Four Leaf Federal Credit Union (formerly known as Bethpage Credit Union) is offering a bonus of up to $550 when you open a new checking account. Bonus is broken down as follows:
Receive a $350 checking bonus when you open a new checking account and receive a qualifying direct deposit of $500+ within 90 days of account opening
Receive an additional $100 bonus when you have a qualifying direct deposit continue to post for 12 consecutive months after the first qualify direct deposit
Receive an additional $100 bonus when you have a qualifying direct deposit continue to post for 24 consecutive months after the first qualifying direct deposit
The Fine Print
To be eligible for the FourLeaf Checking Up to $550 Bonus Offer and receive up to a maximum of $550.00 in bonuses, you must not have an existing FourLeaf checking account in which you are the primary account holder on the checking account and have not previously received a new checking account opening related bonus from FourLeaf. To receive the initial $350.00 bonus (the “First Direct Deposit Bonus”), you must open a Free Checking, Smart Checking, or Student Checking account with FourLeaf between February 2, 2026 and December 31, 2026, which is subject to approval, and have a Qualifying Direct Deposit (as defined below) post to the checking account within ninety (90) calendar days of account opening date.
The First Direct Deposit Bonus will be deposited to the checking account within sixty (60) calendar days following the initial Qualifying Direct Deposit.
To receive an additional $100.00 bonus (the “Second Direct Deposit Bonus”), you must continue to have a Qualifying Direct Deposit post to the checking account for twelve (12) consecutive months following the month of the initial Qualifying Direct Deposit.
The Second Direct Deposit Bonus will be deposited to the checking account within sixty (60) calendar days of receiving the applicable Qualifying Direct Deposit for the Second Direct Deposit Bonus. To receive an additional $100.00 bonus (the “Third Direct Deposit Bonus”), you must continue to have a Qualifying Direct Deposit post to the checking account for twenty-four (24) consecutive months following the month of the initial Qualifying Direct Deposit.
The Third Direct Deposit Bonus will be deposited to the checking account within sixty (60) calendar days of receiving the applicable Qualifying Direct Deposit for the Third Direct Deposit Bonus.
If a Qualifying Direct Deposit does not post to the checking account in any subsequent months following the initial Qualifying Direct Deposit, the checking account will not be eligible to receive the Second Direct Deposit Bonus and Third Direct Deposit Bonus.
The checking account must remain open and in good standing up to and including the date each bonus is deposited to receive the applicable bonus.
A Qualifying Direct Deposit is a recurring electronic deposit of a paycheck, pension, or government benefits (such as Social Security) from an employer, the government, or similar third party of $500.00 or more. Certain types of electronically deposited funds may not be considered a Qualifying Direct Deposit including ATM deposits, debit card transfers, online banking transfers or deposits, and person to person payments such as Zelle®. Bonuses are considered interest and will be reported on IRS Form 1099-INT. The primary account owner is responsible for any applicable taxes. You are only eligible for one (1) new checking account bonus offer. If you open multiple checking accounts, you will only be eligible to receive one (1) new checking account bonus offer. Offer may be modified or discontinued without notice.
All bank account bonuses are treated as income/interest and as such you have to pay taxes on them
Avoiding Fees
Monthly Fees
Free checking has no monthly fees
Early Account Termination Fee
There is no EATF.
Our Verdict
Better than the $250 bonus that didn’t last long, so I suspect this one will suffer a similar fate. Annoying that you need to keep an active direct deposit for so long for the full bonus but even if you just do the $350 bonus it’s worth doing so we will add it to our best bank account bonus page. Just keep in mind it seems to be Chexsystems sensitive.
Hat tip to reader Tony
Useful posts regarding bank bonuses:
A Beginners Guide To Bank Account Bonuses
Bank Account Quick Reference Table (Spreadsheet) (very useful for sorting bonuses by different parameters)
PSA: Don’t Call The Bank
Introduction To ChexSystems
Banks & Credit Unions That Are ChexSystems Inquiry Sensitive
What Banks & Credit Unions Do/Don’t Pull ChexSystems?
