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Author Topic: So if you want to help the economy...  (Read 1897 times)
Akka
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April 10, 2013, 08:56:28 AM
 #21

I am sorry, I though you knew how the markets work...

I apologise - I've assumed wrongly!

/end sarcasm

In my example above, I am not buying Bitcoins, it just happened that I have 125,000 of them, itching my hand to spend and "help" the economy.

And yes, I am pretty certain of my estimate that creating a instant sell order for BTC125,000 will bring down the price +/- 30%, probably over few days.

Then why did you disagree to my example where I talked about buying BTC to spend them?

I am sorry, I though you could read...

I apologise - I've assumed wrongly!

/end sarcasm
,
Still that's a borderline case infolding over 1% of all coins in existence.

If I would exchange 1% of all € in existence for $ this would have the same effect on the Value of the € (not as extreme though, but only due to a grater liquidity).

Are you saying I should not buy things from the US for my €s to not crash the €?

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codro
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April 10, 2013, 09:00:30 AM
 #22

I really think that the shops could really do a lot more to help the economy than consumers can.

Coin value increases all the time so shops could subsidize their prices by some percent, say 5% to make them lower than every other fiat competitor. Even if they'd sell everything at a loss initially, they're guaranteed to make the difference back in a week or so. Sure, it's risky, but due to the nature of Bitcoin, this will happen indefinitely. (unless it is outlawed or something of that nature happens)

And, for companies selling services like hosting, or other online services, offering lower equivalent prices should really be a no brainer - no scary wholesaler breathing down their necks for their money.

It would be an incentive for even casual Joe to go deposit some cash, get some bitcoins, and get his dream TV for less than Amazon or Newegg or whoever. And since they'd be generating so much interest for bitcoins and everyone will want them, value is guaranteed to rise. Kind of like a social/consumer fueled pyramid scheme. Smiley

This would also make it a huge reason to go buy/spend coins, in a way similar to how the Silk Road is incentivising, yet for a good cause.

Have a leap of faith.
gopher
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April 10, 2013, 09:40:24 AM
 #23

I am sorry, I though you knew how the markets work...

I apologise - I've assumed wrongly!

/end sarcasm

In my example above, I am not buying Bitcoins, it just happened that I have 125,000 of them, itching my hand to spend and "help" the economy.

And yes, I am pretty certain of my estimate that creating a instant sell order for BTC125,000 will bring down the price +/- 30%, probably over few days.

Then why did you disagree to my example where I talked about buying BTC to spend them?

I am sorry, I though you could read...

I apologise - I've assumed wrongly!

/end sarcasm
,
Still that's a borderline case infolding over 1% of all coins in existence.

If I would exchange 1% of all € in existence for $ this would have the same effect on the Value of the € (not as extreme though, but only due to a grater liquidity).

Are you saying I should not buy things from the US for my €s to not crash the €?

I struggle to follow your logic here...we are obviously on a different page.

When we analyse a market, we do not look into total coins in existence, we are only interested in the coins in circulation, i.e. traded on that market. That's because the coins in circulation effect the market. Also, there are separate markets, $ is a separate market, € is a separate market, then those fiats traded in different exchanges are also different markets.

In my example, I was referring to one particular market - USD@MtGox. Also in my example, as soon the merchant (or the hypothetical seller of goods I used in my example) accepts the BTC, he would go to a market of his own choice and sell the BTC for fiat, as his input costs would be in fiat. And that's what would cause the price at that particular market to tank, as I mentioned previously, on my estimate, to around 30%.

And that I see cannot be possibly good for the economy, it will upset a lot of bullish investors, it may even cause loss in confidence in the prevailing trend, possibly cause panic sell, from there on it is everyone's guess what will happened to Bitcoin.

Akka
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April 10, 2013, 09:54:25 AM
 #24

I am sorry, I though you knew how the markets work...

I apologise - I've assumed wrongly!

/end sarcasm

In my example above, I am not buying Bitcoins, it just happened that I have 125,000 of them, itching my hand to spend and "help" the economy.

