Opinion by: Carel van Wyk, CEO of MoneyBadger
“Hodl” has become a popular phrase in the Bitcoin community as supporters advocate for the idea of using “bad money” (fiat) for spending while accumulating “good money” (Bitcoin), believing it will gain value. However, this view overlooks Gresham’s Law, which asserts that “Bad money drives out good,” suggesting that in today’s environment, there is little incentive to retain bad money.
The hodl mentality poses significant issues, especially in countries where fiat currencies are struggling, such as South Africa.
This perception leads individuals and governments to regard Bitcoin solely as a long-term savings tool rather than a medium for transactions. This view contradicts Satoshi Nakamoto’s original white paper, “Bitcoin: A Peer-to-Peer Electronic Cash System,” and contributes to the limited adoption and utilization of Bitcoin (BTC).
Savings versus Spending
Saving, or hodling, serves a specific purpose: accumulating enough funds to purchase a home, a luxury vehicle, or to retire early. Regardless of saving in “good money,” conversions to fiat are necessary to make these purchases.
On the other hand, spending fosters market demand for merchants to accept Bitcoin, enhancing its practical use and broader adoption. This, in turn, aids people and regulators in recognizing Bitcoin as functional money.
Related: Bitcoin is ‘made for us’: Africa’s first treasury company eyes unique opportunity
Currently, Bitcoin faces an adoption dilemma: enthusiasts encourage merchants to accept Bitcoin (“orange-pilling”), yet spending is infrequent due to hoarding tendencies. Consequently, many merchants retract their acceptance of Bitcoin, making it challenging to persuade them to reinstate it. For instance, the South African payment processor PayFast accepted Bitcoin until 2014 but ceased in 2019 due to insufficient usage.
Some proponents suggest waiting for natural adoption when Bitcoin holders become affluent. However, persistent hoarding today diminishes the chances of Bitcoin evolving into a widely recognized currency tomorrow.
If Bitcoin remains a mere investment, regulators will continue imposing limitations on its currency functionality. The “wait” mentality leads to hoarding amidst concerns of short-term price fluctuations, limiting current use.
A more effective strategy involves simultaneous saving and spending. Maintain two wallets: one for savings and one for expenditures. (This approach also simplifies tax considerations, which we’ll discuss later).
Spending Strengthens the System
Why would one spend Bitcoin if the goal is simply to amplify fiat holdings? Engaging in regular purchases with Bitcoin (like groceries, coffee, or small luxuries) reinforces its purpose as a cash system, as originally intended. As more Bitcoin holders utilize their currency for daily expenses, it signals to merchants the potential market of Bitcoin spenders they can attract.
This trend encourages merchants to offer Bitcoin as a payment option, unveiling new opportunities for Bitcoin integration. Wallet providers may implement incentive programs and offer spending discounts, boosting sales for merchants. For instance, one South African provider offered 10% back in satoshis for shopping at Pick’n Pay, while Binance currently provides 50% back for QR-code-based payments at local shops. Additionally, employing Bitcoin for direct payments can streamline transactions and mitigate costs by avoiding exchange fees and delays.
Admittedly, one of the strongest arguments against spending Bitcoin is the necessity of including each transaction in tax calculations, complicating tax returns. Future tax regulations may adopt a more rational view, similar to the Australian Taxation Office’s perspective treating crypto as an untaxed personal-use asset for everyday expenditures.
Meaningful Bitcoin adoption. I’ve learned a lot about that this year from working with Nigeria, conversations about Argentina, and, more recently, South Africa.
👇Fantastic chat with @gazza_jenks @staffordmasie @BitcoinEkasi @carelvwyk @MoneyBadgerPay https://t.co/aroYcyKTDY
— Robert Baggs (@rkbaggs) September 19, 2025
In the interim, the practical recommendation for taxpayers in nations lacking a forward-thinking approach, like Australia, is twofold. First, separate your Bitcoin into one wallet for savings and another for spending, then utilize automated tax calculation software to monitor all transactions. This simplifies tax reporting and fulfills regulatory obligations.
