Bootstrapping the Bitcoin Economy: Attracting Vendors

[FooDSt4mP]

We need interoperable, distributed exchanges first.  Then you could just have the bitbuck backed by mtgoxusd, etc.  The exchanges could then use these to transfer funds.  At the end of the day, the balances are squared up in USD.  The block chain is just a ledger after all.  The currency level should also be pegged to the amount in the exchanges.  The block reward can handle deposits, and withdrawals can be handled by requiring the bitbucs be sent to a special address that ensures the bucks are never reused.  They could send the bitbucks back when they receive the funds.  It would need to be enforceable, but dollar backed currencies are better understood legally.  People with money on the exchanges can sell the bitbucks for USD.  It removes the need to deal directly in USD for the exchanges, but it's backed by it. The bitbucks can be spent (any exchange will give you USD for them), or traded for bitcoins.  Some exchanges would be simple like coincard, and others would exist for traders.

[1714846765]

1714846765

[kjj]

So, if there are a lot of crypto experts out there, then why didn't they invent something similar to bitcoin? Let me answer: because most people are not entrepreneurs. Most people are afraid of making mistakes. Most people need to listed to 10 of their Facebook friends before they can have their 'own' opinion. Entrepreneurs do what is called pivoting instead of being afraid of making mistakes.

So none of the crypto experts are enterpreneurs, and you're an enterpreneur who isn't a crypto expert? Then why are you even talking about a new system when you can't put it together?

So in other words the only thing preventing you from building your new system is that you have none of the knowledge required to implement it.

To be honest I think the system would be tricky to implement as a peer-to-peer network. Some clever crypto experts and software engineers may be able to do it, I don't know. To implement it as a centralized system would be very easy, but that's not as interesting as an open source P2P solution.

I have read the Bitcoin paper but only briefly and have been too lazy to learn all the details. Plus I don't know how to start an open source project. So it would take a long time for me just to start the project.

Impressive. You propose a bitcoin-like currency that is centralized, and has magical properties that you have no idea how they would work?

Good job.

No, the centralized version kind of sucks. At the same time, a peer-to-peer solution may be too difficult to implement. The main point is that the problem with bitcoins changing in value all the time can be solved I think by treating the bitcoins as an asset to back up other currencies that are more stable, similar to how gold has been used in the past to back up currencies. Another problem that can be solved is the slow transactions bitcoins have. Several minutes! That's usually too slow for online transactions.

It could be solved that way, if you want to make it far more complex than needed.

Or shop owners could just take out futures, or sell instantly.

Or maybe the shop owners could talk to Visa or MasterCard about acting as a third party to assume the risk of quick transactions, like they do now.

[FooDSt4mP]

It could be solved that way, if you want to make it far more complex than needed.

Or shop owners could just take out futures, or sell instantly.

Or this.  The other may come later, but we need more USD exchanges and a means of enforcing bitbuck levels.  It could end up being another fractional reserve system if the exchanges don't report all of their withdrawals.  Then we again needs a centralized system to enforce it.... in other words, it doesn't look plausible to me anymore as a decentralized system.  However, it would be wonderful for liquidity... arbitrage would happen very quickly.

[JA37]

Intraday changes of that magnitude are quite uncommon. Though any online store can do realtime currency conversion.

You were saying? MtGox today shows a drop of about $1.5, which probably is enough to make vendors nervous.
There are solutions, I agree, but what I'm saying is that most vendors won't bother with the instability that we see right now. A vendors price will always be off, either too high or too low. Unfortunatly.

[Anders]

Another problem that can be solved is the slow transactions bitcoins have. Several minutes! That's usually too slow for online transactions.

It could be solved that way, if you want to make it far more complex than needed.

Or shop owners could just take out futures, or sell instantly.

I think one attractive thing with bitcoins is that they can be used as cash. So that the online shop immediately gets payed. That's useful when buying small things, or buying downloadable content like music for example. And for that to work in practice the transactions would have to be much faster, like a few seconds max.

