Fact check: If I buy 1 bicoin, where does the cash I paid go?

1. Summary of the results

The analyses provided do not directly address the fundamental question of where cash goes when purchasing 1 bitcoin. The sources primarily focus on bitcoin investment risks, exchange fees, and payment processing rather than the mechanics of bitcoin transactions.

The closest relevant information comes from Block's Lightning Network pilot, which mentions that payments can be instantly converted to dollars for businesses that don't want to hold bitcoin ^[1]. This suggests that in some cases, the cash may go to sellers who immediately convert bitcoin back to fiat currency.

One source discusses SolarBank's strategy of using revenue from solar power projects to purchase bitcoin as part of their treasury strategy ^[2], but this describes a corporate buying strategy rather than explaining the transaction flow.

The remaining sources focus on exchange fees and trading costs ^{[3] [4] [5]}, investment risks in retirement accounts ^{[6] [7]}, and general cryptocurrency payment developments ^{[8] [9]}.

2. Missing context/alternative viewpoints

The analyses completely lack the essential information needed to answer the original question. Critical missing context includes:

• Direct explanation of bitcoin transaction mechanics - where the cash actually flows when purchasing bitcoin
• Role of exchanges, brokers, and peer-to-peer platforms in facilitating transactions
• Distinction between buying from exchanges versus individual sellers
• How market makers and liquidity providers participate in bitcoin transactions
• The difference between spot purchases and derivative trading

Financial institutions and exchanges would benefit from maintaining opacity around transaction flows, as this complexity can justify higher fees and commissions. Traditional financial advisors represented in sources like Morningstar ^[6] and Wall Street Journal ^[7] have clear incentives to discourage bitcoin investment, as cryptocurrency adoption could reduce demand for traditional investment products and advisory services.

3. Potential misinformation/bias in the original statement

The original question itself contains no misinformation, as it's a straightforward inquiry about bitcoin transaction mechanics. However, the analyses reveal significant bias against bitcoin investment.

Sources from Morningstar and Wall Street Journal ^{[6] [7]} frame bitcoin exclusively as a "terrible idea" for retirement investing, focusing solely on risks while ignoring potential benefits or providing balanced analysis. This represents clear editorial bias rather than objective financial reporting.

The fee-focused sources ^{[3] [4] [5]} emphasize transaction costs and potential mistakes, which could discourage bitcoin adoption without providing complete context about the technology's benefits or proper usage guidelines.

Traditional financial media outlets have institutional incentives to discourage cryptocurrency adoption, as widespread crypto usage could disrupt their business models and reduce reliance on conventional financial services and advisory products.