Why use bitcoins instead of USD or another currency?

[shamoons]

I've been in the Bitcoin world in some capacity or another for about 7 months now, and so I understand the ins and outs of the concept a bit better than the average noob. In trying to discuss the concept with others, the question comes up of "why", and it's difficult to answer. Getting into and out of bitcoin is a tad harder than cash so assuming I want to do nothing illicit and I'm not overly concerned with anonymity, why would I use it as a transaction currency? I can already use PayPal for transactions over the Internet. Let's not get into a flame war of how to PayPal Sucks because I'll be the first to agree.

For bitcoin to move beyond the niche market of the hoarders and investors, it must have real world applicability and that's what I'm trying to figure out.

Thoughts?

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[mal7798]

I think that as soon as Bitinstant comes out with its debit card, bitcoins will start a new life as a metacurrency, allowing people to maintain the value of their savings while being able to easily convert into dollars for everyday commerce. This will cause the price of bitcoins to rise as they will become more valued for this purpose. Eventually this may lead to just eliminating the fiat currency as vendors just start accepting bitcoins.

[shamoons]

But why? I'm playing Devils advocate for a minute now. If I have $1,000, I can use my debit card to buy a MacBook Air because Apple accepts cash. If I have the same $1,000, I COULD load up on bitcoin and THEN use a BitInstant debit card to buy the same MacBook Air.

But why would I go through that hurdle? I, for as a regular consumer, need to have some incentive to use bitcoin over traditional currency.

[Ivica]

You could use other people's USD to charge up your own bitinstant card.
In reality, if you need someone to send you money they are going through banks and sender probably uses fiat, fees are greater there.
Technically if sender has bitcoins he could just send them to your card directly, so less money goes to third parties (bitinstant still takes 1-2%).

Just, hope that apple will accept bitcoins in future.

[MtGoxTraderBot]

The BTC is always going up, so if you post the 1k into the btc, then sell it when you need to process the purchase that 1k could be 1.5k by then.

[Foxpup]

With Bitcoin, you can securely transfer money to anyone, anywhere in the world, anytime, day or night, even on weekends and holidays, have the funds "clear" in about 10 minutes on average, and all this for less than a penny in fees. No other means of transferring money even comes close.

[MtGoxTraderBot]

He has a good point, if you want to not stress about chargebacks like paypal helps people pull, then btc is the only way to go.

[TangibleCryptography]

With Bitcoin, you can securely transfer money to anyone, anywhere in the world, anytime, day or night, even on weekends and holidays, have the funds "clear" in about 10 minutes on average, and all this for less than a penny in fees. No other means of transferring money even comes close.

This.   That is the value of Bitcoin.  As more people see it, use it (both sending and receiving) the value grows. 

[Domrada]

With Bitcoin, you can securely transfer money to anyone, anywhere in the world, anytime, day or night, even on weekends and holidays, have the funds "clear" in about 10 minutes on average, and all this for less than a penny in fees. No other means of transferring money even comes close.

This.  But it depends on who you are talking to as to how you answer the "why" question.

If the person travels or deals internationally, you will want to focus on the international remittance aspect.

If the person desires privacy, you focus on that.

If the person is super intelligent or is a techno-phile, they will be drawn to bitcoin purely for its novelty.

But for the average person I encounter, the best answer is that, "you should have some, because the price is going up."  

[noregister]

With Bitcoin, you can securely transfer money to anyone, anywhere in the world, anytime, day or night, even on weekends and holidays, have the funds "clear" in about 10 minutes on average, and all this for less than a penny in fees. No other means of transferring money even comes close.

I think this benefit is currently overshadowed by the problems that 1. It costs too much to convert to and from fiat currency, and 2. The bitcoin itself is too volatile in it's exchange rate. But if the currency ever stabilizes and is widely adopted, then fees will lower, and there will be less of a need to convert it to other currencies so a person could just keep so much of their net worth in bitcoins because it's simply economically advantagous and convenient.

[SuperHakka]

Here's where I think the growth sectors of the Bitcoin will be:

1. Emerging markets like central Africa, where they already use mobile phone minutes as a form of currency.
2. Certain countries have culture more amenable to btc, e.g. Japan, Finland.
3. Globlalization will become localisation. As the trend grows to buy more local, there will be more opportunities to use btc to avoid paying taxes.
4. Youngsters, they will be loving it. baseball card culture.
5.  International money transfers, for migrant working abroad sending money back home to their families.
6. Micropayments inside apps.
7. Tourists and travellers, safer than carrying cards and cash.
8. Savers, people with bank deposits earning little interest and getting it up the jacksey from QE infinity.

