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Save, everyone!

Oct 11, 2016

In 2014, the breadwallet team wrestled with how to communicate its values to its customers. It seemed that all great companies benefited from some sort of core raison-d’être. Nike honored great athletes, Google organized the world’s information, and Apple believed that computers could be sexy.

One of our biggest challenges was to articulate not just breadwallet’s differentiating features of simplicity, security, and privacy, but also why anybody would want bitcoin in the first place. It was something of a double-sell, and if new users couldn’t get past the initial hesitation or skepticism towards bitcoin, then it really wouldn’t matter what wallet would be best for them.

Today, despite less bitcoin coverage in the media, the rate of new bitcoin users is reaching a crescendo, and to those who closely follow the cryptocurrency industry, an imminent breakout is readily apparent. We know this because we get to see the numbers behind the scenes as more and more users download breadwallet, which has tripled its customer base in the last 18 months. In the words of Ray Kurzweil:

“Our intuition about the future is linear. But the reality of information technology is exponential, and that makes a profound difference. If I take 30 steps linearly, I get to 30. If I take 30 steps exponentially, I get to a billion.”

A billion bitcoin users? It’s not as crazy as it sounds. Speaking to the benefits of bitcoin itself, we’ve witnessed a noteworthy and encouraging trend with new users, which may also contain clues for what “values” will drive the next big wave of bitcoin adoption.

Take for example the real world case of “Mrs. H,” a 55-year old woman who lives in South Florida. All her life Mrs. H has felt that paychecks ended up being spent as soon as they were earned, and the many costs of daily life prevented her from storing up any substantial amount of money. Two years ago, however, all that changed when Mrs. H discovered bitcoin and set up a regular monthly purchase. Bitcoin is special to Mrs H, because, in her words:

“Bitcoin turned me into a saver.”

This sentiment has come up repeatedly, particularly on online forums. New users tell a familiar story about their personal transition from an initial state of careless spending to a mindset of deliberate budgeting and planning for the future. Admittedly this is an adjustment that many people make naturally as they mature and develop financially, but is there something special about bitcoin and its apparently magical ability to convert spendthrifts into tightwads?

We think so. And part of our hypothesis is that national currencies, such as dollars, euros, or yen, encourage spending due to steadily losing value over time to inflation. Even at just 3% annual inflation, the value of a $100 bill will halve every 25 years. Ever found an old birthday card with cash from your childhood? If so, you may have taken a moment to ponder how the money doesn’t quite buy you what it used to:

“I should have spent this.”

Bitcoin is different. Just like there are only so many Picasso paintings on earth, making them more precious, there is a maximum number of bitcoins that can circulate. Because it is designed with this supply limit, if demand goes up, the value of bitcoins should increase in the long term. So what would the world look like with a currency that doesn’t lose value to inflation? How would your spending habits change if every time you considered making a purchase you stopped and thought “if I don’t spend this money now, it could be worth more later?”

If inflationary currencies encourage spending instead of saving, then maybe they are also to blame for high debt levels, including the crushing student loans and credit card balances that now plague a mass of citizens. It’s a reach, but if bitcoin is the opposite of national currencies, then maybe a world where people use bitcoin is filled with individuals who are flush with money instead of drowning in debt, particularly if the issues we’ve identified are as structural as we suspect them to be.

“My goal is to save up one whole bitcoin.”

Now that the price of bitcoin has increased substantially from where it was four years ago, many new bitcoin users start with the goal of owning one whole bitcoin. Some people call it the “one bitcoin club,” since there will only ever be 21 million bitcoin in existence and not everyone in the world can have a whole bitcoin of their own. Once new users meet their goal, many of these previous non-savers realize how easy it is to save and keep on adding to their balance.

Mrs. H started with the goal of saving two whole bitcoin and has already met and surpassed that milestone. And because she began buying when bitcoin was valued at $250 per coin, her investment has more than doubled now that bitcoin is $600+ per coin. So far, so good.

But two months ago, misfortune struck and Mrs. H was laid off from her job of 15 years. She was worried, as anyone would be, but rather than panic, Mrs H has found comfort in the knowledge that she can always sell her bitcoin if she gets desperate. And so far, she hasn’t needed to resort to that extreme.

“Getting laid off was awful. But it would have been devastating if I didn’t have my bitcoins.”

In the past, Mrs. H never had the purposeful discipline to “stack” dollars. Yet something about bitcoin flipped a switch in her head, and turned her into a saving enthusiast. Even if the value of bitcoin had gone down instead of up, she still would have had something to fall back on, instead of nothing, which had been a common occurrence in the past. In a funny way, Mrs. H saving in bitcoin allowed bitcoin to save Mrs. H.

Now, this story is not an endorsement for people to recklessly invest in unproven financial instruments such as bitcoin, and clearly, bitcoin is a volatile asset that should only be purchased by those who understand the risks involved. But with that caveat, as time goes on, we’d like to see more cases like Mrs. H, because a world with less debt and more financial freedom for individuals seems like a worthy goal. It could take 20 years to get there, so breadwallet is planning for the long haul. We hope to see you along the way, and in the meantime:

“Save, everyone!”

So what do you think? Is bitcoin making thrift and sacrifice cool as the super-saving currency of the future? Ping us on twitter at @breadapp to share your thoughts.

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