Bitcoin Forum

When a big company or even a little shop starts to accept bitcoin people start to get excited and think this adoption will result in the bitcoin price shooting up. Well I'm here to tell you the exact opposite is what actually happens. If a store or big company accepts bitcoin that's all fine and great but they're not holding on to it they're immediately dumping it in most cases and this will just result in the price getting lower. Places that keep the Bitcoin they get are keeping the price higher but they are a minority most just instantly dump upon receival of the bitcoin. We don't need to just get stores to accept bitcoin we need to show them the true value of it and why they should even themselves use it as a currency and not just dump it as some worthless commodity which some believe it to be. If we do this we will see a real increase in price.

I've brought this up in an argument before and can see exactly where you're coming from.

Perhaps more companies accepting BTC will create more awareness therefore more users of BTC.

Both points valid however.

Will the stores always sell the bitcoin they receive right away?

How do customers get bitcoin they use to give to the store?

Most of the big companies who accept BTC will immediately convert to fiat so there is no risk (or upside).

I would say most of the companies accepting BTC do so as a gimmick and have no intent to hold on to it.

Quoted for relevancy.

None of this happens in a vacuum. Stores aren't a perpetual motion machine, driving the BTC price down every time we purchase from them. In order for them to have BTC to depress the price of BTC there need to be prospective purchasers purchasing BTC and driving up the price.

I doubt there'll be 100% efficiency - some purchasers will have a stash of BTC and won't bother buying more simply because they want to buy something, and some merchants will keep some or all of their BTC. But for the moment at least most purchasers will buy BTC around the time they make a purchase, and most merchants will sell BTC around the time they make a sale.

overstock do a $1mill a month in bitcoin.. and guess what, they only value the bitcoin in dollar. but never actually convert it to dollar. they are hoarding.

secondly bitpay do not throw bitcoins onto exchanges to sell for dollar. they just use the dollar value of exchanges for establishing prices. but the whole btc-fiat. is done privately through private investment/capitol funds.

its only coinbase that are swapping the coin on an exchange that is being measured by the community. so relax about companies dealing with bitpay. but your half right in regards to companies using coinbase.... well maybe a 3rd right. as even in coinbases case not all merchants sell 100% back to fiat.

I never said all merchants sell back to fiat.

i think thats all just part of manipulated . we must strong to fight
to win .

Even if it does hurt bitcoin prices in the short term, widening adoption of bitcoin is bound to be a positive in the long run.

+1! I also believe that while it may lower the price in the short term, the long term effect of more and more places taking BTC will eventually make up for it.

Retail adoption is the only thing that will ensure there will be a bitcoin in the future. It is bitcoins utility that makes it attractive. If no one is using it to make purchases, well... this will not work out.

It may be true that this is hurting the price over a short period of time, yes. But I think a lot of people who buy those BTC (maybe even big buyers buying at BitPay, etc.) keep those BTC. Also, it helps Bitcoin get traction in the long term, which is more important than short term gains.

Retailers aren't in the speculation business, they sell or should sell their bitcoins immediately, specially in businesses with low profit margins.

When more shops accepts bitcoin, more people will buy bitcoin to purchase from them. So what if those shops dump the coins for fiat? They will be bought right after by someone else to buy other things. Bitcoin is going around how it should be.

This. Stop sweating the price you greedy shits. It's not about making white americans rich, it's about providing banking services to the unbanked.

Well, but that wouldn't move the price at all - assuming your explanation! I also don't think that people will buy bitcoin just to shop somewhere, shops still accept regular payment systems next to bitcoin! It's Bitcoin enthusiasts who shop using Bitcoin! And some of them are already 'all in' and can't re-buy their coins! ;)

This again?

Yes, store acceptance may hurt bitcoin short term, but then more people will know about it and be safe about it, then make savings in bitcoins too, not only in fiat.

Litecoin, doge, and I think all altcoins have little to no market acceptance, can't say they are valuing because of that.

Umm... Overstock is very much instantly converting BTC sales to USD using coinbase... what gives you any idea they are "hoarding"?

I see where you are going but your not looking at the big picture.

