Bitcoin Forum

I've just been listening to an interview on Agorist Radio with Justin from Voucher-Safe (podcast here http://agoristradio.com/?p=433)

The interview is about what Voucher-Safe tries to solve, and what it doesn't. While talking about gold he mentions that, after the thrill of buying something with a gold-based currency wears off, people rarely use it. Instead they tend to hoard it, keeping it as a store of wealth. A good example of this is http://www.goldmoney.com/ with 1.8 billion in gold, available digitally, that for the most part just sits there as a gold savings account. He then predicts that if bitcoin turns out to be as good as its proponents say it is, it will have the same problem.
Why? Because if a merchant accepts both Bitcoin and Fiat currency people will always prefer to pay with fiat currency simply because the equivalent bitcoin is seen to be more valuable (i.e. $100 woth of bitcoin is > 100$ fiat).

I think this is an interesting point. Thoughts?

Due to the design of bitcoin, even if it does become highly valuable the fact you can express fractions to eight decimal places will ensure it does enter the overall economy. That is hard to do with physical currencies, for obvious reasons. I have no problem with bitcoin achieving higher dollar valuations because of this.

While some may hold on to their bitcoin wallets, I'd think a majority would be just fine with spending 0.025, 0.01, or 0.00332 of them :)

Agreed. Value is extremely relative. That's why it would be a great idea to shift the decimal place ASAP!

I think this could be said with almost any form of currency that isn't paper or plastic, people will hoard it.

Hell, people hold onto change more than they do their bills, I believe it is subconsciously because it is 'heavier' thus has more value.   Or not, whatever, but I believe my joke argument as much as the gold hoarding one, and both theories kind of compliment each other.

lol.

There are a lot of businesses that would work a lot better with a currency like, or based on, bitcoin.

For traded goods, this probably is not true. The dollar, euro, whatever, is quite good at purchasing alpaca socks.

Paying for services on the internet, though, is a completely different thing. Sites like e-lance, get-a-coder, face a detrimental effect from traditional currencies, because the partners in a deal have to settle on method of payment, currency, and they usually face high costs for those transactions, especially when currency conversion is involved.

This is where bitcoins are, well, better.

They may not be perfect, and for many services you may still wish to employ some kind of escrow service. But you could easily cut out the middleman and agree on step-by-step payment based on achieved milestones, which, with a normal currency involved, will raise costs significantly.

Not long ago, i hired coders from another country to have some software developed. We agreed on step-by-step payment, and in the end, even though we had only a handful of steps, the service fees added up to roughly 10% of the total costs.

Bitcoin would have spared me those 10%.

I know this is easy to dismiss off hand.

Here is the quote of his that really got me thinking "Why would I spend my gold if some guy I'm trying to pay will actually accept fiat trash".

Just replace gold with bitcoin.

Think about it seriously for a minute - if you really believe bitcoin is better money than dollars, and amazon accepted both, would you spend btc or usd? Initially, you'd probably spend BTC for the newness factor. But after that wore off you'd spend USD, becuase you fundamentally value BTC more. It's catch 22, because if you didn't value BTC more you wouldnt even have any in the first place.


I don't believe payment fees is a problem that bitcoin is actually trying to solve (fundamentally). Anyone can (and have) create a digital token currency backed in say USD, that can be passed around to side step fees, and they can do it a LOT cheaper than having a global network of ATI 6990's running at 100% capacity 24/7. Bitcoin isn't trying to be a easier payment system (becuase clearly, its not easier - and we're relying on new infrastructure to make this a reality), its trying to be a better money. And the problem with better money is that people prefer to spend their crap money first.

To pay with Bitcoin is much less risky than to pay with credit card and it gives added anonymity (in cases where you don't have to disclose your identity anyway). It is also easier than to pay via SEPA transaction (3 additional passwords for the online banking account, searching the TAN code on a physical letter from the bank, two account numbers for the merchant and his name/address is mandatory as well).
For some it's also an advantage to know that no 3rd party (like the CIA via SWIFT) is going to analyze all your financial transactions - and no, I'm not talking about any illegal payments!

I personally like paying with Bitcoin. I have some saved for the long term but I regularly buy some to spend them shortly thereafter for other things and services or to donate. That way price fluctuations don't affect me very much.

If I have the choice to buy something with Bitcoin, I'll always do so for the reasons above - for me it's the perfect online payment system.

Yes, I consider Bitcoin to be the better money, but not because I think it will rise in value all the time. Therefore I'm spending my "crap" money regularly to buy BTC - so what's the problem? Bitcoin has many unique advantages over gold which make them far more suitable for online payment so the comparison is not really valid.

