what you dont realise is the M0 and M1 money that circulates in peoples daily spending is only a few percent of all "money" locked up in different m3 schemes already.. so it wont lock up peoples m0 and m1 money any differently than current schemes

however people will move from investing in stocks and shares to ALSO invest part of their long term m3 money into bitcoin.. so will reduce the amount locked up in traditional m3 financial investment schemes(but how much % is still unknown)

also to note..
when people buy bitcoin. there is no lock up of that cash.. the market cap is not a reserve/vault of money.. its instead just math of taking the current market price and multiplying it.. its just a empty number of math not an allotment of cash locked up.. when someone buys bitcoin, someone else equally sells bitcoin and so the money still circulates by the bitcoin seller receiving cash and then him using that cash in traditional spending ways circulating it normally(m0 m1 circulation for starters)

when money is truly "locked up" its usually in insurance policies or where pension deposits buy shares and then those shares of companies invest in other things and the circulation of M3 is just bouncing around in the tradfi stock/share/insurance/credit markets
(EG invest in a pharma company which then invests in blackrock which then invests in other companies which keep the m3 money bouncing around in m3 markets)

only some of that will come out of the m3 and move into bitcoin and then the sellers either move it into m0 m1 or.. or.. m3 again

..
remember and emphasis this
when buying bitcoin you are not locking your money up into a vault or reserve, the money does not sit around waiting for you. you are instead buying a currency from a seller and that seller is selling bitcoin to get your money to then have them use your money on their personal choices of how they want to spend their money

that money can just circulate in m0 m1 circulation or end up back in m3 investments of tradfi

Nice write up OP this should really should bring mixed reactions from the community for a healthy debate/discussion.

And I want to agree with you on the possibility of a liquidity reduction should a widespread Bitcoin adoption happen...but then again one of the qualities of money is scarcity, for as long as the central banks aren't printing money to cause inflation then in some way this actually gives fiat value and not liquidity reduction.
Btw, think of it as Bitcoin being a savings account that the banks will benefit from such that the fiat equivalent of holding BTC can easily  be pumped back into the economy to address other business which makes this a win wins scenario, so no need for alarm I guess.

As of consumer spending, it really depends on several factors tbh such as inflation, buying power of fiat or crypto, otherwise Bitcoin doesn't really have this influence over people's spending as its pretty much a parallel economy.

As much as I might want to agree that all that you have said does make a lot of sense, it's still important you understand that the acceptance of bitcoin into the mainstream financial market won't in any way shrink the economy of any country, expect for countries who's economy has or had been previously bad.

Bitcoin is another form of money, and there is no way (not even in the next 30 or 40 years) that Bitcoin will completely wipe out fiat, both will co-exist in harmony, and this is because, people are still going to be needing fiat to invest in bitcoin, which is a means through which bitcoin will become more valuable, and those that live in rural areas where internet is a big problem; are always going to need fiat for their day to day buying and selling transactions.

Every economy will go on as normally, the only thing I see is that alot alot of people are definitely going to be pumping alot of fiat into bitcoin, which may cause the central banks to print even more.

Every time my sister makes a dumb purchase she defends it by saying her money won't be worth anything in the future so she may as well spend it now. I do not believe she is an isolated case, and her reasoning isn't wrong either. People, even those who don't know what QE is, intuitively have come to understand that their money will be FAR less valuable in the future. The only way to combat that is to invest but most people think of investing as difficult and risky, so their bias is to spend all of their available income. Bitcoin provides an incentive for people to save their money, the incentive being that their bitcoin won't lose value systematically. This incentive does not exist for fiat due to negative real interest rates and future pending QE. A world in which Bitcoin achieves mass adoption will clearly impact people decisions on what to buy, how much to buy, and at what price.

People will of course still buy the necessities such as food and a car but the psychological hurdle to clear before buying frivolous items will be raised. And of course, economic growth depends exclusively on the sale of increasingly frivolous items.

I definitely think that there is huge potential for Bitcoin to shake the fiat debt based system. It already has and it is currently making history right now with certain current events. The only thing we know for certain right now is to HODL! Don’t pull a Germany lol.

When was Bitcoin the MOST IMPORTANT thing in the world lol, Bitcoin almost give no impact to the global economy.

Worldwide net private wealth stood at $454.4 trillion in 2022, while current Bitcoin's market cap is $1.3 trillion, it's not even reach the 1% of worldwide net private wealth.

I would say corruption is the biggest thing that shrink the economy because the only few people can access to that dirty money, if they have business and they spend it to their business, the money only flow in himself.

I don't get what you mean by when a consumer's psychology will be changed from buying less. I mean they will prefer to buy BTC for long-term investments but they still have to spend money on their daily needs which means they don't have to spend all of their money in BTC but have to keep some money in liquid form that they could use to meet daily expenses. And how the change in the psychology of consumers is going to crunch liquidity and which liquidity are you talking about, I mean if you are talking about fiat then you also mentioned such a problem can be faced in fiat via lending and printing more money, etc.

Overall, people can't just survive by holding BTC in their wallets, they need food, a roof, have to pay bills, etc. So to meet all the expenses they can't just rely on there funds in the form of BTC because in the long run BTC does give profit but in the short term BTC can also make you loss. And a person with mindset of keeping no funds for emergency cases, is consider idiotic because investing in one coin is extremely risky especially when you are spending it all. Even the emergency funds.

Bitcoin has nothing to do with global economy or any national economy.

It is only one more option, one more spice in an economy of a nation, a national treasury, a local community economy, and a family, an individual finance. A world, nations, locals, families, individuals can choose Bitcoin for their treasuries to improve their financial status.

It is more easily achievable at individual and family scales or small local scales but when it is up to a national scale or bigger as global scale, it is responsibility of government, their many agencies, and many combined regulations, actions to achieve better treasury for the nation or the world. It is not responsibility of Bitcoin and Bitcoin does not have any power to change anything from governments and their bank systems.

It's a bullshit argument based on false premises.


Looking on the internet I see that in the USA, 22% of the population has no savings and 44% could not pay an unexpected 1K.

So I don't even go into the rest. There are countries that are more thrifty than the USA, of course, but they are the exception rather than the norm.

You could have applied it to gold, which is much more widespread in the population, and has not led to shrink the economy (if gold becomes widespread enough that most people hold their savings in it, then it will greatly and permanently reduce liquidity in the financial system).