Lets say one million new people start to use bitcoin and on average of those million keep 1 BTC in their wallet at any particular time (average, some more some less).  In the grand scheme of things I think you will agree that is tiny.

In effect though, that has taken 1,000,000 BTC out of circulation at any particular time, that is just under 5% of the total bitcoins that will ever exist, it is close to 9% of what is in circulation.  

Neil

P.S. If you want to really blow your mind, think what would happen if 21 million people (still a tiny number) wanted to keep an average of 1 BTC in their wallet at any one time.

The point it that Bitcoin is being adopted by big players, I think anyway.  I think people are thinking in the short term price of Bitcoin too much.  What matters is Bitcion gains trust of the average person and if they see big companies testing the waters it's worth dips in the price.  They say all press is good press and I think that is a suitable way of looking at the retail adoption at this time.

Exactly, it is saving reduce the coin supply on market and cause price to rise. The reason for saving using bitcoin comes from the fact that it can be spent at any place, with a long term rising purchasing power. If it becomes more widely accepted, more people will start to save using bitcoin. If you have a good saving and spending plan, you will accumulate bitcoin reserve, have a good life, while still helping it to appreciate

The idea with my equation is that no one is saving anything, it is just 1 million people that have (on average) one bitcoin to spend, that is a ridiculously small number in the scheme of things.

If you added savings (say 1 million people want to save, on average, 1 bitcoin each, still a tiny number) that is 2,000,000 taken out of the available pool!

Numbers start to get crazy very quickly, especially if take into account that in the last rough guess there is something like 8,000,000,000 people in the world all contending for their share of the 21 million coins that will ever exist.

Neil

You're forgetting that with retail adoption, global awareness and adoption comes along. Bitcoin is still limited to a small number of people, that's the issue here. Not all merchants are going to dump directly, partially or at all. Some will hoard these coins.
I'm sorry OP but you have actually got it wrong.

This is right on. When large companies start to accept bitcoin, it will give bitcoin a better image and will start to be associated with bad things like illegal activity less. As more people see bitcoin in a positive light and that there are many ways you can use bitcoin, more people will use it and the price will rise over time.

"using bitcoin hurts bitcoin"

blah.

"People making a website for their business hurts the internet! They're only going on there to find phone numbers, or physical addresses of the business!"

Here is one very good example.
http://www.coindesk.com/malaysian-online-retailer-accepts-bitcoin-wont-convert-fiat-currency/

This actually is a good point and a good analogy. IMO more businesses accepting bitcoin will increase the overall useage of bitcoin by society, regardless of if the business sells the bitcoin they earn right away.

Yes, the network effect will kick in.

In economics and business, a network effect is the effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it.

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

This is pretty much common knowledge here, but you are missing a few points. After the first rush to buy things with Bitcoin, everyone is free to fill up their accounts with more Bitcoin (maybe even cheaper after a little sell-off) and having a Bitcoin payment option and its logo on the page of a merchant may lead people to inform themselves about it and get into and maybe buy a few.

Most merchants are not interested in new technology apart from their own core business and only look for ways to get money fast and easy. As soon as those report less costs, more consumers and less problems, more merchants will jump on the train making it more efficient for everyone.

I love how every other post here ends with "here's why". This place is so full of 100% truth and facts. So many geniuses here.

It's not about the price, it's about adoption, get your head out of your ass

You can't see the wood for the trees. Merchant adoption is good for bitcoin adoption and in the long term bitcoin adoption drives price.

Exactly, one shouldn't worry about this. A big retailer does not need that money right now anyways, they make up for it easy.
Overclockers said that they would keep the coins as well, did they not?

Overstock is even planning to give bonuses to its employees in bitcoins.  :)

I think the association that bitcoin has with illegal activity is hampering its price. I agree that big, legit merchants accepting bitcoin for payment will, over time, take away this association, thus causing the price to rise.

The idea with my equation is that no one is saving anything, it is just 1 million people that have (on average) one bitcoin to spend, that is a ridiculously small number in the scheme of things.

If you added savings (say 1 million people want to save, on average, 1 bitcoin each, still a tiny number) that is 2,000,000 taken out of the available pool!

