I don't think there's a bottleneck. What mean you, this?

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As in what is the biggest blocker to BTC adoption as a medium of exchange.

The way I see it is a chicken and egg situation. Without consumers with BTC there won’t be merchants and without merchants accepting BTC there won’t be consumers

Nah, its a generational problem. The merchants are mostly older than us. Also the previous two-ish generations allowed corporations to take over the government, so there are far fewer merchants than there should be. But that's just about run its course. The debt is parabolic. The dam's about to burst, and if we do this bitcoin project right, small merchants will spring up everywhere as the big corporations shut down - which they will.

There's a growing number of merchants right here only accepting btc. Or giving discounts to discourage the hassle that fiat entails. That's going to accelerate. Its already accelerating.

The only threat I see is Bitcoin Core and their trying to reduce fees for spam. That's a credible threat and has to be stopped. But even if they ruin bitcoin, they can't ruin it irrevocably. Pruned nodes are a thing. But we have to stop the bleeding, or its pointless.