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I'm pretty naive on the subject of Bitcoin so I might be missing something here, but can someone explain to me how it's used right now? Aside from treating BTC

I'm pretty naive on the subject of Bitcoin so I might be missing something here, but can someone explain to me how it's used right now? Aside from treating BTC like a stock that is. The value of it fluctuates so much that actually buying/accepting it seems incredibly risky. The price can go down just as fast as it goes up. As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase. As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700? My confusion really comes from the buying/selling of legal goods; I can see the risk being worth it if you're operating outside the law. But really; if I'm selling something then there's a pretty good chance I'm buying my supplies with a fiat currency. I have hard and set costs I need to cover. If I accept BTC, there's a chance that when it's all said and done the BTC isn't worth what I paid and now I'm losing money. Are businesses just expected to accept that risk? If so, how many businesses are actually willing to accept that risk? Or do we have to wait for the price to settle down before seeing more widespread adoption?

avenoir 9y ago
> When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer Bitcoin Prices lists the exchange rate for many currencies on multiple exchanges. When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment. [1] So it sounds like merchants accept Bitcoin and immediately convert to preferred currency based on the going BTC rate at the time of transaction. [1] https://en.bitcoin.it/wiki/How_to_accept_Bitcoin,_for_small_businesses https://en.bitcoin.it/wiki/How_to_accept_Bitcoin,_for_small_...
iDemonix 9y ago
I know it doesn't specifically answer your question, but my understanding is that a majority of 'we accept bitcoin' businesses use a service to translate it in to their native currency at the time of sale (or very shortly after), and often will list their prices in the native currency (rather than BTC + constant adjustment).
seiferteric 9y ago
Are there any instruments like options or futures for btc? Seems like these could be used to solve this issue.
- 45h34jh53k4j 9y ago
  Yes, some of the chinese exchanges offer futures contracts. The larger western exchanges offer leverage (and its other peoples funds earning interest, currently ~0.015%/day). There is also mining contracts which are a form of derivative. Also -- none of these deriv's provide any solution to volatility (possibly make it worse?)
- acchow 9y ago
  Exactly this - futures denoted in BTC will turn it into a real currency. It requires buy in from many parties - suppliers of materials to manufacturers, manufacturers of products, merchants reselling products, etc. The entire chain can be stabilized with futures so then bitcoin doesn't need to be converted immediately to another currency.
- kristopolous 9y ago
  futures + debt based investing are the two canaries of market crashes. It was true in 2008, 2000, 1987, 1929, 1873, ... heck all the way back to tulip mania or arguably the financial panic of 33AD. The question of "who's buying, how many of them are there, how long do they intend to hold for, and how are they buying?" you can't answer for sure, but when the capital to buy starts getting more scarce and people start leveraging other assets to continue buying...you'll get to a point where market velocity surpasses speculative velocity and the leveraging ability of the buyer. In the physical world, this is a vendor of widgets on the street and a buying frenzy. Buyers spend money on the widgets and turn around and open up their own widget shop as sellers to feed the craze. Eventually enough buyers are converted into sellers, not enough buyers remain and the price crashes. Futures contracts are a form of credit in this model. Bitcoin's crashed 4 times in 6 years - don't think it won't happen again.
rcpt 9y ago
It's useful for donating to WikiLeaks when the banks are blocking those. https://wikileaks.org/Banking-Blockade.html https://wikileaks.org/Banking-Blockade.html
duren 9y ago
It's the same as exchange rates, constantly being recalculated. Though crypotcurrencies are orders of magnitude more volatile. A seller will set their price in USD (or other established fiat), and convert the price to bitcoin at the time of transaction. As far as cryptocurrencies are concerned, I personally view BTC as a good store of value; it's slow and expensive to transfer compared to other coins.
ryanlol 9y ago
