Topic: State of the Real Bitcoin Economy - page 8. (Read 14576 times)

I personally like this idea a lot and others that I've read similar to it in the past.  This is an excellent way to for BTC through the proverbial door.  Thanks westkybitcoins for sparking a interesting conversation that has been on my mind and clearly we're not alone.

Don't get me wrong Mr Froggy.. I hate paypal.. Paypal tried to screw me out of $5k a few years back and only gave it back after threats of legal action.. I now refuse to use paypal.
My reference was "fast and easy as something like Paypal" - as in, fast and easy for grandma to setup and start using..  Read it again and you may notice that nobody said anything about a standard of exellence or how to run a payment system.. Not sure where you dreamt that up from.. But.. Yah..

Paypal! That gave me a good laugh.

If you login to your Paypal account through a VPN, you account is AUTOMATICALLY locked for 24 hours +. Every time.

Paypal doesn't have 2 factor authentication, and they can and do freeze your account at any time for arbitrary reasons.

Paypal isn't the standard of excellence, they serve as an example of how NOT to run a payment system.

What about some kind of dedicated working group trying to push for adoption in key areas.  Maybe seven or eight coud be idendified (eg International Business Payment Settlement, Non US payments) etc.  Each group could try to raise awareness in an area...

more and more I am thinking that the most likely consumer end usage of bitcoin will be in micropayments. for example; you are reading an online magazine and they want to charge you 25 cents to read a whole article. bitcoin fits this need very well. there are several groups and emerging services following this idea, but it will be a few years before we see a mass adoption.

That's really only an issue for point of sales. Anything that ships, there will be plenty of time for confirmation. Low value stuff like mp3 downloads, the amount of double spend fraud will be really low.

And there is a solution, green address - https://en.bitcoin.it/wiki/Green_address


True, but you can adjust prices of goods to the 7-day weighted average, there are free API's already for getting this info.


Actually wallet security I think is a strength for bitcoin, software wallets on a device. Web-wallets I don't have a lot of confidence in.


This is the problem making it hard to obtain bitcoin in the United States and needs to be rectified.


Sending to the wrong address is really difficult to do because of the checksum that is part of the address. It is highly unlikely that a typo in entering the address will result in a valid address.

The vendor simply provides a URI that can be clicked or QR-scanned and typo isn't even an issue.


Vendors just need to provide a URI. The specification has existed for some time, and I believe virtually all wallets work with it.


The main one is the regulatory issue making it difficult to obtain bitcoins. In my opinion.

If gold can still survive, be valuable and be considered a viable investment vehicle purely on it's potential as a store of value, I don't see why Bitcoin can't.

This is also where I think those slamming on the possibility of there being alternate cryptocurrencies are off-track. Bitcoin isn't perfect. It CAN'T be. No system can fulfill every possible benefit that everyone could want. Bitcoin fulfills a niche, but let's face it: the 10-minute confirmation time alone means it's NEVER going to be directly used as a mainstream vehicle for in-person purchases.

That said, workarounds to the flaws are already coming about. Other cryptocurrencies are being tested, developed, and explored. Systems integrating Bitcoin (like Gyft cards) are starting to break onto the scene. Systems layered on top of Bitcoin will emerge eventually. It's only been 4 years, and I can already store and spend my bitcoins in ways the inventor probably never thought of. I can send hundreds of thousands buying electronic equipment, or get a gift card to buy fast food at Burger King... probably while I wait in line, no less.

