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Bitcoin: a currency for which capability to buy pizza is noteworthy, required custom programming, comes with a 10% novelty tax, and is incapable of maintaining
by patio11 14y ago
Bitcoin: a currency for which capability to buy pizza is noteworthy, required custom programming, comes with a 10% novelty tax, and is incapable of maintaining a single price for 24 hours.
- fwr 14y agoIt's the future!
- viraptor 14y agoIs there any currency which maintains a single price for 24 hours? (apart from those artificially connected to value of other currency)
- patio11 14y agoThis means that if you call up Domino's and ask them "How much does a large pizza with extra cheese cost?", and they quote you a price in USD or JPY or not-a-toy, you can reliably expect that quote to last long enough to pay for the pizza. (There is a related concern, as a pizza providing entrepreneur, that your currency should be stable enough that sales of Monday's pizzas can reliably purchase Tuesday's tomatoes without losing half their value overnight, but it actually does Bitcoin way too much credit to say that that is the main reason you can't reliably make a bitcoin-accepting pizzeria.)
- drewblaisdell 14y agoI don't understand why you think this is a point to be made. Yes, the ingredients/labor cost of a pizza from Domino's is USD-relative and the value of this new currency is volatile.
- wsdom221 14y agoI think the point is that it's not really a currency if nobody can print a menu with it as the denomination that is valid for even a month. MSFT or AAPL isn't a currency either. Sure, you can use it to buy money, but there's a reason no one even tries to accept it for a pizza. To be a currency, I do believe you should be able to print it on price tags that change no more often than weekly!
- jerguismi 14y ago> not-a-toy I'm kind of disappointed with your attitude towards bitcoin since I otherwise highly respect your writings and opinions. A software entrepreneur should see the things that bitcoin can potentially enable. Just that it is now just used by black markets and some tech freaks, doesn't mean that this will be the case forever.
- taligent 14y ago> software entrepreneur The good ones also understand business. And Bitcoin as a brand is strongly associated with illegal activities.
- viraptor 14y agoI never got this argument. Currently the money you pay with in the shop is the only one associated with funding wars, gangs, human trafficking, etc.
- mootothemax 14y agoI never got this argument. Currently the money you pay with in the shop is the only one associated with funding wars, gangs, human trafficking, etc. One thing that leaves a nasty taste in my mouth is that Bitcoin encourages people to use services that would otherwise be referred to as money launderers, all in order to try and guarantee their anonymity.
- yebyen 14y agoPlease elaborate on what you're saying. I don't see that Bitcoin encourages anybody to do anything -- Bitcoin just is. It's not clear to me what services would otherwise be referred to as money launderers, or how they are promoting anonymity. Paypal? Mt.Gox? Is it money laundering when you buy Dominos gift cards, or phone cards? Pre-paid mobile phones that you can recharge using cash at any gas station? Web hosting from GoDaddy?
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- dlss 14y agoFYI this is a concern that companies using USD also face. (For example Apple will quote a USD price for a laptop that they will build using Yuan... even though the exchange rate between USD and Yuan is always changing). In fact, your USD pizza parlor example is actually more complicated than you make it sound -- tomato prices, wheat prices, etc all fluctuate based on supply and demand. I think this is a place where web entrepreneurs get confused because their high margins and large suppliers do such a good job isolating them from the problem: if web profit margins were 10% over the cost of hardware, and if you were running your own servers, you'd be exposed to the fluctuation of energy and bandwidth prices... you'd have the same problem predicting how much it would cost to serve a web request. (I imagine Google actually faces problems like these because of their scale). So it's not like these problems don't happen when you use USD... it's that your margins are so high, and your providers are so good, that you've forgotten the problem existed in the first place. #firstworldproblems For those curious how these sorts of problems are handled by non-web companies, the answer is derivatives. Apple will hedge their USD -> Yuan conversions as necessary with currency options, Dominos uses wheat futures, the farmers supplying wheat to dominos are using oil futures, and the oil company will have currency hedges for the 50+ countries they operate in. By buying and selling risk, companies are able to give you the feeling that prices are stable. Even though prices aren't stable. If you'd like to do something like this for your bitcoin site, you should check out https://icbit.se https://icbit.se (a bitcoin derivatives exchange)
- artsrc 14y agoDomino's artificially keep the price of their Pizza constant against the US dollar for long periods. This is common and useful. There are a group of people who think that currencies should be connected to the value of gold. But if you work out the price of currencies in say oil, or shares, then no currency maintains a single price for 24 hours.
- justincormack 14y agoThere were some restaurants in Texas that would price a meal as the price of a barrel of oil.
- jerguismi 14y agoWell, at least your bank nor the goverment didn't know that you were buying that pizza. Unless the pizza broker service or Domino's is working with the goverment.
- garethadams 14y agoGood point. Now the pizza shop and unknown intermediary have a record of my purchase and my delivery address. But at least they can't link it to my credit card!
- taligent 14y agoWouldn't they also need your phone number ? So if you only have a mobile (and this is the government) they would also have your current position. Sounds like a great deal: Free Surveillance with every Large Pizza + Coke.
- icebraining 14y agoWhy would they need your phone number?