[shamoons]

Everyone has given awesome responses, but academic ones. The average Joe has no interest in sending money abroad. The average Joe doesn't understand the technological awesomeness of the concept. "It will be worth more" is a theory or hope.... not a fact. Plus if the value will increase, that decreases my incentive to transact and increases my incentive to hoard.

Let me ask this way.... Why should your mother care about bitcoin?

[Zack]

Simple answer for me is anonymity.

[finkleshnorts]

Everyone has given awesome responses, but academic ones. The average Joe has no interest in sending money abroad. The average Joe doesn't understand the technological awesomeness of the concept. "It will be worth more" is a theory or hope.... not a fact. Plus if the value will increase, that decreases my incentive to transact and increases my incentive to hoard.

Let me ask this way.... Why should your mother care about bitcoin?

Because otherwise she will be left behind by the currency revolution, along with average Joe.

Average Joe isn't going to care about bitcoin for a long time, and that's just the way it is.

[Domrada]

Plus if the value will increase, that decreases my incentive to transact and increases my incentive to hoard.

Let me ask this way.... Why should your mother care about bitcoin?

Yeah, that is perfectly okay.  Let them get introduced to it as a savings vehicle.  Using it in transactions will come later.  

Again, your mother should care because now she has a way to save money without getting robbed by the Fed.

[k3t3r]

so assuming I want to do nothing illicit and I'm not overly concerned with anonymity, why would I use it as a transaction currency? I can already use PayPal for transactions over the Internet.

if you already have means of transaction then why do you need a reason to use something else. you would use bitcoin where it is easier to do so. you seem to be looking for a reason to make easy transactions more complicated. if you can use paypal or cash then use paypal or cash.

For bitcoin to move beyond the niche market of the hoarders and investors, it must have real world applicability and that's what I'm trying to figure out.

Thoughts?

bitcoin already has a market beyond hoarders and investors. maybe you just havent found it.

Let me ask this way.... Why should your mother care about bitcoin?

why do you want her to?

the presumption with this thread is that everyone has to "get" or use bitcoin. they dont.

bitcoin has some particularly good qualities that makes it useful for particular types of trade and transaction.

your mother doesnt have to use it she doesnt even have to know about it. the people who do get it and know how to use it will continue to use it when it convenient for them.

[Malophor]

The value I see in BTC is the ability to trade with LOW transaction fees. Just try selling something of value on a site like eBay with Paypal. Say you sell something for $3000... Well, eBay is going to take $250, paypal another $100. And for WHAT?!?! That's more than 10% of your sale going towards middlemen. It's no better with large credit card companies charging 3%. It's just bits in a database folks. Now those bits are in OUR database and for a much more reasonable rate.

[Stephen Gornick]

For bitcoin to move beyond the niche market of the hoarders and investors, it must have real world applicability and that's what I'm trying to figure out.

When I am at a restaurant and see written on the menu the words CASH ONLY there is then no question as to how I will be paying for dinner. My only options are to leave without ordering, or to pay cash.

Now the restaurant owner knows that some customers prefer to pay with a credit card, but cash works better for the restaurant owner -- probably because of the credit card merchant processing fees of 3% or more.

Now if that is the only reason, the restaurant might wish to put up a sign "credit cards, add 5%", but in the U.S., in many states yet, that is prohibited by law.     So we as consumers are just used to letting the merchant raise prices to accommodate our preference for a convenient payment method.  (and those paying cash get stuck paying the higher prices even though they weren't responsible for any credit card fees.).

So Bitcoin adoption for consumer purchases will likely be led by merchants that wish to receive bitcoins over other payment methods.   When at the counter, you might get some perk when paying with Bitcoin versus paying with any other method.   Like, ... for your $40 tab, you can swipe your card and sign for $40 or you can pay $38.80 worth of bitcoins (a 3% discount).  Which would you choose?

Now, consider this.  Right now the fraud that credit card companies absorb is spread out over the massive amounts of legitimate purchases.  Now if consumers switch to cash methods (including PIN-based debit cards), then the fraudulent purchases that remain on credit cards starts eating up more and more of the profits for the card companies.   So they increase their merchant fees, which drives even more merchants away from accepting them, which causes the amount of fraud on a per-dollar basis to increase even more since that doesn't drop at all.    Credit cards just don't work well for quite a number of areas where payment card fraud occurs, including with online purchases.

Also, there are other merchants that are accepting bitcoin exclusively.  If you want Nestor's Unity board game then your payment choices are bitcoin, gold or silver.  That's it. ... no fiat currency whatsoever:
 - http://nestorgames.com/#unitydeluxe_detail


But that specific example is not going to be typical.  The 3% discount for paying with bitcoin certainly could become standard practice though.