I'm not worried about the state of the Bitcoin economy at all.

the problem is simple and the OP pointed it out perfectly.

even after 3 years he only knows of 3 main places that sell legitimate products for bitcoins. although i know that there are over 10,000. no one truly knows them all..

the solution: a proper 'yellow pages' for bitcoin merchants. once EVERYONE can see there are thousands of merchants, then it will be far easier for everyone to quote a few names to their own local merchants to say, "come on join the revolution".

to further prove the point


i can probably count under 100 gambling 'merchants' for bitcoin. but take foodler for instance. thats many thousand food establishments across america that can deliver locally via bitcoins. so technically food should be the big market for bitcoin.

but not everyone realises that all of these businesses exist

I have the following issues with the idea of BTC retail transactions:

1. Confirmation Time: It takes @ 10 minutes to get the first confirmation that a transaction has been processed. How does that compare to a credit card swipe? Win for the existing system.
2. Price Volatility: The volatility is enormous relative to day to day transaction costs -- how would you like your paycheck to vary by 10% from day to day.   Win for the existing system.
3. Wallet Security: Finding a secure wallet is not easy. Concepts such as hot and cold wallets don't inspire confidence. Why bother when I can just swipe or pay cash? Win for the existing system.
4. Regulatory Risk: Certainly an issue for fiat/crypto exchanges which may or may not apply to merchants in the long run.
5. Payment Risk: No recourse if you send payment to the wrong address
6. Public Key Length: No one can deal with the length of those keys, it's either an alias or the QR code. QR codes aren't really familiar to most people. Establishing alias's takes time and a little bit of sophistication.

It doesn't take more than one of these issues to turn 99% of people off. Until these basic problems are solved, I'm not surprised that the Bitcoin economy hasn't grown as rapidly as some would hope.

Where is the upside case?

1. Safe Haven: No way with all the volatility.
2. Transaction fees: Unclear when you add in the cost of converting to and from fiat. In any event, any savings are small potatoes, yes?
3. Time Savings: For domestic transactions, no. For international transactions, there is a real time saving in getting funds anywhere. However, once they're "there" they still need to be converted back to fiat to be of any real use.

On balance, I think it's amazing that BTC has come as far as it has given the above...

Here's the state of bitcoin from my point of view.
I am hopefully optimistic.

I don't remember when I first heard of bitcoin, but it was several years ago. At the time I dismissed it as a specialized currency for gamers, a means by which they could trade stuff within their own specialized circle.

I had pretty much forgotten about it, until an issue of Internet censorship came up. Many BDSM web sites are forced to filter their content. Not because they were violating US obscenity laws, but because the payment processing companies forced them to. Payment processing companies are scared of being named an accessory in distribution of obscene content but they don't want to have to hire staff to evaluate each web site they process payments for. So instead they have a word blacklist, and they scan your content for words on that list, and threaten to cut you off if too many are there. Words like forced and dead and hypnotized - and it doesn't matter the context.

So what we end up with is limits to free speech that are far more draconian than the government could get away with, but because the processing companies are private and not government, it is not a constitutional rights violation.

In a discussion about that, bitcoin came up as a solution. That was couple months ago. The more I looked at bitcoin, the more I saw it as a solution for so many other things.

Back in the early 80s, most people used credit cards when they needed to finance something. Grocery stores, fast food places, pet stores, a lot of them didn't even have credit card processing equipment. You used credit cards for expensive purchases you needed to finance and you used your checking account for day to day living.

That started to change towards the end of 80s, more and more places started getting the equipment needed to process credit cards and by the time the Internet really took off, the general population had been re-trained to do a lot of their shopping with credit cards and then pay their credit card bill once a month.

But for purchases that you do not need to finance, giving away the kind of information you give away with your credit card number is insecure. If I buy a couple books and I don't need to finance the purchase, the only information the seller needs to have is what address to ship them too. The Credit Card system is the wrong system to use for purchases that are not being financed. Bitcoin is a much better system to use for purchases that are not being financed because with bitcoin, the vendor does not financial information about me that may be of value to a computer hacker.

There are other reasons why bitcoin has advantages over the current financial systems. One of my neighbors went through a really tough spot. He lost his job and was unable to find another for some time. He bounced some checks. He says what happened was he thought he had them covered but a payment to him never came through, I don't know if that is true, but he could not get a checking account.

