Topic: "Merchant acceptance is NEGATIVE for bitcoin" (Read 4300 times)

I think there may be something to this. He's referring to the velocity of bitcoin, which I've seen surprisingly little discussion of around here (I guess not everyone is an economist, eh?) (Nor am I, but I dabble in it.)

A higher velocity effectively increases the effective money supply of bitcoin just as if there were more bitcoins. Some of the previous posters here are wrong in imagining that it would have no effect. It is a mundane phenomena in economics and the effect is well known. If you wanted the price of bitcoin to skyrocket, convince most people with bitcoins to simply hold them and just let people fight for the remaining few being offered for sale. Doing the opposite - flooding the market with a high volume of bitcoin sales - effectively depresses the price. So I think that is part of the reason for the decline the past few months, albeit a minor one at this point.

Good read

Bitcoin is a forgone conclusion at this point, and even if not bitcoin, crypto currency being the dominant medium of exchange. Fiat by central govs simply cannot compete on any level.

Central Govs are so inefficient its hard to know where to start. The reason being [the power to] tax. This power and enforcing it, makes the preservation of self the central function of Govt under layered under the guise of much on the doctrine of public good, eg roads schools/education, police force etc.

The power to tax is dealt a near fatal blow by BTC as tax jurisdiction and legal jurisdictions will be arbitraged to near zero by almost instant capital flight of Cryptos.

But this is not the most powerful aspect of cryptos. Rather Crypto's allow niche provision of goods services in a mass production way, further there is no off or on for the Bitcoin "work force". The economies of scale achieved by are far more nuance, powerful and encompassing that the crude budget, interest rate, bond issuance, QE, etc etc. Fiat simply can't compete with the ways BTC can flow in and out of opportunity. If you remember the last scene in the first total recall movie, the current economy is like us dying out on mars with nothing breathe or in the subsections of society where they can turn the air of at will. BTC has just given air to everyone, en~masse.

The path to uptake may face serious resistance. Yes the internet took media which is powerful, but it not he same as money. Money is power, by tax and qe, and those in power [not you] are not only accustomed to it but that's their only conduit to means to live, that's all they can do. Fortunately the war was over before the first shot was fired becuase ... maths. No amount of power changes maths. Crypto is maths.

Short term negative. Long term positive.

Why?

Yes the merchants for the most part sell the bitcoin right away. That is the short term negative.

But the more merchants there are, the more reason there will be for people to hold bitcoin. Right now it is just speculation or enthusiasts. But when people understand that bitcoin is widely accepted, they'll accept bitcoin in trade and hang on to it until they need to buy something. That's the positive.

Long term a fraction of a bitcoin (or more) being held by each of a few billion people is worth more than whether overstock.com holds on to their 2000 bitcoin or sells it today.

When the first few merchants start accepting bitcoins and directly exchanges them into USD or whatever it might not boost the price. But when more and more accept it there'll be an interest amongst merchants to hold the bitcoins they have.

The premise is faulty. Bitcoin's price going down is not negative for bitcoin. I'd much rather have plenty of merchants accepting bitcoin and have it valued at $1 per BTC, than almost no vendors and have it valued at $1000 per BTC.

How do total sales of goods/services in Bitcoins compare to the number of new Bitcoins created, per month?

Middle Eastern countries use their oil wealth to buy arms from western countries chiefly the US. They also hoard US treasuries. So most of the money flows back to the west.

Another difference is that you can't buy oil using any currency other than the US dollar. So this underwrites the US dollar. Iran tried to switch to the Euro but that has only led to sanctions.

ok i read the post, why would market capitalization drive the price down?

merchant acceptance implies a positive transmission of bitcoins. your post is conceptually negative by definition.

I'll go back and read it just to be sure 

If you own a single satoshi for even a thousandth of a second, you contribute to the demand for BTC. This tends to push the price of BTC up, or at least slow down a decline in the price.

Consider this example: if you buy oil in dollars, even if the seller converts the dollars to a different currency a thousandth of a second later, you are both contributing to the demand for dollars.

Anyone that can think understands the obvious.

Merchant "adoption" means bitpay and coinbase. These are just exchange services, basically providing more outs for someone to sell BTC at.

Now ask yourself who has BTC and is willing to sell? Miners, those with substantial capital gains, and those few that earn BTC incomes.

Merchant adoption does nothing for the value of a BTC.

As long as BTC is exchangeable for fiat, every merchant has "adopted" it. Do merchants have to "adopt" gold for its price to rise? No.


Example.
If i sell my BTC for USD and spend at BestBuy that is the same thing as BTC-->Bitpay--->USD-->BestBuy.

Now think about that.

The only thing that matters for the BTC value to rise is an expanding pool of fiat BID.

Right. Coinbase will guarantee a Bitcoin price for a few minutes for merchants, so merchants take zero risk on Bitcoin volatility. Merchants are never in Bitcoins at all.

With 10-20% volatility in a day, few merchants want to be. Those who really are in Bitcoin are usually selling something with a huge markup.