Numbers start to get crazy very quickly, especially if take into account that in the last rough guess there is something like 8,000,000,000 people in the world all contending for their share of the 21 million coins that will ever exist.

Neil
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People need to stop throwing around this 21 million coins 8 billion people nonsense. It doesn't matter unless there is a reason to use the coins. You can reduce the supply all you want, but if there is zero demand, the price is zero. Bitcoins will not have value unless there is a reason to use them, like retail adoption.

to end this 8 billion people nonsense, there are only 20 Phildo in 5th grade baseball cards in existence and 8 billion people. How much are they worth?

Funny how most people only see the price of BTC as if it was the most interesting part of it. Most of you guys will hold when it reaches highs, hoping for it to go even higher and later you panic sell it for 350$. Don't waste your time...

Utter rubbish. So when Dell and others announce they are no longer accepting BTC then that will be a good thing ?

This only makes sense if you made the incorrect assumption that the BTC spent came from long term holders who would otherwise have sat on them.

I would think that a very large portion of the transactions to retail business likely come from newer users.

Overstock converts 90% to dollars, and holds about 10% as Bitcoins. Read their 10-Q. (http://www.sec.gov/Archives/edgar/data/1130713/000113071314000051/ostk-20140630x10q.htm)

Yeah, it may happen in the short term, Okay. But in the long term it is a very good thing for Bitcoin and much needed to gain more traction and it basically is more PR for it. Also, I think BitPay, etc. sell their BTC to some people based on contracts. Those people tend to hold large amounts of BTC

Even 10% of their sales is a lot considering that most of the BTC from their sales were likely specifically purchased for the explicit reason to spend on overstock or would have been sold on an exchange. In other words, a million in sales to overstock equals $100,000 in net additional purchases of BTC

You're right that it lowers price and we should be encouraging the 'buy back bitcoin' to users to keep the price stable otherwise adoption will slow as people see what may appear to look like a death trend to 0 (obviously this won't happen unless there is a fundamental protocol flaw yet to be discovered)

You have to figure in #1 people will start to accept BTC as BTC and even if not #2 The BTC market cap still has to grow if ever business starts to accept BTC because of liquidity needing to expand from all the BTC to USD transactions.

That said the most important thing now is to make wallets easy to use, they're all horrible at the moment with qr codes, transaction ids, confirmation times and addresses shown along with all that sort of programmer crap all over it. None of this info should be relevant eventually but we are all still excited by the protocol that the underlyings are exposed to people who don't want to know about how it works.

In a nutshell we need a wallet that my 5 year old could use and show my gran why it's great. When this is done, we need a way for people to easily purchase bitcoin anywhere in the world. This is also dreadful at the moment, even some of my city it friends are put off by it... Entering card details on an unheard of website, uploading your passport , etc...

Only when this circle of transactions gets solved will bitcoin possibly reach it's consumer potential. We are years away from it but getting there.

All the retailers selling their coins doesn't hurt the bitcoin price. Someone else is buying them back, perhaps even for a higher price, there's enough volume and growth to keep it up as long the price is not too much a bubble.

3 % per purchase vs 0.1%
1)Discount bitcoiners v credit card 2)Pay staff bonuses in Bitcoin (sales commission) 3)Pay suppliers in Bitcoin

If retail do not adopt BTC then what the hell are you gonna spend your satoshi's on? Nothing, because they would not be accepted by anyone.

As for price correlation, this is simple supply and demand with more BTC spending going on then the new adopters whomm see retailers using the product will need to convert fiat to BTC. I believe the expanding demand would outstrip the already circulating, actually linited, BTC hence the medium to long term would push BTC prices up.

This is just silly we need retailers to accept bitcoin because otherwise we can't spend bitcoin which would mean the demand of the Bitcoin would then go lower as it can't be used as much this thread is just silly and spreading yet more fud.

In fact, previously, a new retailer accepting BTC was taken as positive news and there used to be a spike in the price of bitcoin.
This is no longer the case now a days, with the BTC price remaining stable.

It doesn't mean it's going to stay that way people just didn't see getting Bitcoin would of paid off for them to spend at such sites like Dell if there are a little more important retailers accepting then the price should go up.