The problem with those, let's call them dollar-derivatives, is centralization. Both parties need to agree on that specific derivative and have a contract with the service provider for it. Along go fees, and a lot of complicated work. Paypal for example is highly impractical for b2b payments for services (if at all usable), and so is western union. Bank transfers are cumbersome, expensive and slow when it comes to transfers outside the EU.

Bitcoin on the other hand is reliable, inexpensive and quick. That's it. For b2b transaction, where a certain amount of trust already exists between the business partners, that is ideal.

With untrusted partners, an escrow service of some kind may still be required, thus diminishing the advantages of bitcoin to a certain extent.

This is known as "Gresham's Law" which is: Bad money drives out good.

Fiat is hot-potato money.

jesus. is there anything this argument doesn't solve?



has been done many times in history, just in the other direction.

There will always be some items or services more valuable than bitcoins. Let's imagine. The HD6990 is valuable item today, so is the Bitcoin. The 6990 will lose it's value dramatically in next few years, the Bitcoin will gain the value slowly. You assume that none will trade the long-term valuable bitcoins for short-term HD6990. But this is false. If you get very lucky deal such as 4 BTC for HD6990, you will buy it today no matter what the price will be afterwards! You can do the job and earn additional bitcoins or whatever to get the 4 BTC on your account again. And You will have the 6990 also!

The slow deflation of Bitcoin is not a flaw in any sense, it's additional bonus! If people want Bitcoins, they wil ltrade goods and services for it. Only value of goods and services will determine value of Bitcoins.

You're right, math does solve a lot of problems :)

IF bitcoin is widely used as currency, even for bank accounts, I doubt there would be deflation.

I don't wanna go into a whole discussion about money supply and money creation again, but a constant monetary base ( = the 21 million coins) doesn't mean there is no (monetary) inflation.

for comparison, USD money supplies:
http://www.shadowstats.com/imgs/sgs-m3.gif?hl=ad&t=1308409874

if you look at M1 (which is an even wider defined money supply than monetary base) up until 2008 when everything went to hell in a handbasket, you can see that the money supply of USD central bank money was constant, yet, there was PLENTY of inflation, price and monetary.

same thing can happen in a bitcoin economy.

It's really surreal to have this argument among a bunch of free-market advocates.

In a free market, the price adjusts to balance supply and demand, doesn't it?  Invisible hand, Adam Smith, 'cooperation not coercion', etc.?

So if the bitcoin I bought for $15 is perceived to be more valuable than $15, wouldn't the exchange rate automatically rise to equalize the value?

Let's say Amazon accepts both BTC and USD, and the price of 'The Wealth of Nations' is quoted as 1 BTC or 15 USD.  If people perceive BTC to be more valuable, they would spend their 'trash fiat' first and keep their BTC.

But in a free market, wouldn't the exchange rate then move so that the price of the book is 0.8 BTC, or 0.4 BTC, or 0.2 BTC until the customer was indifferent about which currency to use?

If you say that there is always a preference to hold BTC and not spend it regardless of the exchange rate, aren't you arguing that the free market doesn't work?

So exactly how does one create more than 21 million bitcoins?

how does one "create" a growing M3 while M1 was basically constant for years, just like the 21 million coins whould be constant?
look up the definitions of money, fractional reserve banking, money multiplier.
as I've said, I don't want to repeat that discussion.

That isn't really an answer. Am I to assume you're just pulling things out of thin air? If you already discussed this, perhaps you could provide a link to the previous discussion.

the thread was called "interest rates possible?" or something like it

Ive tried to write an answer to this but it always ends up being tl;dr.

Short answer is, why is this the case for gold backed digital currencies, and why will it be different for bitcoin?

I think the flip side of this arguments (Gresham's law btw) is that maybe some people will simply decide to convert whatever other undesirable currencies they receive into bitcoin (or other assets they consider valuable) as soon as they receive them.  In that circumstance, they won't have any undesirable currency to spend unless they go to the hassle of converting it back (and if merchants accept bitcoin, why would they do that?).

+1!!

If you are not at the point of ambivalence about which of your currencies to spend them you need to buy more of the one you find too precious to spend. It makes no sense to claim that you value an extra bitcoin way more than the equivalent amount of dollars, but not trade the dollars for coins.

Earlier posters are right.  The free market should set the USD/BTC exchange rate precisely at the point where it makes equal sense to spend both.  If BTC were going up in value and the dollar down, for sure, then BTC's current price would go up to reflect that.

