It doesn't matter. Nobody needs to make such a guarantee. As long as it is perceived that you can exchange BTC for dollars people will accept it in lieu of dollars and people will give you dollars for it. It is a self-fulfilling prophecy.
If I offer to send BTC to your Mtgox account for $80 each right now are you going to accept? Of course you are, because you know you can instantly turn around and sell that for $94. Thus you and I both perceive it to be worth at least $80. And if you don't believe in USD we can play the same game with Euros, or silver, or gold. From here it is no longer a question of whether it is worth something but merely one of how much it is worth.
The taxes thing is oft repeated and silly as could be. You'd have no need of USD to pay taxes if you weren't using USD and thereby generating a tax debt.
"When virtually the first mention of Bitcoin in any official capacity comes from "Financial Crimes Enforcement Network" of the US Treasury department"
Their mention was a guideline saying to treat it the same way you treat any other currency interacting with the dollar. That isn't exactly an indication they are going to try to shut anything down let alone evidence that they could do so.
In response to the reward halving the price has gone from $12 to $90... if that isn't much impact in your book I don't know what would be. The price starting rising before the actual event but only because of anticipation of the event.
Correction, the price to mine doesn't set a floor at which nobody mines but the floor at which miners will sell the coins that they mine. At that point they don't stop mining, they stop selling, thus reducing supply until the price raises to the point where they are willing to sell again. Essentially the cost to mine is a market bottom for Bitcoin. This will continue to be important even after the mining efforts no longer unlock blocks because the miners will derive a significant portion of their revenue from transaction fees and similarly, won't sell that coin for less than the cost to accumulate it.
"All that said, I imagine this was a well-intentioned experiment from the start, though I can't know. It's just one of the interesting risks you run, in that position."
I haven't read the Kaminsky analysis so I'd have to check it out. But developing a decentralized payment system like Bitcoin is a challenge nobody had successfully tackled before. I can't see why someone expending all that effort wouldn't mine some out of the gate before revealing to others to represent their stake in the system should it become successful. Just like any other venture, they ran the risk that in all probability their efforts would be wasted and Bitcoin represents a substantial effort by someone. And so long as they cash that horde in slowly rather than in a large dump I don't see it crashing Bitcoin. I also doubt anyone could have expected the mining difficulty explosion.
The Bitcoin platform if it does remain stable, secure, and attain critical mass has the potential to change the world. Many of us knew about it early on and could have mined when CPU's were enough. There was no way to know it would grow to what it is today let alone what it might be tomorrow. Those people who took a chance and did their part are the only reason it ever could grow to what it is today. I have no problem with them getting their rewards. One such person responded to me in another thread. They CPU mined 300 coins and sold at $14 for a $4200 profit. Do I feel bitter knowing that some part of my $90 purchase price when I buy a coin went to pay that person? Not at all. That person is part of why the platform is possible.
I myself have an idea for a decentralized P2P exchange that depends on network elected escrows. When certain volumes are reached the system would kick off bidding for a new escrow position and those who have them would be rewarded with a small percentage of transactions using them. Naturally, the oldest continually operating and trusted escrow accounts would be first in line for new transactions. Would I have a stake in the first escrow account? Quite probably. And there might be substantial rewards in doing so since it might take some time for the volume to grow enough to start popping up others. But I'd be taking a reward because there is an opportunity it wouldn't be the reason for setting the system up.
"Actually I replied to gox and have many concerns remaining at this point. He is making good arguments, though."
I'll be interested to follow the thread.
"If you can link to Bruce Schneier endorsing bitcoin's security, I would love to read it. You can't though, because he hasn't."
Granted. But it is clear Bruce has given it more than a passing glance and the fact he hasn't spoken out about flaws does suggest he hasn't found any.
"Kaminsky... said it had "Ponz-like properties"
That isn't really a technical issue. I've heard the pyramid and Ponz claims before. Bruce's analysis of transactions showing a great amount of coin in the hands of early adopters tends to suggest he may agree and that is why we won't see an endorsement from him. The primary basis seems to be that the early adopters were set to be richly rewarded.
To some extent any economic system is a pyramid. It has to be fueled by a constant influx of new goods and services. But this is where Bitcoin differs from a pyramid scam like a chain letter. With a pyramid scam there are no real goods or services, just an ever growing base of people putting money in. Ultimately the money only flows upward. Bitcoin is quite different. At some point the early adopters will spend their coin, be it because of need, or because the reward is great enough. Either way that coin goes back into circulation and with it's release the other Bitcoin is reduced in value by an amount comparable to what they extracted by the increase in supply. Circulation being the distinction between an economy and a pure pyramid.