And yes, I am pretty certain of my estimate that creating a instant sell order for BTC125,000 will bring down the price +/- 30%, probably over few days.

Then why did you disagree to my example where I talked about buying BTC to spend them?

I am sorry, I though you could read...

I apologise - I've assumed wrongly!

/end sarcasm
,
Still that's a borderline case infolding over 1% of all coins in existence.

If I would exchange 1% of all € in existence for $ this would have the same effect on the Value of the € (not as extreme though, but only due to a grater liquidity).

Are you saying I should not buy things from the US for my €s to not crash the €?

I struggle to follow your logic here...we are obviously on a different page.


Obviously.

As the thread titly says: So if you want to help the economy...

Not: So if you want to increase the price further and further...

I'm talking about Bitcoin being successful here, not being a speculative bubble to make some guys get rich quick on the expense of the late fools.

And if you are talking about dropping 125000 BTC on Gox, don't you see that this example is to extreme?

But this will happen sooner or later, and if by then there is no economy behind BTC of course it will go down.

I stop feeding the troll now.

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gopher
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April 10, 2013, 10:02:15 AM
 #25

...
I stop feeding the troll now.

Sure, everyone is entitled to his opinion, irrespective how wrong it is.

As I always say - show some respect to the trolls, stop feeding them with rubbish!

 Grin


hacknoid
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April 10, 2013, 01:01:18 PM
 #26


For anyone interested, here is the (stock) reply from Newegg:

Quote
Thank you for contacting Newegg.

We apologize for any inconvenience this may have caused. Newegg currently does not process International/Global Credit Cards. We only accept payment methods issued by American banks. We need your credit card has a valid, verifiable United States billing address.

We are aware that there is always some room for improvement, which is why we value your thoughts. Rest assured that your feedback will receive the attention it deserves and Newegg will continue striving to offer high quality products at low, affordable prices and only the finest in customer service.

Clearly they have no idea what bitcoin is... and I think this shows just how far there still is to go.  So, guess I'll stick with other retailers in the meantime.

"the attention it deserves"... doubtful.  However, at the very least I hope I get someone to bring it up over water cooler talk.  Hmmm... think I'll see if there's someone higher that I can inquire to about this...  I feel like getting a proper answer.

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odolvlobo
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April 10, 2013, 10:55:04 PM
 #27

I struggle to follow your logic here...we are obviously on a different page.

When we analyse a market, we do not look into total coins in existence, we are only interested in the coins in circulation, i.e. traded on that market. That's because the coins in circulation effect the market. Also, there are separate markets, $ is a separate market, € is a separate market, then those fiats traded in different exchanges are also different markets.

In my example, I was referring to one particular market - USD@MtGox. Also in my example, as soon the merchant (or the hypothetical seller of goods I used in my example) accepts the BTC, he would go to a market of his own choice and sell the BTC for fiat, as his input costs would be in fiat. And that's what would cause the price at that particular market to tank, as I mentioned previously, on my estimate, to around 30%.

And that I see cannot be possibly good for the economy, it will upset a lot of bullish investors, it may even cause loss in confidence in the prevailing trend, possibly cause panic sell, from there on it is everyone's guess what will happened to Bitcoin.

Perhaps your analysis of your hypothetical scenario is correct, but I think it misses the point. Increasing the number of bitcoins in circulation and increasing the transaction volume increases the stability of the currency. Your scenario describes what might happen if the transaction volume is low. The solution to your scenario is to increase the transaction volume (but not so suddenly that it is a shock to the system).

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gopher
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April 11, 2013, 09:12:06 AM
 #28

I agree with you.

Today the markets are not large enough to support multiple merchants who's input is in fiat, hence it will be in their interest to sell the newly acquired BTC and withdraw the fiat from the system straight away, in effect damaging the markets.

Currently we are in a situation where the markets are driven by speculation, and the merchants play only remote secondary role to the development of the markets. I personally do not expect this to change for some time, not until broader adoption of the BTC occurs and not only by speculators, but across the spectrum of users.

