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"is really just using it as a just-in-time proxy for some other currency" This is true of every currency. Do you think all the manufacturers, laborers, parts,

"is really just using it as a just-in-time proxy for some other currency" This is true of every currency. Do you think all the manufacturers, laborers, parts, raw materials suppliers of that [insert any product here] you just purchased in US dollars is paid for with US dollars?

eridius 12y ago
If I pay a merchant USD for some asset, they don't immediately turn around and convert the USD into something else. They hold on to it for at least a little while, and typically all entities (both businesses and people) hold on to very large sums of currency for long periods of time. They do this because the value is stable, so they know that 1 USD today is worth the same amount (or as close as makes no difference) tomorrow, and the day after. They can hold on to the money for as long as they need, until they want to make another transaction with it. That's radically different from how nearly all businesses treat bitcion. They never hold any BTC balance. They accept BTC as payment, but they immediately convert it into some other currency, and end up never running a BTC balance. This insulates them from the risk of BTC. Also note that their prices are nearly always based on a fiat currency and the BTC they accept is the equivalent of that currency based on the current market rate.
- st0p 12y ago
  Do you have any experience working in a business that does a lot of international trade? My experience is that they convert to local currency ASAP.
  - eridius 12y ago
    Is that relevant? Local currency is still currency. A European business that accepts USD and converts it to EUR does not particularly matter, because most businesses that accept USD are not foreign businesses and will keep it in USD instead of converting it.
lmm 12y ago
Most currencies act as a reliable medium-term store of value. In countries where the local currency is as volatile as bitcoin, people tend to eschew it for business in favour of more stable foreign currencies. So bitcoin is missing a big chunk of what a currency does.

eridius 12y ago

If I pay a merchant USD for some asset, they don't immediately turn around and convert the USD into something else. They hold on to it for at least a little while, and typically all entities (both businesses and people) hold on to very large sums of currency for long periods of time. They do this because the value is stable, so they know that 1 USD today is worth the same amount (or as close as makes no difference) tomorrow, and the day after. They can hold on to the money for as long as they need, until they want to make another transaction with it. That's radically different from how nearly all businesses treat bitcion. They never hold any BTC balance. They accept BTC as payment, but they immediately convert it into some other currency, and end up never running a BTC balance. This insulates them from the risk of BTC. Also note that their prices are nearly always based on a fiat currency and the BTC they accept is the equivalent of that currency based on the current market rate.

st0p 12y ago
Do you have any experience working in a business that does a lot of international trade? My experience is that they convert to local currency ASAP.
- eridius 12y ago
  Is that relevant? Local currency is still currency. A European business that accepts USD and converts it to EUR does not particularly matter, because most businesses that accept USD are not foreign businesses and will keep it in USD instead of converting it.

lmm 12y ago

Most currencies act as a reliable medium-term store of value. In countries where the local currency is as volatile as bitcoin, people tend to eschew it for business in favour of more stable foreign currencies. So bitcoin is missing a big chunk of what a currency does.