Bitcoin Forum

(Disclaimer - yes, I am hoarding ATM.)

I realized something last night.  I was looking at buying some electronics at newegg, so I was pricing those out.  Then I realized I could get the same thing and, comparing prices, for virtually the same dollar value equivalent from bitcoinstore.com.  But, I didn't want to part with my precious bitcoins! 

So, instead, I took the money earmarked for the purchase and converted it to bitcoin.  I am still evaluating which model of item I want, so in the meantime my value of those BTC has gone up in $.  However, I know I will purchase within a day or two.

In the end, I bought more BTC, contributed to the economy and supported a BTC-only merchant.  And worst case, I spent the money I was going to spend anyways.

If you are not holding the spending coins for any period of time, the fluctuations in price aren't that big a deal.  However, using them strengthens the economy, and in the current climate, I wind up saving a few $$ in the end.  Good for everyone!

THIS. This is what I've been trying to tell everyone. You can hoard all you want, but if you do it's also in your interest to participate in the Bitcoin economy to show merchants that people actually want to use Bitcoin to buy stuff. Keep a separate small balance for purchases, and replenish it from another currency as you need to.

Done!  That worked great - and saved about 15% in the process.  I didn't know there was a sale on today ;)

Seriously though - smooth as silk.  I already mentioned this to the guys I work with (who are also into bitcoin) and this is definitely the route we will take in the future.  First time I used bitpay, but they have it down!

Don't be too sure you're helping the economy in that way. The current rise in bitcoin exchange rate is not because of real added value. It's just a shift from fiat currencies to bitcoin. Up to now, bitcoin is too small to obviously impact USD or EUR. But imagine bitcoin performing at the current doubling rate for a while. There will be a devaluation of other currencies going along with the valuation of bitcoin.

Show merchants you don't want to use fiat.  Show them you want to use Bitcoin.  When Merchant A realizes Merchant B accepts Bitcoin, and he's making good money from it, Merchant A will realize he's losing customers by not accepting Bitcoin.

To do this, simply favor the BTC Merchant over the Fiat Merchant.  They'll fall in line as adoption grows.

FWIW I just dropped an email to Newegg customer service to let them know they lost that sale precisely because they didn't accept bitcoin. Now that one email probably means nothing but the more they hear it the more they might realize.

but would you use your bitcoin if you knows bitcoin is going up and govt currency is going down?

People who say "Nobody spends bitcoins, everyone hoards, nobody spends deflationary currencies, and because of this, it's a speculatory bubble and is gonna CRASH" are full of it and need to wipe Paul Krugman's semen off of their lips.

Lots of people buy stuff with bitcoins, just look around. Heck, one merchant I regularly purchase from announced that with very little advertisement, they made $50,000 in bitcoin sales this last month. Bitcoin is just that cool. It's hip. People use it. In case you hadn't ventured outside your mom's basement in a while - it's darned popular.

Why do people spend deflationary currencies? Are they stupid? No, it's because of this simple reason: When the need for a good/service in the present outweighs the potential benefit of putting off the purchase indefinitely due to potential future gains, the purchase will be made.
There is a finite supply of gold, yet it was used as a currency for thousands of years.

Now, some of us have a little mental struggle going on, but OP's method seems to work perfectly for those folks. In the end, I spend a small fraction of my bitcoins each month on "stuff" that I need/want, and the rest is saved and appreciates in value. That's the way it's supposed to work, anyways. None of this USD hot potato stuff "It's inflating, spend it as fast as you can, spend spend spend, consume consume consume, stimulate the useless stagnant economy and all its ridiculous bubbles." Sure you might get 1% interest in your USD savings account but true inflation is way higher than 1% per year. Who wants a hot potato when you can grow a potato plant? Lol analogy.

Oh yeah, any time I have to place an order with a merchant that only accepts USD, I leave a note in the order comments (or send a feedback email) requesting that they accept BTC. Any time I get a donation request in the mail, I send the letter back with a handwritten note explaining how I don't use fiat currencies and I would gladly donate were they to accept BTC, with a URL for Bitpay's free 501(c)3 program.

If I sell something, it's going to be on bitmit.com now on instead of ebay. My first go at this is in my signature, check it out

Thread is smart.

I just wish I could buy my goddamn groceries in Bitcoin. Groceries and gas. Thats where all my fiat goes.

It'll happen in due time...

be the change you want to see
Open up a local coop that accepts bitcoins. Specialize in organic food if you need to to attract the right kind of weird people

If this whole thing continues, entrepreneurs will themselves open up business for BTC payments. It will once they find out that it helps them paying off their current debts in fiat currency. Think about this...

This is exactly what I'm trying to tell people since over a year.

It's not bad if you want to save your coins, just when you want to buy something anyway, look if you can get it for BTC, when you can convert the fiat you wanted to spend anyway to BTC and buy you product for BTC. It's one extra step, but this way you help Bitcoin grow step by step.

I'm glad I'm not the only one who has been trying to explain this to people. People that say "I save my bitcoins and spend my fiat" just don't get it. If they would only realize that buying bitcoins for spending increases the value of the the bitcoins they save.