- mootothemax 14y agoWell, at least your bank nor the goverment didn't know that you were buying that pizza. I think you may have misunderstood Bitcoin; you realise it's not anonymous, right?
- drewblaisdell 14y agoEvery currency is incapable of maintaining a single price for 24 hours.
- bobsy 14y agoGBP... The price of a Domino's pizza hasn't changed in the last 6 month's in my area. With this site the price could feasibly change several times in a single day.
- iso-8859-1 14y agoI think you missed the point. It all depends on what you consider the true price. If you measure in gold, your price fluctuated too. When Bitcoin gets world domination, GBP will be the one flucuating in comparison to Bitcoin, for the same reasons Bitcoin is fluctuating now.
- bobsy 14y agoAs someone who doesn't own quantities of gold and doesn't travel around the world much the true price of anything for me is GBP. I think a lot of people would think the true price of something is that of their local currency. I don't know what America is like. In the UK the Domino's website is very good, very easy to use. Sure you can use BitCoin but I don't understand why someone would want to use BitCoin and pay a premium to do it.
- Tichy 14y agoAccepting credit cards requires custom programming, too, and I think it also comes with a fee.
- drchaos 14y agoAlmost every new technology is more expensive at first, may be difficult to deploy and requires additional effort to be made interoperable with existing stuff, so what exactly is your point? BTC solves some hard problems in an interesting way, that this comes at a price is a no-brainer.
- drpancake 14y agoA famous Ghandi quote springs to mind.
- ig1 14y agoI used to work in actual currency trading and currency volatility is a pretty well understood problem when your dealing with smaller currencies (especially currencies used in politically unstable countries). You just need to maintain a bid-ask spread that's wide enough to protect you from the typical volatility (based upon recent historical data) and have a real-time trigger that suspends trading if the volatility exceeds your spread.
- taligent 14y agoSure. But the majority of countries in which Bitcoin would be realistically used don't have currencies that fluctuate so wildly.
- ig1 14y agoYes, but I'm saying that there's a standard way to handle it, which is essentially taking the payment at a discount to the market rate in order to give you time to change it to your own currency without taking a loss.
- wmf 14y agoIf you do that, you'll realize that accepting Bitcoin has higher fees than credit cards. People won't understand this if their identity depends on them not understanding it.
- SlipperySlope 14y agoCoinbase charges only 1% !! I do not know of any credit card that charges the merchant less, when monthly account fees are added in.
- wmf 14y agoYou missed the point. If you (or your payment provider) add, say, 5% padding to account for exchange rate volatility and then you also pay 1% to Coinbase, your total fees are 6% which is way higher than credit cards.
- SlipperySlope 14y agoMerchants accepting bitcoins increasingly have real time price quotes in bitcoins. Likewise, the Bitcoin Foundation operated its finances in 2012 without a conventional checking account, adjusting the bitcoin salaries of its employees each quarter.
- euroclydon 14y agoSurely there is more to the Bitcoin movement that a desire for a currency that's worse than those sponsored by nation states. Just pointing out that Bitcoin sucks does nothing to address the underlying reason why people want to use Bitcoin. Where I live, alternative currencies seem to have sprung up as a response to feelings of disgust with the current economic system, or mistrust of government or bankers. States and groups are looking at how the federal reserve is currently purchasing more than half of all newly issued U.S. Treasury Bonds, and drawing the inevitable conclusion that the the failure of the system is accelerating. The natural end to an inflationary currency is BOOM! There is a desire out there for a deflationary currency. Bitcoin is deflationary, right? Now I think Bitcoin Sucks is sound economic advice because for every altruistic financial scheme, there have been a hundred scams, but I don't know if Bitcoin has the potential to be useful if we experience hyperinflation.
- akjj 14y ago> drawing the inevitable conclusion that the the failure of the system is accelerating. The natural end to an inflationary currency is BOOM! And yet inflation is as low or lower than it has been in the past 30 years. Not to mention compared to the high inflation of the '70s.
- euroclydon 14y agoThis is not my strong suite, but if you look at the assets which large holders of t-bills are divesting into, you'll find strong inflation.
- eli_gottlieb 14y agoThat's not inflation, that's a capital glut!
- akjj 14y agoThe yields on treasury bills are extraordinarily low by historical standards (i.e. the prices are high) because they are in high demand, not low demand.
- jlgreco 14y agoAh, but it is a currency.
- LilValleyBigEgo 14y agoAsks for your physical address then takes payment in bitcoins. Seems like a pretty good way to defeat Bitcoin's built in anonymity system. Seems like it would be pretty easy to build a database to cross-reference bitcoin addresses to physical location this way. Or to put it shortly: "Seems legit."
- FernandoEscher 14y agoIf by not maintaining the price for 24 hours means that you're spending less and less bitcoins for it, then yes, you're right.
- moe 14y agoThree of your points are wrong, the 4th is shared with every other currency. I don't understand why this unreflected bullshit sits at the top of the thread (and I'm not even involved or affiliated with bitcoin).
- WettowelReactor 14y agoThe fact that a currency like bitcoin with all the shortfalls you are describing has any traction is more indicative of the feeling we have about our current options.