Is cryptocurrency for spending or saving?

Celsius Network
Aug 4 · 6 min read

Cryptocurrency can mean different things for different people. Some may view it as an investment, others see it as a gamble, and some see it as a means of moving money around the world quickly and safely. But one debate still remains — is cryptocurrency best suited as a means of long-term savings, or is it destined to be used like cash for spending and making purchases? Read along as we go over some of the reasons why both of these ideas are correct.

Argument 1: Crypto is for saving.

It’s easy to point to the long-term trend of major cryptocurrencies generally moving upward in value over long periods of time and suggest crypto is for saving based on that fact alone. For example, if we look at Bitcoin beginning its journey at less than a penny each to recently sitting at over $11,000 each, we can see a general long-term upward trend. The same can be said for other major cryptocurrencies, like Ethereum and Litecoin, for example.

This means that despite periods of rapid volatility, crypto could be a good long-term savings vehicle for some people.

But why is crypto a good vehicle for long-term saving? To answer that, let’s take a look at the US dollar. If you were to bury a $100 dollar bill for 10 years and then dig it up and try to spend it, the purchasing power (or value) of that bill would be much less than when you first buried it. The reason for this is inflation. In simple terms, the value of national currencies is always going down. This downward movement happens on purpose and is often controlled or directly influenced by central banks such as the US Federal Reserve.

Now let’s suppose that instead of burying a $100 bill, you bought $100 worth of Bitcoin, kept it in a paper wallet and buried it. When you return back to it 10 years later, you’ll find that your $100 worth of Bitcoin is likely worth a lot more than when it was buried.

This is in part because bitcoin is the opposite of inflationary assets — it is deflationary. That means it was designed to go up in value over time due to its limited supply. While governments can print money as much as they want, no one can create more Bitcoin than the network will allow through mining. Its supply is strictly controlled by the network and cannot be changed by anyone — not even by Satoshi Nakamoto.

It is this deflationary design feature that makes bitcoin and other similar cryptocurrencies so potentially attractive for long-term storage and saving. Essentially, the value of Bitcoin has nowhere to but up.

Argument 2: Cryptocurrency is for spending.

Now that we’ve established the cryptocurrency can be great for saving money long-term, can it also be good for spending and using as cash? Surprisingly, the answer is also yes, but with a few caveats.

Cryptocurrencies allow for an unprecedented degree of independence, freedom, and flexibility. They offer unparalleled convenience and effectively unrestricted access to anyone and everyone. Any amount of money can be sent to anyone at any time. There are no bankers, regional restrictions, banking holidays, wire transfer cut off times, or anything else like that.

As such, cryptocurrency can be an ultimate replacement for national currencies. Currencies like bitcoin could even be the world’s first true international monetary form of money.

So why doesn’t everyone agree that cryptocurrency is just as suited for spending as it is for saving?

The answer to that has to do with cryptocurrency’s volatility. In short, volatility means that the price or purchasing power of cryptocurrency is constantly going up and down. This can make it difficult for businesses to accept payment in cryptocurrency. Many businesses likely fear that if they receive a payment at 10 AM for a specific equivalent dollar amount, that value could drop by 5 PM and the company could potentially be facing a loss of revenue. For individuals, they could fear that perhaps the money they spent on Monday could end up being worth far more on Friday, thus making them having effectively overpaid for whatever they bought.

There are a few potential solutions to this, however. One example is the use of a stable coin. Stable coins are cryptocurrencies that are designed to hold a specific and set value that is pegged to something else, such as the US dollar. That means if you spend five units of a stable coin that’s linked to the US dollar to buy a latte, those same five units will have the same relative value to the dollar six months later. This lack of volatility is very useful when it comes to using cryptocurrency as cash. We at Celsius see the value of stable coins, which is why we have decided to support several of them in our wallet.

This next bit is just our own speculation, so bear with us. It is also entirely possible that as cryptocurrencies continue to mature, their prices will eventually stabilize in much the same way that national currencies are relatively stable today. For example, major national currencies like the US dollar go up and down in value every few minutes much in the same way that bitcoin does. However, the amount by which the value changes is minuscule. What’s more, thanks to the stability of most major national currencies, businesses feel comfortable offering their prices in a national currency that doesn’t change minute-by-minute.

This means that perhaps in the future, major cryptocurrencies will mature to the point that companies will feel comfortable listing prices for their products at a fixed cryptocurrency rate. For example, perhaps McDonald’s will create a new value menu where everything costs 0.000001 BTC, since the exchange rate for BTC has become very stable.

What’s the verdict?

The truth is, there is no single answer to whether cryptocurrency is better for saving or spending. Instead, we believe that both are true, but it largely depends on what your personal goals are.

If you’re looking for a way to save money long-term without relying on banks and their notoriously low interest rates, cryptocurrency could provide an effective vehicle for your long-term savings. By HODLing with Celsius, you can increase the long term value of your crypto to the tune of an additional 10.5% return on your assets each year.

If you need to send money around the world with any regularity and don’t want to pay high wire transfer fees or be restricted by national borders, using cryptocurrency as cash could be right up your alley. Celsius Network makes it easy to save or spend with a fee-free, transparent, and rewarding mobile wallet with unlimited access to your funds at any time.

No matter your answer, it’s quite likely that cryptocurrency offers something that you need. It’s also almost certain that cryptocurrency can do what you need far better than its traditional counterparts.

What’s your take? Is cryptocurrency better suited for saving or spending? Let us know in the comments below.


About Celsius Network

Celsius Network is a democratized interest income and lending platform accessible via a mobile app. Built on the belief that financial services should only do what is in the best interests of the community, Celsius is a modern platform where membership provides access to curated financial services that are not available through traditional financial institutions. Crypto holders can earn interest by transferring their coins to their Celsius Wallet and borrow USD against their crypto collateral at interest rates as low as 4.95% APR.

Download the Celsius Network app and start earning interest on your crypto today ➡️ celsiusnetwork.app.link

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A new way to earn, borrow, and pay on the blockchain.

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