Topic: [POLL] When Buying Groceries...would you use BTC, GOOG or USD...? - page 2. (Read 4640 times)

All the bitcoins I have at this moment in time are safely stored away. I tend to use money away from bitcoin for groceries and such at the moment but I would not ever rule out me using bitcoin at some point to buy groceries.

Another good (long) discussion on the topic.

Bitcoin is much more secure than debit and credit cards.

Nobody with any sense puts more bitcoins on their phone than they would put cash in their wallet.

It is far from a guarantee that BTC will appreciate, however IMO the chances are great that it will over the long run.

Just saying, all it takes is someone behind your back to catch your login identifier and password if that's what it would be like. Bitcoin credit card's are just something I can't see happening at all. Why would the world need to use bitcoin to buy groceries anyways?

OK--it's time for a poll.  Just added...let's get scientific...

I agree, everyone hold your bitcoins and do not do anything until we are told what the price will be. Hopefully some government authority will tell us what to do like they do with the rest of our lives.

I feel like no one should spend their BTC until we know how high its really gonna go.

Also interesting about this, beyond what D&T has already mentioned is that this volume seems to have at least some correlation with the price over the same period of time.  http://bitcoincharts.com/charts/bitstampUSD#rg360ztgSzm1g10zm2g25zv

In other words, as Bitcoin appreciates, people are more likely to spend it.

Yeah, everyone should just keep as much BTC on their phone or whatever as they would in their real wallet that they put fiat in.

Bitcoin all the way.

That's why you don't keep a lot on cellphone wallet. All the main stash should be kept cold, ideally with multisig. Then another wallet on laptop for a few BTCs to refill the cellphone wallet.

The longer term view is most helpful in this discussion.  Not sure I completely agree with the last point, given that micro-ecosystems can suffer from their own devices, regardless of surrounding environments.  But the information you provide is exactly the kind of factual offset I've been looking for...things are not always what they seem and it's important to keep perspective in a Bitcoin world where people measure years of progress in weeks or months. 

Despite the spam and mining reasoning you provided...I find the 7000% to 20% year-over-year volume growth statistic fascinating...this seems to lend itself to the possibility of increased quality versus quantity transactions.

For a currency which has only existed for 5 years and really has only had reasonable choices on where to spend it in the last year?  Sure.


It actually hasn't.  There is a lot of noise in the numbers but lets take a look at what it looks like when we look at a trailing twelve month moving average.

Daily Transaction Volume:
https://blockchain.info/charts/n-transactions?timespan=all&showDataPoints=false&daysAverageString=365&show_header=true&scale=0&address=

Compared to a year ago txn volume on a TTM basis is about 20% higher.  Now one might say "only 20% growth" but the prior year we saw txn volume increase 7000%.  That wasn't due to rational increase in economic activity.  It was due to a lot of spam, waste, and bloat.  Like Satoshi Dice having each two txns on the blockchain for every bet and some betters making hundreds of bets per hour.  Even the losses were "paid" out as spammy 1 satoshi txns.   Miners were just as bad.  Many would set auto payout to the absolute minimum and instead of taking one payment per day from the mining pool they could get 30 or 40.  Today txn fees are low but not zero and that has caused a change in behavior.  

Estimated USD Daily Transaction Volume:
https://blockchain.info/charts/estimated-transaction-volume-usd?showDataPoints=false×pan=all&show_header=true&daysAverageString=365&scale=0&address=

Now keep in mind this is just an estimate.  It is impossible to verify for sure exactly how much the user intended to transfer but some reasonable guestimates can be made.  For example if a user spends 0.37285783 in multiple inputs and creates two outputs one is exactly 0.25 and the other is 0.12285783 it is more likely the 0.25 was the intended amount.  Now the point of these numbers is not the exact amount but the change over time.  May 2012 on a TTM basis it was $6M per day and in May 2013 it was $60M per day.  More users, more merchants, only 20% more transactions but 10x the volume being transfered.  Why?  Well it is hard to safe for sure but it kind of hard to say users are just hoarding coins or that they are hoarding more coins then they did in 2012.  With an average price this year of $600 the miners collect ~$2M but the volume of txns is closer to $60M.  Hard to fathom a scenario where miners liquidate $2M in new coins a day, speculators buy those $2M in new coins and it somehow requires funds to change "hands" 15x each day to make it all work. 



That assumes that you believe in Keynesian anything.  Still even if true the paradox of thrift would only apply if Bitcoin was the sole currency in the world (global commerce could absolutely not occur unless Bitcoins were spent) or would be limited to sectors that used Bitcoins exclusively (i.e. SilkRoad).  Otherwise it is like saying "Gold will become worthless because it will become too valuable".

