Topic: Major companies accepting BTC will ultimately drive prices down? (Read 2614 times)
I don't know about price, but it will certainly drive the GINI coefficient down. This is a very good thing!
January 26, 2014, 01:46:19 PM
From what I am reading from various reports, it seems like the BTC orders are flowing in right upon the launch of accepting BTC, but then slowing down drastically thereafter. I'm sure it will slowly pick up though over time..
January 26, 2014, 12:36:10 PM
[...]Kinda weird, Overstock and now Tiger-Direct and still basicly nobody seems to actually use BTC to buy stuff ...
Why would you when bitcoin is going to the moon next week/month/year?
No, no, i'm saying there's no sense for holders of bitcoin to use them as they will appreciate dramatically in value. At least, this is a wide spread position of many holders of bitcoin. I'm not saying its right or wrong, just saying it is.
Unfortunately, that way of thinking is very common and I think it is one of the things that could kill Bitcoin. If everyone thinks that way, then Bitcoin is just a modern version of the tulip bubble. Bitcoins only have value if people are willing to spend them.
Anyway, there is no reason why someone couldn't buy bitcoins and spend them and then buy more. Currently, the only advantage to paying with bitcoin is that it avoids the small risk incurred by using a credit card. Merchants, on the other hand, might be motivated to give discounts to bitcoin users because their risk is much higher, and hopefully the discounts would be enough motivate more people to pay with bitcoins.
January 26, 2014, 12:17:20 PM
Why would you when bitcoin is going to the moon next week/month/year?
That kind of reasoning isn't sound. You are basically saying there is no sense for merchants to accept bitcoin, because there will a negligible amount of trade anyway.No, no, i'm saying there's no sense for holders of bitcoin to use them as they will appreciate dramatically in value. At least, this is a wide spread position of many holders of bitcoin. I'm not saying its right or wrong, just saying it is.
The positive is the perception that bitcoin is going mainstream, the negative is they (Overstock etc) aren't building up an economy as they don't hold themselves and facilitate a selling pressure.
Yes, thats the impression i have as well. Its just perception, not a real economy (yet). But if its just the perception thats driving the price instead of an actual economy, then the price is obviously bubbling up.So the price is based on the assumption that one day BTC will be a mayor currency, but actually moving in that direction would drive the price down in the near to mid term.
Or in other words, the price can only go up if people believe that BTC will be a real currency, but actually isnt used for anything other than speculation.
January 26, 2014, 11:48:22 AM
[...]Kinda weird, Overstock and now Tiger-Direct and still basicly nobody seems to actually use BTC to buy stuff ...
Why would you when bitcoin is going to the moon next week/month/year?
No, no, i'm saying there's no sense for holders of bitcoin to use them as they will appreciate dramatically in value. At least, this is a wide spread position of many holders of bitcoin. I'm not saying its right or wrong, just saying it is.
Overstock and Tiger Direct are looking to exploit a market niche, those with large bitcoin holding that may already be sitting on large gains. Those willing to support bitcoin by spending a couple of 1/10th a bitcoin to buy some consumer goods. I don't see they are the same as those buying at $500, $800 or buying $3k miners. The positive is the perception that bitcoin is going mainstream, the negative is they (Overstock etc) aren't building up an economy as they don't hold themselves and facilitate a selling pressure.
January 26, 2014, 10:35:34 AM
Just a thought if all the bitcoin hoarders can now buy their nice nerd pod equipment from tigerdirect.com and lingerie for said girlfriend or wife with bitcoins. Wont we see alot of liquidation daily from these companies which will slowly crash prices? Not sure if anyone has posted this and apologies if it has. It just now occurred me is is all I'd like to know how you all feel about it.
I wonder what the sales volume for tigerdirect.com is daily. Whos processing the payments for them and overstock.com ? Shed some light on this topic for me I'm not ready to panic sell yet!
Shit... Now saying that makes me realize forget mining btc I think i'll just start processing btc payments now.
I wonder what the sales volume for tigerdirect.com is daily. Whos processing the payments for them and overstock.com ? Shed some light on this topic for me I'm not ready to panic sell yet!
Shit... Now saying that makes me realize forget mining btc I think i'll just start processing btc payments now.
