The medium of exchange is a tool used for transactions of goods and services. Throughout the history of humanity, people have traditionally opted to use the best form of money at their disposal to be the medium of exchange.
But there are different nuances to the emotions the purchaser feels depending on how they spend their MoE.
These emotions have been the subject of numerous psychological studies, specifically showcasing the differences in emotional responses when spending cash and spending credit.
A study performed by Drazen Prelec and Duncan Simester at MIT in the year 2000 titled “Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay,” showcased these differences.
The abstract of the study is as follows:
“In studies involving genuine transactions of potentially high value we show that willingness-to-pay can be increased when customers are instructed to use a credit card rather than cash. The effect may be large (up to 100%) and it appears unlikely that it arises due solely to liquidity constraints.”
The results shown in the table showcase that credit card respondents offered higher bids on average than their cash counterparts.
In the conclusion, the experimenters noted:
“This is the first study that demonstrates that willingness-to-pay is increased when customers are instructed to use a credit card rather than cash. The results are surprising both due to the size of the premium and the ubiquity of credit card use…”
We believe the results of these studies are ingrained in human society because of how we view spending cash vs spending credit. Cash is rooted in the present day and is an immediate action. It is PAINFUL to pull cash out of your wallet and part ways with it. This is a phenomenon called “pain of paying” that says you have a heightened sense of loss when paying with cash compared to credit. This makes you more conscious of where you are spending your money. On the flip side, spending credit is a deferral to the future, where you will eventually have to pay your bill. In the now, you bask in the dopamine of receiving whatever item or service you have paid for. Strangely, that dopamine you feel only comes at the removal of real emotion that typically occurs in the moment of purchase.
We would even argue that swiping or tapping your credit card makes you feel NOTHING.
In this feeling of NOTHING, you may actually feel LIFELESS because through the deferment of the present, emotion in the now leaves you.
Studies aside, think about yourself.
Think about how you feel when you leave a $10 bill on the table for a tip compared to scribbling in 20% on the receipt. Think about how you feel when that $20 bill leaves your wallet compared to when you tap your credit card and an invisible money transfer magically happens.
We know these acts feel different even though the end result is the same.
But when you think about it, our financial rails have been largely digital since as far back as we can remember.
Direct deposit, digital.
Automatic bill payment, digital.
Any credit or debit card swipe, digital.
Using a physical bill for payment is increasingly uncommon because nearly every aspect of the traditional financial system has been ported online. Couple that with the convenience of not having to carry around exact change or hundreds of dollars of cash, and you get a mass migration to this digital space when it comes to payment.
By society transitioning to digital payment rails, we have been programmed and become used to the habitual feeling of “nothing” when we pay.
Tap card here, swipe card there, credit, credit, debit, spend, spend, spend. No real emotions. Nothing. Just a repeating cycle of credit.
Bitcoin brings cash and all the associated feelings of spending it to the digital world.
In the age of endless credit card and debit card swipes, Bitcoin pulls you back to the age of cash. An age where every transaction meant something because of the instant settlement nature and the finality of each trade. With Bitcoin, once your transaction is confirmed, the deed is done. No intermediary is waiting to initiate a money transfer from your account, and there is no deferment of credit to the future, where you will then pay off your bill. Bitcoin payments reside in the “now” and mimic passing your paper currency from your hands to the recipients’.
The emotions you feel when spending Bitcoin are real because of the cash-like properties Bitcoin possesses. At the same time, every purchase you make forces you to accept the opportunity cost that whatever you are choosing to purchase is worth you parting with your precious Bitcoin. This is not the same scenario when discussing credit swipes because the dollar depreciates over time, AND using credit is a deferral of payment to the future. Bitcoin is programmed to appreciate over time and settles near instantaneously with no chargebacks.
Using Bitcoin for payments brings a level of personal responsibility and life to every purchase decision that is not typical of a society living on credit. In a Bitcoin-driven world, we believe these levels of personal responsibility and vitality as it relates to spending decisions will lead to a much more innovative world because when the choice is part with your Bitcoin or hold it, whatever you are looking to purchase must be useful to outweigh the cost of holding your Sats.
Considering the landscape today, spending Bitcoin is still exciting every time because it feels “new.” We argue that a lot of the emotions of spending cash trickle into spending experiences and actually enhance the experience. Yes, it is painful to spend your Sats, just like cash, but when you can immediately replace your Sats via dollar conversion, you instead focus on the feelings you feel from actually using your Bitcoin as it was designed to be used.
It’s exciting to purchase Ghee from GreatGhee, coffee from Satoshi Coffee Co, Pecan Butter from Oshi, and Fruit from Sats 4 Snacks.
It’s exciting to buy apparel from Hodl Hat, The Bullish Shop, or Orange Label, and decor from Archimedes Emporium
It’s exciting to reward software devs for their contributions on Lightning Bounties.
It’s also exciting to walk into a national brand like Steak ‘n Shake and spend Bitcoin.
Others think so too:
It does not matter where you are spending your Sats today; the emotions are the same.
We view these emotions as a reaction to the fact that the Bitcoin Circular Economy is still in its infancy when compared to the juggernaut traditional finance rails of digital credit and debit.
At Branta, we want to help build and bring together Bitcoin merchants, storefronts, and companies, all in the pursuit of making Bitcoin payments more secure and frictionless.
Making Bitcoin an accessible medium of exchange to all is the Bitcoin thesis.