Quote:
Originally Posted by DefendTheCult
When the first boom happened, I thought it was Cyprus, but stats now show that they had little to do with it, and hardly anyone in that country was buying up coin. BUT maybe what happened there sparked people here to think "maybe that could happen here" and prompted some buy ups? I don't know.
I think for the most part the one theory I side with most is the Bubble rider theory, mainly from China.
I think this is right, people thought about "wait, maybe my money isn't safe in a bank, this could happen here next!"
Quote:
Originally Posted by surftheiop
Then why are people expecting this to catch on? I can't imagine any major corporations are going to want to be associated with this by accepting bitcoins?
It's still a big market, and only a small percentage of it. Bitcoin has the biggest advantages in transactions from a long distance that cannot be purchased with traditional means. Gambling is another big potential.
Quote:
Originally Posted by RAW_FORCE
His statement is false. The largest bitcoin payment processor alone did more business than Silk Road in March.
The payment processor business is almost entirely a different way of cashing out and avoiding exchanges. Think about it this way. You invested a small amount of money getting Bitcoins very early on. Maybe you mined, maybe you bought a few when they were super cheap. There are a decent number of people who have a reasonable amount of holdings from when the price was <$10. Many of these people are not rich by any means, but all of a sudden have a huge portion of their net worth tied up in Bitcoins. They need (or want) to buy something. Rather than cashing out Bitcoins, then buying, just buy direct with Bitcoins! Plus most of these enthusiasts are excited to just use them for something. The price went so high they were fabulously wealthy, so it only made sense to divest some of their holdings for any major purchases they are making. I don't have the numbers, but it has to be a large portion of the merchants are simply taking the cash immediately (which I presume Bitpay will just sell on the open market). So it's a useful way to reach customers with zero risk and get attention. But it's not really much different than someone selling on Mt. Gox first, then buying with a credit card. It's not increasing demand for the coins, but rather putting more of them on the market.
Silk Road is a bit different in that you have people who *need* to buy Bitcoins to participate. Even if they buy, do the transaction, then the merchant sells, you have a time period where they are being held, which will decrease velocity and raise the value.
Gambling will be a much bigger effect because you will have people cashing in and out much less. The amount of profits made from gambling is much less than the amounts gambling sites keep "stored" away on their sites. This effectively makes Bitcoins more scarce and raises the price. For example, someone depositing $1000 in BTC on a poker site will raise the value of BTC much, much more than someone buying $1000 worth of drugs on Silk Road.
Obviously the community has a big interest in getting regular retailers to take Bitcoins, as it would allow it to be harder to present it as "only for drugs". But the market for "get some bitcoins to buy stuff" really is limited to countries or people who do not have access to credit cards. You will see some smaller merchants accept it as payment as a way to lower fees and possibly order a discount, but I doubt this would be significant enough to have people acquire bitcoins just to spend them to save 1-2%.