Encouraging people to spend a deflationary currency.

[anarchomedia]

Vendors accepting bitcoins need to offer a discount on transactions denominated in btc.  They can because the btc will most likely appreaciate in value in the time between earning it and spending it.  Bitcoins is a real hard currency, the hardest, so you do prefer to earn btc rather than funny fiat money but your customers will have the opposite preference, they will rather spend the funny money and save the hard currency.  To encourage them to give you real btc instead of funny money you can and should offer a discount for btc payments. 

[mindtomatter]

You know Bitcoin actually raises the costs for some merchants, right?   Their suppliers don't accept bitcoin so they need to convert into local currency, which usually has at least 1 or 2% exchange fees.   

This talk is based on the idea that Bitcoin will be worth much more than it is now, so why do people want to spend it?    While the fundamentals may suggest that, it's very seldom a straight rise up and to the right when it comes to new commodity markets, even ones as compelling as Bitcoin in this time of monetary chaos. What happens if bitcoin drops to $40/ea tomorrow, and stays there for a week?  Will you be saying vendors should increase prices to accomodate for the increased risk?   I don't think so.

It's a chicken/egg problem for sure, but if vendors have real costs that must be paid in USD or something similar they on-load either quite a bit of risk by holding volatile bitcoins or risk having money they sold for real goods or services suddenly diminish in value to them, which could be catastrophic.

Yes I know Bit-Pay offers a compromise solution, but that doesn't change the fact that a compromise between two imperfect options is still imperfect.  Lots of risk up in here, especially for businesses trying to work with the currency.

This is of course a short term problem, once users start denominating USD in BTC instead of the other way around it's off to the races.

[Lethn]

This argument has been going around in circles for.... Well, It's probably going to carry on for years when you look at the hardcore neo-Keynesians that troll here. When paper money drops in value like a rock ( and it will ) because of hyperinflation it's going to be much easier for people to spend Bitcoins on stuff. You already have places like Bitspend that specialise in letting you purchase goods in Bitcoin without needing to convert the money to paper currencies so I wouldn't be surprised if the opposite service comes along. The reason it's expensive for customers to shop at Bitcoin store is because they don't earn any Bitcoins, if they accepted them and diversified like the merchants do then they would be better off, paper money is drastically losing it's purchasing power in the face of currencies like Bitcoin which is why it appears so expensive to buy anything that is exclusive to the virtual currency.

So please, enough with the alarmist hyperbole already, I'm getting tired of seeing it spammed everywhere, it's like I'm watching television again.