[Anders]

Or maybe the shop owners could talk to Visa or MasterCard about acting as a third party to assume the risk of quick transactions, like they do now.

Then we would be back to centralized solutions requiring a trusted third party for the transactions. One of the good things with bitcoins is that no such third-party mediator is needed.

[kjj]

Or maybe the shop owners could talk to Visa or MasterCard about acting as a third party to assume the risk of quick transactions, like they do now.

Then we would be back to centralized solutions requiring a trusted third party for the transactions. One of the good things with bitcoins is that no such third-party mediator is needed.

There is room in the world of commerce for both.  And there are inherent risks in all transactions that neither buyers nor sellers want, but can't be mitigated.  Bitcoin was not created to destroy Visa and MasterCard.  They, or their analogues will have a place in the bitcoin world.

[Anders]

Or maybe the shop owners could talk to Visa or MasterCard about acting as a third party to assume the risk of quick transactions, like they do now.

Then we would be back to centralized solutions requiring a trusted third party for the transactions. One of the good things with bitcoins is that no such third-party mediator is needed.

There is room in the world of commerce for both.  And there are inherent risks in all transactions that neither buyers nor sellers want, but can't be mitigated.  Bitcoin was not created to destroy Visa and MasterCard.  They, or their analogues will have a place in the bitcoin world.

Yeah, true, there is room for many solutions. Maybe even companies like Visa and MasterCard could create solutions similar to the BitDollar currency I have proposed. They could even use ordinary U.S. dollars instead of creating a new currency. And then let people lock bitcoins in exchange of real dollars.

[ralisse]

While there is no doubt demand for bitcoin in the developed world, I think there could be tremendous demand in the third world or in countries currently experiencing high inflation or where there is little faith in the currency. Vietnam, Venezuela, Angola and Afghanistan come to mind. While I fully support the P2P distributed nature of the bitcoin network, one of the challenges in these areas is the lack of access to infrastructure capable of supporting P2P networks. What people in these countries do have are cellphones. I've often thought that people's cell phones (either via apps or telephone numbers) could connect to a central bitcoin wallet to facilitate exchanges. These wallets would be necessary to facilitate exchanges, but the fundamental network would remain a P2P distrubuted one.

My 0.02 BTC

[kjj]

Or maybe the shop owners could talk to Visa or MasterCard about acting as a third party to assume the risk of quick transactions, like they do now.

Then we would be back to centralized solutions requiring a trusted third party for the transactions. One of the good things with bitcoins is that no such third-party mediator is needed.

There is room in the world of commerce for both.  And there are inherent risks in all transactions that neither buyers nor sellers want, but can't be mitigated.  Bitcoin was not created to destroy Visa and MasterCard.  They, or their analogues will have a place in the bitcoin world.

Yeah, true, there is room for many solutions. Maybe even companies like Visa and MasterCard could create solutions similar to the BitDollar currency I have proposed. They could even use ordinary U.S. dollars instead of creating a new currency. And then let people lock bitcoins in exchange of real dollars.

In a world where BTC is the dominant currency, what purpose would it serve for Visa or MasterCard to invent a new currency?

If they merely process transactions denominated in BTC, like they do now in USD, etc, we will have solved the quickness problem, and the rollback risk problem, and all without having invented yet another new currency.

[SgtSpike]

Holy shit!  I got my new source for condoms!

Bad move, going to hurt his diaper sales.

This post is so full of win.

[Anders]

In a world where BTC is the dominant currency, what purpose would it serve for Visa or MasterCard to invent a new currency?

If they merely process transactions denominated in BTC, like they do now in USD, etc, we will have solved the quickness problem, and the rollback risk problem, and all without having invented yet another new currency.

I think you missed this part of my post: They could even use ordinary U.S. dollars instead of creating a new currency.