He finally got a savings account that he can use with a debit card, but it can not be used as a MC/Visa so even though he is working now again, he can't buy stuff on-line yet. But he could use bitcoin and make purchases with bitcoin, so it is of value to merchants to accept bitcoin. There are a lot of people they can't sell to simply because there is not a means for the transaction to take place. Bitcoin provides that means.

The problem with bitcoin at least in the United States is that it is too difficult to aquire due to the MSB laws that differ from state to state to state.

It is my hope that at some point, places like Western Union will wake up and realize they can make a fortune as a local place with all the necessary permits that can sell bitcoin. I also hope that laws are adjusted.

In some respects, I see the use of bitcoin as an expression of free speech against a banking system that is broken, and I would like to see that first amendment aspect brought up in court challenging some of the current laws here in the US that make it difficult to work with bitcoin.

So for state of bitcoin, I think it has a really bright future and is the right solution to a lot of problems, especially for purchases that don't need to be financed, but we need (at least in the U.S.) to focus on more legal options for obtaining the currency. That's what is holding it back.

The success of Bitcoin comes from the Silk Road.

There are ways to fast convert fiat to btc via paypal or credit card, see here: http://gamblingbitcoins.blogspot.ro/2013/06/how-to-buy-bitcoins-with-creditdebit.html. The problem are the fees which are still high.

Make it easy so anyone can use it (as I mentioned earlier)..
Get the porn industry to adopt it...

I think the single largest barrier to entry in terms of mainstream adoption is the conversion of fiat to BTC.  Volatility is a concern as well but if you are able to quickly convert and transfer, it isn't as much an issue.  The average person is not going to wait 5 business days on Coinbase (and taking on all the volatility while you wait) or pay $40 for a wire to an exchange.  You can use a service like BitInstant but then one of the main advantages of Bitcoin (low transaction fees) goes out the window.  The problem is that with other payment methods, such as credit cards, the fee is assessed to the merchant.  Bitcoin flips this to an extent in that the fee is now on the consumer.  This is a difficult transition for many people to make.  It doesn't matter if the merchant fee is baked into the price, the average consumer doesn't realize this so it's a moot point.

The one way to boost adoption is for the merchants to realize that they are paying lower fees and pass that discount on to the consumer.  A consumer needs perks to make a change especially if they're going to take on the initial inconvenience.  I don't think the advancement that Bitcoin has made over the last few years should be trivialized, as there has been substantial improvement, the main issue is that we as the early adopters do not become content with the improvement and fall into a stagnation.  We need to constantly push the envelope.  The challenge is finding a happy medium that gives incentive to both merchant and consumer to choose Bitcoin over other readily available payment methods. 

Gambling is a big market for bitcoin, but it is too difficult for non-techies to set up without a big incentive.  Something like gambling gives incentives to a large group of motivated people to use it.  Silkroad too for some, but there are few other killer apps out there yet.  No VisiCalc for the Apple ][ and PC.

My list:
1. Silkroad type
2. Gambling
3. a. Wealth preservation
 3. b. appreciation, we hope
4. Easy transactions between jurisdictions, yes, but only limited need so far
5. Namecoin for the .bit TLD maybe. Needs special configuration
6. Speculation


Once it is easy to use so that your aunt or grandmother can use it easily, that will increase adoption. The audience here is not the huge sweet-spot market that would hit a large percentage of the population.

first up, good thread, this is exactly the discussion the btc community has to have ...