A Ponzi is actually easier to address. Rewarding early investors does not a Ponzi scheme make. There is nothing wrong with rewarding early investors, see Bill Gates, Steve Jobs, etc. Ponzi schemes use new investments to pay fake returns. First this doesn't work with Bitcoin because it isn't an investment. There is nothing about Bitcoin that requires anyone ever value it beyond the actual goods and services in circulation. The increasing value should either reflect greater buying power of Bitcoin or a reduction in the amount of available Bitcoin and thus each remaining coin representing more of that value.
I read an estimate the early adopters coin was worth about $75m. That doesn't seem unreasonable as an appropriate reward for building a billion dollar economic system. Especially one designed to be decentralized and carrying the risk of severe repercussions from entrenched powers.
That's an interesting data point. They certainly do keep going when they are up as well though. That's why nobody ever leaves the casino when they are ahead.
"BitPay... is acquiring new merchants at a rate of 1,000 per month"
Thousands was overstating a bit and it is a far cry from critical mass but definitely an indication that there is real economic activity not only happening but growing within Bitcoin the Bitcoin world. The same article indicates that BitPay has 4000 signed merchants so the rate of signup is increasing dramatically which suggests to me that same publicity and growth that is driving the massive upward trend in the market is driving a massive upward trend in merchants accepting Bitcoin.
It looks like gox already explained why your attack strategy wouldn't work. But I do apologize. It sounds like you did have some reasonable questions that required a solid understanding of the design to answer.
"I do not buy that there has been adequate review of the system - at least, that is not what I see when I look at the public discussion."
I'm going to have to disagree here. The client has been taken over by a completely new team of developers who certainly have reviewed it's code. The mining and transaction logic certainly have been reviewed extensively, especially by those trying to build a bigger/better miner. Even the >51% attack wasn't a given but discovered by researchers trying to find flaws in the protocol.
Bruce Schneier, perhaps you are familiar with him, has looked into Bitcoin before and even written a paper on the results of his statistical analysis of the transaction trail and his uncovering of early adopters and their Bitcoin movements. If he had found any fundamental flaws in the protocol you can be certain he would have been all over them like white on rice.
"Do you imagine anyone could recoup the capitalization of an entire market by finding a flaw in the market?"
Yes, that was a bit of hyperbole. But the market cap it ceiling of potential gain. A billion dollars would be unlikely, while a million would be peanuts. There would certainly be tens to hundreds of millions to gain. The point being, there is a large enough financial incentive to turn even the whitest hat black.
Coinbase is a great concept but you can't actually buy any coin there. It perpetually gives the "we've exceeded the 24 limit" message at any time of any day.
Mtgox, that largest bitcoin exchange in the world. You must be right, it must not work. lol. I suppose you think it being Japanese is somehow a negative?
localbitcoin.com... omg, needed an 's' localbitcoins.com. Figuring that out would have required less typing than comment about it...
"My landlord hasn't heard of them and isn't interested. He can't buy groceries with them either, so why would he. I transfer my rent payment from my bank to his every month, and he pays his mortgage the same way. I'm sure he would tell me his mortgage holder isn't going to take bitcoins either."
Apparently you missed all that about bitpay... which would deposit local currency into his bank account within 24hrs. There is a 0.99% fee but he probably would be okay with that since unlike your bank transfer it can't be reversed.
"No need for this ridiculous straw man. Bitcoin trading is an extremely niche activity"
Of course it is but it is a rapidly growing niche. Rapidly growing or not it has only been around for 4 years. Expecting your local grocery store to take Bitcoin is extremely premature. It is surprising that they ran a pilot and likely they did it before there was anything like bitpay. Your local grocery likely doesn't take Paypal either but I don't think many would argue that paypal is an irrelevant payment medium. Give it another ten years and maybe it will be reasonable to discuss the level of penetration you are talking about.
Gambling is based on probability. Like the probability of a trend continuing or breaking in a way that pays back more than you bet. Or the 20% chance overall chance of winning that you typically have on a bet in a speculative market.
People con themselves into thinking they can find consistent mathematical patterns in roulette and slot payouts too but they eventually lose all their money following them. The only way to win consistently forever is to rig the game and play on a small statistical advantage.
" Apparently merchants need more incentive because there is a significant dearth of them right now. I still can't pay my rent or buy food with them."