However...  we can still talk about differences in the scenarios in which one or the other currency has a guaranteed government monopoly.  Then, their adoption leads to different behavior.

IF there is only one form of money and it is frequently, artificially, and arbitrarily inflated by a governing body that looks out only for itself, THEN people will spend that money faster.  If bitcoins were the national currency and USD were like bitcoin, scrounging around in a few tiny corners of the economy looking for shelter from banks and senators, then people would save more and spend less.

People will be reluctant to spend bitcoin while it is rapidly appreciating in value.  It's a problem.

To counter this, merchants might offer a 5% or 10% discount for payment in BTC (because hey, they prefer having bitcoin too).

Currently, merchants pay 4% more when their customers use credit cards.  They would like to offer a discount for payment in cash, but they can't, because it is against the terms and conditions of the credit card companies.

There are no lawyers and no weasel rules or restrictions with bitcoin, so they're free to do the Win-Win thing with their customers.  If BTC catches on in a big way, and both merchants and customers give up on credit card companies completely, well, good riddance.

Except that it won't go up in value.

His whole comment is speculation, trying to leverage up the value of Bitcoin while it's true consumer value is 1$ at most.

Eventually speculation will drive the price to the "proper" value, and then the value won't change terribly much (or at least there will be no expectation that it goes up that much), then people will spend more.  Assuming there's anything worth buying with it.

To sum up this thread, people are using Dollars, backed by Bitcoin, choosing to do that instead of using the Dollar backed by Gold.   However, we all should just switch to Bitcoins backed by Gold, hoard the Bitcoin, spend the Gold, the USD is now completely useless? 

Actually, isn't that what a lot of people want out of Bitcoin.  I prefer having many forms of currency lol.  I am fucking around, but I see some interesting points here and will now just go into lurk mode, the way the daily/hourly/by the minute (multiple) exchanges of Bitcoin works makes old school way of thinking on currency a little different imo, so older theories and maybe even things that were known as true are adjusting.

+1!!

Doesn't this response completely answer the original question?

A divisible and fungible asset like a currency can never be "too valuable to spend", since by definition you get the value of the amount you spend. By virtue of comparative advantage, from your point of view it's at most as valuable as the things you decide to buy.

What interferes with the spend decision of the holders are those pesky deflationary expectations everybody rants about, and that somehow "don't apply" to bitcoin. If an asset is expected to rise, people will hoard it given the choice. It's only human to aim for realizing the gains of your most productive assets. You will always slaughter the old cow, not the gestating one.

For a non-productive asset like bitcoin the expectations are purely speculative (if they were technical the efficient market would have corrected the price up). So the correct title of the thread is Bitcoin too hyped to spend: captures both the deflationary aspect and the speculative mania aspect.

Gresham's law does not apply because the government does not force a certain $/BTC parity (or anybody else for that matter).



I believe the time scale is to small to actually see a direct correlation between the ~0% M1 increase in 2006-2007 and the inflation in those years. Just like deflationary expectations, there are inflationary expectations. People expect to have their paychecks increased yearly, and this eventually goes into the price of goods and services, regardless if no more currency was injected into the market. I think our old friend Milton would say that inflation is always a monetary phenomenon and if printing stops, so will inflation, eventually. So the 2007 inflation was made possible by earlier printing.

If you convert all of your currency into bitcoin, hunger will force you to spend them, no?

Time preference means some investors will exhaust their patience and cash out.

Also, newbies that brought into bitcoin will have an irrational aversion to loss, which explains the current price stability.

Let not forget that investors' return is dependent on the size and growth of the economy so some will be interested in boosting productive capacity of the economy.

Or you may finds goods and services that you really want, but you have like 4000 bitcoin and this thing cost 1.50 BTC.

Spending on needs(food, clothing, shelter) isn't really a "choice" in the economical sense. Choice is more like buying a new TV or having a $40 meal. Those are not needed for survival.

That's why I said "given the choice". Suppose you are the supermarket, they accept both USD and BTC, and you have a portable BTC e-wallet and some dollar bills. After the novelty wears out, rational people will not pay with BTC. And this is why you will never be able to pay groceries in BTC. Deflation destroys trade.

precisely.

while the OP notes that:


...he neglects that which has the most impact on that calculation:  what can one afford?

in my line - rare books - this is a common question, with a simple answer.  if one buys a group of rare books - from an estate, for example - one is left with the question of how to sell them, and there are really only two choices.