Yep, BTC will only work as long as we actually spend it within the economy, if we don't it is no longer currency, but simply an asset that would be worth no real world value as they can't be used for anything being literally a pile of electrons on a hard drive.

This is the way to do it, just convert your purchase cash into BTC, then buy :) Or start mining, generate BTC out of electricity and it is essentially "free money" in the Bitcoin economy, though it inst in terms of electiciy use and time to generate them. Miners are getting paid for their support.

I see number of flaws in your logic.

Sure, your view is very popular, shared by many on this forum, but let's see if it is true.

Today the Bitcoin economy (market cap, price) is mostly driven by speculation.

Two years ago, there were many discussions going to encourage the increase of the Bitcoin's utility value. That's the reason there was an increase in new merchants and development of merchant tools/payment gateways. No one thought at the time that in the future Bitcoin will become the best speculative market out there.  

But in January 2013 all that changed - after an explosive exposure of Bitcoin in the media, hoards of opportunistic "investors" came to Bitcoin with one single intention - short term gain. That overtook the combined miner's and merchants drive that was prevalent at the time, instantly transformed the nature of Bitcoin. Not that most on this forum noticed, nor understood.

Going forward, we all await the imminent arrival of a a new driving force - the upset, but looking good with their new hair-do ex Cypriots (add to them the Spaniards, Italians, Lichtensteinians, Maltese etc) - who are queuing on the Gox to get their moneys in, with slightly different intentions though - (1) to re-gain their fiat losses, and (2) perhaps gain a point or thousand points in their newly discovered store of value.

The Bitcoin will never be the same again.

Good for everyone!

I disagree.

My example - in light of the increase of Bitcoin price, I can now buy myself a business jet. I want to "help" the Bitcoin economy, so I offer Boeing to pay BTC. They then go to Gox, open an account, wait for a month or more to get verified. In the mean time, I pay them BTC 125,000 and take the jet. Eventually, some months later, Boeing now able to withdraw fiat, dumps the BTC to the market, crashing it some 10-30% (my estimate) getting less fiat to what it was worth when they accepted my BTC payment. I can just imagine the conservative financial director there having a cup of tea with the chairman of the board, saying; "you know what, I thought it was a great idea at the time".

Not going to happen!

Please be just a troll.

You can't be serious with a border line example of 1% the total BTC Value. That's just ridiculous.

So you are not buying a new with BTC because 1 Million PCs at once would increase the Price of BTC to much?

Even if a normal directly sells the BTC for Fiat, people buying and businesses selling BTC at a constant rate helps to stabilize BTC.

And the point is, that trade makes BTC more interesting for more and more Businesses.

I am sorry, I though you knew how the markets work...

I apologise - I've assumed wrongly!

/end sarcasm

In my example above, I am not buying Bitcoins, it just happened that I have 125,000 of them, itching my hand to spend and "help" the economy.

And yes, I am pretty certain of my estimate that creating a instant sell order for BTC125,000 will bring down the price +/- 30%, probably over few days.

Then why did you disagree to my example where I talked about buying BTC to spend them?

I am sorry, I though you could read...

I apologise - I've assumed wrongly!

/end sarcasm
,
Still that's a borderline case infolding over 1% of all coins in existence.

If I would exchange 1% of all € in existence for $ this would have the same effect on the Value of the € (not as extreme though, but only due to a grater liquidity).

Are you saying I should not buy things from the US for my €s to not crash the €?

I really think that the shops could really do a lot more to help the economy than consumers can.

Coin value increases all the time so shops could subsidize their prices by some percent, say 5% to make them lower than every other fiat competitor. Even if they'd sell everything at a loss initially, they're guaranteed to make the difference back in a week or so. Sure, it's risky, but due to the nature of Bitcoin, this will happen indefinitely. (unless it is outlawed or something of that nature happens)

And, for companies selling services like hosting, or other online services, offering lower equivalent prices should really be a no brainer - no scary wholesaler breathing down their necks for their money.

It would be an incentive for even casual Joe to go deposit some cash, get some bitcoins, and get his dream TV for less than Amazon or Newegg or whoever. And since they'd be generating so much interest for bitcoins and everyone will want them, value is guaranteed to rise. Kind of like a social/consumer fueled pyramid scheme. :)

This would also make it a huge reason to go buy/spend coins, in a way similar to how the Silk Road is incentivising, yet for a good cause.

Have a leap of faith.

I struggle to follow your logic here...we are obviously on a different page.

When we analyse a market, we do not look into total coins in existence, we are only interested in the coins in circulation, i.e. traded on that market. That's because the coins in circulation effect the market. Also, there are separate markets, $ is a separate market, € is a separate market, then those fiats traded in different exchanges are also different markets.

In my example, I was referring to one particular market - USD@MtGox. Also in my example, as soon the merchant (or the hypothetical seller of goods I used in my example) accepts the BTC, he would go to a market of his own choice and sell the BTC for fiat, as his input costs would be in fiat. And that's what would cause the price at that particular market to tank, as I mentioned previously, on my estimate, to around 30%.