I believe its a yes for short run, but in long run it is going up cause more people get to know bitcoin and start buying them..
January 26, 2014, 10:26:38 AM
[...]Kinda weird, Overstock and now Tiger-Direct and still basicly nobody seems to actually use BTC to buy stuff ...
Why would you when bitcoin is going to the moon next week/month/year?
In that case BTC isnt backed by an economy that requires the value to be high, unlike e.g. USD or EU, which is basicly backed by a large economy.
But the current speculative value of BTC is based on the fact that it one day it will have a large economy using it.
But if you think the price will rise even though it wont be actually used, hmm, thats basicly the definition of a pyramid scheme. And those burst sooner or later anyway.
So basicly assuming the economy grows the price will drop short to mid term.
If you assume its a pyramid scheme it will crash sooner or later.
And yes, i spend my coins.
January 26, 2014, 04:16:17 AM
Most large businesses accepting bitcoin are converting the bitcoin their customers spend into fiat at the time of each transaction through their payment processors. The premise of large stashes being accumulated and then being dumped is probably not worth worrying about at the moment. This also would not be in the interest of the companies themselves, who employ folks savvy to such market dynamics.
Thats the point though, the large businesses "accepting" bitcoins are just using a bitcoin denominated payment processor, who take the payment in BTC and give the business $. The payment processors are then disposing of those bitcoin daily. This is creating a selling pressure on bitcoin what ever way you cut it. It may be small (and I dont believe there is a lot of volume going on here) but it would potentially push prices down, unless people are buying up those bitcoins at the same rate. Until business actually accept and hold bitcoin directly, this will be the case.
[...]Kinda weird, Overstock and now Tiger-Direct and still basicly nobody seems to actually use BTC to buy stuff ...
Why would you when bitcoin is going to the moon next week/month/year?
January 25, 2014, 10:27:19 PM
Shit... Now saying that makes me realize forget mining btc I think i'll just start processing btc payments now.
Mining IS processing payments, thats what mining is for.But the revenue from transaction fees is actually shrinking, below 25BTC per day in January except for one day where it was 30BTC.
Kinda weird, Overstock and now Tiger-Direct and still basicly nobody seems to actually use BTC to buy stuff ...
January 25, 2014, 10:21:54 PM
Seems like merchants could offer some sort of added bonus when paying with BTC, like 5% off purchases or free shipping when using BTC to encourage use. That would boost sales and seemingly be a way to boost the value of each BTC in the process. That would give people an incentive to acquire and use btc
January 25, 2014, 09:27:07 PM
To the OP: Any action in the market moves the prices, the price is the result of a trade. All trades require two goods, what is sold and what is bought. In indirect trade, money is always one of the goods traded. Therefore, When you buy something for money, the other party buys the money for something. So, when you buy something for money, you marginally move the price of the good upwards, and the price of the money downwards. On the other hand, the other party who wants the money more than the good, move both in the other direction.
The only demand for money is reservation demand. So if someone who likes to hold money, eventually sells the money to someone, and that someone has a low reservation demand for them, the price of the money goes down.
That is what is suspected here, some holder sells his money to tigerdirect.com, who doesn't really want them and therefore immediately rids themselves of it.
But eventually, the bitcoins will end up with another holder. Therefore it is only the total demand to hold bitcoins that decides their value.
The only demand for money is reservation demand. So if someone who likes to hold money, eventually sells the money to someone, and that someone has a low reservation demand for them, the price of the money goes down.
That is what is suspected here, some holder sells his money to tigerdirect.com, who doesn't really want them and therefore immediately rids themselves of it.
But eventually, the bitcoins will end up with another holder. Therefore it is only the total demand to hold bitcoins that decides their value.
January 25, 2014, 06:43:13 PM
I'm not an early adopter, but I'll try to think like one. If I would have bought bitcoins under 20$ during 2012,
and now I had the opportunity to spend some for luxury items, would I spend extra fiat to replenish my stash?
No I wouldn't, I would wait for the start of a major price drop, sell a lot of coins and buy back more coins at a lower price.
For me (thinking as an early adopter) it would be difficult to spend 800+ $ on a bitcoin that I bought below 20$.
As for very early adopters, who bought below 5$, and together are holding millions of bitcoins, why would they buy more coins with new fiat?