1.  sell the very best books first - they will sell more quickly and for more money.  you will get your investment back sooner, pay your bills, and take your profit from the crappy books afterwards.  the problem here is that you are depending on profits from merchandise of lesser quality - it frequently doesn't work out that way, and you're stuck with crap.  or,

2.  sell the crappy books first.  it'll take longer, and you'll have to find some way to eat and pay the rent until they sell - but when you're done with those you'll have the very best stuff to sell, which should give you your profits in larger sums (always good).  the drawback here is the vagaries of the market; books tend to fluctuate in value, as most luxuries do.

so the answer here is the same:  what can you afford?

Postulate:  as the economy of the world deteriorates, Bitcoin will do better as a medium of exchange and become less of a value store or speculative medium.

Why would you give yourself that choice? If bitcoins are so valuable, why would you not immediately convert all your USD to bitcoins?

It's nonsense, for two reasons:

1) If it was correct, it would apply equally well in the other direction. If a merchant accepts both Bitcoin and fiat currency, people will always prefer to pay with bitcoin simply because the equivalent bitcoin is seen to be more valuable and thus the merchant will be willing to accept a lower price.

2) It contains the oxymoronic claim that that the "equivalent" bitcoin will be "seen to be more valuable". If it's seen to be more valuable, it's not the equivalent, it's less than that.

The reason people hoard gold (and people may hoard bitcoin for the same reason) is that they irrationally believe it will increase in value (or, equivalently, that their fiat currency will decrease in value) more than other people do. So they think others are underpricing its future value today. However, there are also going to be people who think bitcoin will blow up any day now, so they will think others are overpricing its future value.

In any event, hoarding is a fact that influences the price of a currency, but that influence is to increase its value. Scarcity isn't a problem with bitcoins because they are divisible.

To put it another way:

If BTC is appreciating by 0.1%/month, whereas USD is depreciating by 0.1%/month, then if you convert your USD to BTC as soon as you receive your salary you'll get free relative 'interest' on your salary per month and as all you have are BTC you'll be spending those during the month on food, TVs, etc.

Of course it can. Lots of people here would not sell bitcoins at the current exchange rate because they think it's too low, so why would they spend them for something using the exchange price as reference? Unless they have no fiat currency it would be irrational, because converting fiat to bitcoins has a fee. It's more economical to use the fiat.

If the current exchange rate is so low, why aren't people buying them to make the price go up?

A hard drive deep to center field, its going . .going . . GONE!!!.  8)

They are, but currently they are being outvoted.

There will always be some people who believe that the market is underestimating or overestimating the future value of something. The people who will not sell bitcoins at the current exchange rate believe that the market is drastically underpricing the future value of bitcoins. There are also people who think that bitcoins will become worthless any day, and therefore you shouldn't pay $15 for them today because they might crash before you can do anything with them. These people think the market is overpricing the future value.

The exchange rate for bitcoins is the weird balance largely between these two extremes. This is, I think, a temporary issue for bitcoins. Either bitcoins will die or the volume will increase to the rate that people's disagreement over the future value is not so great.

This is not entirely true.


Gresham's Law states that bad money drives out good only as long as there is a law requiring people to use the "bad" money.
Since the Bitcoin is decentralized and independent, and therefore by its very nature "lawless", it should drive out all the bad (fiat) currencies. So states Gresham's Law.


Not "bad" money drives out "good", but Government Force!

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You would want to use the local currency because there is no advantage to not doing so. Your reasoning includes all the factors in favor of your conclusion, but ignores all the precisely equal factors that lead to the opposite conclusion. If your argument were correct, it would mean almost everyone would prefer bitcoins to dollars at the current price, which would mean practically nobody would sell bitcoins at the current price and most people would want to buy them. This would raise the price to higher than it is. But not only is the price not higher than it is, it can never be higher than it is. Any argument that bitcoins are superior to another currency because of their expected future value is an argument that bitcoins are being sold too cheaply to account for that value.

If most people agreed gold would rise to $5,000/oz in the next two years, it would rapidly rise to nearly $5,000/oz today. In that case, an ounce of gold today includes the right to have an ounce of gold in two years and so the value of gold today would include the value of that right. Similarly, a bitcoin today includes the right to have a bitcoin in two years and so the value of a bitcoin today includes the value of that right. The problem is, the value of that right is somewhere between $0 and $10,000.

The thing is, no matter what the exchange rate of BTC to USD settles at, bitcoin will still have properties that make it more valuable than USD. For me, bubbleBoy has given the best account for the hoarding scenario, deflationary expectations.