Actually, most merchants are using Bitpay or Coinbase, so they never touch BTC.  Bitpay and Coinbase are dumping Bitcoin and capturing juicy spreads at the same time.  I'm not sure this talking head in the OP is correct though because it doesn't matter how many merchants you have, if consumers aren't buying them to pay for stuff.  This is just current BTC holders shopping, as is evidenced by a recent poll I saw at Coindesk, that said that 75% of merchants had seen little to no growth in revenue.  Of course, people can't spend what they don't have.  

So to say merchants are adopting Bitcoin, is really inaccurate.  BitPay and Coinbase adopted Bitcoin, merchants are still using the same old fiat.  They're just riding the hype and hoping to cash in on a little bit of the money current BTC holders have.  The price keeps dropping because consumer demand to buy BTC is not there.  It's really as simple as that.  If people wanted them, they'd buy them.  Numbers don't lie.  You can blame China if you want, that only highlights the lack of consumer demand from the rest of the world.

Yes, it is a net benefit because of the increased dispersal.

It will weigh on the price, temporarily, but the net effect is it makes it easier to get bitcoins into more hands because the current holders have more places to spend them, in easier ways, and willing buyers can get them at a cheaper price ...

... it is just another phase/wave in the adoption curve, nothing to get too excited about.

Link?

The actual problem is merchants are cashing BTC for bank currency immediately because they have limited use of them. When enough merchants accepts them, they'll no longer need to cash out which will be good for BTC then.

Yes, that's right. Also there was a bubble.

Greater merchant acceptance just means that early adopters dust off their paper wallets and bring coins out of cold storage to spend. That increases the supply of bitcoins while demand remains constant because no one is buying bitcoins to spend when other payment methods are more convenient.

This is good for what buyers there are. These old coins are now in the hands of newer speculators/investors. The price of a bitcoin has gone down so more people can afford to put their money in.

Greater merchant adoption also means that they start mentioning bitcoin in their marketing materials so that creates awareness. That could boost prices. Will it be enough to entice consumers to use bitcoin? Not by itself but it will help. Using bitcoin needs to get easier and safer before we see greater adoption by consumers.

Vinny Lingham has a nice piece in Medium where he explores this angle

I just read an article that said in South Korea 5g will be out by 2020.  It will be 1000 times faster than the 4g of the ipones and galaxies.  Well..... that is what they say anyway.  I am waiting to see, but if it does happen, then yes, cell phone internet speed will be comparable to that graph.  Just another part of the puzzle coming together for the digital revolution.  

http://khnews.kheraldm.com/view.php?ud=20131218000816&md=20131221004323_BH

Everyone I know says don't buy bitcoin, but I just want to get more and more into crypto.

Just finished reading through this thread. This is the most important and concise post:

Very well said, thank you.

For more insight into the evolution and inevitable global adoption of cryptocurrency, I highly recommend watching Bitcoin the organism, Jeff Garzik at TEDxBinghamtonUniversity.

Also, a reading of the History of the Internet wikipedia page will prove fruitful.


"Almost instant in historical terms" is what happens when a decentralized, democratic, organicly adaptive, mathematics-based solution comes along for a problem that was formerly, and poorly, addressed by some ancient, industrial-age centralized solution.

Now class, who can tell me what these all have in common?

• Pre-internet telecom networks
• Blockbuster video
• The Newspaper
• The record store

and the newest member of the list:

• Nation-state fiat currency

Let's put aside the problems of fiat inflation and hyper-inflation for now.  On your own time, study root causes of WWII, Weimar republic. Hint: fiat hyperinflation to pay war debt.

The point is, a vast, labyrinthe system of interconnected centralized national banks is an over-engineered solution to the problem of trust. Good engineering is not what you add, it's what you remove. The blockchain's power as a technological superforce is rooted in the brilliant simplicity of the mathematics under the hood. This is Occam's razor at work.

Very simply put, cryptocurrency is a better way of doing money. I'm sorry, boys and girls, but there will be no epic battle for the fate of money. This fight was over before it even began.
We early adopters are going to drink your fiat milkshake, and there's nothing anyone can do to stop it.
That's why a few of us with even tens of BTC in cold storage know we are already set for life.

For those of you paying attention, the answer is yes, you should probably divest from your nation's fiat into the safe haven of the crypto of your choice, ASAP.
This is going to be over very quickly. Dangerously quickly... Once we've got ~10% global adoption, shit will get serious. I'm talking permanent exponential growth, it could be all over in months or days.

Impossible to know when or how long, but it will happen sooner or later.


1993-2007.
1% - 97%
14 years.

Four years later, BAM! Cryptocurrency is invented.

I think most of you folks are not comprehending how short a length of time four years is, when weighed against the magnitude of the innovation that is cryptocurrency.



The waves are getting shorter every generation. The beginning is near.



http://www.ctetrailblazers.org/2012/06/technology-changes-everything-computers.html