Bitcoin framing

[DannyHamilton]

It seems that there is an issue in the mindset of those using bitcoin. Shouldn't bitcoin be the default currency of bitcointalk and the various exchanges that assist people in getting into and out of bitcoin currency? People talk about the price of bitcoin, about buying bitcoin and selling bitcoin.

If bitcoin is going to be our default currency, shouldn't those conversations be phrased differently?  When you exchange bitcoin for an object (Alpaca socks?) you don't sell bitcoin for the object, you use your currency (bitcoin) to buy the object.  When you exchange bitcoin for USD, you don't sell bitcoin, you use your currency (bitcoin) to buy dollars.  Same thing for the reverse, when exchanging USD for BTC you don't buy bitcoin, you sell dollars to get more of your currency (bitcoin).

If bitcoin is our default currency, then bitcoin doesn't have a price, it is the unit that is used to determine the price of other stuff.  So instead of saying that the current price of bitcoin is $12, shouldn't we be saying that the current price of USD is 0.0833 BTC.

When an online exchange lists market prices, it seems that the ASK price should be the price (in BTC) that dollars (or whatever currency is being sold) are selling for, and the BID price should be the price (in BTC) where people are willing to buy dollars.

Perhaps it is just too early in the life of bitcoin for people to consider it the default currency, but it seems like the longer we wait to make this change, the more difficult it will be to get everyone to shift their thoughts about it.

[niko]

Yes to all.

[ElectricMucus]

In order for that to happen the value of Bitcoin needs to be derived from actual goods instead of fiat money.

For example it is established that one pair of alcapa socks is worth 1 BTC, then we could compare that value to something like a bitcoin keychain.  The problem is that bitcoin started out being valuated in Dollars, even initally with the Pizza story.
If people instead would have used their BTC to exchange pictures they made or any other selfmade product, or service it would have turned out differntly. That premise is difficult to get away from because most Bitcoins in circulation derive their value from the value in the fiat money not the good.

[Desolator]

We are nowhere near the volume of BTC trades to have it be a standalone currency with static prices.  If I'm selling 1 thing and my vendors that supply me with it don't take BTC, then I'm taking BTC in the context of USD.  I've never seen a static price on anything with BTC.  That's why everyone calls it a meta-currency because it's all about its value in another currency.  It'd need to be 100x more widespread before we see things priced with static BTC prices.

[Insu Dra]

As long as the majority of costs related to products or services are not payed in the same currency conversion is needed to make sure you keep a stable profit and/or to avoid losses.

As long as this conversion is needed you will probably not see a change in the mind set of people.

[markm]

Some players have always had problems like this.

Many many years ago in my Digitalis D'ydii Cluster game software it was standard for each planet's starport's price-list to let you choose what kind of cargo to use as unit of account in which to price all other items on the pricelist.

Back then this was justified by the fact each and every one of the trillions upon trillions upon billions upon billions of planets each had their own local currency that was just some kind of alien collectable symbol or token to folk on other planets, left behind as tip to the starport upon leaving the planet with actual cargo that hopefully some other planet might find valuable.

Open Transactions follows much the same tradition: choose an asset to "buy" or "sell", choose another asset to serve as a "currency" in that transaction in the sense of being that asset of the pair of which you are offering some variable/negotiable quantity in return for some fixed quantity of the asset inserted in the "commodity" position in that transaction.

Merely changing which asset you choose to measure all other assets in does not really change the problem since it is merely perpetuating the same tunnel-vision mindset while crossing out the label of the asset the previous tunnel-vision used and writing your own favourite asset in its place in crayon.

-MarkM-

[DannyHamilton]

In order for that to happen the value of Bitcoin needs to be derived from actual goods instead of fiat money.

For example it is established that one pair of alcapa socks is worth 1 BTC, then we could compare that value to something like a bitcoin keychain.  The problem is that bitcoin started out being valuated in Dollars, even initally with the Pizza story.
If people instead would have used their BTC to exchange pictures they made or any other selfmade product, or service it would have turned out differntly. That premise is difficult to get away from because most Bitcoins in circulation derive their value from the value in the fiat money not the good.

I don't understand why the value of Bitcoin needs to be derived from goods for that to happen.  With people thinking of the value of bitcoins in terms of what their local currency can buy, we should still be able to say that 1 USD can be bought or sold for 0.0833 BTC.  We should still be able to talk in terms of using bitcoin to buy or sell other currencies.

[DannyHamilton]

. . . It'd need to be 100x more widespread before we see things priced with static BTC prices.