For those that argue that, essentially, the free market will value BTC to account for this, your missing the fact that the price can never account for certain properties of bitcoin, because whatever the price settles at, it still has those properties. Even if 1BTC is worth 1 Billion USD, a merchant will price a product in USD and in the equivalent BTC, based on exchange rate, and the BTC will still have those properties that make you value it over the USD, namely, deflationary expectations.

The only solution I can see it to provide a different force the stops people hoarding it, and makes them want to spent it. There are 2 universal properties people value that bitcoin could give them, that at the same time would make them want to spend it. First is low transaction fees. This is something Bitcoin already has. The second is ease of use. This is something that bitocion does not (yet) have. Even if it did, USD already has this. A niche use case (for the general population) is anonymous payments. Bitcoin will always be the preferred payment there.

My prediction:
Bitcoin will always have 'hoarding forces' acting on it, but it will also have 'spending forces' acting on it. Thus, whenever there is a tie in the forces (which depends on the situation), and a product is available in USD and BTC, the user will choose to use USD. I don't think the hoarding forces for BTC will be as strong as they are for gold.

This makes no sense. Say we all had good reason to believe that gold would raise to $5,000/oz over two years due to deflation. The price would rapidly be bid up close to $5,000/oz today. Yes, it would still have the property that it will be worth $5,000/oz in two years, but that would no longer be any big deal.

Once the deflation is built into the present price, it will no longer deflate. The idea that everyone can expect a currency to deflate is simply not possible under any realistic situations. An expected deflation will already be priced into the market. It is not possible for a currency to deflate regardless of what its current price is -- that's like saying it is worth more than it is worth.

x7

The market volume is over 3,000 BTC a day. Someone is spending BTC.

Clearly I'm not an economist, but I don't buy your line. Your saying that theres a current price now, X, that will drive out all future inflationary pressures, including accounting for fiat inflation. This seems unlikely. And anyone who holds both BTC and USD knows this. Thuse, there is a hoarding presure.

Sure there is a pressure, but it moves everyone to a point where a bit of extra coin is worth as much as a bit of extra dollar to them.

If you are in a position where $15 is worth less to you than a coin, buy a coin. Then if $15 is still worth less to you than a coin, buy a coin. Keep going until you have so few dollars that dollars are just as precious to you as coins. Now you are ambivalent between spending dollars or coins. If you greatly prefer spending dollars to coins you are making a big mistake in your allocations.

Yes, that's exactly what I'm saying. Think about it: Would you rather have 10 bitcoins today or 10 bitcoins next year? If you say 10 bitcoins next year, you're an idiot because 10 bitcoins today includes the right to have 10 bitcoins next year, plus the ability to spend 10 bitcoins before that should it be beneficial to do so. So everyone expecting a currency to deflate is impossible. It implies that the choice spend the currency rather than saving it is not just worthless (which is possible) but less than worthless (which is absurd).

Thanks to everyone who contributed to the thread.

I have a lot to think about, even though I'm not actually convinced either way. I agree with many of the arguments, both for and against, but I can't reconcile this with the general failure of gold backed digital currencies to resist hoarding, and why bitcoin will be immune to the same fate, since it shares a lot of similar properties. Hence the quote from the voucher-safe guy in the original post. I think something is missing from the model but I can't work out what it is. I'll get there eventually ;)

Cheers

I think you reversed things mid-stream....yes, BTC is not being forced on anyone....but USD / EUR / etc *are* being forced on people (via Legal Tender laws).  Therefore this is why good money (like bitcoin / gold / silver) is being driven out of the market.

People will naturally choose to first spend all their 'bad money' in such situations and hoard the 'good' money. This is exactly what we see with regards to BTC.

EDIT: Sorry, wrote this after reading OP without realizing this argument has already been made several times in this thread. :)


I don't know anything about goldmoney.com, but I do think the bitcoin design gives people reason to spend it rather than just hoard it.

For one thing, if you actually believe that it will generally be going up in value week on week (a good reason to hold on to as much as you can), then you would be wise to put your whole paycheck into bitcoin when you receive it. If you do this, then when you want to spend money at a merchant who accepts both fiat currency and bitcoin, then you will find it far easier to just spend your bitcoins than to transfer them back into fiat currency.

silk road does not accept dollars.