How To Use Our Direct Deposit Page For Bank Bonuses Page
Common Bank Bonus Misconceptions + Why You Should Give Them A Go
How Many Bank Accounts Can I Safely Open Within A Year For Bank Bonus Purposes?
Affiliate Links & Bank Bonuses – We Won’t Be Using Them
Complete List Of Ways To Close Bank Accounts At Each Bank
Banks That Allow/Don’t Allow Out Of State Checking Applications
Everyone’s got a take on flipping right now. Half the internet will tell you the math is dead, margins got squeezed out, rates broke the model, and you should move on. The other half is posting check photos on Instagram.
Somewhere in the middle is the truth. And the truth sounds a lot like Leka Devatha, a Seattle-based investor who left a corporate career at Nordstrom to flip houses full-time and has closed over 60 deals in one of the country’s most unforgiving markets.
We put her in the “Texting With” hot seat and asked the questions most investors are actually thinking but are too polite to ask in the group chat.
“How Do You Even Find a Flip That Pencils in Seattle Right Now?”
You get closer to the deal than everyone else.
Leka’s exact words: “Off-market relationships, speed to close, and knowing your rehab numbers so you can see margin where others see risk.” When every serious buyer is running the same MLS search and submitting the same offer, the edge lies in the prep work you did before the listing ever went live.
The people who say the math doesn’t work in Seattle are usually running the math on someone else’s deal. The investors still closing are doing it because they underwrite faster, move faster, and trust their numbers more than the competition does.
“What Kills a Flip? Walk Us Through the Autopsy.”
Scope creep. Every time.
You budget for cosmetics, and when you demo the kitchen wall, behind the wall is a problem that has been living in that house since the Clinton administration. Now your light refresh has a structural component and a permit timeline.
As Leka puts it, “What looked like a cosmetic project reveals structural or systemic issues mid-demo, the schedule stretches, carrying costs stack up, and by the time you exit, you’ve eaten your margin in holding costs, overruns, and a slow market.”
The honest fix: Build contingency in from day one, and price scope discoveries before they price you out.
“If a New Flipper Had $100K and One Shot, What Should They Actually Buy?”
Leka says, “A dated but structurally sound single-family in a proven resale neighborhood.” Cosmetic-only scope. Purchase price low enough that your $100K covers the down payment, rehab, carrying costs, and a buffer you actually intend to use.
The ARV needs to be defensible, with “comps that closed in the last 90 days,” not from 2022 that you found just to make the spreadsheet look better.
The first deal is not supposed to be the one that retires you. It’s the one that teaches you what carrying costs actually feel like, what real scope creep looks like mid-demo, and whether you have the stomach for it before you go bigger. A boring deal with a real profit beats an exciting deal with a negative lesson.
“How Do You Actually Fund a Flip Today? What’s the Stack?”
Hard money is still the backbone, typically 70% to 75% LTV on purchase with rehab draws built in. It’s running 10% to 13% today, which is not cheap, but as Leka says, “The speed is worth it when you’re competing for a deal.”
Having a lender you’ve already closed with matters more than the rate on paper. They pick up the phone. They move.
Hard money rarely covers everything, so private capital fills the gap: down payment, equity cushion, and closing costs. “This money moves on trust, not underwriting,” Leka says, which means you need to earn it before you need it.
A business line of credit or a HELOC on an existing property is what Leka calls “your dry powder.” It’s not the primary stack; it’s what makes you competitive when something shows up fast. Close clean, then refinance or sell before the line comes due.
And here’s the part most people skip. Leka’s take: “The stack is less important than knowing your all-in cost of capital, timeline, and exit with precision. Every day you’re wrong on any of those three, your projected profit shrinks.”
“You Left Nordstrom to Flip Full-Time. What’s the Part Nobody Talks About?”
Leka says, “The income gap nobody prepares you for.”
Not just financially, but psychologically. At a corporate job, you get a paycheck every two weeks, whether the quarter was good or bad, and as Leka describes it, “your self-worth gets quietly tied to that stability.” When you flip, you can do everything right and still wait eight months to see a dollar.
Her reframe on the whole thing: “The leap isn’t really about courage; it’s about rewiring how you measure progress when there’s no external validation telling you you’re on track.” That part takes longer than most people think, and it doesn’t come up in the YouTube videos about your first flip.
