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If you sell Bitcoin every time you buy bread then you just sell whenever. It will be a large flow of market orders even if there aren’t enough asks.

• whatshisface 6y ago
  You don't sell Bitcoin every time you buy bread, the merchant obtains bitcoin and sells it when they think they should. If nobody is holding Bitcoin, you have to buy it when you buy bread, which means there's a 1:1 balance between buying and selling with each transaction. If everybody is holding bitcoin, then the merchant will not mind waiting a little to offload it, because they know they will do better by taking their time. I guess you're describing a situation where Bitcoin is used purely as a store of value and never as a medium of exchange. I can agree that a fiat store of value, if never used as a medium of exchange, or even a numeraire, is on very shaky ground.
  • ivalm 6y ago
    Baker definitely should sell Bitcoin every time someone buys bread, otherwise they would be taking on currency risk, which is insane. Since they paid for flour/labor/amortized capex in fiat, if BTC price moves down they won’t be able to cover their obligation. This means a baker need to sell at least as much BTC as would cover their fiat costs. Since bakery margins are low it means they should sell most of the BTC they get every time someone buy bread from them. Again, in real/practical world merchants are not there to invest in crypto, they are there to produce tangible goods and collect surplus of exchange tokens —- everything that is not profit needs to be de-risked.