Lets not derail this topic.  I'm not talking about static prices.  Static prices rarely occur with any currency that is in a period of hyper-inflation.  I'm asking about changing the way we talk about exchanging bitcoin for other currencies.  Buying and selling other currencies with bitcoin, rather than buying and selling bitcoin with other currencies.

[justusranvier]

The linguistic changes you are talking about are an effect of people and businesses being able to pay more of their expenses in bitcoins instead of local currency. Changing the way people talk about Bitcoin will not magically cause this to happen.

You're trying to push on a string. When Bitcoin becomes more widely accepted the way we talk about it will change.

[ElectricMucus]

In order for that to happen the value of Bitcoin needs to be derived from actual goods instead of fiat money.

For example it is established that one pair of alcapa socks is worth 1 BTC, then we could compare that value to something like a bitcoin keychain.  The problem is that bitcoin started out being valuated in Dollars, even initally with the Pizza story.
If people instead would have used their BTC to exchange pictures they made or any other selfmade product, or service it would have turned out differntly. That premise is difficult to get away from because most Bitcoins in circulation derive their value from the value in the fiat money not the good.

I don't understand why the value of Bitcoin needs to be derived from goods for that to happen.  With people thinking of the value of bitcoins in terms of what their local currency can buy, we should still be able to say that 1 USD can be bought or sold for 0.0833 BTC.  We should still be able to talk in terms of using bitcoin to buy or sell other currencies.

That's because we naturally derive value from the things we are consuming most of the time.
I played DiabloIII for a while for example, there lets say a useable 1-Hand weapon is worth about 1,000,000 gold a useable chest plate about 2,500,000 and so on. The same things are also sold for paypal and credit cards on another auction house, but those prices are derived from their respective gold value not verse visa. That is because most people don't use the Real Money Auction House and prefer to trade using the Gold they collected while playing the game.

In order for that to happen (naturally) Bitcoin needs some niche market where it is used as a primary currency, just like the ingame gold currencies do.

[DannyHamilton]

The linguistic changes you are talking about are an effect of people and businesses being able to pay more of their expenses in bitcoins instead of local currency. . .

That doesn't seem right.  When I am in a foreign country, I can't buy much of anything at all with my home currency.  Still, when I exchange my home currency for foreign currency to make purchases, I think of it in terms of buying the foreign currency that will be used for all my purchases.  When it is time to head home, I sell the leftover foreign currency to get my home currency back.  Even though nearly all of my expenses will be paid in that foreign currency, I still think and talk in terms of my home currency when talking about currency exchange.

[DannyHamilton]

I don't understand why the value of Bitcoin needs to be derived from goods for that to happen.  With people thinking of the value of bitcoins in terms of what their local currency can buy, we should still be able to say that 1 USD can be bought or sold for 0.0833 BTC.  We should still be able to talk in terms of using bitcoin to buy or sell other currencies.

That's because we naturally derive value from the things we are consuming most of the time.
I played DiabloIII for a while for example, there lets say a useable 1-Hand weapon is worth about 1,000,000 gold a useable chest plate about 2,500,000 and so on. The same things are also sold for paypal and credit cards on another auction house, but those prices are derived from their respective gold value not verse visa. That is because most people don't use the Real Money Auction House and prefer to trade using the Gold they collected while playing the game.

In order for that to happen (naturally) Bitcoin needs some niche market where it is used as a primary currency, just like the ingame gold currencies do.

It seems you are proving yourself wrong with this very example.

In your example, the "new" currency is DiabloIII-gold.  This currency is valued in terms of goods (weapons, chest plates, etc).  And yet still, I assume, when exchanging DiabloIII-gold with USD, you don't refer to buying dollars with DiabloIII gold, or selling dollars to get DiabloIII gold.  So even though the currency is valued in terms of goods, you still frame your discussions about currency exchange in terms of buying  and selling DiabloIII-gold for dollars rather than buying and selling dollars for DiabloIII-gold.

Clearly valuing a currency in terms of goods has no bearing on how people think about the currency exchange with other currencies.

[Luno]

Thought about the mind framing also: When people makes an offer here for goods or services, they should at least make as great an effort in other fora or communities. It's like the only market segment in Bitcoin is people understanding Bitcoin already, as if the biggest concern is if your customers understand Bitcoin, not if they would buy x product.

Several understands it though, and makes Bitcoin only web shops, but do they advertise them anywhere but here and Reddit/bitcoin? Think of a "Brick n' mortar" shop running a Bitcoin special week with a 20% discount on everything paied in Bitcoin, having kids spam the neighbourhood with fliers beforehand.

