Bitcoin Forum

This topic is about how to make sure that bitcoin ends up being a usable currency instead of just a pyramid scheme.

SHORT VERSION
1. Don't tell your friends "Buy Bitcoins and sell them later to make money!
2. Make people accept Bitcoins as donations/payments

LONG VERSION

Original Bitcoin Vision
Bitcoin COULD become a reliable way to transfer money to anybody. We can all agree, that Bitcoins that keep their value and can be used to buy  just about anything online would be a good thing.

Bitcoin value explosion "Bootstraping the Currency"
What we see at the moment is a rise in value that is caused by new people who hear about Bitcoin. Basically, there are these types of people:

(A) People who already have Bitcoins
(B) People who hate Bitcoins and won't buy any as long as it's not established as a currency
(C) People who would buy Bitcoins, if they knew they existed
(D) People who don't know, but wouldn't buy any if they did.

The only type of people who are relevant here are A and C. Let me explain:
At the moment, most type A people probably act like this: Make money by buying some Bitcoins, wait some time, sell them to type C people, who then become type A people. The interesting question is what will happen when we run out of type C people.

The Clock is Ticking
The rise in Bitcoin value is probably mainly caused by type C people turning into type A people. The number of type C people left is the countdown on the End Game Clock and it ticks faster the more press coverage / word of mouth Bitcoin gets.

End Game Scenario 1: Destruction
Assuming that you can't buy anything useful with bitcoins when there are no type C people left, nobody wants to buy any more Bitcoins. This means hyperinflation and the value will drop to zero almost instantly. A lot of people will have made a lot of money, even more will have lost some, but the important thing is that we won't have a nice, established online currency.

End Game Scenario 2: Useful Bitcoins
Lets say that a lot of retails and service providers accept Bitcoin. You can order everything you like using bitcoins, donate to your favourite youtube artist, book a vacation etc. When we run out of type C people, the value explosion stops, but Bitcoin should remain stable. You can just spend them to buy stuff and your local Bitcoin2Legacy-Money converter trades them at the stable rate to USD or whatever.

Now, in both scenarios you will have made a lot of money with bitcoins if you ran the "buy, wait, sell" tactic. But in the second scenario we get a useful crypto currency as a bonus on top of that!

Don't talk about Bitcoins!
Sure, telling your friends "Hey, invest 10 bucks into bitcoins and you'll have 100 in 2 months" is fun, but this isn't helping. All it does is make the End Game Clock run faster. It might not even help you make more money, since Bitcoin might not peak higher, just sooner. So you would only be making money faster, but not more.

Create a market instead!
So what we need for Bitcoin to stay is an actual Bitcoin market. Here's how to do that.

1. Start with people that you don't actually have to pay because you can get their stuff for free. This could be your favourite blogger or a youtube artist, who constantly asks for money at the end of his actually good videos http://www.youtube.com/watch?v=i6sdpc8stqI&feature=channel_video_title (http://www.youtube.com/watch?v=i6sdpc8stqI&feature=channel_video_title) Be creative and make it sound like donating in bitcoin is a totally normal thing "Hey, I tried to donate to you but I couldn't find your bitcoin address anywhere on the site. Could you just mail it to me so I can donate?". Starting with these people is best, since they don't risk ANYTHING by using bitcoins: If it works out, they get extra donation, if it doesn't and Bitcoin fails, they haven't lost anything compared to not accepting Bitcoins in the first place.

2. If you can, sell your products/services accepting Bitcoins as payment.

3. Be bold towards sellers of stuff that you don't really need, but would be nice to have. Say you find something for sale somewhere (product, service...) and then tell the guy "I would buy it if you accepted Bitcoins". You have to be honest here, buy it if he accepts Bitcoins, don't buy it if he doesn't. It is very important that people don't start to think "Yeah, those crazy Bitcoin guys want me to pay with that, but I refused to accept it so they still bought it in USD!".

4. The hardest case is paying for stuff that you definitely will buy. Hopefully, convincing (1) and (2) will cause somebody of (3) to accept Bitcoins. If two shops offer the same thing for the same price, buy the thing paying with Bitcoins.

If you behave like this, you help establishing Bitcoin. Creating a market still takes time and the End Game Clock is running. Please don't speed up the clock by hyping Bitcoin! Telling your friends about Bitcoin, spamming forums etc. only cuts the time we have to get a real market going. You won't lose money if the Bitcoin value rises slower since it will still peak at the same level, only later.

Thanks for reading.

If you think this was worth reading:
13FsW67CtKn97TfjVqG8bDqTRA3b7Xjgxg

P.S.: I would appreciate it if this topic became sticky. I think it is very important that every Bitcoin user understands the consequences of their actions.