There are thousands. Bitpay alone is processing more than $2M a month in merchant transactions. Here are a couple online examples. http://www.bitmit.net/en/recent and https://www.bitcoinstore.com/
There are several restaurants so you CAN buy food. As for rent, it isn't a given but your landlord just might take them if asked just like he probably would take gold if asked.
If your expectation of a new system is that it only exists if every vendor everywhere takes it from day one then you've set an impossible bar. It takes time. At a billion dollars there are no shortage of private companies in the US and the EU that are much larger than the Bitcoin economy. It is going to take time before you start seeing a shop taking Bitcoin on every corner. But there are merchants who take them and the number is growing rapidly.
"The one place I found that would actually offer Federal Reserve Notes for BTCs limited me to trading no more than 2."
You must not have looked very hard. localbitcoin.com, bitinstant.com, mtgox.com... you can buy or sell a hell of a lot more than 2 BTC at any of these places.
"Properly stated until you sell it, it is an unrealized gain and typically is not taxed, though there are some special cases."
Why would I need a citation? You agreed with me. The rest is semantics.
Bottom line is, it's no different than wow gold at the end of the day. If you start selling it and make a USD profit there is tax. If you sell virtual crafts to players and accumulate a bunch of it you don't owe any taxes or have anything to report.
No that's the problem with gambling. And if you won it would bolster your confidence and you'd bet it all again. Speculative markets are nothing but high stakes gambling.
Bitcoin is an open source currency invented by nerds. It definitely qualifies as news for nerds. The billion dollar mark is a legitimate point of note so this definitely qualifies as news for nerds.
Personally, I have no interest in stories about games. Just because you aren't interested in a topic doesn't mean none of us are.
Granted. There are plenty of individual companies in the US and EU that are valued at more than $1B but it is still a notable milestone not insubstantial. There is a long way to go before this is any sort of threat to the entrenched currency systems of the world. Bitcoin is large enough to be considered a player on the NYSE now but the NYSE is chicken feed relative to the foreign currency exchange.
True, but that is just a question of volume. Bitcoin has surpassed the currency of 20 nations but if you sold 9m worth of those currencies for dollars it would swing them drastically too.
Yesterday the trade volume on mt. gox was about $15,000,000. So yeah, $9,000,000 would swing the price rapidly. But you could move that much without such a big swing if it did it a little more slowly. A billion dollars relative to the multi-trillion dollar economies of the USD and EURO would be a smaller movement relative to the volume but it certainly would shift the price if done as a one off move.
There are plenty of companies in the EU and US with stock valued at more than $1B so we have to keep that in perspective. A $9m instantaneous sell off would move their price as well! These 20 nations are very small ones but they are nations. Bitcoin has grown to rival or exceed the economies of actual nations. That is a big milestone but it isn't end game vs the global economy.
The inflationary economic hypothesis has functioned on a large scale for a few decades. The entire world had a successful deflationary economy for several thousand years before that.
Traditionally fiat and inflation was something a broke government did to finance something it couldn't afford like a war. A system that is designed to make spending beyond your means feasible doesn't seem like a sound fiscal system to me.
But hey, to each his own. But stop pretending that inflation being taught as economics 101 now actually makes the hypothesis proven, tested, or correct.
Trade drives deflation/inflation not the other way around.
Yup, the key thing here isn't really how much they are worth. The key thing is that people see them as worth something and thus will give you things for them. It doesn't matter if the price drops in a crash because short of some fundamental technical flaw invalidating the entire bitcoin system, people aren't likely to ever value them at 0 again.
Which I'm sure you are fine with. Especially if you are using something like Bitpay. After the initial setup to be able to accept, it essentially costs nothing to be able to keep doing so no matter how low the volume. The fees are lower than credit cards by a long shot with no charge backs. The 0.99% is 0.99% less than you get with cash but then you have to process and deposit the cash manually so BTC might even preferable to cash in the end.
Because of this more and more merchants are starting to sign up and they don't have the exchange fees and hassles to deal with anymore so they will no longer charge more for BTC payment. If anything they could afford to give incentives for BTC payment.
Now we need a ready way to convert fiat to BTC. Banks would be in a prime position to do this since they already give cash and that is no more reversible than BTC.
Slashdot Mirror
It doesn't matter. Nobody needs to make such a guarantee. As long as it is perceived that you can exchange BTC for dollars people will accept it in lieu of dollars and people will give you dollars for it. It is a self-fulfilling prophecy.
