Stages of Growth in the Bitcoin Economy

[kiba]

From bitcoin, it is clear that the first stage of growth is marked by sporadic services and goods that can offered with relatively little investment. It is also dominated by exchange entrepreneurs and bitcoin speculators.

Speculation and exchange between one currency to another is the main form of economic activities. The liquidity grease the engine of small web app and businesses.

I think the second stage of economic growth is the payment processor, and the ability to pay for goods.

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[jgarzik]

I think the second stage of economic growth is the payment processor, and the ability to pay for goods.

IMO, MyBitcoin's Shopping Cart Interface (SCI) is quite adequate for payment processing.  It is equal to the level offered by Pecunix, Liberty Reserve, GlobalDigitalPay and Perfect Money.

[Babylon]

An easy way to put your paycheck into bitcoin is going to be an important step.  Something that does not include a middle man such as paypal or pecunix or anything else.

[kiba]

An easy way to put your paycheck into bitcoin is going to be an important step.  Something that does not include a middle man such as paypal or pecunix or anything else.

Middlemen should be convenient, but not assholely.

[Anonymous]

An easy way to put your paycheck into bitcoin is going to be an important step.  Something that does not include a middle man such as paypal or pecunix or anything else.

I dont have anything against middlemen who do the right thing.

[FreeMoney]

It'll be cool once we have the critical mass for their to be bitcoin 'dealers' in large cities.

[kiba]

It'll be cool once we have the critical mass for their to be bitcoin 'dealers' in large cities.

I think that's at least 6 stages from where we at.


For stage 3, I am thinking the rise of MMO that use bitcoins.

[FreeMoney]

6! 4 at most! ;-)

[Babylon]

RE middlemen.

Unfortunately all the available options are either inconvenient or assholey.

[kiba]

I am predicting the divison of labor already.

Older bitcoiners have an enormous reputation due to their contribution to the bitcoin economy and the number of people who can vouch for bitcoiner's trustworthiness. These guys will end up top dog and brokers for huge deal.

New guys will have to find their own niches other than what the older bitcoiners occupied.

[Drifter]

Not quite sure I agree with that. Sure, there will initially be more trust put into those individuals and businesses that have gained that trust, but that is no different than any type of trade. If something new comes along that is better implemented, they would soon get their deserved credit. Internet Explorer basically had the entire market until little unknown Firefox came around and gained popularity simply for better implementation.

The original Bitcoiners and businesses set the bar, but that's all it is for the competition. It might very well seem to be one sided at this age of Bitcoin, but that is only because the low number of users. With this number of users, you only need to be the first on the spot, and only later does it becomes a race of who has the best niche and implementation. When larger business begins to take root with polished websites and an even larger reputation, we'll begin to see a change.

My name and post count may not show, but I've been around since the end of 2009, when a few hundred coins could get you at most $5. Bitcoin only had one exchanger and no business to even use them. Then, if you were interested you could simply generate some coins. At this point, the Bitcoin economy is going to be strongly influenced by payment options for first time users, and popularity of Bitcoin itself. Since generation of coin is increasingly difficult (and too difficult for a first time user looking to get started) The popularity won't come without decent payment options. Right now, growth is heavily determined by the ease of turning cash into coin.

[FreeMoney]

Maybe pooled generation will help get newcomers some tiny amounts of their own.

[kiba]

Maybe pooled generation will help get newcomers some tiny amounts of their own.

I don't understand what you're thinking there.

[FreeMoney]

Maybe pooled generation will help get newcomers some tiny amounts of their own.

I don't understand what you're thinking there.

Instead of waiting an average of 2 months for 50 coins. New people who use the pooled mining software that is being developed could have .5 coins in 15 hours or something. After a few days, they come play some poker and win big and buy a silver dime on biddingpond. Then they are like "damn, this is so cool, I'm going to wire $400 to mtgox and buy a bunch of coins"

[kiba]

Maybe pooled generation will help get newcomers some tiny amounts of their own.

I don't understand what you're thinking there.