>The value of it fluctuates so much that actually buying/accepting it seems incredibly risky. The price can go down just as fast as it goes up. Why? If someone sends me 1BTC I'll just instantly sell 1BTC, it is tremendously unlikely that I'm gonna get screwed even if there's a 1-2 second delay. >if the value of a BTC is going up, why would I use it to buy anything? Because you want things and not numbers on the internet. >As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700? By being smart and not waiting to cash out. Your maximum loss will be the value of whatever buffer coins you hold, and I guess you could hedge around that too.
- 45h34jh53k4j 9y ago
  There is no 1-2 second delay tho; bitcoin transactions take 1 hour to confirm. At best, you might have 7 blocks between receiving, sending and being credited on the exchange. Of course, this is possibly things like Litecoin are more stable as you can 'get in and out' in 15 minutes.
  - celticninja 9y ago
    Some places will allow immediate conversion to dollars. I know bitpay used to facilitate that.
    - 45h34jh53k4j 9y ago
      Bitpay was cashing to fiat from unconfirmed bitcoin tx's? SMH If its a bitpay to bitpay tx its all internal and likely didnt actually touch the bitcoin blockchain.
      - celticninja 9y ago
        This was merchant payments. Essentially bitpay guaranteed the USD you would get at the point the transaction occurred. They didn't send the USD, that happened a day later. So buyer pays in btc, bitpay handle the transaction, probably sell the same amount on an exchange at that point, tx confirms and they pay out the USD. The BTC then goes into the bitpay reserve for the next merchant.
skizm 9y ago
Bitcoin purists will say that, eventually, there is no "cash out" phase. 1 BTC = 1 BTC and who cares about what the dollar equivalent happens to be. Once everything is in BTC you will never exchange it for dollars. Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No, so why would you care what the dollar equivalent to a BTC is when everything you buy is priced in BTC? This is long term obviously. The reason the price is "high" now is because there is a finite amount. ~21 million BTC is the max that can ever exist at once. So, theoretically if you replaced the world's currencies with BTC, having a single BTC would make you incredibly wealthy.
- baddox 9y ago
  But be careful about only mentioning the views of "Bitcoin purists." That sounds like a pretty extreme view, and will be dismissed as a straw man by the Bitcoin fans or optimists, who likely vastly outnumber the "purists."
- beaner 9y ago
  Not sure why you'd be downvoted. This is what some purists think and it's a popular meme. [1] [1] http://imgur.com/gE8hDnY http://imgur.com/gE8hDnY
- droopybuns 9y ago
  Is it a big deal that a BTC can never be lost and later found? On a long enough timeline, won't lost credentials result in BTC that are functionally permanently out of circulation?
  - droidist2 9y ago
    Interesting question. Since there's a limited supply theoretically on a long enough timeline every BTC will be lost.
    - tlrobinson 9y ago
      Currently Bitcoins can be divided to 8 decimal places, and if eventually that's not enough the protocol can be upgraded.
45h34jh53k4j 9y ago
Its also used to purchase other cryptocurrencies. Trades ride the volatility of USD/BTC, as well as the XXX/BTC. In extreme cases you have USD/BTC, BTC/XXX, XXX/YYY! While there is a large number of LTC, BTC and ETH exchanged for fiat (USD, EUR, RMB, KRW); Most of the trades are between BTC and alts - https://coinmarketcap.com/exchanges/volume/24-hour/ https://coinmarketcap.com/exchanges/volume/24-hour/
icebraining 9y ago
As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase. Why do you spend any currency when you can buy Bitcoins instead, let it grow and then sell them back into the original currency? Any reason you can give applies to spending Bitcoin.
- deleted 9y ago
  [deleted]
- ehxcaet 9y ago
  Not sure that really applies. You NEED to buy things. Rent/mortgage. Food. Transportation expenses. The guy's right - at this point, why would you ever spend BTC on those transactions when you can spend $ instead? The reason why you spend any currency instead of buying BTC is because you need to. Not because you're willingly buying something unnecessary to forsake potential earnings in the future.
  - icebraining 9y ago
    Right. I'm not in any disputing Gresham's law; if you have enough USD to cover an expense, you're surely spending it first. But the idea that "the reason why you spend any currency instead of buying BTC is because you need to" is just plain wrong. You're essentially saying that people spend strictly what they need to live and save every penny beyond that, and can only wonder whatever led you to that conclusion.
celticninja 9y ago
It is possible for a business to accept bitcoin and immediately have it converted to dollars so they are not exposed to the currency risk but get the benefits of irreversible payments, so little chance for fraud.