“You’ve Done 60+ Flips. What Did You Use to Obsess Over That You Don’t Even Think About Anymore?”
Comps. Early on, Leka would agonize over every sale within a mile, second-guess the price per square foot, and build elaborate spreadsheets trying to “science my way to certainty.” Now she can walk a property for 20 minutes and land within a tight range of what it will sell for.
Because, as she puts it, “The real comp isn’t a spreadsheet. It’s 12 years of watching what buyers actually do when they walk into a room.”
That kind of pattern recognition doesn’t come from a course. It comes from closing deals when you’re scared, losing money once in a way that stings just enough, and showing up again anyway.
The spreadsheet is still there. It’s just not running the show anymore.
Leka Devatha is a Seattle-based real estate investor and flipper with 60+ transactions and a track record in one of the country’s most competitive markets. Follow her on Instagram: @leka_devatha
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Sunday 1 March 2026 was the 80th anniversary of the Bank’s coming into public ownership, following the Bank of England Act 1946. It was the first of eight major nationalisations by the post-war Labour government and the only one not to be later reversed, in whole or in part. Some opponents, at the time, were said to consider it a revolutionary ‘measure of first-class importance’; others considered it inconsequential. Although it was a defining point in UK financial history, it did not feature highly in the public consciousness. Yet it laid enduring foundations for the Bank’s operational and financial independence, carefully balancing powers to act in the public interest with limits on political interference.
The Bank’s Governor at the time was (Lord) Thomas Catto – or ‘Catto of Cairncatto’, as he often liked to style himself. He was, according to historian David Kynaston, ‘a canny, obstinate Scot’, who had started his career as a clerk in a shipping company, and worked his way up the merchant banking ladder. He and the great economist John Maynard Keynes worked so closely together during the war as senior government advisors at HM Treasury – Keynes as the great intellectual force, Catto expertly filling in the practical details – that the pair were affectionately known as ‘Catto and Doggo’.
Lord Catto of Cairncatto, Governor of the Bank of England 1944–49 (archive reference: 15A13/13/1/3/18/2).
This familiarity and trust with Treasury officials, and his strong working relationship with Labour’s first post-war Chancellor, Hugh Dalton, enabled Catto to work very effectively behind the scenes to, in his words, ‘secure the adoption of the least possible disturbance to the existing set-up’ in the Bill to be presented to Parliament. The Bank would remain organisationally independent from the civil service, and would gain a broad power to request information from, and make recommendations to, bankers ‘in the public interest’. And HM Treasury would, if necessary in the public interest, be able to give directions to the Bank – but only after consulting its Governor, and not with respect to individual bank customers. The ‘public interest’, however, remained undefined (the Bank did not receive any formal statutory objective until 1998, with monetary policy independence).
Crucially, Catto persuaded the Treasury to omit a provision from the Bill that would have empowered the Bank to regulate the proportion of assets of different descriptions that banks may hold. The Bank’s archive contains Catto’s handwritten note (below) of a meeting with Dalton in August 1945, in which Catto emphasised the dangers to public confidence of such an invasive power – ‘One step at a time’, he urged! This, and other stories about Catto’s influence on the Bill, is told in more detail by Austen Saunders’ Bank Underground post from March 2021, and in John Fforde’s official history of the Bank.
Governor Thomas Catto’s handwritten record of his meeting with Chancellor Hugh Dalton, of 17 August 1945, from the Bank of England archive. ‘… In particular Paragraph 7 is very dangerous at this stage. It is not part of taking the B of E into public ownership and it is only to the latter that the Government is committed. Then why go further at this stage. Clause 7 is really taking powers not only of bringing the B of E under public ownership but bringing all banks under public control. That is something on which public opinion has not been tested and will be very devastating to confidence: moreover it is completely unnecessary. One step at a time. CofC ; [‘Catto of Cairncatto’] 17/8/45.