Instead of waiting an average of 2 months for 50 coins. New people who use the pooled mining software that is being developed could have .5 coins in 15 hours or something. After a few days, they come play some poker and win big and buy a silver dime on biddingpond. Then they are like "damn, this is so cool, I'm going to wire $400 to mtgox and buy a bunch of coins"

Interesting, but a bit way aroundness.

I thought an interesting introduction for kids is to play MMO and then discover that they can exchange their MMO currencies for bitcoins and use bitcoins to spend on things.

[FreeMoney]

People tend to get into things gradually. The example was just one of many possible ways for someone to get interested that didn't involve spending a lot of money upfront. Buying a small amount would probably be fine for most people, but that seems very hard now, since PP has chargebacks and new people have no reputation. So it would be nice if people could get a bit without having to wait a long time, hand outs are fine too, but I think they cheapen it a bit "oh, people just give these things away, they must not really be worth anything" sort of thing.

[kiba]

People tend to get into things gradually. The example was just one of many possible ways for someone to get interested that didn't involve spending a lot of money upfront. Buying a small amount would probably be fine for most people, but that seems very hard now, since PP has chargebacks and new people have no reputation. So it would be nice if people could get a bit without having to wait a long time, hand outs are fine too, but I think they cheapen it a bit "oh, people just give these things away, they must not really be worth anything" sort of thing.

New people could earn bitcoins by joining talhoe lafs when bitcoin micropayment integration are built in. It make easy for people to earn a little bit of bitcoins.

[FreeMoney]

People tend to get into things gradually. The example was just one of many possible ways for someone to get interested that didn't involve spending a lot of money upfront. Buying a small amount would probably be fine for most people, but that seems very hard now, since PP has chargebacks and new people have no reputation. So it would be nice if people could get a bit without having to wait a long time, hand outs are fine too, but I think they cheapen it a bit "oh, people just give these things away, they must not really be worth anything" sort of thing.

New people could earn bitcoins by joining talhoe lafs when bitcoin micropayment integration are built in. It make easy for people to earn a little bit of bitcoins.

Sure, I didn't mean to imply that pooled generation is uniquely necessary or something. Eventually I hope there will be lots of microjobs people can do for BTC.

[kiba]

People tend to get into things gradually. The example was just one of many possible ways for someone to get interested that didn't involve spending a lot of money upfront. Buying a small amount would probably be fine for most people, but that seems very hard now, since PP has chargebacks and new people have no reputation. So it would be nice if people could get a bit without having to wait a long time, hand outs are fine too, but I think they cheapen it a bit "oh, people just give these things away, they must not really be worth anything" sort of thing.

New people could earn bitcoins by joining talhoe lafs when bitcoin micropayment integration are built in. It make easy for people to earn a little bit of bitcoins.

Sure, I didn't mean to imply that pooled generation is uniquely necessary or something. Eventually I hope there will be lots of microjobs people can do for BTC.

I think microjobs are stage 4  of economic growth.

[Beelzebuddy]

Are you getting these "stages" from somewhere reasonably official, like an economist or something, or are you making them up?  'Cause I'm not an economist either, but I don't think stages are best concept to approach currency adoption with.

The only thing that really matters when increasing the spread of bitcoins is increasing the things you can get for them.  When you can buy something tangible with bitcoins in an easier manner than any other means, bitcoins, for you, have value.

Currency exchanges are a important and useful element, as they tie bitcoins into other measures of worth.  Everyone likes money.  That'll only get you so far though, because other than laundering money, there's no reason to exchange cash for bitcoins for cash.  A market where everyone's an investor can't be much more than a hobby.  Seeing as this is what 80% of the Marketplace chatter is about (with another 15% being casinos), I feel this niche is pretty well saturated.

However, services which only accept bitcoins are where value really comes from.  It expands the economy coming and going: the people who use them need to have gotten bitcoins somehow, and people who receive the bitcoins need to spend them somehow.  This kind of service could be standard internet sites which consciously choose to only accept bitcoins (as my site does), or it could be the only real option for certain commerce markets (like Freenet), owing to bitcoins' security and anonymity.

In any case, before this turns into a real ramble, I don't see any "stages" anywhere.  Just continual growth, or lack thereof, in small or large amounts, with a critical mass somewhere in the hopeful future.