Topic: The paradox of Bitcoin adoption (Read 444 times)

The burning of electricity is debatable, if the price doesn't go up enough to make miners add more gear fees alone will not be able to make such a dent that will trigger a lot more power usage. Besides, the halving will take care every 4 years of a doubling in price, so at one point the consumption will be caped, by price, by ROI as the length grows, and by the prices in electricity.

Besides the fees can be bypassed with LN, and if you look right now at the chain, the fees are not the problem.

As for the paradox itself, it resembles what I've always said:


If poeple don't want to spend their coins merchants will not offer the solution for 1 client a month.


This is just wrong, there are merchants accepting bitcoins as payment all over Europe and bitcoin is not legal tender here.
Besides those merchants were not accepting bitcoin because they wanted to but because under the law of Salvador you must accept everything that is legal tender. Merchants in the US for example don't have this obligation.

Speaking of Salvador, has anyone any data on transactions made by day via that Chiva wallet?

Customers have to make the first move Obviously, when the customers or clients would feel the need of crypto payments no matter how small proportion of customers, it will always drive the merchants to add this as a payment method. It's because merchants see everything based on their profitability and cost, therefore, customers have to drive this change always. I think paradox is when you have customers who want to pay in bitcoin but you have a supplier who doesn't wants to receive in bitcoin, this leaves you open to a great extent of risk.

Isn't it easier for merchants to see if their customers are interested in a Bitcoin payment option than for customers to individually express their wish for this? Most brands nowadays have presence online, so they can easily at least make polls on Twitter or something to learn if their audience is interested. Then there's also an option of actually choosing a way of making Bitcoin a payment option in your shop and placing a sticker with "Bitcoin accepted here" on the counter. Individual people are not likely to talk to people in a shop and ask them about Bitcoin. It's also way less efficient than making a public poll because it's hard to understand the demand by the number of people who actually say something.

There are a couple of small merchants I shop at who offer a small discount for paying in bitcoin. When discussing this with one of them, he says it is because he gets to avoid credit card fees by accepting bitcoin, and he is interested in bitcoin and would be wanting to buy it anyway, so he essentially "buys" it directly from his business and this lets him avoid exchange/trading/withdrawal fees. But that is because he is interested in holding bitcoin as a private individual, and not as a business. It's a different story to start offering discounts for bitcoin which are being held by your business, as price fluctuations could have a significant impact on how you pay your staff, suppliers, bills, etc. This is partly the reason that most businesses which currently accept bitcoin to do through a payment processor which converts directly to fiat for them. Such businesses are also the least likely to offer discounts since they are replacing credit card fees for their payment processor fees and they are never actually holding bitcoin at all.

It would certainly be a nice outcome of the price increase if more business wanted to hold bitcoin, since it would facilitate the move away from centralized payment processors to more businesses accepting bitcoin directly.

Absolutely. The things which attracted to me to bitcoin in the first place - having full control over my own money without requiring third parties to hold it for me, decide where and when I am allowed to access it or spend it, monitor or even censor my transactions, etc. - are still the things which make me keep using it today. I obviously won't lie and say the price increase hasn't been incredibly nice over years, but even when bitcoin was worth the same or less than what it was when I first got involved, I've still been buying it and using it.

Your words only prove my point: you have been exchanging your bitcoin, or at least part of it, for something you consider more important than ever-growing decentralized digital currency. The idea you have and are promoting, which is, if I get it right, that bitcoin can and should be used as a medium of exchange, matters much more to you than getting maximum wealth. That all also made me think that currently Bitcoin is also undervalued in terms of possible use cases. Bitcoin is mostly seen as a speculative asset, an investment, a store of value, but almost no one considers it a means of payment. However, if you've read the right economic books, you should know that a medium of exchange is a primary function of money, whereas the others, a store of value and a unit of account, are derivatives from the main function. So, we probably must focus more on a medium of exchange part of Bitcoin because if it is not used as that medium, it is not real money.

Merchants will adopt it when it's within their interest to adopt it. They don't need customers initially using cryptocurrencies, they need to know that Bitcoin is accessible enough, that if they start selling products for Bitcoin, it can be easily enough acquired, and used by its customers. I suspect if Bitcoin continues to appreciate in price, then the amount of merchants wanting to accept Bitcoin will adopt it, but not only adopt it, but offer discounts if you purchase with cryptocurrencies, which then creates that intrigue from their customers.

