Bitcoin Forum

Thank you for reading. I'll make it short and sweet. Buying bitcoin costs 1% on America's most popular seller, coinbase. I have heard that others charge as low as .5%. From a consumers and currency standpoint, why would the consumer pay to buy bitcoin to use it as a currency when they could easily use their credit card and GET PAID upwards of 2% on every transaction. I understand that bitcoin is cheaper for the merchant, but it looks to me like it is more expensive for the consumer. I would really appreciate an answer thank you.

Credit card fees by merchants are becoming increasingly common (it recently became legal in the US, though I think only gas stations generally charge them ATM). Credit card companies are effectively bribing consumers to use a credit card, but the irony is that it's factored into the prices at the store, so they aren't really saving that 2% or whatever (if they otherwise wouldn't have used the credit card), but effectively increasing the stores' costs, which goes right back into prices. This doesn't factor in the chargeback and other risks merchants need to factor into their costs, on top of the 30-60 day holding period they may have to wait to actually receive funds, which ends up translated into higher prices. Cash customers have it worst since they're subsidizing the plastic users. This is partially why so many sites offer discounts for paying in BTC (and for many large purchases, merchants/contractors are usually quite willing to offer a substantial discount if the customer pays in cash, too).


From a totally rational self-interest perspective, it is generally reasonable to use credit cards, especially when they have those $100 etc. sign-on bonuses (simply pay the balance off and cancel the account once you get the bonus). All of your transactions are tied to your legal identity and easily retrieved by various organizations, there's significant chance of a data breach compromising personal/financial data (the recent Target case, for example), there are harsh APRs if you don't pay your balance every month, and they sometimes charge you annual fees on top of that. There'll always be a place for credit cards for people using them wisely, though, but I don't think they're generally worth the costs and risks risks, especially for merchants as new options are coming out (even outside cryptocurrencies).

Thank you for the reply. I was more alluding to your second paragraph where you described the rational self interest of using CC instead of BTC. To me this is a complete deal breaker for widespread adoption of BTC as a currency. Not only is there not an upfront dollars and cents reason for a consumer to use these coins in transactions, but there is a small PENALTY in doing so, in the range of 2-2.5% (1% coinbase fee and 1-1.5% opportunity cost of not using a CC.

The reasons for a merchant to embrace BTC as a currency are there, but they aren't there for the consumer. All of your points in favor of BTC as a currency are overarching principles which, sound as they are, do not resonate with your average consumer who mainly looks at the face-value and immediate cost of doing business. I can see it working if merchants largely reward those using BTC, but not until then. Think about it, Credit cards generally charge 2-3% to merchants for doing business. Coinbase on the other hand charges 1% to the consumer and 1% to the merchant for a total of 2%. It doesn't really lessen transaction fees that much, it merely shifts it onto the consumer. This is a recipe for failure in my opinion.

To me, it is only when BTC is used as a currency that it will stabilize in price. It needs a stream of transactions constantly to stabilize. This won't happen until the consumer has reason to use BTC as a currency. Right now there isn't a reason.

I'd be interested to hear what you or anyone else thinks of this. I would love to be wrong, so let me know if you see a problem in my line of thinking.

Your starting with Coinbase is a bad premise.... There are better ways to obtain your bitcoin such as localbitcoins.com.

I have never bought a single bitcoin, nor do I intend to, but let's just say I've had a lot of bitcoin.

Edit:

There is more to worry about the price fluctuation in bitcoin anyways, then compared to a small percentage in buying.

Hopefully, it will go up.... but, as recent days as shown us, that is not always the case.

Serious response.

Once Bitcoin's price stabilizes, why would anyone take federal reserve notes that can be instantly created digitally without limit, when you can have something that can't be created in the same manner?

Why? Because they always have and it's so darn easy.

Sure, I get my points on my card, but I encourage bitcoin because it takes the power from the banks who hold onto their money unless the "right" person wants it, I have a business, and product and experience, but that no longer matters to banks, because I am not their type... but I digress. The dollar is going down, so is the Euro and the Yen. It is unsustainable, you know it, we all do. When it goes down and we have that next big crash in the stock market, try to get some gas for $3, just try.