Is the gap still to big for every day adoptation? Does anyone who promotes Bitcoin by word of mouth, have any printed materials with easy instructions to leave with the local shop owner in their neighbourhood after you had the "B - talk". I know that I'm blaming myself as much as anyone with these statements, and that an easy point of sale system is still being worked on, but beans should be spilled less here, than everywhere else. Everyone here is a torchbearer, go light the world.

[acoindr]

The linguistic changes you are talking about are an effect of people and businesses being able to pay more of their expenses in bitcoins instead of local currency. Changing the way people talk about Bitcoin will not magically cause this to happen.

You're trying to push on a string. When Bitcoin becomes more widely accepted the way we talk about it will change.

I agree with this. For common people/talk the change will happen naturally.

For professional traders it makes no difference. Right now, for example, currency traders talk of "buying" dollars, euros, yen or whatever else.

[ElectricMucus]

I don't understand why the value of Bitcoin needs to be derived from goods for that to happen.  With people thinking of the value of bitcoins in terms of what their local currency can buy, we should still be able to say that 1 USD can be bought or sold for 0.0833 BTC.  We should still be able to talk in terms of using bitcoin to buy or sell other currencies.

That's because we naturally derive value from the things we are consuming most of the time.
I played DiabloIII for a while for example, there lets say a useable 1-Hand weapon is worth about 1,000,000 gold a useable chest plate about 2,500,000 and so on. The same things are also sold for paypal and credit cards on another auction house, but those prices are derived from their respective gold value not verse visa. That is because most people don't use the Real Money Auction House and prefer to trade using the Gold they collected while playing the game.

In order for that to happen (naturally) Bitcoin needs some niche market where it is used as a primary currency, just like the ingame gold currencies do.

It seems you are proving yourself wrong with this very example.

In your example, the "new" currency is DiabloIII-gold.  This currency is valued in terms of goods (weapons, chest plates, etc).  And yet still, I assume, when exchanging DiabloIII-gold with USD, you don't refer to buying dollars with DiabloIII gold, or selling dollars to get DiabloIII gold.  So even though the currency is valued in terms of goods, you still frame your discussions about currency exchange in terms of buying  and selling DiabloIII-gold for dollars rather than buying and selling dollars for DiabloIII-gold.

Clearly valuing a currency in terms of goods has no bearing on how people think about the currency exchange with other currencies.

But that's not the point.
When I say: This chest-plate is worth 2.5mio gold, it is something every DiabloIII player understands, that is because every player knows how many hours he has to play the game to collect that amount.
But when I say: These alacapa socks are worth 1 BTC you immdeatly begin translating that value to Dollar.

In order to make that transition you are talking about we need first value our goods in BTC, other currencies will follow naturally.

[paraipan]

Yes to all.

+1   that should change the mindsets pretty easy

[DannyHamilton]

But that's not the point.
When I say: This chest-plate is worth 2.5mio gold, it is something every DiabloIII player understands, that is because every player knows how many hours he has to play the game to collect that amount.
But when I say: These alacapa socks are worth 1 BTC you immdeatly begin translating that value to Dollar.

In order to make that transition you are talking about we need first value our goods in BTC, other currencies will follow naturally.

But you are still talking about goods purchase and I'm still talking about currency exchange.

You can translate the value of the goods to dollars knowing that each dollar that you sell will get you 0.0833 BTC towards your goods purchase or you can translate the value of goods to dollars knowing that each BTC that you buy will cost you $12.  You'll get the same result either way.  Clearly using your DiabloIII-gold example, how you value the currency doesn't control how you talk about the exchange with other currencies.

[ElectricMucus]

You don't seem to get it.  

So you want to use bitcoin to describe the value of other currencies, on purpose. I understand that.
What I and others here are trying to make you understand is that this can only come naturally.

Sure you can pretend and just do it, but that's more like a thought exercise which doesn't have much going for it. If that is what you want, by all means go right ahead.

[Stephen Gornick]

Perhaps it is just too early in the life of bitcoin for people to consider it the default currency, but it seems like the longer we wait to make this change, the more difficult it will be to get everyone to shift their thoughts about it.

For an individual who holds bitcoins as a store of value that thinking is correct.  

As a society which doesn't (yet) hold bitcoins as a store of value, the reference doesn't work.  Buying gold is a term that is familiar to individuals and investors even, not "selling dollars".

[DannyHamilton]

Buying gold is a term that is familiar to individuals and investors even, not "selling dollars".

But gold isn't often used as a currency.  Do the Japanese engaged in currency exchange think/talk in terms of buying Yen, or do they think/talk in terms of selling dollars?  Do the British think in terms of buy of selling Pounds Sterling, or do they think/talk in terms of buying dollars?