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Here's Why People Don't Buy Things With Bitcoin (vice.com)
An anonymous reader shares a report: One reason for this, if you live in Toronto like me (or anywhere else for that matter), is that there's basically nowhere to spend digital coins in the real world. Coinmap, a service that maps bitcoin-accepting locations all over the world, shows a few places that accept bitcoin in Toronto, but it's clearly out of date -- I called several businesses listed on the site and they had no idea what bitcoin even is. A bigger problem is perfectly illustrated in a Reddit post from Wednesday morning complaining that a bitcoin transaction worth just $9 still hasn't gone through the network after two days of waiting. Two. Days. The likely reason is that the fee attached to the transaction in order to incentivize faster confirmation -- 50 cents, which is about as much of a premium as I'd pay for a $9 transaction -- simply wasn't enough. "Should I have paid $3 on a $9 transfer to get it processed?" the person wrote.
Philosophical debate on reality aside, there is nothing less real about Bitcoin than other fiat currency.
The design and process used to exchange BTC is probably deeply flawed, if these experiences are any indication. I can certainly whip out examples of currency systems through out history that were flawed in some way, and in many cases led to their eventual abandonment. I see no reason that we should assume that BTC will remain with us forever as an exchange medium, one day it will be a footnote in history and perhaps something similar but vastly improved will be available instead.
“Common sense is not so common.” — Voltaire
The author has a good point, and I've always felt that the transaction fees were a big problem for bitcoin. Many of the people who are looking for an alternative form of payment are trying to get away from all the fees banks put on their money, but if you have to spend more than 5% in transaction fees to get your payment processed, have you really gained anything?
I like the concept behind crypto-currencies, but it's just not going to work if it's more expensive to use it than to use existing payment methods.
Not necessarily. A lot of stuff doesn't have to do with any real or perceived value. Prices can be driven by speculators speculating what other speculators will speculate.
That is, it's gamblers betting on what they think other gamblers will bet on, knowing that those other gamblers are also betting on what other gamblers will bet on. Even if they're pretty sure that Bitcoin is all hype and will eventually collapse, they're placing a bet that the bubble won't burst quite yet.
This.
the economic crisis of 2008, tarp, central bank stimulus by g7, etc. reminded the world that as flawed as they are, sovereign nation states that float fiat currency are still a backstop to a currency's floor and fundamentals. Not just a currency, I would say an institution. Sure there are multinational entities and pseudo-governments like the eu but my point is -- bitcoin being floated as an arbitrary currency will always be more fragile than something backed by a sovereign, because at least a sovereign is an institution with goals, one of which being the credibility of their currency. the recent forking of bitcoin, twice -- is also a concern. if bitcoin were at least licensed or supervised or administered by a known financial entity, and subject to control by host and operating countries, i think it would do better.
ultimately i think bitcoin is a proof of concept for blockchain verification. i can see it being applied to technologies like passports, professional licenses, contracts. But I think that as long as it is run without an institutional framework it will not last.
Bitcoin is gold. You can't use gold in the stores either. Use of altcoins like Denarius DNR with super fast transactions and low fees will probably more likely be the future of cryptocurrency.
Philosophical debate on reality aside, there is nothing less real about Bitcoin than other fiat currency.
Sure there is. The US government has a law that says that businesses must accept US dollars. The fact that other people are legally required to accept it makes it "real money".
Now you can get all hypothetical and theoretical and say, "fiat money is always made up", but you said you wanted to put aside the philosophical debate on reality. Being very practical, there's not really anything to stop the value of bitcoin from dropping to zero tomorrow. There are a lot of things that will stop the value of the US dollar from dropping to zero tomorrow.
You can use Bitcoin person to person.
Yes, Bitcoin (BTC) has been taken over by companies and individuals who hate the original anarchist idea of unstoppable decentralized cryptocurrencies.
This takeover will centralize and have high fees and controls and you will lose.
That's why there's now Bitcoin Cash to replace it...
https://www.bitcoincash.org/
Only stupid people believe that in the new world of cryprocurrencies that any particular crypto will be *THE COIN* for all eternity.
That's not what this is all about.
You have to adapt, and exchange.
Or go back to sucking the teat of the fiat government you love so dearly.
Philosophical debate on reality aside, there is nothing less real about Bitcoin than other fiat currency.
My bank notes have a promise to pay the bearer the face value from the Bank of England, the bank of the world's fifth richest nation.
I only please one person per day. Today is not your day. Tomorrow isn't looking good either. - Scott Adams
The US government has a law that says that businesses must accept US dollars.
What law? I do not believe there is a US federal law that requires private businesses or individuals to accept currency from the Federal Reserve Bank. We all choose to do so because it is incredibly convenient and there are many laws and statues that encourage it.