Right now crypto is in it's infancy, so it goes up and down pretty crazily, but it will stabilize, and when it does exchange rates will go down. Right now you have the ability to get in and be a part of something that finally can replace fiat currency, yes, it is going to cost you a little extra to get in, but so does getting into silver or gold. You can't get any at spot, but still many more people buy metals than bitcoin because they view it as a viable alternative to fiat, those same people will be buying bitcoin in the coming years, you can be ahead of them or with them or behind them, or you can hold your dollars till they are almost worthless.

Coinbase has the convenience, funding, and veneer of a respectable company that frankly others do not have. If BTC is to go mainstream, the BTC exhanges must have each of those three variables.

But lets forget about Coinbase. I have yet to see ANY exhange that doesn't charge a premium of some kind. Any premium, no matter how small, cannot compare to the BONUS that you get from dealing with CC's. Am I right?


This is an interesting argument. I'll have to think about this one.

I feel that your reasons for using BTC have an ideological tone, which I'm sure you know doesn't translate to mainstream users. Mainstream users love cash back and convenience, and they hate small fees. They don't know what you are talking about when you talking about the power of the banks and what fiat currencies are. My question is: What is going to make Joe Sixpack on the street corner buy and use bitcoin. Right now I just don't see a compelling argument.

I think it is interesting how few people want to talk about this issue. From where I'm standing this is probably the single biggest issue holding bitcoin from being adopted as a mainstream currency. CC's pay you to use them. Paypal is free. Bitcoin COSTS money. No one seems to want to admit that this is a problem.

If I take my salary in bitcoin, then using bitcoin no longer has this "exchange fee" that you keep mentioning.  Instead, there is an "exchagne fee" to get USD that I can then spend to pay my credit card bill (which if I'm carrying a balance also has an "interest fee").  Or instead I could just directly spend the bitcoins, and avoid the "exchange fee" and "interest fee".  I might even find merchants that offer lower prices for bitcoin payments, saving me even more.  And the bitcoins that I don't immediately spend intrinsicallly increase in value over time due to deflation!  Try that with your credit card and USD.

Seems people won't want to use USD and credit cards because of all these immediate fees that are avoided with bitcoins.

So what it looks like to me is that you are saying that a paradigm shift so large as for you to be paid your regular salary in bitcoin is required for bitcoin to become cheaper? I'm not saying that bitcoin isn't ideologically better. I am saying that it is going up against practical considerations that are keeping it from going mainstream. So far in this thread people's conditions by which bitcoin becomes cheaper have all been very impractical, at least in the short term (10 years or so.) Even if your employer were to pay you in BTC, your company would have to pay the exchange fee.

My topic isn't what does BTC need to do for YOU to love it. My topic is what does BTC need to do for mainstream users to love it.To me the only solution is for the exchanges to somehow drop the deposit fees.

There are several companies that are already paying their employees with bitcoin, if not their entire salary, then at least a portion of it.  Those companies that are willing to accept bitcoin as payment will have to do something with those bitcoin that they receive.  They could exchange it for fiat (costing them "exchange fees"), but it is cheaper for everyone involved if they just use it to pay those employees that are interested in receiving some of their salary in bitcoins.

Those employees will then be looking for somewhere to spend those bitcoins rather than exchange them.  This creates additional opportunities for additional companies to accept bitcoin and a market pressure to do so.  Those companies can then use those bitcoins to pay some of their employees salaries as well. And so on, and so on.

If a company's supplier announces that they will accept bitcoin as payment, then there are even more reasons for the company to accept bitcoin: customers that want to pay with it, employees that want it as a portion of their salary, and suppliers that are interested in receiving it as payment.  The best and most profitable way for the company to acquire these bitcoins isn't to exchange fiat for them, but rather to accept bitcoins for their product/service.

Note:  Bitcoin is already being used.  You keep talking about what needs to happen before it can be accepted (by the public or by companies).  It already is.  The rest is the snowball of network effect.  The only question is how quickly will the bitcoin economy expand.

the real adoption of crypto will come when it is more stable than fiat. For that, we must wait for the big fiat crisis.

You'll start seeing businesses offer btc coupons. Also coinbase absurd 1% will drop once circle comes around.

Lastly you don't have to worry about fraudulent transactions and wasting time calling to get a new card, eg. Target.

Very lastly, not many people qualify for a cash back card and especially no annual fee. You forgot that huh? Plus many Americans are preyed upon like the rush card that targets black people, charges absurd fees and no cash back!