Dell is a very important retailer, in my opinion. In fact, it is proof that bitcoin is almost mainstream and is being treated like a currency, and not just an investment.

This argument has been parroted endlessly. WE KNOW! However, merchant adoption must come first otherwise the average consumer has no reason to even USE bitcoin.

Do these businesses not have any employees? Every buisness that begins accepting has employees getting introduced to bitcoin for the first time. I agree it would be awsome if every buisness that accepted them would at least retain the 2-3% they would pay in fees in bitcoin and I think we as consumers have a right to only spend our coins with those retailers who openly state they retain a portion. But back to my origional point the world is a big place.

I talk to many people everyday who still have not even heard of bitcoin so what better way for people to be exposed to it than to learn on the job your company now accepts it.

You really think? i believe there are a lot of companies who are interested in Bitcoin and do want to be part of it, and thus keep their BTC in  some wallet and hope the price goes up even further! Even that Overstock boss is a big fan of BTC now and telling everyone how great it is!

They don't necessary have to retain bitcoins. Even if they spread it around, like Overstock is doing with employee bonuses in bitcoin, is a wonderful initiative.

Oh cool, I hadn't heard of that.  Could increase usage exponentially when a new business accepts bitcoin if they give some to employees.

Faith to the system comes with stability. Bitcoin slowly builds its userbase of people that really believe in the technology.
Not scammers, not speculators.

The next stage is more widespread adoption and the price will skyrocket.

Stability in terms of price? If stability --> higher adoption --> price sky rocketing, then it really wasn't stable initially, was it?

It's natural for the price to skyrocket with widesread adoption. Don't confuse stability with stagnation.

As adoption by companies goes up the supply of BTC being used goes up. As users of BTC go up the demand goes up. Right now we are in a massive company sweep, where more and more companies are accepting BTC. The "supply" of companies accepting BTC is far outweighing the "demand" for using said BTC.


In other words when looking at a rough supply/demand chart, US, the PEOPLE, are the demand. The companies are the supply. There is TOO MUCH supply coming in vs demand coming in, to make the price go up right now.

That is the most simplistic I can explain that. I vote to sticky this please. k thx.

I don't know my gut just tells me the OP is a BTC trader and the market hasn't been going as hoped.  The price isn't rapidly falling and more people are using Bitcoin as a result of the retail adoption.  How is this a bad thing?  IF anything it gives people to try out Bitcoin for a reasonable amount of money and then they will see how it works.  People won't try Bitcoin it they think it's a bubble ready to pop!

The downward trend in price seems to be event specific - government intervention in bitcoin, rather than higher retail adoption.

I don't think that companies will necessarily keep bitcon as an investment (most companies do not tend to speculate on things unrelated to their business) but rather as a way to potentially pay their employees, suppliers and vendors in the future. Paying the above people this way would likely be cheaper then paying in fiat in many cases.

The more people use bitcoin, the higher the price, easy as that.
It doesn't mean the price can't go down, if more current holders are preferring to sell ofcourse it would go lower but as long as the use is expanding it will create a higher low and build on top of that.

If having 0.001 BTC is discouraging, we can always say that I have 100K satoshis.
That would be encouraging.  :D

I agree. The primary reason that people will likely same and accumlate bitcoin would be because they want to pay their vendors, suppliers and merchants in bitcoin.

With the exception of banks and hedge funds, companies are really not allowed to speculate with their money. If for example you are a car company, then you will spend all your money on some aspect of building or selling the cars you make, not some unrelated investment.

I agree that some companies may eventually accumulate more bitcoin in order to pay their suppliers and others who they owe money on a regular basis. It would also be possible that they accumulate bitcoin in the same way they accumulate dollars or euros.

I see two of the reasons why they dump:
First, when a retail sell its product, it need to replace a new one. How can the retail buy a new one? By bitcoin?
Second, the bitcoin price fluctuates too much, and it's risky for them to keep it.

That's what happens when you add more holes into a bucket but limit the ways to get water in. If only buying Bitcoin was as easy as spending it.

The rarer it is, while holding value, the greater it's value will become. It won't take long for the rareness of Bitcoin to become evident, especially when there are more people who want it.