A ‘streamlined Socialist Statute’
The Eton-educated Hugh Dalton, known for his ‘back-slapping bonhomie and booming voice’, introduced the Bill at its second reading in the House of Commons on 29 October 1945 as a ‘model’ for future nationalisations. Containing just five clauses and three schedules, he described it as a ‘streamlined Socialist Statute’, involving a ‘minimum of legal rigmarole … [so] that it can be understood as readily by layman as by lawyers, which is as it should be’. The Bill would ‘lay the foundations of an economic plan for this country, and a new social order’.
In his memoirs, Dalton revealed that he didn’t see need to mention the events of the interwar years to justify a Bill that stood on its own merits. Some on the Labour benches did, though, refer to the interwar gold standard ‘debacle’ in which, on Governor Montagu Norman’s advice, the government had returned the British Pound to its pre-war gold parity in 1925 but had abandoned it in 1931 amid rising unemployment and economic turmoil. This caused the Labour government to fall, prompting the Labour Party to adopt a policy of public ownership for the Bank. As the influential Socialist intellectual, Harold Laski, put it in 1940, ‘Britain has been conquered only twice in its history. The first time was by William the Norman in 1066 and the second by Montagu the Norman in 1931.’
A revolution or an irrelevance?
The duty of introducing the Bill in the Lords for its second reading on 22 January 1946 fell to the newly ennobled Frederick Pethick-Lawrence. He was a pacificist, a conscientious objector who, with his wife Emmeline Pethick-Lawrence, had been prominent in the campaign for women’s suffrage, which had led them to be imprisoned and to go on hunger strike. Pethick-Lawrence explained to Parliament that it ‘is the habit of people in these islands to carry out wide, secret and hidden revolutions without changing the outer form, but it is also the custom in this country when that has been done to give statutory form to the change in order that in future it may be recognised, that we cannot go back on it, and also so that the consequences may be fully understood’.
Lord and Lady Pethick-Lawrence outside their Surrey home in 1949 (reproduced with the kind permission of The Master and Fellows of Trinity College, Cambridge; archive reference PETH/9/128).
A few months earlier, Sir Winston Churchill had declared in his response to the 1945 King’s Speech, to gasps of surprise from Conservative MPs, that ‘the national ownership of the Bank of England does not in my opinion raise any matter of principle … what matters is the use to be made of this public ownership’. Yet it was Churchill’s wartime Chancellor, Sir John Anderson who described the Bill as a ‘Measure of first-class importance … an enormity’ that could damage confidence in sterling and even replace a small part of the unwritten British constitution.
In contrast, Colonel Oliver Stanley, summing up for the Conservatives in the Commons, called the Bill ‘a sham; not because it is going to do harm, but because it is going to do nothing at all … a piece of political eyewash’. Breaking ranks, the controversial Conservative, Robert Boothby MP described it, in a wide ranging, memorable speech, as ‘a momentous occasion in the history of this House and the country’. Borrowing the words of Abraham Lincoln, he said that nationalising the Bank would help make money the ‘servant of humanity’ rather than its master. He also cited Vincent Vickers, who had resigned a Directorship of the Bank of England in 1919 to become a thorn in Governor Montagu Norman’s side: ‘We have to remember that … the purchasing power of money, and consequently the price of goods, can be, and has been, varied intentionally and deliberately, not by the will or action of the State, but by those individuals who themselves manage and control the money … no one in authority here dares alter the system because the financiers don’t want it altered.’.
Press reaction to the Bill was generally muted. The Economist said that ‘It would take a very nervous heart to register a flutter’ although the FT’s leader on the day of nationalisation sounded a note of caution: the government had ‘given formal notice that it means actively to govern the direction as well as the volume of credit in the country … Since the new economic architecture must start somewhere, the basis of the inverted pyramid of credit is an obvious place for the foundation-stone’.
The 1946 Act’s quiet legacy
The Bank of England Act 1946 leaves several quiet but lasting legacies. The Bank remains in public ownership: the Treasury Solicitor continues to hold 100% of stock in the Bank of England on behalf of HM Treasury. After Norman’s marathon tenure of 24 years that concluded in 1944, the 1946 Act introduced strict fixed terms for Governors. Although they have been adjusted over the years, they remain in place and now stand at an eight-year (non-renewable) term for the Governor and five-year (once renewable) terms for the Deputy Governors. The 1946 Act placed statutory responsibility for ‘managing the affairs of the Bank’ on the Bank’s Court of Directors, a duty which, except for policy matters now reserved to statutory policy committees, endures. HM Treasury retains power under section 4 of the Act to direct the Bank ‘in the public interest‘ after consultation with the Governor, and the Bank may, if authorised by HM Treasury, direct ‘bankers’ to comply with requests in the public interest, although carve-outs for monetary policy and micro-prudential regulation and supervision have been introduced. These reserve powers have never been used, thoughtheir existence as a formal ‘option of last resort’ may have helped, paradoxically, to secure the Bank’s operational independence.