The Personal is Political
Numerous individuals and crypto influencers prioritize accumulating fiat wealth, neglecting Bitcoin’s original mission. Bitcoin was designed to serve as a neutral, open-source currency that is global, censorship-resistant, and permissionless.
This pathway leads us into the realm of regulations influenced by how society interacts with innovative, disruptive technologies like Bitcoin. Physical transactions using Bitcoin at retailers illustrate its swiftness, ease, and empowering nature compared to fiat. Bitcoin payments often outpace credit card transactions in speed for similar purchases.
However, in October 2022, the South African government categorized Bitcoin as a “financial instrument” (rather than money), reflecting public perception. SA Reserve Bank deputy governor Kuben Naidoo stated, “We do not intend to treat it as currency as it cannot functionally replace cash in shops. Our perspective shifted to viewing [cryptocurrencies] as financial assets instead.”
Bid farewell to purchasing self-custody lattes without navigating convoluted cross-border financial regulations.
Merchant activation initiatives transform the narrative by facilitating real-world usage. Consequently, spending Bitcoin transitions from a purely financial activity to a form of activism advocating for monetary freedom. Presently, we witness a rise in crypto transaction volumes at leading physical retailers and online e-commerce platforms in South Africa.
Among these transactions, 67% are conducted using Bitcoin, succeeded by Tether’s USDt (15%), XRP (8%), and Ether (4%). This trend is unsurprising, as regions utilizing Bitcoin primarily as a store of value and transactional medium are often those where local currencies are most vulnerable.
In South Africa, we endure some of the strictest currency restrictions globally, grappling with declining private property rights and government spending promises that exceed our economic capacity. This breeds anxieties regarding hyperinflation, reminiscent of the situation in neighboring Zimbabwe, prompting South Africans from all backgrounds to seek alternative monetary forms to safeguard against the slow but persistent devaluation of the rand. An example is the thriving circular Bitcoin community developing along the Garden Route, a key tourist area.
The repercussions of biased regulatory viewpoints are already visible. For example, crypto payment service firms in South Africa have experienced delays in their license applications since November of last year.
This predicament arises because the Financial Sector Conduct Authority (FSCA), responsible for issuing financial instrument licenses, operates under regulations that classify crypto solely as a “financial asset,” not as a “means of payment.” Many crypto payment firms offer functions beyond just wallets or exchanges (the designated “financial instruments”); they also enable transactions.
Currently, there exists no licensing framework for crypto payments, causing uncertainty for the FSCA regarding its legal capacity to grant licenses. The regulators are striving to address this deadlock through the SA Reserve Bank’s National Payment System department, resulting in postponed license issuance. Similar uncertainties prevail regarding the classification of cryptocurrencies under South Africa’s exchange control policies, compounded by ongoing court cases like the Standard Bank vs. SARB, which may extend for years.
The future utility of Bitcoin evokes the famous opening line from Charles Dickens’ “A Tale of Two Cities,” situated just before the French Revolution: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity.”
Decide your stance: Should Bitcoin serve as money or merely as a speculative tool? Or can it fulfill both roles?
If you advocate for Bitcoin as a financial medium, treat it accordingly—save and spend it as you would any currency. Possessing Bitcoin that appreciates in value without practical usage is akin to owning a luxury sports car without ever taking it for a drive.
Regarding those dual wallets? Nobody is suggesting draining your savings. Instead, view your savings wallet as your “number go up” reserve and your spending wallet as your “make a difference” fund. Subsequently, contribute to the movement.
Adoption will not flourish through hoarding alone. It requires spending. You’ve successfully hodled. Now it’s time to spend.
Opinion by: Carel van Wyk, CEO of MoneyBadger.
This article serves general informational purposes and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views or opinions of Cointelegraph.