But as far as I know, I can choose to refuse cash money and only accept my payments in barter. (I mean if I really don't want to run a successful business)
I will have to find some US currency to pay the tax man though, they quit accepting bushels of wheat as payment some long time ago.
“Common sense is not so common.” — Voltaire
So it's like a sadistic game of chicken with your money? No wait. OTHER people's money?
Holy shit.
I tend to rant.
If a 5.5% fee can't get a transaction complete in 2 days, how much does it cost?
I've never paid more than 3% extra for credit card transactions, 1.5 or 2% is more common. My bank gives me back 1% of that anyway. If the merchant absorbs that cost and distributes it across its credit card and cash customers, I effectively get a discount.
Gold's physical value is... well... mostly decorative. It does have uses but in such small quantities that they hardly figure compared to the jewellery market.
Why do people want shiny crystals and yellow metal? Same kind of questions. Same kind of answer: scarcity but demand. You can't find them lying around in the back garden, but equally other people want them (because THEY can't find them lying around in their back garden either).
Bitcoins aren't generated by raw processing power as such - it's a specialist type of processing. FGPA and ASICs generate more Bitcoin that CPUs/GPUs ever could. Hence the harder to make in bulk, the more valuable they are.
You can "track" the wallets from creation to end. Yes. But that doesn't necessarily tell you anything. The WannaCry guys have spent their Bitcoins, still nobody knows who paid the ransoms, who received them or what they were spent on. Just that they were spent.
Physical merchants don't take stock certificates, or even cheques any more. But they still have value to people. And anyone can accept them, the same as anyone can accept Bitcoin. But it's like me offering to pay for your car in bananas. Sure, you can. There's a famous legal case about it. But do the bananas - despite having an obvious value - have that value TO YOU as opposed to, say, a banana dealer, or someone who owns a food store? Probably not.
You are correct. While it is legal tender for all debts, it is not a requirement to accept it. Furthermore, the word "debt" implies repayment. There is a difference between a straight-up trade (buying something at a register), receiving goods in advance (eating dinner, then paying the bill), and financing a debt (buying a car using a loan). There are nuances between those scenarios that affect legal requirements for payment, and furthermore, an additional consideration is payment in dollar equivalents such as using a credit card to purchase something using dollars, but not physical currency.
The long and short of it is you are correct, most transactions have no requirement to use U.S. dollars, but everyone does so anyway because nobody barters in livestock anymore.
24 beers in a case, 24 hours in a day. Coincidence? I think not!
The idea of any blockchain-verified cryptocurrency being widely used as money never made sense, and never will. What, if I buy lunch for $10, I have to wait several hours or days for a bunch of server farms in China to verify my transaction while burning enough energy to light every house in my neighborhood? Either that, or pay $2 or $3 to get it "expedited" in 15 minutes?
It's insane. The world economy is far too large and complex to be funneled through 1 MB or 2 MB or 4 MB chunks of data verified one at a time, and even the people pushing BTC realize that now. When was the last time you heard BitPay brag about how many new merchants were using their service? The idea of BTC as money has all kind of faded away. It simply won't scale, regardless of the supposed "solution" of SegWit.
Now it's all about the speculative frenzy, and the different factions within the Bitcoin ecosystem fighting for control of the blockchain with hard forks. BTC is useful for moving large sums of currency across borders without government control (many wealthy Chinese like that), but as far as being used as "money", that ship has long sailed.
Luckily instant transactions at low fees are implemented right now (as in the next few hours) on Bitcoin, with the inclusion of SegWit, enabling Lightning Networks.
it's in my head
That's part of the problem. Bitcoin is far from being any sort of common currency, so any merchant will be thinking about converting BTC back to USD or whatever other local currency. When BTC price fluctuates so much - why should I offer to sell you something today when I could make more USD by selling it to you tomorrow? Conversely why should I accept BTC from you today if I could lose money just due to BTC's daily price fluctuations. After all, I am not guaranteed to be able to cash out my BTC instantly - there's an arbitrary delay. If I'm a merchant and my profit margin is 10%, I'd be a fool to commit to a price in a currency that has been known to swing 30% or more during a single day. That is why BTC won't be mainstream until it stops being so volatile. And it will never stop being volatile because speculation is the only thing driving BTC.
Seven puppies were harmed during the making of this post.
We need to have a bank account with bitcoin that is not necessarily tied to a bitcoin wallet, that would just be bitcoin credit, similarly to what a fiat coin account would be. And then bitcoin credit card where a payment wouldn't require any movement of bitcoin from a wallet to the next and the financial institution could approve that purchase in bitcoin immediately. And then, financial institutions would only need to do a bitcoin transaction once in a while in large batches and they wouldn't mind paying $5 to complete that transaction. A bitcoin transaction would also be required when you are cashing out, but hopefully you don't have to cash out $9 dollars at a time, just like you don't withdraw $9 from an ATM.