The customers will then purchase Bitcoin, and purchase products from the merchants at a reduced rate, therefore getting their product for less than they would with fiat. Then, the merchants don't entirely lose out by accepting Bitcoin if the price of Bitcoin continues to appreciate in price, which is something I think a lot of us believe it will do.

That's just one example of a way to break this "paradox" as you say. Plus, I believe this is already being done in some merchants. They offer a 5-10% discount, and then continue to hold it until the price goes up. Rinse, and repeat. Obviously, there's a risk factor with this, and not all merchants will be willing to accept that risk, but that depends if they're interested in Bitcoin outside of their business, it might be enough to spur the change.

I think time will show us what is to be concluded. Still cryptocurrencies are growing. Continuously being famous, people do get themselves involve and accept crypto into their lives as much as possible. For now, activities using cryptos are still limited but we could tell what have cryptos achieved from the day it existed right?

That's not entirely true.
Most of the times :
The government doesn't really comply with these terms. The merchants and the clients might not even have a hand in this.
When you see the price of Bitcoins rising, you won't use it as a payment method, why would you? Generally you would actually use it as an investment and hold it for a long period of time. That would decrease their demand as well which would prompt the sellers to choose not to engage in cryptocurrencies like bitcoins.
I do think that, merchants and clients would only accept Bitcoins when it would be more beneficial to use it for transactions for examples :
1. For international transactions
2. Transactions needing third parties
For the regular basis I do think that it would be more advisable for the clients to hold their bitcoins since right now it's more profitable. When the price is stable, it might be a good idea tho. It's a lot about situations as well.

Deja vu: The merchant is the party behind the gift card. It doesn't matter if you pay with bitcoin or not; you have to trust them you'll get the product you paid. It's not a third party, but there's always trust.

Didn't it do those within a week 8-9 years ago?

I will never do that because I would not be using bitcoin anymore, instead I would be relying on some third party

Well in a slightly longer period of time this still happens. The rise from $30k to $60k for example, took only 3 months.

I'm seeing bitcoin this way too, but I have to admit that it's annoying to buy stuff in different exchange rates each time. At the moment, in order to avoid this I have to make a time deposit for gift cards so I can have all my purchases in the same price. You obviously can't do this if you don't have enough liquidity and must be aware for the gift cards' expiration date.

The one who also dislikes having $50 instead of $100. Fortunately, these highly fluctuating times have gone. It's way calmer now.

I wish this happens to me too. It'll feel great to pay my fast food deliveries via lightning instead of cash.

Yes, absolutely. I spent some around just earlier today, in fact. And you could ask the same question of anyone who has ever sold bitcoin, as it is the exact same process. They are still exchanging their bitcoin for something else - the only difference is they are receiving fiat instead of goods. So why does anyone sell bitcoin ever, knowing that it is likely to outperform their other assets?

Why do I spend it? Because I value bitcoin as a currency and I value the advantages it brings over fiat. I like being able to spend my money on my terms, without my bank or credit card company sticking their noses in to when and where I am spending my money and what I am buying with it. I like being in complete control of my money without having to depend on a third party, who can choose to censor me and my transaction at any time. Would I be able to buy more goods with my bitcoin if I waited 1/5/10 years? Probably. But if everyone thought like that then it would never happen, since no merchant would ever go to the hassle of accepting bitcoin since no one was spending it. And with zero adoption there would be zero growth.

When I buy or otherwise receive bitcoin, I buy some which goes to cold storage, and I buy some which goes to a hot wallet to be spent on goods, services, or whatever I need. And I will continue to spend my bitcoin, even though it will be worth more in the future, because if nobody ever spent it, then it would be worth nothing.

Right, the lack of widespread adoption is arguably the most remarkable reason Bitcoin is still far from being valued enough. And yes, if no one wanted Bitcoin, its value would magically disappear because the value is always subjective and never objective. It is undervalued, therefore, because there are some people, billions of people, who have not yet recognized its value. In other words, the current demand for Bitcoin is little if compared to what it might potentially be. It doesn't mean, however, Bitcoin can't fail on the path of achieving its highest possible value, but at least it tends to achieve it.