They can manipulate the market, they get both more fiat (some cashed out) from late adopters and more coins when they buy back cheaper.
and now I had the opportunity to spend some for luxury items, would I spend extra fiat to replenish my stash?
No I wouldn't, I would wait for the start of a major price drop, sell a lot of coins and buy back more coins at a lower price.
For me (thinking as an early adopter) it would be difficult to spend 800+ $ on a bitcoin that I bought below 20$.
As for very early adopters, who bought below 5$, and together are holding millions of bitcoins, why would they buy more coins with new fiat?
They can manipulate the market, they get both more fiat (some cashed out) from late adopters and more coins when they buy back cheaper.
I believe most people holding large amounts of coins and sitting on large gains are following disciplined divestment strategies. They are constantly selling as the price goes up (and/or over time) in order to diversify their portfolio (otherwise you quickly end up with 90% of your assets in bitcoins, which is high-risk for even the most ardent bull). If they spend $1000 on some luxury item, then it's just $1000 worth of bitcoins that don't get sold at BitStamp.
January 25, 2014, 05:53:51 PM
Most large businesses accepting bitcoin are converting the bitcoin their customers spend into fiat at the time of each transaction through their payment processors. The premise of large stashes being accumulated and then being dumped is probably not worth worrying about at the moment. This also would not be in the interest of the companies themselves, who employ folks savvy to such market dynamics.
January 25, 2014, 04:13:54 PM
Anyone that is a long term holder and cares about the bitcoin economy should consider a strategy of spend and replenish.
Or really, any rational person reading this.
It is super simple: make as many purchases as possible with bitcoin, and immediately buy your bitcoins back with fiat. ( using eg coinbase or your preferred exchange method. ) You do not face any exchange risk because you are buying the bitcoin at the same time you spend.
This way you are effectively spending your fiat cash and keeping your btc holdings intact, however each purchase is a vote for bitcoin to the merchant instead of a vote for fiat.
Also, you are increasing the velocity of money in the bitcoin economy, which stimulates growth.
This is the win-win strategy. rational self interest.
Or really, any rational person reading this.
It is super simple: make as many purchases as possible with bitcoin, and immediately buy your bitcoins back with fiat. ( using eg coinbase or your preferred exchange method. ) You do not face any exchange risk because you are buying the bitcoin at the same time you spend.
This way you are effectively spending your fiat cash and keeping your btc holdings intact, however each purchase is a vote for bitcoin to the merchant instead of a vote for fiat.
Also, you are increasing the velocity of money in the bitcoin economy, which stimulates growth.
This is the win-win strategy. rational self interest.
At the cost of "generating" fees for miners, coinbase/bitpay, and possibly your bank. (I estimate somewhere around 2-5%, accounting for spread and all).
Yes it's noble, but not a free lunch.
January 25, 2014, 03:35:37 PM
I'm not an early adopter, but I'll try to think like one. If I would have bought bitcoins under 20$ during 2012,
and now I had the opportunity to spend some for luxury items, would I spend extra fiat to replenish my stash?
No I wouldn't, I would wait for the start of a major price drop, sell a lot of coins and buy back more coins at a lower price.
For me (thinking as an early adopter) it would be difficult to spend 800+ $ on a bitcoin that I bought below 20$.
As for very early adopters, who bought below 5$, and together are holding millions of bitcoins, why would they buy more coins with new fiat?
They can manipulate the market, they get both more fiat (some cashed out) from late adopters and more coins when they buy back cheaper.
and now I had the opportunity to spend some for luxury items, would I spend extra fiat to replenish my stash?
No I wouldn't, I would wait for the start of a major price drop, sell a lot of coins and buy back more coins at a lower price.
For me (thinking as an early adopter) it would be difficult to spend 800+ $ on a bitcoin that I bought below 20$.
As for very early adopters, who bought below 5$, and together are holding millions of bitcoins, why would they buy more coins with new fiat?
They can manipulate the market, they get both more fiat (some cashed out) from late adopters and more coins when they buy back cheaper.
January 25, 2014, 04:03:08 AM
Anyone that is a long term holder and cares about the bitcoin economy should consider a strategy of spend and replenish.
Or really, any rational person reading this.