Not many people are rich, white and have a credit score that can qualify for a rewards card with no annual fee like yourself and brethren.

@Player01 In the same way the adoption of cryptoccurencies will be accepted because people are already loosing trust in a fiat paper currency.

Your my second post here and since it's been awhile since you asked with no reply here goes:

The bitcoin market is new.  To " get in" means converting your currently accepted assets to bitcoins for use.  for me, I would just go and spend the 1% with coin base  and call it an " investment" in bit coin.   Some call this " fools tax".  It's what we pay to learn, by directly using, the currency. Or, you can sell something physical you have, for bitcoins.  That's what I'm doing.

As bitcoins become more accepted by both merchants and customers alike, I believe the market to " get in" using usd and converting them to bitcoins, will become competitive, mYbe free.  Like it is to register with most websites like this one.

Just my .00000002
Veterans feel free to add

@OP your basic premise is wrong, bitcoin is not currency. When you realize that bitcoin is not currency it all makes sense.

This begs the question, what is currency?

From Blacks Law

What is CURRENCY?
Coined money and such bank-notes or other paper money as are authorized by law aud do in fact circulate from hand to hand as the medium of exchange. Griswold v. Hepburn, 2 Duv. (Ky.) 33; Leonard v. State, 115 Ala. SO, 22 South. 504; Insurance Co. v. Keirou, 27 111. 505; Insurance Co. v. Ivupfer, 2S 111. 332, 81 Am. Dec. 284; Lackey v. Miller, 01 N. O. 20.



Law Dictionary: http://thelawdictionary.org/currency/#ixzz2onbOTlow

So....guess that settles it ::)

Edit: this begs the question.  Are paper wallets considered " currency"?   Lol
You'll find I'm a stickler for definitions....

How's this differ from a token at an arcade?

Ack! Twice in one post even!

"raises the question", not "begs the question"

http://en.wikipedia.org/wiki/Begging_the_question

Yes you are correct.  Had I not provided proof of my assumption, that bitcoins are in fact NOT currency, as legally defined, I would have committed a fallacy of begging the question--leading to circular logic. With the addition of a second begging, clearly redundant.  But I do not agree that " raising the question" is an appropriate replacement regarding proper grammar.  Wiki can suck it.

Are we clear that bitcoins cannot be considered "currency" as currency is defined as paper tradable from hand to hand, per Blacks definition?  Should You, the human, find yourself in a legal issue using bitcoins--- this will of course, be a part of the Laws grammar.

http://en.wikipedia.org/wiki/Begging_the_question

http://www.britannica.com/EBchecked/topic/200836/fallacy#ref1102387

http://dictionary.reference.com/browse/beg%20the%20question


Perhaps not such a "stickler for definitions" after all?

No dude, wiki obviscates true definition, it should NOT be your reference.   I thought peeps knew that about Wiki? It's additional data to be sure, but anyone can put what ever in there....lol....and a thousand Frenchmen COULD be wrong.

For true definition, you have to go back in time.  To HARD PRINT. The meanings get simpler, and less occulted.

I hate when people say anyone can edit Wikipedia. It's completely false. Try it, your changes will be instantly reverted even if correct.idiots.

Ps obfuscate

Ok, well...that's probably why the Supreme Court doesn't use WIKI for Case Law  ::)

And when they do, it's time to sell the farm. :-*

And what of Britannica and dictionary.reference.com?  Are you simply choosing to ignore the fact that the definition they present demonstrates that you are using the phrase "begs the question" incorrectly?

If I find a print edition of a dictionary that also demonstrates that you are using the phrase "begs the question" incorrectly, will you admit that you made an error?

yes i stand corrected!  :-*

All digital dictionaries should be considered supplementary as all digital info can be altered. do you agree?

Certainly, digital info can be altered, although there are reliable sources of digital information.

Regardless, it seems we are now all on the same page.  It doesn't "beg the question", it "raises the question".

Now that we've gotten past that, we can work on answering the question that has been raised. . .

Within U.S. case law, bitcoin is already considered "a money".  I suspect that it will only be a matter of time before a federal court determines that it is also "a currency".

If the government says it it must be true.   Bitcoin is not money or currency and is not likely to become either. It is a digital collectible. It is the digital equivalent of trading cards.