- zwily 9y ago
  That's what 99% of the businesses that accept Bitcoin (that aren't themselves crypto-coin based businesses) do. Overstock is a counter-example. They keep 50% of the BTC they collect now as investment.
deleted 9y ago
[deleted]
aresant 9y ago
Fascinating how many questions / comments in this thread question if crypto currency macro even has a use case in this world. And for good reason. Is it a currency? Yes and no. Is it a store of value? Yes and no but sure is volatile. Is primary use case illegal transactions? Definitely, sometimes. Is it a anarchist mechanism to shelter wealth and detach from any nation state? Yes absolutely, probably most of the China money that drove the last price bump was getting cash out of China. Is it a pyramid scheme? Absolutely in many cases, ICOs are making this way easier. The answer I've arrived at, and why I am compelled by crypto is that in each use case above it has the potential to be the BIGGEST, at a scale never recognized before. EG Crypto could be the biggest currency. All it takes is adoption and figuring out scaling. Way easier to transact in a flat-world with a portable currency. Crypto could be the biggest store of value. The beautiful math behind bitcoin (and others) is self-limiting creating real scarcity. With mass adoption will come stability. Crypto could drive the majority of illegal transactions. If they figure out privacy more completely it's the perfect mechanism. Crypto could become the "people's" wealth vault, and undercut nations ability to tax & control markets by truly privatizing wealth. All it takes is MOST of us to decide. And finally, because it's entertaining to think about, Crypto could drive the biggest pyramid scheme the world has ever seen. There is absolutely no SOFTWARE of structural limitation to running a $1 trillion dollar end game pyramid on Crypto. In fact you figure out the privacy side, add in mass adoption and you could just leverage the current ICO structure for it. I love crypto because it's boundless. You have to have some imagination and blind faith to believe any of the use cases above will become true. But the fun part is there is no limiter on any of those things becoming true.
- tenaciousDaniel 9y ago
  Exactly. Though I think that so many people having invested so much money at such an early stage in this technology's development is the reason why the scrutiny is off the charts. Everyone, from naysayers to evangelists, need to cool off a bit and realize that this stuff is brand new. I'm 110% confident that cryptocurrency in general will yield some very interesting things in the next few decades. But I'm 0% confident that anyone today has a grasp on what those things will be specifically. We should all just be having fun with it and seeing what we can make.
mtgx 9y ago
Even though Bitcoin was initially called a cryptocurrency, I think it's now becoming more clear that cryptocurrencies are more like "cryptoassets" [1] or crypto commodities. Some of the people who started calling it digital gold a while back got it right. Using Bitcoin is more like using gold (not necessarily physical gold) to pay for stuff. Gold's value also fluctuates significantly over one year's time. [1] - https://medium.com/@cburniske/why-i-like-the-term-cryptoassets-ab6b76e1ee33 https://medium.com/@cburniske/why-i-like-the-term-cryptoasse...
- discombobulate 9y ago
  That's questionable. I believe there may be an issue with the economic model if there aren't sufficient transactions (once the issuance starts to slow). Not enough crypto for the miners. They then don't support the network. The network is then less secure. The price then reflects the lack of security. There's thinking that the winning crypto(s) currency will be both gold + currency.
ringaroundthetx 9y ago
For an entire half-decade there have been payment processors that made it seamless for businesses to accept bitcoin and cash some or all of it out immediately if they wanted to. If it takes a $100 million fund raise article for you to ask why everyone else isn't crazy, c'est la vie. People look for validation all manner of ways. Coinbase also has merchant services that allow for immediate cash outs. This is probably one of cryptocurrency's smallest markets.
- stanmancan 9y ago
  I'm not sure I follow what you're saying in the first two sentences? Neat to know that you can cash out immediately though; that makes more sense. Are the vendors that accept BTC pricing their goods based on the current exchange rate for 1 BTC? ie. I price product A at $1500USD, I then say I accept BTC, so when someone puts it in the shopping cart it converts $1500USD to BTC and charges them that amount? Sorry, just not familiar and trying to figure out how it works. I haven't came across anyone that accepts BTC (although I haven't looked either).