Remember one important thing. The closer we approach the 21 million maximum, the slower new ones will be created - half as many this 4 years as the last 4 years. Yet, if there isn't something that drastically reduces the population on earth, there will always be way more people who want it than the number of bitcoins out there. And the number of people will be increasing.

As long as something doesn't destroy Bitcoin's ability to be used, it will continue to increase in value. Odds are that, as the number of people using it increases at a faster exponential rate than the number of bitcoins being created, the value will only rise.

The thing that will make the value of a bitcoin shoot beyond the moon, will be when the effect of all those $17 trillion dollars that were created in various Quantum Easing programs starts to be felt. This will happen as this fiat is gradually dumped on the market.

Lots of stuff to consider.

:)

It depends. I'm one of the people behind BitKassa (https://www.BitKassa.nl/), the Dutch Bitcoin payment provider that is being used for most merchants in Arnhem (active since the Arnhem Bitcoincity (https://bitcointalk.org/index.php?topic=619465.0) event in May). Most merchants use BitKassa to accept Bitcoin payments and receive euros. However, these bitcoins are not being dumped on exchanges. So far we have sold exactly ZERO bitcoins of all the payments we processed.

Besides, more and more businesses are accepting Bitcoin every day. Once merchants start realizing that they can not just accept Bitcoin payments (as a cost reduction and service to their customers), but also SPEND bitcoins to their suppliers, it will quickly increase their incentive of actually keeping the bitcoins, and no longer convert them to fiat at all.

I really don't see where the OP is coming from.  How can a company advertising Bitcoin to their customers be bad.  And if people use Bitcoins to buy things from them they got what they wanted.  Thsi in my book is a full circle win win, Please weigh the pros and the cons and take into consideration of potential longterm holders coming in because of all this adoption.

If someone has posted something like this a year or so ago my mind would have melted down and then blown up.

So how does it work? Do you pay the merchants EUR from your own reserves? Is it sustainable?

Unless they can do things like pay interest on loans, buy can for their cars and food every night with bitcoin straight up, they'll have to sell bitcoin for fiat at some point. That's the problem right now.  Like their employees aren't taking thousands of bitcoins for salary I'll tell you that much.

I have alwas thought about this point
imagine amazon selling his diaries sells in bitcoin market
fatality
but there are many points of view

It would be nice if these companies would offer an option to pay employees a portion of there pay in BTC if they so chose. It wouldn't be much different then them offering a stock option or something like that. Granted it would be higher risk but I bet alot of people would take some coin a couple percent perhaps.

I don't think this would be possible. This person would have massive exchange rate risks and would be vulnerable to loosing a lot of money. This would also very quickly get expensive for him because some business process tens of thousands of dollars in bitcoin sales per month.

isnt there a new service where you can lock the value of your bitcoins then im sure they can lock each transaction made then it wouldnt be a problem for them to hold the bitcoins and pay there employees as well.

Yes, and yes.

Then the service is taking the risk and is probably expensive, while not really safe, if Bitcoin crashes really bad, you can bet the company would fold.

The only possibility is that investors in the company use it as a way to buy into Bitcoin over time, using spare millions of Euros they've got.

Then the company will need some valuable backing to do so, but  also heard there was some kind of locking the value of bitcoin service coming.  some type of bitcoin locker, heard of it?

Yes, Coinbase will do that. For a few minutes. Just long enough that shopping cart programs can accept Bitcoins without the selling merchant taking an exchange risk. You pay a small premium for that service.

This sounds more or less like selling your bitcoin and then repurchasing more bitcoin when you are ready to spend it. If you did not actually do this then you would need to pay for some kind of derivative that would essentially cause similar effects on the market.

Selling and repurchasing bitcoin without the transaction fees.

This is something that has been greatly debated time and time again. I believe in the grand scheme of things, adoption is the greatest way to grow bitcoin.

I think the setup described by zolace would likely have a greater effective fee then selling and then buying bitcoin on an exchange. The "fee" would likely be in the form of some kind of risk premium that you would need to pay to compensate the other side of the transaction for the risk they are taking. This is very similar to how various types of options on financial products work.