In conclusion, the 1946 Act struck a careful balance in empowering the Bank to act where necessary without undue interference with banking business, formalising the government’s powers to direct the Bank, while simultaneously securing the Bank’s own operational and financial independence from government. It was neither revolutionary nor inconsequential. Over the years, the Bank has become much more accountable to Parliament, its independence and powers have been strengthened and broadened. The Bank’s objectives, and those of its statutory committees, have been codified and detailed. Nonetheless, the 1946 Act helped to secure the principle that, above all else, the Bank must act independently, in the UK public interest, to maintain the value of money and a safe, efficient, effective, and competitive financial system now and into the future.
Andrew Hewitt works in the Bank’s Resolution Directorate.
If you want to get in touch, please email us at bankunderground@bankofengland.co.uk or leave a comment below.
Comments will only appear once approved by a moderator, and are only published where a full name is supplied. Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England, or its policy committees.
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The Bank of Canada said the financial system has functioned well through recent global shocks, but highlighted the risk of an asset price correction as well as vulnerabilities related to the role hedge funds are playing in debt markets.
There are more Americans experiencing food insecurity now than there were during the pandemic, a new survey from the Federal Reserve of New York found.
In the survey from Feb. 2026, the New York Fed asked American households about their spending habits, just as consumer sentiment reached an all-time low this month and as the economic effects of the Iran war were starting to be felt at home. The survey asked Americans questions such as if someone in their household dipped into savings to cover expenses; had trouble finding enough food to eat; had children miss meals: received food donations; or received Supplemental Nutrition Assistance Program (SNAP) benefits.
The Fed said the results are concerning, as the percentages of economic hardships increased across the board, compared to when the Fed conducted the Survey of Consumer Expectations early in the pandemic.
“We find a remarkable increase in food insecurity, particularly among lower-educated and lower-income households and households with young children,” the researchers wrote.
One-tenth of respondents reported not having enough food to eat or that their children missed meals, more than double the 4% who reported so in June 2020. More than a third of households reported dipping into savings to pay for groceries, compared to just 21.8% early in the pandemic.
“Such financial stress is reflected in concerns about affordability due to the high cost of living, persistent inflation, and high interest rates, and in high delinquency rates for credit cards and auto and student loans,” the researchers wrote.
The findings come as more low and middle-income households feel the pressure of higher housing and food costs, and experience higher effective inflation rates. Inflation reached 3.8% in April, the highest level seen in almost three years. The Fed economists say the findings show signs of a growing “K-shaped” economy, as lower-income Americans face financial stress and affordability issues while higher earners seem to drive productivity and wage growth.
As food insecurity increases, the researchers found that there has also been an increase in consumer pessimism. The University of Michigan monthly consumer sentiment survey fell to 44.8 this month, a rating lower than the Great Recession and the pandemic. The percentage of families who believe they will be financially better off in a year is also rapidly declining, the New York Fed found.
Low consumer sentiment comes as the Trump administration has celebrated what he called “lifting” 2.4 million Americans off of SNAP benefits. The One Big Beautiful Bill Act cut $186 billion from SNAP over 10 years, amounting to a 20% funding reduction. The cuts have hit children and the elderly particularly hard. Before the cut, they made up 39% and 20% of SNAP recipients, respectively. Additional cuts to Medicaid, Medicare, and the Affordable Care Act subsidies have also raised the cost of living for lower- and middle-income families.
Some Capital One cardholders are seeing targeted Capital One Offers that award 1,000 bonus miles after spending $20 at select retailers.
