This is known as "Gresham's Law" which is: Bad money drives out good.
Fiat is hot-potato money.
Topic: Bitcoin too valuable to spend - page 4. (Read 7070 times)
Paying for services on the internet, though, is a completely different thing. Sites like e-lance, get-a-coder, face a detrimental effect from traditional currencies, because the partners in a deal have to settle on method of payment, currency, and they usually face high costs for those transactions, especially when currency conversion is involved.
I don't believe payment fees is a problem that bitcoin is actually trying to solve (fundamentally). Anyone can (and have) create a digital token currency backed in say USD, that can be passed around to side step fees, and they can do it a LOT cheaper than having a global network of ATI 6990's running at 100% capacity 24/7. Bitcoin isn't trying to be a easier payment system (becuase clearly, its not easier - and we're relying on new infrastructure to make this a reality), its trying to be a better money. And the problem with better money is that people prefer to spend their crap money first.
The problem with those, let's call them dollar-derivatives, is centralization. Both parties need to agree on that specific derivative and have a contract with the service provider for it. Along go fees, and a lot of complicated work. Paypal for example is highly impractical for b2b payments for services (if at all usable), and so is western union. Bank transfers are cumbersome, expensive and slow when it comes to transfers outside the EU.
Bitcoin on the other hand is reliable, inexpensive and quick. That's it. For b2b transaction, where a certain amount of trust already exists between the business partners, that is ideal.
With untrusted partners, an escrow service of some kind may still be required, thus diminishing the advantages of bitcoin to a certain extent.
To pay with Bitcoin is much less risky than to pay with credit card and it gives added anonymity (in cases where you don't have to disclose your identity anyway). It is also easier than to pay via SEPA transaction (3 additional passwords for the online banking account, searching the TAN code on a physical letter from the bank, two account numbers for the merchant and his name/address is mandatory as well).
For some it's also an advantage to know that no 3rd party (like the CIA via SWIFT) is going to analyze all your financial transactions - and no, I'm not talking about any illegal payments!
I personally like paying with Bitcoin. I have some saved for the long term but I regularly buy some to spend them shortly thereafter for other things and services or to donate. That way price fluctuations don't affect me very much.
If I have the choice to buy something with Bitcoin, I'll always do so for the reasons above - for me it's the perfect online payment system.
Yes, I consider Bitcoin to be the better money, but not because I think it will rise in value all the time. Therefore I'm spending my "crap" money regularly to buy BTC - so what's the problem? Bitcoin has many unique advantages over gold which make them far more suitable for online payment so the comparison is not really valid.
For some it's also an advantage to know that no 3rd party (like the CIA via SWIFT) is going to analyze all your financial transactions - and no, I'm not talking about any illegal payments!
I personally like paying with Bitcoin. I have some saved for the long term but I regularly buy some to spend them shortly thereafter for other things and services or to donate. That way price fluctuations don't affect me very much.
If I have the choice to buy something with Bitcoin, I'll always do so for the reasons above - for me it's the perfect online payment system.
Yes, I consider Bitcoin to be the better money, but not because I think it will rise in value all the time. Therefore I'm spending my "crap" money regularly to buy BTC - so what's the problem? Bitcoin has many unique advantages over gold which make them far more suitable for online payment so the comparison is not really valid.
after the thrill of buying something with a gold-based currency wears off, people rarely use it. Instead they tend to hoard it, keeping it as a store of wealth.
I think this could be said with almost any form of currency that isn't paper or plastic, people will hoard it.Hell, people hold onto change more than they do their bills, I believe it is subconsciously because it is 'heavier' thus has more value. Or not, whatever, but I believe my joke argument as much as the gold hoarding one, and both theories kind of compliment each other.
I know this is easy to dismiss off hand.
Here is the quote of his that really got me thinking "Why would I spend my gold if some guy I'm trying to pay will actually accept fiat trash".
Just replace gold with bitcoin.
Think about it seriously for a minute - if you really believe bitcoin is better money than dollars, and amazon accepted both, would you spend btc or usd? Initially, you'd probably spend BTC for the newness factor. But after that wore off you'd spend USD, becuase you fundamentally value BTC more. It's catch 22, because if you didn't value BTC more you wouldnt even have any in the first place.
There are a lot of businesses that would work a lot better with a currency like, or based on, bitcoin.
For traded goods, this probably is not true. The dollar, euro, whatever, is quite good at purchasing alpaca socks.
Paying for services on the internet, though, is a completely different thing. Sites like e-lance, get-a-coder, face a detrimental effect from traditional currencies, because the partners in a deal have to settle on method of payment, currency, and they usually face high costs for those transactions, especially when currency conversion is involved.
This is where bitcoins are, well, better.
They may not be perfect, and for many services you may still wish to employ some kind of escrow service. But you could easily cut out the middleman and agree on step-by-step payment based on achieved milestones, which, with a normal currency involved, will raise costs significantly.
Not long ago, i hired coders from another country to have some software developed. We agreed on step-by-step payment, and in the end, even though we had only a handful of steps, the service fees added up to roughly 10% of the total costs.
Bitcoin would have spared me those 10%.
For traded goods, this probably is not true. The dollar, euro, whatever, is quite good at purchasing alpaca socks.