  - ringaroundthetx 9y ago
    Some vendors and some listing sites show at least two exchange rates. National currency and the cryptocurrency of choice. Stripe and Coinbase give the options of automatic conversion to the cryptocurrency exchange rate when displaying it. Some merchants, usually more established ones like Microsoft, Newegg, Namecheap, typically won't show the bitcoin price until you chose that option and they generate the timed invoice.
    - stanmancan 9y ago
      Interesting, thanks!
utexaspunk 9y ago
Can I get a bank account which works like a normal bank- accepts EFTs in dollars, has a debit card which pays in dollars, but where my balance is stored in BTC and everything is exchanged to/from BTC at the current rate on the fly? With enough of a balance, it seems like I'd be able to weather any fluctuations in the exchange rate and my funds would for the most part appreciate at a much greater rate than the measly interest on a savings account. Does that exist? Would that be a terrible idea?
- mrb 9y ago
  The Coinbase Shift card does this. It's not a bank account, but just a debit card that exchanges USD<->BTC in real time to settle transactions.
- elatier 9y ago
  Have a look at Revolut - they're adding Bitcoin, Ethereum and Litecoin as holding currencies in the coming weeks.
mrb 9y ago
"As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase." If it goes up so much, isn't it incredibly silly for you to not buy any? See, the reason why you haven't bought BTC yet is the same reason why BTC is still used to buy things. BTC might go down tomorrow, so why not spend it today and get more bang for your buck now. Case in point: I've personally spent ~100 BTC over the years (buying domain names, Steam games, paying my CPA, buying on Newegg, eating at Charlie Shrem's bar in NYC, etc.)
- chocolatebunny 9y ago
  Your CPA accepts bitcoins?
  - mrb 9y ago
    Yes: https://www.tyracpa.com https://www.tyracpa.com
rb808 9y ago
Initially people did use to to buy stuff, but it there isn't really an advantage over credit cards. Now people just want to buy it because it keeps going up in price. Classic Pyramid get rich scheme.
VLM 9y ago
Buy and sell limits prevent using coinbase to trade BTC like a stock unless you're talking extremely low limits or extremely long term (like a retirement fund, which I wouldn't recommend) So the liquidity is weird, I can turn less than $15K into USD in a few moments, but $15001 will take me two weeks and is scary given volatility. I would argue this intentional as in this is why coinbase isn't very useful for drug money laundering. I once bought a commemorative Swiss Army knife with Debian Linux branding and spent like $200 on nickel and time fees to buy a $100 knife. The numbers are only slightly exaggerated. Transferring money is incredibly expensive.
Fej 9y ago
Bitcoin transactions in which the payee retains the currency instead of immediately exchanging it for USD, EUR, GBP, or another usual currency are largely done for illicit purchases, especially those involving narcotics. This is done because Bitcoin is extremely easy to launder through "tumblers". Unlike, say, paper currency, an individual 'unit' of Bitcoin (insofar as that exists) is not tracked with a serial number. Additionally, in the US, the IRS is underfunded and prolific sellers are smart. Unlike banks, Bitcoin does not inherently have names attached to accounts/wallets, and so it is much easier to evade taxes than with typical currencies.
- sowbug 9y ago
  TL;DR: holding Bitcoin means you're probably a criminal.
MichaelBurge 9y ago
Something like Bitpay guarantees the exchange rate for 15 minutes between invoicing the customer and conversion to USD. More generally, you'd outsource those risks to dedicated finance companies and handle USD: Exchange rate risk, fee calculation risk, confirmation/double-spending risk, etc. Just like in how there is an entire shell game of risks being offloaded between companies when you accept credit cards, and no merchant directly accepts credit from an unknown customer.
Vadoff 9y ago
>As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700? You can accept BTC and convert it to cash instantly upon acceptance if you want.
pbreit 9y ago
Don't get hung up the price fluctuations if all you want to do is use it for transacting. You will only be exposed to BTC price fluctuations for a few seconds or minutes. There's a bilateral parasitic relationship between those who want to use it for transactions and those who want to speculate on its value.
deleted 9y ago
[deleted]
imaginenore 9y ago
1) you don't really know that its value will go up, the past doesn't guarantee the future 2) money itself is useless, people like spending it 3) why would you buy computer/phone today if you can buy it next year for half the price?