Even gold only has value because people believe it does. Its only real value is as a conductor, but beyond that, it's pretty worthless. Gold is too malleable and cannot be used in building.
Hi, I have some extremely valuable tulips that I will trade to you for that government backed fiat currency.
In California, businesses (like restaurants) can refuse to accept money from anyone for any reason. They are not required to do business just because you have dollars or legal tender. If they don't like the fact that you are trying to pay in pennies, they don't have to accept it. Therefore, some business could legally refuse dollars but accept bitcoin if they wanted to.
OK a new size TV
On the other hand, the long term trend of bitcoin value has been up
So back to problem 1 - why should I agree to sell you something today when I can make more money by waiting and selling it to you tomorrow?
Seven puppies were harmed during the making of this post.
Because scaling the transactions was becoming a problem. SegWit is supposed to allow for future development of the 'lighting network' which is supposed to allow thousands of transactions a second instead of just hundreds. Its a technological problem, for which there are multiple solutions. We'll just have to let the market work itself out.
Interesting times if you are an amateur economist.
It's a pyramid scheme combined with a game of hot potato. Just don't be the last one holding the Bitcoin.
Exactly. Bitcoin will never have the core feature of a desirable currency, which is stability. The only people who transact in volatile currencies are those who must -- namely the citizens of the countries that issue them. If you own BTC, there's little incentive to spend it because you likely believe it will be worth more of a "real" currency in the future, so you're holding it. If you believe it's going to depreciate, then you're probably going to liquidate by selling all of it, not by buying a pizza and paying transaction fees. And if you believe it's going to remain relatively stable, then I want some of what you're smoking.
https://www.eff.org/https-everywhere
There's a lot of bitcoin hate on Slashdot from people who are mad they don't own any bitcoin, and didn't get in when it was affordable.
Value is what people believe it to be. The US dollar is just as imaginary as bitcoin, the difference is there is an infrastructure in place to process it, whereas bitcoin is non-central. There are plenty of places you can exchange bitcoin, like gold, but issues like the one in the article do happen mostly because it's still in its infancy. Playing a mmorpg someone went off on how it's insane that in game gold has real value when it's imaginary, I pointed out that the in game economy of world of Warcraft alone exceeds that of Venezuela
Money has three primary functions, a unit of account, a store of value and a medium of exchange. Your examples only function as a very limited medium of exchange, they do not provide a way to store value and they certainly can't be used sensibly as a unit of account. The volatility of Bitcoin is neither here nor there when using it as a medium of exchange, but it is most definitely a relevant consideration if you are using it as a store of value or unit of account. Here's a little primer on what money actually is: https://www.boundless.com/busi...
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
It's silly that you folks are arguing against the effects of deflation.
We've got plenty of data that shows what happens when your currency is deflating: people rationally hold their money. That's one reason why central banks are so afraid of deflation.
I'd expect you to lower the amount of bitcoin you expect.
Oh, so you admit that BTC has no real value because even you want to peg it to some other fiat currency. You just proved why BTC will never become a standard. Everyone is looking to see what BTC can get them in USD, GBP, EUR, JPY, etc and not BTC as a store of real value.
If people were planning on keeping BTC, everyone would be flocking to BTC to use it as a long term store of value and everyone would be thinking how many BTC their government issue fiat currency could buy them. After all, it has already been pointed out that BTC keeps gaining value. So only a fool would not want to store say their life savings in BTC. People don't though - why is that? Because they know that BTC's exponential growth is speculative only.
Seven puppies were harmed during the making of this post.
The other side of this, as a purchaser, is :
"Why would I spend my bitcoins now, when they are very likely to be worth more tomorrow?"
The first proper bitcoin purchase - where 2 pizzas was purchased for 10,000 bitcoins - comes to mind here.
You are in a twisty maze of processor lines, all alike.
There is a lot of hype here.
Those who fail to learn from history are doomed to repeat it. Possibly the most well-remembered example is Tulip Mania, which occurred in 1637.
Basically you attach the notion of immense value to some object which has little or no actual value, then sell limited shares in that object and let the hype train do the rest.
You are in a twisty maze of processor lines, all alike.
There is a lot of hype here.
Well, ordinary money isn't real either.
Money, like bitcoin, is only as real or as valuable as everyone exchanging it says it is.
That's why larger investors have gotten more friendly with smaller investors in the 21st century. They realized they can make even more money if they blow the bubbles up big and stick a bunch of suckers with the dynamite just as the last bit of fuse burns down.
I don't use bitcoin in part because it is of very limited utility -- you can't buy much with it directly. I also don't use it because it's inconvenient.