It is super simple: make as many purchases as possible with bitcoin, and immediately buy your bitcoins back with fiat. ( using eg coinbase or your preferred exchange method. ) You do not face any exchange risk because you are buying the bitcoin at the same time you spend.
This way you are effectively spending your fiat cash and keeping your btc holdings intact, however each purchase is a vote for bitcoin to the merchant instead of a vote for fiat.
Also, you are increasing the velocity of money in the bitcoin economy, which stimulates growth.
This is the win-win strategy. rational self interest.
Or really, any rational person reading this.
It is super simple: make as many purchases as possible with bitcoin, and immediately buy your bitcoins back with fiat. ( using eg coinbase or your preferred exchange method. ) You do not face any exchange risk because you are buying the bitcoin at the same time you spend.
This way you are effectively spending your fiat cash and keeping your btc holdings intact, however each purchase is a vote for bitcoin to the merchant instead of a vote for fiat.
Also, you are increasing the velocity of money in the bitcoin economy, which stimulates growth.
This is the win-win strategy. rational self interest.
I do agree with that, kind of "yo-yo" hodler
Also reminds me
"
The General Theory of Employment, Interest and Money, John Maynard Keynes.
Book 3, Chapter 10, Section 6 pg.129
http://en.wikipedia.org/wiki/The_General_Theory_of_Employment,_Interest_and_Money
January 25, 2014, 01:59:34 AM
Anyone that is a long term holder and cares about the bitcoin economy should consider a strategy of spend and replenish.
Or really, any rational person reading this.
It is super simple: make as many purchases as possible with bitcoin, and immediately buy your bitcoins back with fiat. ( using eg coinbase or your preferred exchange method. ) You do not face any exchange risk because you are buying the bitcoin at the same time you spend.
This way you are effectively spending your fiat cash and keeping your btc holdings intact, however each purchase is a vote for bitcoin to the merchant instead of a vote for fiat.
Also, you are increasing the velocity of money in the bitcoin economy, which stimulates growth.
This is the win-win strategy. rational self interest.
Or really, any rational person reading this.
It is super simple: make as many purchases as possible with bitcoin, and immediately buy your bitcoins back with fiat. ( using eg coinbase or your preferred exchange method. ) You do not face any exchange risk because you are buying the bitcoin at the same time you spend.
This way you are effectively spending your fiat cash and keeping your btc holdings intact, however each purchase is a vote for bitcoin to the merchant instead of a vote for fiat.
Also, you are increasing the velocity of money in the bitcoin economy, which stimulates growth.
This is the win-win strategy. rational self interest.
January 25, 2014, 01:49:26 AM
Just a thought if all the bitcoin hoarders can now buy their nice nerd pod equipment from tigerdirect.com and lingerie for said girlfriend or wife with bitcoins. Wont we see alot of liquidation daily from these companies which will slowly crash prices? Not sure if anyone has posted this and apologies if it has. It just now occurred me is is all I'd like to know how you all feel about it.
What you say is true, but you are overlooking the fact that as more stores accept bitcoins, adoption will increase. In addition, I don't think that savers will spend all of their bitcoins, and as adoption increases, so will saving.
Anyway, it is possible that prices will drop. Perhaps this is why the exchange rate has been dropping ever since Overstock.com started accepting.
January 24, 2014, 11:37:02 PM
Oh i'm a holder and a long term one but dont get me wrong I love getting myself a cool toy here and their and bragging about how btc purchased it. It was just one of those things I didnt really think about my buddy told me tigerdirect is accepting bitcoins an i'm just like yeah!! buying a new LTC/gaming rig then realized about how many other bitcoiners were thinking the same thing. I would love to know how many sales in BTC they actually got though in first 24 hours of release.
January 24, 2014, 10:55:12 PM
The liquidity and volatility problems are because the exchanges are not cross-linked. Once bitfinex and bitstamp got their interchange terms worked out, bitstamp/bitfinex volatility dropped like a rock, and liquidity on both sides doubled. MtGox is an illusion.
January 24, 2014, 09:45:34 PM
It depends. More transaction volume that will be ecommerce specific will cause a bigger demand of BitCoins to be available on exchanges, but there is also problem with currently not-used bitcoins. There are many BitCoin owners who don't want spend their coins in exchanges, but will be more eager to do it on ordinary shopping.
