To expand, what happens when fiat payment processing costs converge with BTC processing costs through middleman? Why do we think Visa etc won't react? Once all else is equal I'd think the current credit system is way more favorable to businesses than Bitcoin. That's even giving Bitcoin a 100% longterm success and adoption outlook.

I think before Bitcoin there was a lot of reason to believe that the future of payment processing was heading towards extremely low to zero cost.

Why do you think that more merchants accepting bitcoin is a gimmick and that it will cause downward pressure on the price. Surely people using bitcoin is the end goal and the more transactions carried out in it, the more it's utility, and hence long term value, increases?

because currently ppl using btc with merchants to buy goods = ppl selling btc for fiat

If it's hoarders who start spending coins, it will put downward pressure on the price when the merchants start converting them to USD

This makes a lot of sense. Anyone have a guess as to how significant this may be?

There is no reason to think that greater merchant acceptance will necessarily put downward pressure on the btc price. If someone is holding bitcoins, it by definition means they prefer every single one of the coins in their holdings to anything anyone is willing to exchange it for at that moment. They prefer it even to anything else in the world at the same price, since otherwise they could exchange for fiat and buy that item instead. Why would someone with this mindset suddenly start allowing their bitcoin holdings to fall just because there are now more items available that do not require the extra step of converting to fiat?

Such is forum life, you have fanboys and haters as most of the posters. Objective analysis from some but rarely do you see opinions change.

This is my thinking too. Would hoarders decrease their bitcoin holdings just because it becomes easier to spend/use bitcoins.

Right. I think to some extent it depends on who is spending the bitcoin. If I already hold mostly bitcoins and/or hold a considerable amount of bitcoin I'm not that concerned about spending a small % of it.

It's hard to know how significant this is. Someone holding a single bitcoin, probably doesn't want to spend much of it without replenishing their holdings.

I think increased merchant acceptance and transaction volume will rather quickly generate an increase in demand for bitcoin that will cause an increase in price. e.g. Netflix accepting bitcoin may cause 5M to be converted to fiat, but significantly more money will flow into bitcoin due to the credibility gained from Netflix acceptance.

Probably. Think of it as some weird iteration of the wealth effect where a person is perfectly fine with acting irrationally.

http://www.coindesk.com/overstock-la...bitcoin-buyers

Overstock says they're going to give 1% back to customers when they buy with Bitcoins.

Still not profitable for someone to trade USD for BTC intending to spend them, but it's pretty close now.

Sure there is. Unless the middle man(or the merchant) is going to be holding onto these Bitcoins then in the current situation on Overstock, X% of every Bitcoin sale is essentially a market sell order of Bitcoin.

This will of course change once merchants either begin holding BTC or the middle men dont just dump merchant's BTC right onto the market. Maybe whoever is processing Overstock's BTC business is taking on some of Overstocks' BTC on their balance sheets but I highly doubt they are taking 100% of Overstock's BTC business and holding.

Also, what is the point of buying something on Overstock in Bitcoin if you are just going to go to an exchange to replenish the BTC you just spend with USD? Certainly it costs you more time and $ to do that as the consumer? You are basically selling BTC to yourself and paying a fee to do it.

Maybe, maybe not. Also some merchants may hoard their received bitcoin (Overstock has said they may hold some of their coins). Plus, the adoption by merchants will increase the exposure of others to bitcoin, possibly creating new hoarders.

If all the shops in Ecuador said they are accepting US dollars would that put downward pressure on the US dollar or make more people in Ecuador start using dollars, thus increasing the need for US dollars? (I realize that Ecuador already heavily uses US dollars, just wondering what macro effect that has on the currency.)

Without hoarders - and the huge price spike - 99% of people would not have even heard of Bitcoin and there would be next to 0 interest. Price spikes - thanks to hoarders - is exactly what is driving media coverage and general interest.

The converse is not something you actually want - at least not yet. If Bitcoin is stable and actually used as money, it means that post-exchange fees, it's more expensive than using a credit card. And you don't get any of the benefits of using a credit card: (1) cash back, (2) warranty extensions/similar, (3) ability to dispute. This makes Bitcoin far inferior to credit cards.

The areas where Bitcoin is superior is mostly illegal stuff; sneaking money in/out of countries, buying illegal stuff. But this gets you bad press, regulatory oversight and government intervention.

It's a pretty tough path to thread on. Pitfalls on both sides. But for now, it's probably better than Bitcoin be treated like a commodity instead of being used a currency that facilitates illegal transactions.

The person the merchant or middle man sells to might be another hoarder.

The point was that the people spending btc on overstock are more likely to be people who would have sold them soon anyway, not hoarders. One exception is people who like to promote bitcoin by doing their share to make overstock's decision to accept bitcoin a success. They would not mind paying some exchange fees to do so.