If I offer to send BTC to your Mtgox account for $80 each right now are you going to accept? Of course you are, because you know you can instantly turn around and sell that for $94. Thus you and I both perceive it to be worth at least $80. And if you don't believe in USD we can play the same game with Euros, or silver, or gold. From here it is no longer a question of whether it is worth something but merely one of how much it is worth.
The taxes thing is oft repeated and silly as could be. You'd have no need of USD to pay taxes if you weren't using USD and thereby generating a tax debt.
You can't spend Bitcoin? News to me. There are fewer places to spend Bitcoin but you can certainly spend it.
"When virtually the first mention of Bitcoin in any official capacity comes from "Financial Crimes Enforcement Network" of the US Treasury department"
Their mention was a guideline saying to treat it the same way you treat any other currency interacting with the dollar. That isn't exactly an indication they are going to try to shut anything down let alone evidence that they could do so.
In response to the reward halving the price has gone from $12 to $90... if that isn't much impact in your book I don't know what would be. The price starting rising before the actual event but only because of anticipation of the event.
"-transactions inside the bitcoin economy."
Of course this affects the price. If I spend my BTC I have to replace my BTC before I can spend again.
Correction, the price to mine doesn't set a floor at which nobody mines but the floor at which miners will sell the coins that they mine. At that point they don't stop mining, they stop selling, thus reducing supply until the price raises to the point where they are willing to sell again. Essentially the cost to mine is a market bottom for Bitcoin. This will continue to be important even after the mining efforts no longer unlock blocks because the miners will derive a significant portion of their revenue from transaction fees and similarly, won't sell that coin for less than the cost to accumulate it.
"All that said, I imagine this was a well-intentioned experiment from the start, though I can't know. It's just one of the interesting risks you run, in that position."
I haven't read the Kaminsky analysis so I'd have to check it out. But developing a decentralized payment system like Bitcoin is a challenge nobody had successfully tackled before. I can't see why someone expending all that effort wouldn't mine some out of the gate before revealing to others to represent their stake in the system should it become successful. Just like any other venture, they ran the risk that in all probability their efforts would be wasted and Bitcoin represents a substantial effort by someone. And so long as they cash that horde in slowly rather than in a large dump I don't see it crashing Bitcoin. I also doubt anyone could have expected the mining difficulty explosion.
The Bitcoin platform if it does remain stable, secure, and attain critical mass has the potential to change the world. Many of us knew about it early on and could have mined when CPU's were enough. There was no way to know it would grow to what it is today let alone what it might be tomorrow. Those people who took a chance and did their part are the only reason it ever could grow to what it is today. I have no problem with them getting their rewards. One such person responded to me in another thread. They CPU mined 300 coins and sold at $14 for a $4200 profit. Do I feel bitter knowing that some part of my $90 purchase price when I buy a coin went to pay that person? Not at all. That person is part of why the platform is possible.
I myself have an idea for a decentralized P2P exchange that depends on network elected escrows. When certain volumes are reached the system would kick off bidding for a new escrow position and those who have them would be rewarded with a small percentage of transactions using them. Naturally, the oldest continually operating and trusted escrow accounts would be first in line for new transactions. Would I have a stake in the first escrow account? Quite probably. And there might be substantial rewards in doing so since it might take some time for the volume to grow enough to start popping up others. But I'd be taking a reward because there is an opportunity it wouldn't be the reason for setting the system up.
"Actually I replied to gox and have many concerns remaining at this point. He is making good arguments, though."
I'll be interested to follow the thread.
"If you can link to Bruce Schneier endorsing bitcoin's security, I would love to read it. You can't though, because he hasn't."
Granted. But it is clear Bruce has given it more than a passing glance and the fact he hasn't spoken out about flaws does suggest he hasn't found any.
"Kaminsky... said it had "Ponz-like properties"
That isn't really a technical issue. I've heard the pyramid and Ponz claims before. Bruce's analysis of transactions showing a great amount of coin in the hands of early adopters tends to suggest he may agree and that is why we won't see an endorsement from him. The primary basis seems to be that the early adopters were set to be richly rewarded.
To some extent any economic system is a pyramid. It has to be fueled by a constant influx of new goods and services. But this is where Bitcoin differs from a pyramid scam like a chain letter. With a pyramid scam there are no real goods or services, just an ever growing base of people putting money in. Ultimately the money only flows upward. Bitcoin is quite different. At some point the early adopters will spend their coin, be it because of need, or because the reward is great enough. Either way that coin goes back into circulation and with it's release the other Bitcoin is reduced in value by an amount comparable to what they extracted by the increase in supply. Circulation being the distinction between an economy and a pure pyramid.