So based on this analysis, would you say that you are quite comfortable with current BTC circulation velocity?

Perhaps what is most disconcerting from my point of view is the trending decrease in transaction activity, despite the recent meteoric rise in new users.

The fundamentals of saving notwithstanding, the concern would be that given Bitcoin's unique nature...too much hoarding could potentially lead to a spiraling version of Keynesian Paradox of Thrift.

I think you might have some unrealistic expectations about the velocity of money.  The velocity of money varies by a number of factors but generally is in a range of 1 to 2 and that is annually.  I can't recall any functional economy having a velocity of >5 in modern history.  If all 3% was economic activity (which it isn't) that would be a velocity of >10.  I am not sure why you would expect the txn volume to be an even higher percentage of the float.



If you break that down daily it would mean right now ~0.3% of the money supply in the US "changes hands" each day and 99.7% doesn't move at all.  This is to be expected.  Most entities (people, business, organizations) don't spend every cent they acquire as soon as they acquire it.  Even people "living paycheck to paycheck" generally spread out consumption over a two week period.  Maybe not perfectly distributed but certainly not spend 100% of paycheck hours after getting it and then consumption is 0 for 13.96 days.  For savers the portion they save will have a velocity of <1, potentially a small fraction of one.  Companies often keep a years worth of operating capital in reserve to ride out bad sales, bad decisions, or an overall bad economy ("yes cash is king").  

It just isn't human nature for money to have some off the charts velocity.  Keeping something in reserve is in our DNA.  You likely are here right now because one of your ancestors did save some resources.  The ones that didn't starved to death.  There are a couple of high profile reports of people buying sports cars with Bitcoins but my guess is they wait until they had exactly enough Bitcoin down to the satoshi and then spent them all.  Sure they may have spent hundreds or thousands or Bitcoins but they only did so because of the reserve they didn't spend.  Deep in that subconcious they felt ok with splurging because of the comfort that remaining reserve gave them.

Umm depends. I really don't know if Bitcoin is easy and fast enough for the day-to-day purchases. For smaller sums cash is still a nice solution. What I don't like about cash is that it's kinda dirty and sticks. Bitcoins are cleaner. Although, I've heard that there are some that smell like Frappuccino for some reason...

If I could I would use BTC for everything I purchase, I find it a much better way to pay for things, if I also had the choice I would get my paycheck in BTC

Agreed--this is from the MIT Report that I referenced in an earlier post...and initially seemed to address new Bitcoins only (this link shows updated language in lower left chart).  This was later amended in the comments section, but still unclear as chart only seems to reference transactions within certain timeframes after initial mining...or after acquisition?  This is the only piece of evidence I could find that points towards trending BTC spending versus hoarding...although even this chart states that a US shutdown sparked hoarding in October 2013, causing a price spike.

Now let's talk about all coins generally...circulated coins if you will.  The Blockchain charts paint a very different picture.  With roughly 5 million BTC users, and transaction volume around 60,000 per day, we're looking at 1 transaction every three months per user...not exactly a vibrant economy.  The total output volume chart down-trending is especially troubling: https://blockchain.info/charts/output-volume  This shows that at the current float, only about 3-4% of all BTC is moving daily...what then, is the other 96% doing...?  And keep in mind, that even of this 3-4%, not all of it is necessarily being spent...much of this volume is likely day-trading, and some transactions are users just moving their own BTC from one wallet to another wallet they own.

Regardless, I suppose the larger question we should be addressing generally is...Why don't more people spend Bitcoin, and what will it take to change current trends?

To clarify assertions made earlier, I've never stated that no one will spend an appreciating currency, but it does seem like Bitcoin's appreciative nature is causing a large portion of the user base to hoard.  Now to address these comments made on a couple of occasions:


You are talking about Moore's Law--the cost of a unit decreases exponentially over time.  People want instant gratification, or moreover...have a need that must be fulfilled near-term, like needing a new computer.  The consumer gratification created by purchasing the product is enough to overcome the potential for increased purchasing power down the road...sometimes, other times people do wait, often for years before buying that new car or computer, until the product/technology reaches maturity and prices bottom out a bit.  Not sure this applies seamlessly to spending or saving BTC.  Perhaps a more appropriate comparison would be to trading or holding quickly appreciating stocks.  

I can't speak to why some people do or don't invest in stocks, real estate et al...we'd have to ask those people.  What I can say is that people buy and do things that don't increase their purchasing power for myriad reasons.  None of which explain the technical trends regarding BTC hoarding that seem to be apparent in the Blockchain charts.  People seem to be viewing Bitcoin as a good long-term speculative investment and hodling (sorry, couldn't help myself), and they are generally choosing to make their purchases by some other means...for now.