But mainly, it's far too volatile for my tastes.
With my current coinbase sell limits, it would take me ten weeks. That could be improved apparently, but I can't imagine how I could get to the point where that would matter. Alternatively, there are probably other major organizations that could absorb that level of transaction.
The strength of Bitcoin comes from the health of the computers maintaining the Bitcoin network, and those computers are only on the network is because they're getting paid in bitcoin to maintain it.
Once it becomes hard to impossible to mine bitcoin, to the point where it is not financially feasible to do so, Bitcoin's network will weaken and fold as miners move onto the next crypto-currency with a better ROI.
This will have the net effect of weakening the number of systems maintaining bitcoin - and potentially weakening the strength of the bitcoin network. This *might* possibly cause bitcoin's price to suddenly drop as people pull out.
It's either that or bitcoin has to continue to inflate for eternity I guess.
READY.
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The retail problem is easy to fix. Look as a building estimator I had unreasonable clients who would ask for massive penalties, for delays or work quality and so I would simply adjust the mark-up to allow for those penalties to occur. I would win the job and not be concerned for losses because those penalties were already allowed for, if they did not occur lots of profit, if the quote was to high and I did not win the job, meh, at least no risk of major losses (those clients were always arse holes so it was better to lose the job). So sell stuff for bitcoin at retail and bitcoin fluctuates by 30% just straight up add 30% to the 50% on top of the profit margin and just in case add some more based upon how much competition in that market, less competition even higher margin, you have a fish in a barrel market and trade out of that bitcoin for real cash as quickly as possible to limit losses.
From a suckers point of view, compare the imaginary bit coin price to a real currency to see how much you are actually paying for stuff and find you are paying pretty much double, even triple the real currency retail price and the retailer will just say, oh that's the old price, we haven't adjusted it yet and we only do increased imaginary bit coin values once a month, of course decreases are programmed in instantly via a program.
So you can buy bitcoin with retail products at a massive discount, rather than paying for it with real dollars. Consumables work best, so sure illegal drugs but also legal drugs will work (booze, tobacco, MJ in some locations). Want to know the true worth of bitcoin, create a basket of products priced in bitcoin and compare that price to a basket of the same products in a real currency backed by a real countries assets.
Chaos - everything, everywhere, everywhen
Men in suits, potentially with guns, can tax your income and/or transactions and require payment of those taxes in a fiat currency. Which means that at the end of the day that fiat currency is backed by the value of human labor and/or physical assets.
Bitcoin is backed only by demand for Bitcoin, and therefore can drop to absolute worthlessness on a whim, versus a complete collapse of governing authority.
Chose a shop at random. It will accept your USD/EUR/GBP/Whatever. Try to pay as bitcoin, watch them thinking you are insane. The lack of penetzration in shop make bitcoin solely a speculating commodity and not a currency. Facit : for 99+% of the population, the one who count, bitcoin do not exists.
C. Sagan : A demon haunted world:
http://www.amazon.com/gp/product/0345409469/
visit randi.org
Funny I just bought stuff at the corner store and the checkout girl's eyes glazed over when I asked if I could pay in American dollars. Then I ordered some delivery from a fast food joint and once again the dude on the phone said "what?" when I asked if I could pay in American dollars. Some standard you have there, which isn't even accepted in Europe.
"There's someone in my head but it's not me." - Pink Floyd, Dark Side of the Moon
I would rather people rationally hold their money than irrationally spend it... But by all means, lets let the central banks control monetary policy...
Yes it's an anecdote! Were you expecting original research in a Slashdot comment?
Problem with this kind of bubble is that at some point, they'll have to convert the BTC to USD or other currency for the price to drop. The price will drop when they will dump it, but dump it for what? You can buy nothing with BTC, and exchanges probably don't have enough of other currencies to back the BTC value.
I know that BTC is in a big bubble hype right now, but how can this bubble burst if you can't even dump it?
Very few retail locations officially accept USD outside of the US. However, in almost all cases, you can talk them into taking it. They will usually penalize you though in terms of the exchange rate. On the other hand, in the US, it does seem that people are oblivious to the fact that other currencies exist.
It bursts because you *can't* dump it.
An asset is worth what you can sell it for, nothing more. As long as you can convert BTC to some government's currency, it's worth that amount. If there's a run out of BTC, and exchanges run out currency to exchange it for, the price of BTC collapses. At that point, the price lands at whatever speculators think they can low-ball purchase it for on the hope of a recovery.
There's enough gullible/greedy people in the world for that game to probably work a few times. Given the volatility and lock of oversight of BTC, I wouldn't be surprised to see that level of crash happen in a matter of an hour or two. Probably the fact that blockchain transactions can take so long to complete would be the only thing slowing it down.