avenoir 9y ago

> When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer Bitcoin Prices lists the exchange rate for many currencies on multiple exchanges. When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment. [1] So it sounds like merchants accept Bitcoin and immediately convert to preferred currency based on the going BTC rate at the time of transaction. [1] https://en.bitcoin.it/wiki/How_to_accept_Bitcoin,_for_small_businesses https://en.bitcoin.it/wiki/How_to_accept_Bitcoin,_for_small_...

iDemonix 9y ago

I know it doesn't specifically answer your question, but my understanding is that a majority of 'we accept bitcoin' businesses use a service to translate it in to their native currency at the time of sale (or very shortly after), and often will list their prices in the native currency (rather than BTC + constant adjustment).

seiferteric 9y ago

Are there any instruments like options or futures for btc? Seems like these could be used to solve this issue.

45h34jh53k4j 9y ago
Yes, some of the chinese exchanges offer futures contracts. The larger western exchanges offer leverage (and its other peoples funds earning interest, currently ~0.015%/day). There is also mining contracts which are a form of derivative. Also -- none of these deriv's provide any solution to volatility (possibly make it worse?)
acchow 9y ago
Exactly this - futures denoted in BTC will turn it into a real currency. It requires buy in from many parties - suppliers of materials to manufacturers, manufacturers of products, merchants reselling products, etc. The entire chain can be stabilized with futures so then bitcoin doesn't need to be converted immediately to another currency.
kristopolous 9y ago
futures + debt based investing are the two canaries of market crashes. It was true in 2008, 2000, 1987, 1929, 1873, ... heck all the way back to tulip mania or arguably the financial panic of 33AD. The question of "who's buying, how many of them are there, how long do they intend to hold for, and how are they buying?" you can't answer for sure, but when the capital to buy starts getting more scarce and people start leveraging other assets to continue buying...you'll get to a point where market velocity surpasses speculative velocity and the leveraging ability of the buyer. In the physical world, this is a vendor of widgets on the street and a buying frenzy. Buyers spend money on the widgets and turn around and open up their own widget shop as sellers to feed the craze. Eventually enough buyers are converted into sellers, not enough buyers remain and the price crashes. Futures contracts are a form of credit in this model. Bitcoin's crashed 4 times in 6 years - don't think it won't happen again.

rcpt 9y ago

It's useful for donating to WikiLeaks when the banks are blocking those. https://wikileaks.org/Banking-Blockade.html https://wikileaks.org/Banking-Blockade.html

duren 9y ago

It's the same as exchange rates, constantly being recalculated. Though crypotcurrencies are orders of magnitude more volatile. A seller will set their price in USD (or other established fiat), and convert the price to bitcoin at the time of transaction. As far as cryptocurrencies are concerned, I personally view BTC as a good store of value; it's slow and expensive to transfer compared to other coins.

ryanlol 9y ago

>The value of it fluctuates so much that actually buying/accepting it seems incredibly risky. The price can go down just as fast as it goes up. Why? If someone sends me 1BTC I'll just instantly sell 1BTC, it is tremendously unlikely that I'm gonna get screwed even if there's a 1-2 second delay. >if the value of a BTC is going up, why would I use it to buy anything? Because you want things and not numbers on the internet. >As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700? By being smart and not waiting to cash out. Your maximum loss will be the value of whatever buffer coins you hold, and I guess you could hedge around that too.