A Ponzi is actually easier to address. Rewarding early investors does not a Ponzi scheme make. There is nothing wrong with rewarding early investors, see Bill Gates, Steve Jobs, etc. Ponzi schemes use new investments to pay fake returns. First this doesn't work with Bitcoin because it isn't an investment. There is nothing about Bitcoin that requires anyone ever value it beyond the actual goods and services in circulation. The increasing value should either reflect greater buying power of Bitcoin or a reduction in the amount of available Bitcoin and thus each remaining coin representing more of that value.
I read an estimate the early adopters coin was worth about $75m. That doesn't seem unreasonable as an appropriate reward for building a billion dollar economic system. Especially one designed to be decentralized and carrying the risk of severe repercussions from entrenched powers.
That's an interesting data point. They certainly do keep going when they are up as well though. That's why nobody ever leaves the casino when they are ahead.
My original source is an announcement by Bitpay on bitcointalk.org. But I found a third party article more quickly.
http://www.paymentssource.com/news/bitpay-reaching-2m-milestone-in-march-cuts-fees-3013622-1.html
The relevant quote is:
"BitPay... is acquiring new merchants at a rate of 1,000 per month"
Thousands was overstating a bit and it is a far cry from critical mass but definitely an indication that there is real economic activity not only happening but growing within Bitcoin the Bitcoin world. The same article indicates that BitPay has 4000 signed merchants so the rate of signup is increasing dramatically which suggests to me that same publicity and growth that is driving the massive upward trend in the market is driving a massive upward trend in merchants accepting Bitcoin.
"I'll point at my more specific concerns here"
It looks like gox already explained why your attack strategy wouldn't work. But I do apologize. It sounds like you did have some reasonable questions that required a solid understanding of the design to answer.
"I do not buy that there has been adequate review of the system - at least, that is not what I see when I look at the public discussion."
I'm going to have to disagree here. The client has been taken over by a completely new team of developers who certainly have reviewed it's code. The mining and transaction logic certainly have been reviewed extensively, especially by those trying to build a bigger/better miner. Even the >51% attack wasn't a given but discovered by researchers trying to find flaws in the protocol.
Bruce Schneier, perhaps you are familiar with him, has looked into Bitcoin before and even written a paper on the results of his statistical analysis of the transaction trail and his uncovering of early adopters and their Bitcoin movements. If he had found any fundamental flaws in the protocol you can be certain he would have been all over them like white on rice.
"Do you imagine anyone could recoup the capitalization of an entire market by finding a flaw in the market?"
Yes, that was a bit of hyperbole. But the market cap it ceiling of potential gain. A billion dollars would be unlikely, while a million would be peanuts. There would certainly be tens to hundreds of millions to gain. The point being, there is a large enough financial incentive to turn even the whitest hat black.
Coinbase is a great concept but you can't actually buy any coin there. It perpetually gives the "we've exceeded the 24 limit" message at any time of any day.
Mtgox, that largest bitcoin exchange in the world. You must be right, it must not work. lol. I suppose you think it being Japanese is somehow a negative?
localbitcoin.com... omg, needed an 's' localbitcoins.com. Figuring that out would have required less typing than comment about it...
"My landlord hasn't heard of them and isn't interested. He can't buy groceries with them either, so why would he. I transfer my rent payment from my bank to his every month, and he pays his mortgage the same way. I'm sure he would tell me his mortgage holder isn't going to take bitcoins either."
Apparently you missed all that about bitpay... which would deposit local currency into his bank account within 24hrs. There is a 0.99% fee but he probably would be okay with that since unlike your bank transfer it can't be reversed.
"No need for this ridiculous straw man. Bitcoin trading is an extremely niche activity"
Of course it is but it is a rapidly growing niche. Rapidly growing or not it has only been around for 4 years. Expecting your local grocery store to take Bitcoin is extremely premature. It is surprising that they ran a pilot and likely they did it before there was anything like bitpay. Your local grocery likely doesn't take Paypal either but I don't think many would argue that paypal is an irrelevant payment medium. Give it another ten years and maybe it will be reasonable to discuss the level of penetration you are talking about.
Gambling is based on probability. Like the probability of a trend continuing or breaking in a way that pays back more than you bet. Or the 20% chance overall chance of winning that you typically have on a bet in a speculative market.