As someone who just recently learned about bitcoin, and started buying there are two reasons I'd use bitcoin despite the disadvantages. (I won't go out of my way, but if Amazon started accepting, I'd spend a fair amount.)

1) Being an earlier adopter of a cool new frontier in money.

2) By being part of the bitcoin spending economy, it's like a vote for bitcoin as a currency. The more who use it, the more widespread it'll become. The more widespread, the more it'll go up in value.

Those two things seem worth the small % lost for me, plus the time in buying a few more via bitstamp.

I have never used any of the advantages of a credit card mentioned above, I only use it for ease of payment (I think credit cards are different outside the states in terms of getting cashback.)

I don't think they will. But all we keep hearing about itt and elsewhere is that bitcoin is a legit currency and people want to spend them. If hoarders do start spending, those coins will become available on exchanges where they weren't before.

I'm not lumping you in that group at all.

It's a financial decision in that it might help them reach some extra customers, and it would be beneficial for them the more people used it.

This. Think of merchants like a more convenient exchange.

In a vacuum this is true, but a hoarder is more likely to sell if it is convenient for him. The conversion to fiat is somewhat a pain now, there are tx fees, etc..., so a merchant who just accepts it might push them closer in that direction. Add in also that a hoarder and long term Bitcoin believer may also be more likely to spend on a merchant as a political statement of support for that merchant.

New America foundation has this bitcoin event yesterday that I thought was pretty good. They had people from academia, industry, and government. If you follow Bitcoin very closely there will not be that much new information, but interesting nonetheless.

http://newamerica.net/events/2014/new_coin_of_the_realm

That wasn't my main point I was pointing out to financier about bitpay and saying that I doubt it would ever hit 0/btc as long as there are even 2 people who use the system, BTC is acceptable as a currency because it works which is practically the definition of what a currency is..

I won't disagree that its a marketing decision but usually anything a business does is for marketing and potential profit, also middlemen is a choice congnitively made by the business it isn't required however probably the best decision with the price volatility


What would make you believe that? Its hard to believe that the Credit mafia would let go one of their largest sources of income. Even reducing the amount by cents would cost them hundreds of millions if not billions of dollars, they have people to pay while bitcoin operates on willing miners which power equates to thousands of times stronger than the best supercomputers on our planet..,

If you bring up a theoretical point of payment processors putting the cost on their customers I rebuttal with the fact that who is to say that in the future these middle men will even be necessary?

Jed McCaleb's Exit from Ripple Labs: The Plot Thickens

Jed McCaleb, the creator of E-Donkey and the founder of one of the largest Bitcoin exchanges, Mt.Gox, dropped out of Ripple Labs (a company that he is also a co-founder) to 'spend his time looking into new things: man-made surf parks and artificial intelligence'. As was written in an article from Wired: http://www.wired.com/wiredenterprise...9/jed_mccaleb/

But a video recently uploaded in YouTube (http://www.youtube.com/watch?v=uQ2DCKLHaQs&t=461) says otherwise. In the video, he mentioned that he left the company due to 'disagreements with someone brought on to be CEO'.

So which is it really? Maybe we will hear Jed McCaleb's side of the story in full in the near future. But for now Jed is probably busy on a new 'secret bitcoin project' (http://alphatesters.secretbitcoinproject.com/).

Good article:

http://themisescircle.org/blog/2014/...cant-have-any/

^although I think he doesnt explain a few things well enough

you mean i can't use litecoin in a hypothetical scenario where it becomes more popular than bitcoin?

so the people and businesses that use the cryptocurrency are your examples of the infrastructure of bitcoin that will keep it dominant? i don't think i need to go into why that is false.


why is it ridiculous? why is it impossible for america to back a cryptocurrency that has everything that bitcoin has minus every anti-governmental quality? if america announces that anonymous cryptocurrency is illegal and that they support ripple, everyone will dump BTC, crash the exchanges and you will never see your money.

you mean how the news of china's bitcoin stance saw the price drop by 50% in a single day?
yes, there is. "bitcoin does not have the qualities that will enable governments and banks to control it and that's why it is in a potentially precarious position."

I don't buy that hoarding is better than spending. If everyone hoards because they think the value will go up, but no one uses it, then eventually it'll just crash. Hoarding so the price goes up just creates a bubble. It also leads to the large price swings.

That's why I never bought gold. The idea was that everyone should buy gold, and bury in under their beds and just wait for it to go up because everyone else would do the same thing.

I know that bitcoin needed a certain market cap, and the publicity of a high value and that was created by hoarding, but right now I think there is plenty of hoarding. Making bitcoin useful and used is the way that bitcoin will move onto the next level.

That said, that is what seems to be happening, more companies are accepting it, more people are using it, it's utility is increasing.

Though, of course, all I plan to do is hoard. But if it looked like that was everyone else's plan then I wouldn't be getting into the currency.