45h34jh53k4j 9y ago
There is no 1-2 second delay tho; bitcoin transactions take 1 hour to confirm. At best, you might have 7 blocks between receiving, sending and being credited on the exchange. Of course, this is possibly things like Litecoin are more stable as you can 'get in and out' in 15 minutes.
- celticninja 9y ago
  Some places will allow immediate conversion to dollars. I know bitpay used to facilitate that.
  - 45h34jh53k4j 9y ago
    Bitpay was cashing to fiat from unconfirmed bitcoin tx's? SMH If its a bitpay to bitpay tx its all internal and likely didnt actually touch the bitcoin blockchain.
    - celticninja 9y ago
      This was merchant payments. Essentially bitpay guaranteed the USD you would get at the point the transaction occurred. They didn't send the USD, that happened a day later. So buyer pays in btc, bitpay handle the transaction, probably sell the same amount on an exchange at that point, tx confirms and they pay out the USD. The BTC then goes into the bitpay reserve for the next merchant.

skizm 9y ago

Bitcoin purists will say that, eventually, there is no "cash out" phase. 1 BTC = 1 BTC and who cares about what the dollar equivalent happens to be. Once everything is in BTC you will never exchange it for dollars. Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No, so why would you care what the dollar equivalent to a BTC is when everything you buy is priced in BTC? This is long term obviously. The reason the price is "high" now is because there is a finite amount. ~21 million BTC is the max that can ever exist at once. So, theoretically if you replaced the world's currencies with BTC, having a single BTC would make you incredibly wealthy.

baddox 9y ago
But be careful about only mentioning the views of "Bitcoin purists." That sounds like a pretty extreme view, and will be dismissed as a straw man by the Bitcoin fans or optimists, who likely vastly outnumber the "purists."
beaner 9y ago
Not sure why you'd be downvoted. This is what some purists think and it's a popular meme. [1] [1] http://imgur.com/gE8hDnY http://imgur.com/gE8hDnY
droopybuns 9y ago
Is it a big deal that a BTC can never be lost and later found? On a long enough timeline, won't lost credentials result in BTC that are functionally permanently out of circulation?
- droidist2 9y ago
  Interesting question. Since there's a limited supply theoretically on a long enough timeline every BTC will be lost.
  - tlrobinson 9y ago
    Currently Bitcoins can be divided to 8 decimal places, and if eventually that's not enough the protocol can be upgraded.

45h34jh53k4j 9y ago

Its also used to purchase other cryptocurrencies. Trades ride the volatility of USD/BTC, as well as the XXX/BTC. In extreme cases you have USD/BTC, BTC/XXX, XXX/YYY! While there is a large number of LTC, BTC and ETH exchanged for fiat (USD, EUR, RMB, KRW); Most of the trades are between BTC and alts - https://coinmarketcap.com/exchanges/volume/24-hour/ https://coinmarketcap.com/exchanges/volume/24-hour/

icebraining 9y ago

As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase. Why do you spend any currency when you can buy Bitcoins instead, let it grow and then sell them back into the original currency? Any reason you can give applies to spending Bitcoin.

deleted 9y ago
[deleted]
ehxcaet 9y ago
Not sure that really applies. You NEED to buy things. Rent/mortgage. Food. Transportation expenses. The guy's right - at this point, why would you ever spend BTC on those transactions when you can spend $ instead? The reason why you spend any currency instead of buying BTC is because you need to. Not because you're willingly buying something unnecessary to forsake potential earnings in the future.
- icebraining 9y ago
  Right. I'm not in any disputing Gresham's law; if you have enough USD to cover an expense, you're surely spending it first. But the idea that "the reason why you spend any currency instead of buying BTC is because you need to" is just plain wrong. You're essentially saying that people spend strictly what they need to live and save every penny beyond that, and can only wonder whatever led you to that conclusion.

celticninja 9y ago

It is possible for a business to accept bitcoin and immediately have it converted to dollars so they are not exposed to the currency risk but get the benefits of irreversible payments, so little chance for fraud.

zwily 9y ago
That's what 99% of the businesses that accept Bitcoin (that aren't themselves crypto-coin based businesses) do. Overstock is a counter-example. They keep 50% of the BTC they collect now as investment.