If gold is so good for savings, why have any fiat currency at all? Why not save your money in gold from the very start right until you need the money and only then convert them into fiat? It would be stupid to have always inflating fiat currency when you can have always deflating gold/bitcoin, wouldn't it? The problem with gold lies in the conversion to/from fiat currency. It's either too costly or too cumbersome. If it was easy you would prefer to store all your money in gold, and only convert into fiat currency when you need to. In a trade though, you would prefer to pay with gold because converting isn't free and involves a third party.

Bitcoin, however, is not gold, in the sense that it's very easy to convert to and from fiat currencies. The problem with bitcoin is in the risk of having it. You don't know what the price of bitcoin will be tomorrow, whether it's going to be 2x its price today or 0. And until you do you'll want to store some of your money in bitcoin, while still keeping most of it in fiat currency, since you don't want to lose everything in one day because you were storing it in bitcoins, but you also don't want to be the loser that didn't invest into bitcoin early and become rich with little effort. In other words if one wishes to solve the hoarding problem of bitcoin, one needs to up the chances of bitcoin becoming mainstream. Built-in deflation has nothing to do with hoarding.

Two reasons: Fees and convenience

Metals purchases, from GoldMoney, costs from 2.5% (for gold) to 4.0% (for silver) to replenish any spending I might wish to do.  
Bitcoin costs, from Mt. Gox, 0.65% to replenish (Plus charges for adding funds, which are $0.25 with Dwolla, for example)

Cashing out USD funds from GoldMoney costs another 1% (minimum about $0.50, maximum about $5).  
Cashing out USD funds from Mt. Gox costs $0.25 (the Dwolla per-trx fee).

Because GoldMoney's purpose is high dollar investment, their systems are built to be very secure.  This also makes it inconvenient to use by the customer for spending, and inconvenient to use by the merchant for use in receiving payment.

Because of Bitcoin's P2P nature, convenience can range from easy to hard based on the level of security needed and on other factors (e.g. use of an e-wallet like MyBitcoin on one end to an offline "air gap" wallet on the high-security end.)

Bitcoin is an agile currency.  GoldMoney is not.  Gold and silver such as bullioin or junk silver is not.  

That doesn't mean Bitcoin should replace gold and silver, but it does mean that Bitcoin doesn't suffer the same propensity for hoarding.

+1

The OP is assuming that Bitcoin has survived its birth pains and now, a few years into the future, is a relatively stable deflating currency, and you can spend them widely and easily.

With this scenario in mind, the answer to the OP is: get paid in bitcoins.

Bitcoins: Too valuable to accept anything else as payment.

Seriously, it's merchants who decide what to accept as payment. I'd buy steaks with my dirty socks if I could.

If Bitcoin gets big merchants who are not politically driven will accept both their local currency and Bitcoin, assuming the cost is low enough. There will probably also be companies doing automatic conversion, just like VISA and MasterCard does for practically any fiat today.

+1

This was my original thought when pondering the question.

If it's too valuable for the consumer to spend then it's too valuable for the vendor not to accept.

You don't get this with gold because - although it has an equivalent value to the thing you're buying - it's physically impractical for the vendor to accept. For this reason, Gold is (now) a poor choice for barter and trade but an excellent store of value - hence the hoarding. That's not true of bitcoin.

If widget is worth 1 USD, 15 BTC and 1/1500 oz of Gold then the only thing that effects your choice of which to pay with is which one is more practical. USD has the upper hand in that respect and that's still true today and that's why we hoard bitcoin. Hopefully, it won't be true in the future.

JoelKatz is correct.
BubbleBoy is incorrect.

Bitcoin is a digital commodity, not a digital currency.  It will increase in value until someone comes up with a better version of or replacement of bitcoin, then the value will collapse.

That's the trouble - they don't prefer bitcoin currently, because their expenses are in USD or their local currency.

That's no reason not to take bitcoins if they can negotiate a very minimal commission on exchanges and charge very slightly above fair market value. (But still less than it would typically cost you to convert your local currency to bitcoins and then use that to pay them.)

As a bonus, they can take any fraction of their profit in bitcoins bought slightly below market value. And they make a slight additional profit on the exchange rate for their costs. This only works if the market depth goes up though. They have to be able to exchange most of their income for their local currency without excessively moving the market.

This discussion should be moved to Economics.

Yes this is of course true. At one point however, the "bad" money will have become so bad, that merchants will refuse to accept it all together, requesting gold/silver/BTC instead. At that point in time, the "good" will have driven out the "bad"

I'm predicting the future here, but "bad" money is nothing but a paraphrase for worthless money, and history has shown that all fiats die in hyperinflation.
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