And that I see cannot be possibly good for the economy, it will upset a lot of bullish investors, it may even cause loss in confidence in the prevailing trend, possibly cause panic sell, from there on it is everyone's guess what will happened to Bitcoin.

Obviously.

As the thread titly says: So if you want to help the economy...

Not: So if you want to increase the price further and further...

I'm talking about Bitcoin being successful here, not being a speculative bubble to make some guys get rich quick on the expense of the late fools.

And if you are talking about dropping 125000 BTC on Gox, don't you see that this example is to extreme?

But this will happen sooner or later, and if by then there is no economy behind BTC of course it will go down.

I stop feeding the troll now.

Sure, everyone is entitled to his opinion, irrespective how wrong it is.

As I always say - show some respect to the trolls, stop feeding them with rubbish!

 ;D

For anyone interested, here is the (stock) reply from Newegg:


Clearly they have no idea what bitcoin is... and I think this shows just how far there still is to go.  So, guess I'll stick with other retailers in the meantime.

"the attention it deserves"... doubtful.  However, at the very least I hope I get someone to bring it up over water cooler talk.  Hmmm... think I'll see if there's someone higher that I can inquire to about this...  I feel like getting a proper answer.

Perhaps your analysis of your hypothetical scenario is correct, but I think it misses the point. Increasing the number of bitcoins in circulation and increasing the transaction volume increases the stability of the currency. Your scenario describes what might happen if the transaction volume is low. The solution to your scenario is to increase the transaction volume (but not so suddenly that it is a shock to the system).

I agree with you.

Today the markets are not large enough to support multiple merchants who's input is in fiat, hence it will be in their interest to sell the newly acquired BTC and withdraw the fiat from the system straight away, in effect damaging the markets.

Currently we are in a situation where the markets are driven by speculation, and the merchants play only remote secondary role to the development of the markets. I personally do not expect this to change for some time, not until broader adoption of the BTC occurs and not only by speculators, but across the spectrum of users.

The OP premise is that by using merchants to buy goods we would be "helping" the Bitcoin economy. I stated that the current economy's nature is not what everyone thinks it is, it has changed dramatically over the last 4 months, hence today, by using merchants to buy goods and pay them in BTC, we would be damaging the economy.

To clarify, I am assuming that helping the economy to grow means driving the price of BTC and the total market cap up, and damaging means driving the price of BTC and the total market cap down.

In retrospect, I see my mistake as emphasising on the potential damage buying goods with BTC could cause to the economy. I should have stated that in today's climate, such damage will be minimal, negligible, irrespective of the good intentions and the efforts of the people to "help" the economy. I also should have stated that if one wants to help the economy, one should have gone and purchased BTC, contribute to the driving the price up, then hold for long period, until the markets stabilised to +/- 0.01% daily fluctuations. That will be the sign to watch for. AT that time the Bitcoin economy will be deemed mature, the short-term speculators would have left long-time ago, and the Bitcoin would have been described as a great store of value, very similar to the precious metals.

That's what I think.

Well put.


This is the issue I struggle with ATM.  Realizing that every transaction that goes through Bitpay results in an immediate sell order at whatever the current best bid price is on Mt. Gox will actually help drive the valuation lower.  We need more speculators and big investors putting the money up to counterbalance this with an upward trend.

My original point was that rather than sitting on the sidelines and not doing anything, and rather than risking money by buying BTC with money that you can't afford to lose (I don't advocate Bitcoin as an investment to anyone that can't afford to lose the investment), if you spend the fiat you would normally have spent by going through a bitcoin merchant, you will help stimulate the development and adoption of the economy.

I guess I would also argue that buying BTC with fiat then immediately spending and having bitpay convert it back is basically a zero sum game.  However it does result in more money spent in the bitcoin ecosystem, which hopefully adds more credibility.


The ideal outcome. 

However currently Bitcoin is experiencing some of the growing pains that would be expected at this point.  I also expect a ton of new bitcoin startups to appear, as well as scams and schemes.  Again, part of the growing pains.  It all comes with increased valuation and exposure to the masses, and is something that needs to happen in any maturing system.

The blindness is bizarre. How can you ignore the fact that the BTC used in the transaction also has to be bought with fiat? In order for the BTC to be sold on Mt. Gox by the merchant, it first has to be bought by the customer (on Mt. Gox perhaps). The two currency transactions balance each other perfectly.

I guess you missed the part where I went on to say


They do indeed balance each other out going this route; my initial thought you quoted above was for the way bitpay functions in general, which is to take BTC already in circulation and process them when they are spent at bitpay merchants.  I probably didn't explain that line of thought fully... these days my brain seems to be all over the place.  :P

You are not right.

I've never invested a single cent of fiat in Bitocoin, yet I have plenty of them "precious" in my wallet, I've also spend many of them in the past on buying various stuff, mostly computer parts, GPUs, FPGAs and ASICs, FYI I always paid in BTC, admittedly not knowing what the merchant will do with them.

Currently I am contemplating to buy some high-ticket non-Bitcoin related stuff, just waiting for the right moment (i.e. when the markets are more robust, calmer and traders full of confidence), then I will find some time , sit down and make couple of hundred sell orders (to follow the trend).

That's because I care for the economy!