First I opened this thread expecting to find someone who was trying to hold down the price while their money got to Mt.Gox, I was pleasantly surprised.

Secondly the cat is out of the bag on bitcoin, I don't think anyone can significantly slow the spread of the information now.

Lastly I don't think a price crash would destroy bitcoin, as long as the technology is sound people can pick up the pieces and build the bitcoin economy you want to see created. This would take place at a much slower pace then we are currently seeing but I don't see any reason why it couldn't happen.

I was expecting something more like this...


The first rule of bitcoin club is you do not talk about bitcoins.

The second rule of bitcoin club is you DO NOT talk about bitcoins.

If your computer overheats, crashes, melts, or your power goes out, the mining is over.

Two GPUs per MB.

One pool at a time.

No cases, no monitors.

Mining will continue as long as it's profitable.

If this is your first night at bitcoin club, you have to mine.

Well, just remember this rule of thumb:
Instead of saying "Hey friend, buy Bitcoins to get rich!" say "Hey stranger, accept Bitcoins to get rich!".

"Get rich" is part of the problem...

If you want it established as a currency, then "getting rich" isn't one of the main reasons anyone should use it.

You don't get rich using US Dollars.  You get rich providing services, investing in ideas, or buying and selling goods, the currency you perform those actions in doesn't matter.  Bitcoins should make commerce easier, so it's easier to get rich performing commerce. 

If the only reason for Bitcoins existence is to speculate on markets related to Bitcoins themselves, we're doomed.

Mischief. Mayhem. Alpaca socks.

"Satoshi's not here. Satoshi went away. Satoshi's gone."

Bitcoin as a store of value/ financial instrument is not a market?

I just don't think that that will be enough. For the currency to succeed, there needs to be a real economy, where you can buy real things.

Speaking of buying real things with bitcoins, the wiki page for that seems to be mostly incorrect. Does anyone know of a legitimate site where I could buy things like a new Android phone? I'm not interested in temporary things like renting a server or buying food.

Sounds cool ... but I'd like to propose a little amendment to that ;-)

Instead of saying "Hey friend, buy Bitcoins to get rich!" say "Hey stranger, offer valuable services and products you accept Bitcoins for to get rich!".

You might consider changing the subject from "Don't talk about Bitcoins! (Bitcoin Establishment Plan)" to "Bitcoin Establishment Plan: How to talk about Bitcoins" ;-)

Good idea, jashan. I changed the subject.

When/if that other guy who wanted to donate 0.01 BTC to me figures out how to do so I'll just forward it to you. :)

The original poster has correctly described how the speculative bubble inflates and bursts, but he maintains the illusion that it can be somewhat steered to become something other than a bubble.

Sorry pal, you don't know human nature; the people who will promote Bitcoin most aggressively are the early adopters or those who invested significant sums of money. They have a vested interest to draw more suckers in and inflate it even more, so they will skip the "make sure you go against your better judgement and spend any coin you might acquire, don't hoard them like me and become rich, for that will mean it's just a bubble" part.

You should expect them to cling on the dream to very end, "it's a temporary dip, a great opportunity, now is the time to buuuuy !". Some will undoubtedly live the dream and retire wealthy, but the vast majority is in for a big disappointment and even financial ruin for some. That's how a zero sum game works.

Anyhow, the spectacle of human nature is just startin` and I have front row seats :D

Calling your Bitcoins that you buy/sell/(trade for goods) a currency is stepping into a legal minefield in my opinion, as the financial industry is regulated by numerous laws beyond the scope of this posting, for legislation administrative rulings see http://fincen.gov/

Calling your Bitcoins that you buy/sell/(trade/barter for goods) a digital P2P crypto-commodity is maybe more accurate.

Thanks for writting this. Its very important that bitcoins become more accepted by traders.

Hehe, cool ;-) ... I decided to give it a try with 0.1 and guess what: That immediately worked (I still had a 0.001 transaction fee active). So maybe it was just the error message that was misleading ;-)

The error says "This transaction is over the size limit." - it should actually be "This transaction is below the size limit". Seems like I can send 0.1 but I can't send 0.01. I have a very weird Bitcoin Balance now: 84.4299 ... it's really time we switch to 1 BTC = 1,000,000 BTC ... 84,429,900 BTC would look much more reasonable, now wouldn't it?

Too late, parent poster.

The Wall Street Journal online posted a story about bitcoin. All we can do is point people at the resources to understand it. Any suggestions to regulate behavior are antithetical to bitcoin in principle anyway. Freedom to spend, but we can't talk about it? Doesn't make sense.

Just let the market do its thing, it is the best promoter we have.