Paying for services on the internet, though, is a completely different thing. Sites like e-lance, get-a-coder, face a detrimental effect from traditional currencies, because the partners in a deal have to settle on method of payment, currency, and they usually face high costs for those transactions, especially when currency conversion is involved.
This is where bitcoins are, well, better.
They may not be perfect, and for many services you may still wish to employ some kind of escrow service. But you could easily cut out the middleman and agree on step-by-step payment based on achieved milestones, which, with a normal currency involved, will raise costs significantly.
Not long ago, i hired coders from another country to have some software developed. We agreed on step-by-step payment, and in the end, even though we had only a handful of steps, the service fees added up to roughly 10% of the total costs.
Bitcoin would have spared me those 10%.
I don't believe payment fees is a problem that bitcoin is actually trying to solve (fundamentally). Anyone can (and have) create a digital token currency backed in say USD, that can be passed around to side step fees, and they can do it a LOT cheaper than having a global network of ATI 6990's running at 100% capacity 24/7. Bitcoin isn't trying to be a easier payment system (becuase clearly, its not easier - and we're relying on new infrastructure to make this a reality), its trying to be a better money. And the problem with better money is that people prefer to spend their crap money first.
There are a lot of businesses that would work a lot better with a currency like, or based on, bitcoin.
For traded goods, this probably is not true. The dollar, euro, whatever, is quite good at purchasing alpaca socks.
Paying for services on the internet, though, is a completely different thing. Sites like e-lance, get-a-coder, face a detrimental effect from traditional currencies, because the partners in a deal have to settle on method of payment, currency, and they usually face high costs for those transactions, especially when currency conversion is involved.
This is where bitcoins are, well, better.
They may not be perfect, and for many services you may still wish to employ some kind of escrow service. But you could easily cut out the middleman and agree on step-by-step payment based on achieved milestones, which, with a normal currency involved, will raise costs significantly.
Not long ago, i hired coders from another country to have some software developed. We agreed on step-by-step payment, and in the end, even though we had only a handful of steps, the service fees added up to roughly 10% of the total costs.
Bitcoin would have spared me those 10%.
For traded goods, this probably is not true. The dollar, euro, whatever, is quite good at purchasing alpaca socks.
Paying for services on the internet, though, is a completely different thing. Sites like e-lance, get-a-coder, face a detrimental effect from traditional currencies, because the partners in a deal have to settle on method of payment, currency, and they usually face high costs for those transactions, especially when currency conversion is involved.
This is where bitcoins are, well, better.
They may not be perfect, and for many services you may still wish to employ some kind of escrow service. But you could easily cut out the middleman and agree on step-by-step payment based on achieved milestones, which, with a normal currency involved, will raise costs significantly.
Not long ago, i hired coders from another country to have some software developed. We agreed on step-by-step payment, and in the end, even though we had only a handful of steps, the service fees added up to roughly 10% of the total costs.
Bitcoin would have spared me those 10%.
lol.
after the thrill of buying something with a gold-based currency wears off, people rarely use it. Instead they tend to hoard it, keeping it as a store of wealth.
I think this could be said with almost any form of currency that isn't paper or plastic, people will hoard it.Hell, people hold onto change more than they do their bills, I believe it is subconsciously because it is 'heavier' thus has more value. Or not, whatever, but I believe my joke argument as much as the gold hoarding one, and both theories kind of compliment each other.
Due to the design of bitcoin, even if it does become highly valuable the fact you can express fractions to eight decimal places will ensure it does enter the overall economy. That is hard to do with physical currencies, for obvious reasons. I have no problem with bitcoin achieving higher dollar valuations because of this.
While some may hold on to their bitcoin wallets, I'd think a majority would be just fine with spending 0.025, 0.01, or 0.00332 of them
While some may hold on to their bitcoin wallets, I'd think a majority would be just fine with spending 0.025, 0.01, or 0.00332 of them
Agreed. Value is extremely relative. That's why it would be a great idea to shift the decimal place ASAP!
Due to the design of bitcoin, even if it does become highly valuable the fact you can express fractions to eight decimal places will ensure it does enter the overall economy. That is hard to do with physical currencies, for obvious reasons. I have no problem with bitcoin achieving higher dollar valuations because of this.
While some may hold on to their bitcoin wallets, I'd think a majority would be just fine with spending 0.025, 0.01, or 0.00332 of them
While some may hold on to their bitcoin wallets, I'd think a majority would be just fine with spending 0.025, 0.01, or 0.00332 of them
I've just been listening to an interview on Agorist Radio with Justin from Voucher-Safe (podcast here http://agoristradio.com/?p=433)
The interview is about what Voucher-Safe tries to solve, and what it doesn't. While talking about gold he mentions that, after the thrill of buying something with a gold-based currency wears off, people rarely use it. Instead they tend to hoard it, keeping it as a store of wealth. A good example of this is http://www.goldmoney.com/ with 1.8 billion in gold, available digitally, that for the most part just sits there as a gold savings account. He then predicts that if bitcoin turns out to be as good as its proponents say it is, it will have the same problem.
Why? Because if a merchant accepts both Bitcoin and Fiat currency people will always prefer to pay with fiat currency simply because the equivalent bitcoin is seen to be more valuable (i.e. $100 woth of bitcoin is > 100$ fiat).
I think this is an interesting point. Thoughts?
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