deleted 9y ago

[deleted]

aresant 9y ago

Fascinating how many questions / comments in this thread question if crypto currency macro even has a use case in this world. And for good reason. Is it a currency? Yes and no. Is it a store of value? Yes and no but sure is volatile. Is primary use case illegal transactions? Definitely, sometimes. Is it a anarchist mechanism to shelter wealth and detach from any nation state? Yes absolutely, probably most of the China money that drove the last price bump was getting cash out of China. Is it a pyramid scheme? Absolutely in many cases, ICOs are making this way easier. The answer I've arrived at, and why I am compelled by crypto is that in each use case above it has the potential to be the BIGGEST, at a scale never recognized before. EG Crypto could be the biggest currency. All it takes is adoption and figuring out scaling. Way easier to transact in a flat-world with a portable currency. Crypto could be the biggest store of value. The beautiful math behind bitcoin (and others) is self-limiting creating real scarcity. With mass adoption will come stability. Crypto could drive the majority of illegal transactions. If they figure out privacy more completely it's the perfect mechanism. Crypto could become the "people's" wealth vault, and undercut nations ability to tax & control markets by truly privatizing wealth. All it takes is MOST of us to decide. And finally, because it's entertaining to think about, Crypto could drive the biggest pyramid scheme the world has ever seen. There is absolutely no SOFTWARE of structural limitation to running a $1 trillion dollar end game pyramid on Crypto. In fact you figure out the privacy side, add in mass adoption and you could just leverage the current ICO structure for it. I love crypto because it's boundless. You have to have some imagination and blind faith to believe any of the use cases above will become true. But the fun part is there is no limiter on any of those things becoming true.

tenaciousDaniel 9y ago
Exactly. Though I think that so many people having invested so much money at such an early stage in this technology's development is the reason why the scrutiny is off the charts. Everyone, from naysayers to evangelists, need to cool off a bit and realize that this stuff is brand new. I'm 110% confident that cryptocurrency in general will yield some very interesting things in the next few decades. But I'm 0% confident that anyone today has a grasp on what those things will be specifically. We should all just be having fun with it and seeing what we can make.

mtgx 9y ago

Even though Bitcoin was initially called a cryptocurrency, I think it's now becoming more clear that cryptocurrencies are more like "cryptoassets" [1] or crypto commodities. Some of the people who started calling it digital gold a while back got it right. Using Bitcoin is more like using gold (not necessarily physical gold) to pay for stuff. Gold's value also fluctuates significantly over one year's time. [1] - https://medium.com/@cburniske/why-i-like-the-term-cryptoassets-ab6b76e1ee33 https://medium.com/@cburniske/why-i-like-the-term-cryptoasse...

discombobulate 9y ago
That's questionable. I believe there may be an issue with the economic model if there aren't sufficient transactions (once the issuance starts to slow). Not enough crypto for the miners. They then don't support the network. The network is then less secure. The price then reflects the lack of security. There's thinking that the winning crypto(s) currency will be both gold + currency.

ringaroundthetx 9y ago

For an entire half-decade there have been payment processors that made it seamless for businesses to accept bitcoin and cash some or all of it out immediately if they wanted to. If it takes a $100 million fund raise article for you to ask why everyone else isn't crazy, c'est la vie. People look for validation all manner of ways. Coinbase also has merchant services that allow for immediate cash outs. This is probably one of cryptocurrency's smallest markets.

stanmancan 9y ago
I'm not sure I follow what you're saying in the first two sentences? Neat to know that you can cash out immediately though; that makes more sense. Are the vendors that accept BTC pricing their goods based on the current exchange rate for 1 BTC? ie. I price product A at $1500USD, I then say I accept BTC, so when someone puts it in the shopping cart it converts $1500USD to BTC and charges them that amount? Sorry, just not familiar and trying to figure out how it works. I haven't came across anyone that accepts BTC (although I haven't looked either).
- ringaroundthetx 9y ago
  Some vendors and some listing sites show at least two exchange rates. National currency and the cryptocurrency of choice. Stripe and Coinbase give the options of automatic conversion to the cryptocurrency exchange rate when displaying it. Some merchants, usually more established ones like Microsoft, Newegg, Namecheap, typically won't show the bitcoin price until you chose that option and they generate the timed invoice.
  - stanmancan 9y ago
    Interesting, thanks!

