold,’ then the project has failed,” suggesting that while a national Bitcoin reserve may benefit the state, it may not necessarily enhance Bitcoin’s utility.
Dorsey’s argument emphasizes the need for Bitcoin to realign with its original vision as outlined in its white paper: a peer-to-peer cash system facilitating global transactions. In contrast, around the globe, a variety of ‘circular Bitcoin economies’ are emerging, designed to leverage Bitcoin as a functional currency while demonstrating its viability as a transactional medium.
Understanding Bitcoin Circular Economies
The Bitcoin Federation describes a Bitcoin circular economy as a “local economic ecosystem where Bitcoin (BTC) is used increasingly as a medium of exchange, a unit of account, and a store of value.” These economies share a common belief in the superiority of Bitcoin as a currency, aiming to utilize it not only for transactions but also for the settlement of financial obligations.
This perspective significantly contrasts with the prevailing mindset in the United States, where many crypto advocates regard Bitcoin primarily as a reserve asset to hoard—a sentiment echoed by former President Donald Trump at the Nashville Bitcoin conference in July 2024, who advised attendees, “Never sell your Bitcoin.” In contrast, leaders like Michael Saylor, CEO of Strategy and a Bitcoin maximalist, have likened Bitcoin to an investment asset, suggesting that substantial ownership could grant control over the digital economy akin to a modern-day ‘manifest destiny.’
When questioned about the implications of mass adoption by a nation like the US on Bitcoin’s foundational ideals, Isa Santos, founder of the Bitcoin Isla project in Isla Mujeres, Mexico, asserted, “Yes, but that’s the beauty of Bitcoin. It’s for your enemies too.” This sentiment reflects a recognition that while government adoption might conflict with Bitcoin’s grassroots ethos, it also affirms its universality.
Stelios Rammos, founder of the Bitcoin crowdfunding project Geyserfund, echoed this view, asserting that government adoption was inevitable and even beneficial. “Bitcoin is for everyone, and its truest founding principle is being permission-less money.” Rammos emphasized the necessity of focusing on how Bitcoin is adopted, rather than questioning its adoption itself.
Circular economies, in particular, are poised to play a vital role in cultivating a future where Bitcoin is utilized by everyday people, rather than merely sitting as a digital asset in vaults of financial institutions. Rammos noted, “Circular economies will have a huge role to play in bringing about a future where Bitcoin is held and used by everyday people, and not just held as a pure asset within digital vaults at large banks and governments.” Conversely, Santos highlighted the potential for large-scale adoption from nations like the US to enhance global awareness of Bitcoin, ultimately benefiting the entire network and bolstering circular economies internationally.
The Impact of Bitcoin on Local Communities
Bitcoin circular economies have particularly flourished in developing nations where local currencies struggle to maintain value. For instance, in Cuba, rampant inflation and low wages have driven citizens to adopt Bitcoin as a means of safeguarding their savings. In rural Peru, where many individuals lack access to traditional banking services, Bitcoin has emerged as a lifeline, enabling them to save and manage their daily expenses effectively.
However, these communities also face significant challenges, mainly due to Bitcoin’s volatility, which complicates its acceptance as a stable saving instrument. Despite these hurdles, Bitcoin communities actively engage in educational initiatives and community development projects to foster grassroots adoption.
Santos emphasized that each circular economy possesses unique characteristics tailored to the needs of its community, with volunteerism often serving as a unifying factor. For example, Bitcoin Ekasi, located in South Africa, supports the local Surfer Kids community by compensating coaches in Bitcoin while onboarding local vendors to accept Bitcoin payments.
Rammos pointed out that these circular economies not only benefit local populations but also serve to enhance the Bitcoin network as a whole. As more areas embrace Bitcoin, they attract tourism, particularly from expats inclined to spend their Bitcoin, ultimately enriching the local economy. Rammos remarked, “Ultimately, the local populations gain from being a Bitcoin circular economy as much as the Bitcoin network benefits from having them; it’s a true symbiosis.”
Whether driven by Wall Street or Main Street, the overarching aim of those spearheading these circular economies is to see Bitcoin fully integrated into the financial system. Rammos optimistically concluded, “There will be a point in the hopefully not-so-distant future, where we won’t need the term circular economies anymore; it will just be the Bitcoin economy, or just, the economy.”