ok, in terms of an investment, btc has already done very well, but there are several things we need to observe closely if we are to find ways of continuing to increase the btc/fiat prices for the benefit of investors, early and new alike

if we agree that most investors view btc as a safe haven, a hedge against inflation or currency collapse, then we need to look at what the alternative instruments are doing, i think btc has a problem with the spot price of gold and silver continuing to fall, investors are thinking, gold and silver are time-tested, btc is 4 years old, gold and silver are getting cheaper the more i wait, so im going to keep waiting for bargain prices of gold and silver, and forget about buying btc, which may be waaay overvalued, my point is that when gold and silver reach their bottoms, and begin to rally again, especially if this is combined with another big correction in the usd, then it wont take long before those metals are getting too expensive, or too expensive for investors to want to buy, and they'll decide theyve missed their chance, and then they;ll look around at alternative, and eye btc

we also need to identify what "caused" the rise in btc/fiat price from mid-2012 to the boom in feb/mar 2013, to the bubble and crash in april, we need to try and determine some common factors of what drove that bull market, and see if it can be replicated

but apart from this, i really think the key is the falling PM prices atm, i think btc will start climbing after that, because gold and silver bugs who miss the u-turn wont want to miss the next best thing, btc

in terms of transacting, i think btc community needs to try hard to get btc to the poorer peoples of the world, the volatility of btc is settling, and when it begins to rally next time i expect it to be steadier, with stronger trends, rally/small correction/rally/small correction etc, a zig zag path, upwards

i agree, btc needs to get away from silicon valley vc and become more "international", plus the "masses" the mums and dads out there, will have one main question, "what can i buy with it?" and so the btc economy has to be able to supply the everyday products the mums and dads buy   

How long did it take you to figure out that you could do that?
How long/confusing was it to fund your wallet?
How much research did it take for you to find/configure your wallet?
How long would it take for you to explain all of this to grandma, and Suzy in accounting? And would they be able to have it all setup, and be buying things in 10 minutes.. Like with PayPal?

I know this is just going to make me sound like I'm just placing blame and dodging the real issue but I think a lot of the slow adoption etc. is due to the government sponsored attacks not at Bitcoins network because I'm not tinfoil hat wearer because I'm talking about attacks against the actual philosophy behind Bitcoin. Neo-Keynesians HATE Bitcoin since it's a living example against everything they stand for, even when they come on here trying to act polite and diplomatic they basically just ooze passive aggression and they'll make up outright lies which certainly haven't helped with spreading Bitcoin to mainstream businesses. What certainly doesn't help as well are the twats who go around freezing the accounts of Bitcoin merchants, maybe we do need to get more pure Bitcoin companies up and running for sure because our governments certainly aren't going to be nice about all of this.

Eh, maybe it's Summer but I've been a bit pessimistic lately when I see people being so openly attacked for associating with Bitcoin but I guess we should've known this type of thing would happen, as has been said there has been some real growth in some areas, I've noticed web hosts and VPNs all over the place taking Bitcoins too but when it comes to physical goods however not much is going on at least in a properly organised capacity.

Hi,

good issue, I thought about it too ...

I think the problem for business, physical merchands, is not the technic. Technically BTC is great, if you get it, it's impossible easy. Problem is volatility - who would accept BTC in these days, when the price is sinking or nobody knows where it will be in the next 30 days? I think, BTC-price has to calm down for some month, at best, slowly but cointually rising, so the merchands smell profit if they accept it.

Two nights ago I had an idee. What would happen, if world of warcraft and all these other big online games accept BTC or, better, Satoshis? Think about it. WoW buys 1 BTC, which are 100.000.000 Satoshis. They could spread them in the world. Gamers could gather Satoshis with their Avatar in WoW, export them to their wallet, import them in another game and so on ... would this be legal? I think, for gamers this would be a great advantage, and the game-providers could profit with little transaction fees ...

The thing is: If you count in Satoshis, they are always cheap, no matter what's the prize for a btc. And players would use Satoshis without regard to the prize. If they could change them to fiat, nice, if not, they could change them into some icon ... so, this would be what I think BTC needs - its own economy.

Can't agree with that - I pay for my VPS using Bitcoin - takes only seconds and is easier than any other way I've ever done a payment over the internet (and costs me no intermediate fees).