Some of the reported merchants include:
eBay
Home Depot
Dollar General
Sam’s Club
Cumberland Farms
and more
These offers are for Capital One account holders only and may vary by user. Like many Capital One Offers, you’ll generally want to activate the deal before making your purchase. Also make sure to carefully read the details of your offers before using them.
Guru’s Wrap-up
1,000 Capital One miles for only $20 in spend is actually pretty solid deal, especially if you can trigger it with something you already planned to buy anyway.
The recent near halving of Bitcoin’s price has reignited debate about its true value. As a store of value, net present value asset pricing models suggest it should be worth zero because it pays no dividend. Yet its price remains far above zero, and its total value is still large despite recent turbulence. In this post I explore the question: what’s Bitcoin’s value as a means of exchange? I show that using a simple quantity theory of money framework helps explain its extreme volatility, the powerful influence of sentiment, how prices can surge even when transaction usage is low, and – crucially – why innovations by competitors and limited retail payment adoption pose significant downside price risks.
Economics textbooks present four functions for money: medium of exchange, store of value, unit of account and a standard of deferred payment. In this post I focus on solely on the first. The original white paper, presents Bitcoin exclusively in ‘medium of exchange’ terms, as a ‘peer-to-peer version of electronic cash’ allowing payments ‘without going through a financial institution’. The words ‘asset’ or ‘investment’ are entirely absent.
Just like fiat, Bitcoin pays no dividend and has no intrinsic value (you can’t eat it, smoke it or make jewellery out of it). Fiat nevertheless has value because people are willing to accept it as payment for real stuff (ie labour, goods, services). If Bitcoin did become a medium of exchange could it, by the same logic, have value too?
Elsewhere, I and many others have argued that keeping accounts and/or managing payments in cryptocurrency is not viable because of the day-to-day volatility in its price and lack of singularity. But setting those issues and interactions aside here, I run a ‘what if you’re wrong’ type thought experiment.
The quantity theory of Bitcoin
I approach this through the lens of the quantity theory of money which can represent vastly different views about the value of Bitcoin within a common framework.
Let’s begin with the textbook equation:
MV=PT
This says that the supply of money, M, times the velocity, V (how often each unit changes hands) is equal to the price level times the total transaction value T (sometimes replaced by real GDP, Y). P here is expressed as price of goods in currency, whereas we normally think about Bitcoin prices the other way round (ie how much stuff do you need to buy one Bitcoin). It’s easier to work with if we rearrange it a little:
US$ price of Bitcoin = T/MV
The price of Bitcoin equals the real value of transactions it’s used for, all divided by supply (M) times velocity (V). Quantity is fixed at 21 million Bitcoin, so its price is determined by the value of transactions it services and how fast it whizzes round. The bullish case is that transaction use will grow, so T gets bigger; and so, for a given velocity, the price has to rise.
How much will Bitcoin be worth?
It all depends on your long-run view on T and V. Let’s start with T – currently 2025 payments on the lightning network, are estimated to be $14 billion and the latest estimate of Bitcoin use for transactions under $10,000 (a plausible retail cutoff) is $146 billion annually. What about some other benchmarks? Bitcoin is currently used for some illicit payments, so another thought experiment is to assume Bitcoin takes on all of them: then adding drugs ($800 billion), money laundering ($800 billion) and tax evasion ($171 billion) gets you about $2 trillion. If it becomes visa-sized payment medium then T is $17 trillion. If it takes over all digital transactions it’s $26 trillion. Or if, as Bitcoin maximalists argue, it becomes the world’s money, then T is world GDP: $155 trillion.
What about V? At the higher end, if someone loads up a payment card each and spends the balance down to zero each month, velocity is 24. For illicit transactions, studies suggest a velocity of about five. For broad money pre-GFC this was around two. Or if you are looking at GDP, then velocity can be as low as one. The table shows what these imply for the price:
In short, you can get wildly different valuations depending on what you plug in.
No coiners think it’s largely useless for real world payments and so T is zero, rendering Bitcoin worthless, regardless of velocity. The upper grey panel shows that that current T implies prices a fraction the current $70,000 or so.