utexaspunk 9y ago

Can I get a bank account which works like a normal bank- accepts EFTs in dollars, has a debit card which pays in dollars, but where my balance is stored in BTC and everything is exchanged to/from BTC at the current rate on the fly? With enough of a balance, it seems like I'd be able to weather any fluctuations in the exchange rate and my funds would for the most part appreciate at a much greater rate than the measly interest on a savings account. Does that exist? Would that be a terrible idea?

mrb 9y ago
The Coinbase Shift card does this. It's not a bank account, but just a debit card that exchanges USD<->BTC in real time to settle transactions.
elatier 9y ago
Have a look at Revolut - they're adding Bitcoin, Ethereum and Litecoin as holding currencies in the coming weeks.

mrb 9y ago

"As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase." If it goes up so much, isn't it incredibly silly for you to not buy any? See, the reason why you haven't bought BTC yet is the same reason why BTC is still used to buy things. BTC might go down tomorrow, so why not spend it today and get more bang for your buck now. Case in point: I've personally spent ~100 BTC over the years (buying domain names, Steam games, paying my CPA, buying on Newegg, eating at Charlie Shrem's bar in NYC, etc.)

chocolatebunny 9y ago
Your CPA accepts bitcoins?
- mrb 9y ago
  Yes: https://www.tyracpa.com https://www.tyracpa.com

rb808 9y ago

Initially people did use to to buy stuff, but it there isn't really an advantage over credit cards. Now people just want to buy it because it keeps going up in price. Classic Pyramid get rich scheme.

VLM 9y ago

Buy and sell limits prevent using coinbase to trade BTC like a stock unless you're talking extremely low limits or extremely long term (like a retirement fund, which I wouldn't recommend) So the liquidity is weird, I can turn less than $15K into USD in a few moments, but $15001 will take me two weeks and is scary given volatility. I would argue this intentional as in this is why coinbase isn't very useful for drug money laundering. I once bought a commemorative Swiss Army knife with Debian Linux branding and spent like $200 on nickel and time fees to buy a $100 knife. The numbers are only slightly exaggerated. Transferring money is incredibly expensive.

Fej 9y ago

Bitcoin transactions in which the payee retains the currency instead of immediately exchanging it for USD, EUR, GBP, or another usual currency are largely done for illicit purchases, especially those involving narcotics. This is done because Bitcoin is extremely easy to launder through "tumblers". Unlike, say, paper currency, an individual 'unit' of Bitcoin (insofar as that exists) is not tracked with a serial number. Additionally, in the US, the IRS is underfunded and prolific sellers are smart. Unlike banks, Bitcoin does not inherently have names attached to accounts/wallets, and so it is much easier to evade taxes than with typical currencies.

sowbug 9y ago
TL;DR: holding Bitcoin means you're probably a criminal.

MichaelBurge 9y ago

Something like Bitpay guarantees the exchange rate for 15 minutes between invoicing the customer and conversion to USD. More generally, you'd outsource those risks to dedicated finance companies and handle USD: Exchange rate risk, fee calculation risk, confirmation/double-spending risk, etc. Just like in how there is an entire shell game of risks being offloaded between companies when you accept credit cards, and no merchant directly accepts credit from an unknown customer.

Vadoff 9y ago

>As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700? You can accept BTC and convert it to cash instantly upon acceptance if you want.

pbreit 9y ago

Don't get hung up the price fluctuations if all you want to do is use it for transacting. You will only be exposed to BTC price fluctuations for a few seconds or minutes. There's a bilateral parasitic relationship between those who want to use it for transactions and those who want to speculate on its value.

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imaginenore 9y ago

1) you don't really know that its value will go up, the past doesn't guarantee the future 2) money itself is useless, people like spending it 3) why would you buy computer/phone today if you can buy it next year for half the price?