People con themselves into thinking they can find consistent mathematical patterns in roulette and slot payouts too but they eventually lose all their money following them. The only way to win consistently forever is to rig the game and play on a small statistical advantage.
" Apparently merchants need more incentive because there is a significant dearth of them right now. I still can't pay my rent or buy food with them."
There are thousands. Bitpay alone is processing more than $2M a month in merchant transactions. Here are a couple online examples. http://www.bitmit.net/en/recent and https://www.bitcoinstore.com/
There are several restaurants so you CAN buy food. As for rent, it isn't a given but your landlord just might take them if asked just like he probably would take gold if asked.
If your expectation of a new system is that it only exists if every vendor everywhere takes it from day one then you've set an impossible bar. It takes time. At a billion dollars there are no shortage of private companies in the US and the EU that are much larger than the Bitcoin economy. It is going to take time before you start seeing a shop taking Bitcoin on every corner. But there are merchants who take them and the number is growing rapidly.
"The one place I found that would actually offer Federal Reserve Notes for BTCs limited me to trading no more than 2."
You must not have looked very hard. localbitcoin.com, bitinstant.com, mtgox.com... you can buy or sell a hell of a lot more than 2 BTC at any of these places.
"You got a citation for that?"
"Properly stated until you sell it, it is an unrealized gain and typically is not taxed, though there are some special cases."
Why would I need a citation? You agreed with me. The rest is semantics.
Bottom line is, it's no different than wow gold at the end of the day. If you start selling it and make a USD profit there is tax. If you sell virtual crafts to players and accumulate a bunch of it you don't owe any taxes or have anything to report.
No that's the problem with gambling. And if you won it would bolster your confidence and you'd bet it all again. Speculative markets are nothing but high stakes gambling.
Bitcoin is an open source currency invented by nerds. It definitely qualifies as news for nerds. The billion dollar mark is a legitimate point of note so this definitely qualifies as news for nerds.
Personally, I have no interest in stories about games. Just because you aren't interested in a topic doesn't mean none of us are.
Granted. There are plenty of individual companies in the US and EU that are valued at more than $1B but it is still a notable milestone not insubstantial. There is a long way to go before this is any sort of threat to the entrenched currency systems of the world. Bitcoin is large enough to be considered a player on the NYSE now but the NYSE is chicken feed relative to the foreign currency exchange.
True, but that is just a question of volume. Bitcoin has surpassed the currency of 20 nations but if you sold 9m worth of those currencies for dollars it would swing them drastically too.
Yesterday the trade volume on mt. gox was about $15,000,000. So yeah, $9,000,000 would swing the price rapidly. But you could move that much without such a big swing if it did it a little more slowly. A billion dollars relative to the multi-trillion dollar economies of the USD and EURO would be a smaller movement relative to the volume but it certainly would shift the price if done as a one off move.
There are plenty of companies in the EU and US with stock valued at more than $1B so we have to keep that in perspective. A $9m instantaneous sell off would move their price as well! These 20 nations are very small ones but they are nations. Bitcoin has grown to rival or exceed the economies of actual nations. That is a big milestone but it isn't end game vs the global economy.
The inflationary economic hypothesis has functioned on a large scale for a few decades. The entire world had a successful deflationary economy for several thousand years before that.
Traditionally fiat and inflation was something a broke government did to finance something it couldn't afford like a war. A system that is designed to make spending beyond your means feasible doesn't seem like a sound fiscal system to me.
But hey, to each his own. But stop pretending that inflation being taught as economics 101 now actually makes the hypothesis proven, tested, or correct.
Trade drives deflation/inflation not the other way around.
Yup, the key thing here isn't really how much they are worth. The key thing is that people see them as worth something and thus will give you things for them. It doesn't matter if the price drops in a crash because short of some fundamental technical flaw invalidating the entire bitcoin system, people aren't likely to ever value them at 0 again.
You can also burn it to keep warm in the winter.
Which I'm sure you are fine with. Especially if you are using something like Bitpay. After the initial setup to be able to accept, it essentially costs nothing to be able to keep doing so no matter how low the volume. The fees are lower than credit cards by a long shot with no charge backs. The 0.99% is 0.99% less than you get with cash but then you have to process and deposit the cash manually so BTC might even preferable to cash in the end.
Because of this more and more merchants are starting to sign up and they don't have the exchange fees and hassles to deal with anymore so they will no longer charge more for BTC payment. If anything they could afford to give incentives for BTC payment.
Now we need a ready way to convert fiat to BTC. Banks would be in a prime position to do this since they already give cash and that is no more reversible than BTC.