Have you ever spent your Bitcoin knowing that this is the hardest asset you have ever had? If yes, why? Maybe, the things you bought with Bitcoin were at the time more important for you than keeping money? We may have different reasons to spend money, whatever money, but the one thing that is clear: we don't need money itself, we need things we can buy with it. The reason we are holding Bitcoin today is that we can buy more things in the future. Bitcoin is not an end, it is just a means to it.

My issue with this is what makes bitcoin undervalued? People think they will be able to trade bitcoin for more goods or services in the future than they are able to do today, hence, it is currently undervalued. But that premise rests on the fact that there will be growth of bitcoin in the intervening time, that there will be more demand for bitcoin in the future, that there will be more people accepting it for goods and services, that there will be more people wanting to own it, etc. All this growth depends on adoption. If no one adopts bitcoin and no one uses bitcoin, then growth will stall and price will stagnate.

I don't disagree that people preferentially spend bad money, but if absolutely no one spends the good money then it ceases to function as money. If absolutely everyone simply held bitcoin and never used it or transacted it for anything ever, then it would be worthless.

Merchants would just accept it if there's a demand so I agree to those that says that it should come from the consumers and it's us. It's already in the making that the majority of the merchants will adopt bitcoin. AFAIK, many of them have adopted it in the past yet they've also removed their adoption to it when they've announced that they would no longer be accepting it. But I think we're on the right time and this is the start of it when there's a hype to the market, there will also be the attraction and all eyes on bitcoin which these merchants will announce their acceptance on it inspite of no demand for the payment of bitcoin because it will give them the attention and looks big news.

I also think the cycle is slowly being broken. One thing to remember is that most people don't like change, and adopting something new into society (especially different societies across the world like Bitcoin) takes a long time. One issue with Bitcoin is that some people want to hold it like it's gold and not spend it. This is partially why I think we still need to see more companies accepting other forms of cryptocurrency. But, that's something we're already starting to see happen as well. Many big companies out there accept Bitcoin already, even though most people don't pay with it. Some companies (like the huge AMC movie chain here in the US) are even accepting other cryptos now like Ethereum and Litecoin. Be patient.. Bitcoin adoption is already underway, but it's going to take lots of time for it to finally work it's way into a lot of peoples everyday life.

When the majority are ready to accept change, try something different from what they are use to, some people don't want to give crypto a try even though they have not used it, they make their decision based on what they read on the Internet and from some clueless people around them,

You can try to educate people about crypto and how to use it but the willingness must come from within, many merchants don't accept btc because they don't know it and are not ready to learn, hence potential buyers will not be able to spend their btc to buy.

Yeah but only to some extent and it somewhat depends on your views. The investors and specifically traders affect volatility.

* There is one hardcore bitcoin view that sees it as a currency that provides financial sovereignty and people with this view don't care about the price fluctuations at all.
* Another more mellow view is those who spend bitcoin while enjoying the increase in their purchasing power. For example you have $100 and park it in bitcoin then after some months you have $200 to spend. Who doesn't like that?

This is why despite all the slow adoption we are still seeing great progress in adoption to the point that I have even seen restaurants that accept bitcoin payment in where I live!

Have you ever heard of Gresham's law? In a nutshell, it states that overvalued money drives out undervalued money from the market. What does it mean? In our case, it means that people tend to spend their fiat money because they clearly understand that fiat's purchasing power is gradually declining. It is happening because governments all over the world debase their currency through some sort of money printing out of thin air or credit creation. Today our fiat money has a higher price than it will tomorrow. Bitcoin, on the other hand, has been appreciating in value because the demand for it increases, and the dollar's price, in which bitcoin's value is measured, is declining. So, people believe the dollar is overvalued because its price tends to zero in the long-term, but bitcoin is undervalued because its price tends to infinity. Given that people have both currencies on hand, they spend the overvalued and hold undervalued. When or if the dollar disappears, people will have only one option, which is Bitcoin. They will have to spend it because there will be no other "bad" alternatives.

They didn't just started it themselves. They were forced to accept it. That's kinda against what we, as community, support. We don't want to go off half-cocked with the adoption. Whoever respects what bitcoin has to offer is welcomed to allow it.

There are? What's the point? There's a lightning network standing there...