BitCoin have problems with liquidity and volatility so price behaviour can go really crazy.
Still this trend is good for BitCoin owners and BitCoin in general because "value" will stay longer in BitCoin network - thanks to that price should be more stable.
BitCoin have problems with liquidity and volatility so price behaviour can go really crazy.
Still this trend is good for BitCoin owners and BitCoin in general because "value" will stay longer in BitCoin network - thanks to that price should be more stable.
January 24, 2014, 07:55:10 PM
I have wondered about this too, if major companies are bringing in a lot of bitcoin transactions and immediately selling back to local currency. That seemingly would present potentially more supply than demand..
January 24, 2014, 07:27:41 PM
If enough of them accept bitcoin payments, then they will be able to pay each other directly with bitcoins, which will eliminate the need to cash out the coins on exchanges. Currently merchants have to cash out bitcoin on exchanges, but that is a temporary hassle
AFAIK companies paying each other with bitcoins would be against the law, at least in some countries.
January 24, 2014, 06:34:55 PM
If enough of them accept bitcoin payments, then they will be able to pay each other directly with bitcoins, which will eliminate the need to cash out the coins on exchanges. Currently merchants have to cash out bitcoin on exchanges, but that is a temporary hassle
January 24, 2014, 05:09:01 PM
When I raised the same issue about a month ago, the uber-bulls laughed at me. Short term this is bearish.
HODLers will only spend their bitcoins when the price is close to an ATH, but there is a clear downtrend, which is about now too.
When the price will drop further, there will be no incentive to spend bitcoins, because they'll have to buy them back with fiat.
So they'll just spend their fiat instead, unless they are altruistic and want to truly broaden the usage of bitcoin.
HODLers will only spend their bitcoins when the price is close to an ATH, but there is a clear downtrend, which is about now too.
When the price will drop further, there will be no incentive to spend bitcoins, because they'll have to buy them back with fiat.
So they'll just spend their fiat instead, unless they are altruistic and want to truly broaden the usage of bitcoin.
January 24, 2014, 04:53:42 PM
My guess is that we will continue to see cycles in the value of bitcoin up and down...but they will happen over progressively longer time cycles...that's probably a very "good" thing for the eco-system.
I mean it is kind of amusing...there were people predicting that there would be very slow adoption my merchants because no one would ever want to be spending their bitcoins because it was better to just hold onto them and see them increase in value tomorrow.
Now there is the fear/potential that there will be some dip in value because of the reasons you suggest. The net effect of that in my mind is that yes...some pent up "paper-wealth" of some early adopters will get spent because it may be in a current trend slowly to sightly lower values.
But...in the long run that will only encourage MORE merchant adoption...and thus MORE public interest as a means of payment...and bolster value.
I wouldn't sell if I were you...
I mean it is kind of amusing...there were people predicting that there would be very slow adoption my merchants because no one would ever want to be spending their bitcoins because it was better to just hold onto them and see them increase in value tomorrow.
Now there is the fear/potential that there will be some dip in value because of the reasons you suggest. The net effect of that in my mind is that yes...some pent up "paper-wealth" of some early adopters will get spent because it may be in a current trend slowly to sightly lower values.
But...in the long run that will only encourage MORE merchant adoption...and thus MORE public interest as a means of payment...and bolster value.
I wouldn't sell if I were you...
January 24, 2014, 04:41:33 PM
Just a thought if all the bitcoin hoarders can now buy their nice nerd pod equipment from tigerdirect.com and lingerie for said girlfriend or wife with bitcoins. Wont we see alot of liquidation daily from these companies which will slowly crash prices? Not sure if anyone has posted this and apologies if it has. It just now occurred me is is all I'd like to know how you all feel about it.
I wonder what the sales volume for tigerdirect.com is daily. Whos processing the payments for them and overstock.com ? Shed some light on this topic for me I'm not ready to panic sell yet!
Shit... Now saying that makes me realize forget mining btc I think i'll just start processing btc payments now.
I wonder what the sales volume for tigerdirect.com is daily. Whos processing the payments for them and overstock.com ? Shed some light on this topic for me I'm not ready to panic sell yet!
Shit... Now saying that makes me realize forget mining btc I think i'll just start processing btc payments now.
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