Some more fiction:

Swimmer:  "But its anonymous!"  ???
Anders:  "No it is not!"  ::)

Swimmer:  "But its untraceable!"  ???
Anders:  "No it is not!"  :D

Swimmer:  "But its illegal!"  ???
Anders:  "No it is not!"  :)

Swimmer:  "But you can launder it!"  :o
Anders:  "Yes you can! Like most assets!"   :(

Swimmer:  "But if you LAUNDER it, THEN it will become maybe untraceable or even anonymous!"  >:(
Anders:  "Yes."  :(

Swimmer:  "But laundering is illegal!"  >:(
Anders:  "Yes it is."  :(

Swimmer:  "Oh I get it!, Ghostbusters go after those LAUNDERERS and DRUG PEDDLERS at least we can LITIGATE .... THEM!"  :)

All legal Bitcoin crypto-commodity users:  Cheer!!  :D

In the future your money will be digital. That money will cost you a lot to store and spend. This is already happened to a large extent. Consider how much more expensive it is to use your credit card vs. cash.
The real strength of BTC is that it has the advantages of being digital and it is still your money to spend and save at basically no cost.

In order to be able to buy and sell things with a currency it has to have a high trading volume. Otherwise, the first merchant to cash out will drop the price to near zero and then the rest will panic. Buying BitCoins to hold helps increase the trading volume and it helps hold the value up against cash outs.

I don't think it makes sense to try to change your behavior to make the currency work. Use the currency in the way that makes the most sense to you so that it's the most useful to you.

We need some channels were people dont need to get out of the Bitcoin economy. That is why I think its so important to get food business to accept bitcoins. If I earn bitcoins and can use them to buy food, there really is no need to change them back to a government currency. And as the business that accept bitcoins grow the food business can use them to buy computers, etc... Once we create some "circular flow" there will be no need to use the government currency.

Right, but that's much harder to get. And a circle that passes through a government currency works just as well to promote bitcoins, possibly better because the increased conversion volume helps stabilize the currency.

I used to think like that. Now I am not so sure. Consider gold: You can't really buy groceries with it, and everybody I know has already heard of it. Still: Look ma, no crash.

Don't get me wrong. It is certainly helpful and a great opportunity to use bitcoin in as many markets as possible. But I don't think we'll all go to hell if we don't regularly spend our coins on carrots. Some of us might just collect them and buy a house with them one day. And that's OK.

FWIW, I guarantee I can buy groceries with Gold.

Maybe not at a super-chain, but most definitely at a corner grocery store, where the owner actually waits on customers.  I'll probably pay a premium for those groceries too, as he/she will charge me a "fee" for taking an "alternative currency", but maybe not.

Every once in a while someone makes a video where they go to a fast food place, grocery store, etc. and try to buy $20 worth of groceries with a $20 gold piece, and are laughed out of the store.  Once you understand why gold is valuable, you recognize the value - But if you're talking to a mis-educated grocery store clerk who has never touched a gold coin, much less knows how to value it relative to the current economic paradigm, it doesn't go so hot.

Perspective is important.

And as an aside, look like you can eat bitcoins
http://www.bitcoinclassifieds.net/Food/

One of my favorites is a guy who tried to GIVE AWAY a gold coin on a boardwalk. He was in a pretty affluent area, and not one person took him up on his offer. He also goes into a local coin dealer who authenticates the coin and says it is worth market value.

Priceless.

Hence the reason I stated, "where the owner actually waits on customers".  Some high-school kid making $7/hour isn't going to take a form of currency that isn't a US Dollar.  They wouldn't take valid foreign currencies, not to mention something like precious metals.

But isn't that only true because the person you'll be speaking to in that circumstance has a vested interest in making themselves the best deal possible?  With a good white sheet intended to explain the concept and advantages cleanly and simply, you could make exactly the same arguement for bitcoin acceptance, right down to the premium for better service

I'm not arguing with you.  I do just that.  The poster I quoted however made the statement you couldn't buy groceries with Gold, I disagree with that statement as I most certainly could.

Then I'll stop arguing with you :)

Ok, i'll argue with you a little more - The OP is thinking "meta" when we're still at the very early stages of adoption - The person-to-person sort of education, as opposed to mass market reality.

If bitcoin gets popular, the blockchain will be several terrabytes in length... gg

The blockchain is only needed as the ultimate backing store. Most transactions can bypass the blockchain if the blockchain becomes a limiting factor. Think of the blockchain as inter-bank transfers.

Maybe you'll end up having your block chain on your personal server / NAS and all your devices just connect to that to verify their transactions. For people who don't have their own servers, there will be public ones from trusted authorities like the CCC or the several PirateParties.