[kjj]

In a world where BTC is the dominant currency, what purpose would it serve for Visa or MasterCard to invent a new currency?

If they merely process transactions denominated in BTC, like they do now in USD, etc, we will have solved the quickness problem, and the rollback risk problem, and all without having invented yet another new currency.

I think you missed this part of my post: They could even use ordinary U.S. dollars instead of creating a new currency.

And you missed the part where they could use BTC, and that using BTC would make the most sense, since the transactions would be denominated in BTC, and since BTC is the customary unit of currency in that scenario.

[Anders]

And you missed the part where they could use BTC, and that using BTC would make the most sense, since the transactions would be denominated in BTC, and since BTC is the customary unit of currency in that scenario.

But the point was that the value of bitcoins goes up and down so fast that it's difficult for both buyers and sellers to know what the actual value is at any given time. So it's impractical to have prices in bitcoins.

[Garrett Burgwardt]

And you missed the part where they could use BTC, and that using BTC would make the most sense, since the transactions would be denominated in BTC, and since BTC is the customary unit of currency in that scenario.

But the point was that the value of bitcoins goes up and down so fast that it's difficult for both buyers and sellers to know what the actual value is at any given time. So it's impractical to have prices in bitcoins.

You're not listening to what people say.

Using a floating rate is very possible with almost every shopping cart program. It is trivial to denominate in btc.

[kjj]

Silver has been on a wild roller coaster ride.  Hasn't stopped APMEX or NWTMint from presenting and honoring the floating prices on their website.

[Anders]

And you missed the part where they could use BTC, and that using BTC would make the most sense, since the transactions would be denominated in BTC, and since BTC is the customary unit of currency in that scenario.

But the point was that the value of bitcoins goes up and down so fast that it's difficult for both buyers and sellers to know what the actual value is at any given time. So it's impractical to have prices in bitcoins.

You're not listening to what people say.

Using a floating rate is very possible with almost every shopping cart program. It is trivial to denominate in btc.

In practice it would be difficult. For example if I see a price for a product in BTC, how do I know that the seller is not trying to rip me off? How do I know it's a fair exchange rate? I would have to make my own currency conversions all the time which would be tedious and burdensome.

[Garrett Burgwardt]

And you missed the part where they could use BTC, and that using BTC would make the most sense, since the transactions would be denominated in BTC, and since BTC is the customary unit of currency in that scenario.

But the point was that the value of bitcoins goes up and down so fast that it's difficult for both buyers and sellers to know what the actual value is at any given time. So it's impractical to have prices in bitcoins.

You're not listening to what people say.

Using a floating rate is very possible with almost every shopping cart program. It is trivial to denominate in btc.

In practice it would be difficult. For example if I see a price for a product in BTC, how do I know that the seller is not trying to rip me off? How do I know it's a fair exchange rate? I would have to make my own currency conversions all the time which would be tedious and burdensome.

I guess, if you're thinking in USD all the time. I've gotten to the point where I just think in BTC, it happens after a while.

[Anders]

I guess, if you're thinking in USD all the time. I've gotten to the point where I just think in BTC, it happens after a while.

Ok, so how much is one bitcoin worth at this moment in USD? You can't know that for sure since the bitcoin value changes so much and so fast. The bitcoin price can change a lot within a single day! While the price in U.S. dollars can remain stable for months.

[Garrett Burgwardt]

I guess, if you're thinking in USD all the time. I've gotten to the point where I just think in BTC, it happens after a while.

Ok, so how much is one bitcoin worth at this moment in USD? You can't know that for sure since the bitcoin value changes so much and so fast. The bitcoin price can change a lot within a single day! While the price in U.S. dollars can remain stable for months.

My point is you're too attached to the USD.

For example, I see on bitmunchies that I can get a fancy condom for .18 btc or so. I think that's a good price. I have no idea how much that is in USD right now, but it doesn't matter.