The lower panels show the hypothetical scenarios. If use is confined to illicit payments, and velocity is five the price settles at $19,000. Visa-style volumes with payment card type velocity, the price is around $34,000. If takes over all electronic payments and has an M2 like velocity you are at $619,000. Or if takes over as the world’s currency your valuation could surpass £5 million.
What does this say about price dynamics?
To justify current valuations from such a model, the story must be of (beliefs about) the *future* rather than current scale of transactions, which are far too low to support current prices. And the vast range of potential prices creates highly volatile expectations.
Even small changes in the perceived probability of a future scenario can generate sizeable swings in prices.
The model also implies a paradox about hoarding: the less holders use their Bitcoin for real transactions, the lower velocity is, and the higher the price. There is ample evidence that a large chunk of Bitcoin is not actively circulating but rather lies idle in wallets.
Hoarding can amplify price swings. If you think Bitcoin will surge in price, you won’t spend it today, instead you’ll hoard it. But if sentiment swings and you think Bitcoin will lose value, then you want to spend it, or sell it for dollars, further depressing the price.
For more optimistic valuations to be validated in this framework, Bitcoin must at some point start to move towards those bullish long run usage levels. How have things progressed on that front over the past few years?
The recent history of Bitcoin and payment systems
In the late 2010s sceptics argued the argued the triad of scalability, delays and cost would prevent Bitcoin’s widespread adoption as a payment medium. But bulls countered that takeoff was imminent, with comparisons to internet adoption, and some even suggesting Bitcoin might become the world’s primary means of payment sometime in the 2020s.
That disagreement was less about the technical limits of Bitcoin *at the time* and more about whether/how/how fast the system could develop to overcome them *in the future*. Central to the optimistic case was confidence in an emerging ‘second layer’ of infrastructure, led by the Lightning Network to enable Bitcoin to scale-up. Simply put, the idea was apparatus sitting below (and crucially off) the main protocol to handle most transactions. Freed from the technical limitations of the main blockchain, advocates argued this could deliver faster settlement, lower fees and – crucially – a much higher transactions volume.
Evidently, that higher volume hasn’t come to pass. Bitcoin has seen little to no growth as a payment medium since the late 2010s as adoption flatlined. And it is increasingly hoarded – around 60% of Bitcoin supply has not changed hands in the past year. Even in El Salvador, where it became legal tender, it was used for less than 5% of transactions and accepted by less than fifth of firms. And, like in 2018, Bitcoin conferences still aren’t taking crypto.
Lightning was too expensive because opening and closing a bilateral ‘payment channel’ between two parties still requires an on-chain Bitcoin transaction which creates a high fixed cost, with rising Bitcoin transaction fees passed on to lightning fees. Not to mention problems with liquidity and network reliability.
Many of the most far-reaching innovations in payments technology over the past two decades have actually come from Bitcoin’s competitors in digital payments, providing challenges. Gone are the days when cheques were a key payment tool, or bank transfers needed several days to clear. In most jurisdictions, fast payments now offers free and near instantaneous domestic payments between accounts. On cross border payments, Swift Go introduced near instant settlement of transfers for small-value high-volume transactions, and multiple rails have been developed for transfers outside of SWIFT. Since the late 2010s, stablecoins have grown dramatically, especially for cross-border payments, taking on many of the purported advantages of Bitcoin: ‘open all hours’, quick online payments, and even programmability, but without Bitcoin’s price gyrations.
What next?
Current valuations of Bitcoin as a payment medium are incompatible with current low usage levels. And the experience since the late 2010s is that progress towards adoption stalled. Perhaps the most high-valuation yet plausible scenario for the price of Bitcoin is that Bitcoin retreats to illicit payments where its anonymity and secrecy are particularly advantageous. But then authorities would surely take a more hostile approach. And with fewer legitimate, users it’s harder to disguise transactions, especially moving funds between Bitcoin and the regular system. Is that a viable longer-run business model? Without a compelling and sizeable use case I see little value in Bitcoin as a means of payment.
John Lewis works in the Bank’s Centre for Central Banking Studies Division.
If you want to get in touch, please email us at bankunderground@bankofengland.co.uk or leave a comment below.
Comments will only appear once approved by a moderator, and are only published where a full name is supplied. Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England, or its policy committees.
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