[Ivica]

The value I see in BTC is the ability to trade with LOW transaction fees. Just try selling something of value on a site like eBay with Paypal. Say you sell something for $3000... Well, eBay is going to take $250, paypal another $100. And for WHAT?!?! That's more than 10% of your sale going towards middlemen. It's no better with large credit card companies charging 3%. It's just bits in a database folks. Now those bits are in OUR database and for a much more reasonable rate.

The following quote is from - https://www.coindl.com/page/item/242

There is tremendous market opportunity in the money remittance industry. For example, Western Union’s 2010 annual gross revenues were about $5.2 billion with 84% happening between private individuals. To send $1,000 from the United States to Mexico would cost about $30. From the
United States to Germany would be about $68 plus currency conversion fees. Could you provide the service faster, cheaper or with more privacy?

Also probably relevant video for question "why use bitcoins instead of usd" - https://www.youtube.com/watch?v=OtN9YUvh_XM

[Trion]

Just for me:
1) deflation. Nobody can create significantly more bitcoins, that already exist. My assets are protected.
2) speed. SEPA, bank wire and some times even bank transfer require from one day to several days. Bitcoin - just 10 minutes.
3) no geographical restrictions. I can use bitcoin in USA and in UK as well.
4) protection. I an be sure, that nobody in whole universe will not able to take my bitcoins, if I will not allow them. (If I will secure my wallet, of course)
5) no daily or monthly restrictions. Right now I have to wait, because I have set too small limit in one of my bank accounts...
6) small fees. Just nice surprise for such powerful tool.

First reason, deflation, is the most important one. Even gold is not so protected from inflation,
because gold meteor can fall, or we can find another huge store of gold somewhere in Africa.

[the425]

to support cryptoanarchy

[haroldtodd]

i noticed allot of people are setting up stores to use bitcoin... awesome way to get the name out. Just sux b/c some of them you can't trust. I would rather carry a usb than  a wallet.. less bulge lol

[Pteppic]

A lot of the problems with using bitcoin at the moment because of fees and awkward user experiences are either being solved or can be solved just as a result of increased usage and scale. If you only want to use bitcoin as a payments method, then sure, wait for a while until the infrastructure and services are in place.

But all the projects that are being developed in the community are part of creating the reality that people want to see instead of just waiting for it to turn up.

[khabaro]

just wait more years.  then you see bitcoin get more use.  then every one want more :-)

[bitcoinspace]

I think the only way for bitcoin to succeed in commerce among average consumers would be that buying with bitcoin would reduce the retail price.

[tral]

When anonymity and security are what you're after, bitcoin is the way to go.

[Brunic]

When you want to send a message to somebody, do you send a message to Fedex telling them to write a letter to Mr. X so they can post it through regular mail and give the fees to the one who receives it?

No, it would be stupid, and Internet invented email for that.

But when you pay online, you send a message to VISA/Mastercard/Paypal telling them to send money to Mr. X using their private transfer network and give the fees to the one who receive it. Add to this that this company possess and keeps all your private informations and transactions informations while keeping all the rights to give you or cancel your credit card as they wish.

We think that this method is pretty stupid, and Internet invented Bitcoin for that.

[caveden]

... why would I use it as a transaction currency?

Inflation protection. Currently Bitcoin inflates rapidly, but the rate will dramatically reduce in some years, since it follows an asymptotic curve. Government currencies inflate exponentially.
But yeah, that's more a "store of value" usage, not "means of transaction".
I understand that, as means of transaction, Bitcoin does not fit perfectly to every use cases, although it's great for some of them. And the reason it doesn't fit well to some use cases is mainly because conversion is still a hassle. Maybe one day it will be easier and cheaper to convert from and to legacy money. And with more business accepting bitcoins as payments, maybe one day it will be easier to earn your revenues in bitcoins as well, making conversions less necessary.

[Stephen Gornick]

When you want to send a message to somebody, do you send a message to Fedex telling them to write a letter to Mr. X so they can post it through regular mail and give the fees to the one who receives it?

No, it would be stupid, and Internet invented email for that.

But when you pay online, you send a message to VISA/Mastercard/Paypal telling them to send money to Mr. X using their private transfer network and give the fees to the one who receive it. Add to this that this company possess and keeps all your private informations and transactions informations while keeping all the rights to give you or cancel your credit card as they wish.

We think that this method is pretty stupid, and Internet invented Bitcoin for that.

That's a fantastic response!

Here's an infographic of just one type of transaction (online credit card) and only one side of it (the missing part is where the consumer pays the credit card company.



With bitcoin, it is person-to-person.

I couldn't find a good existing diagram to show the process for Bitcoin.  This is kind of close:

[HolyScott]

Because its so much fun.