The OP premise is that by using merchants to buy goods we would be "helping" the Bitcoin economy. I stated that the current economy's nature is not what everyone thinks it is, it has changed dramatically over the last 4 months, hence today, by using merchants to buy goods and pay them in BTC, we would be damaging the economy.

To clarify, I am assuming that helping the economy to grow means driving the price of BTC and the total market cap up, and damaging means driving the price of BTC and the total market cap down.

In retrospect, I see my mistake as emphasising on the potential damage buying goods with BTC could cause to the economy. I should have stated that in today's climate, such damage will be minimal, negligible, irrespective of the good intentions and the efforts of the people to "help" the economy. I also should have stated that if one wants to help the economy, one should have gone and purchased BTC, contribute to the driving the price up, then hold for long period, until the markets stabilised to +/- 0.01% daily fluctuations. That will be the sign to watch for. AT that time the Bitcoin economy will be deemed mature, the short-term speculators would have left long-time ago, and the Bitcoin would have been described as a great store of value, very similar to the precious metals.

That's what I think.
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April 11, 2013, 02:33:30 PM
 #29

Well put.

I agree with you.

Today the markets are not large enough to support multiple merchants who's input is in fiat, hence it will be in their interest to sell the newly acquired BTC and withdraw the fiat from the system straight away, in effect damaging the markets.
...
The OP premise is that by using merchants to buy goods we would be "helping" the Bitcoin economy. I stated that the current economy's nature is not what everyone thinks it is, it has changed dramatically over the last 4 months, hence today, by using merchants to buy goods and pay them in BTC, we would be damaging the economy.

This is the issue I struggle with ATM.  Realizing that every transaction that goes through Bitpay results in an immediate sell order at whatever the current best bid price is on Mt. Gox will actually help drive the valuation lower.  We need more speculators and big investors putting the money up to counterbalance this with an upward trend.

My original point was that rather than sitting on the sidelines and not doing anything, and rather than risking money by buying BTC with money that you can't afford to lose (I don't advocate Bitcoin as an investment to anyone that can't afford to lose the investment), if you spend the fiat you would normally have spent by going through a bitcoin merchant, you will help stimulate the development and adoption of the economy.

I guess I would also argue that buying BTC with fiat then immediately spending and having bitpay convert it back is basically a zero sum game.  However it does result in more money spent in the bitcoin ecosystem, which hopefully adds more credibility.

Quote
In retrospect, I see my mistake as emphasising on the potential damage buying goods with BTC could cause to the economy. I should have stated that in today's climate, such damage will be minimal, negligible, irrespective of the good intentions and the efforts of the people to "help" the economy. I also should have stated that if one wants to help the economy, one should have gone and purchased BTC, contribute to the driving the price up, then hold for long period, until the markets stabilised to +/- 0.01% daily fluctuations. That will be the sign to watch for. AT that time the Bitcoin economy will be deemed mature, the short-term speculators would have left long-time ago, and the Bitcoin would have been described as a great store of value, very similar to the precious metals.

The ideal outcome. 

However currently Bitcoin is experiencing some of the growing pains that would be expected at this point.  I also expect a ton of new bitcoin startups to appear, as well as scams and schemes.  Again, part of the growing pains.  It all comes with increased valuation and exposure to the masses, and is something that needs to happen in any maturing system.

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odolvlobo
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April 11, 2013, 04:31:09 PM
 #30

This is the issue I struggle with ATM.  Realizing that every transaction that goes through Bitpay results in an immediate sell order at whatever the current best bid price is on Mt. Gox will actually help drive the valuation lower.  We need more speculators and big investors putting the money up to counterbalance this with an upward trend.

The blindness is bizarre. How can you ignore the fact that the BTC used in the transaction also has to be bought with fiat? In order for the BTC to be sold on Mt. Gox by the merchant, it first has to be bought by the customer (on Mt. Gox perhaps). The two currency transactions balance each other perfectly.

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hacknoid
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April 11, 2013, 04:55:16 PM
 #31

This is the issue I struggle with ATM.  Realizing that every transaction that goes through Bitpay results in an immediate sell order at whatever the current best bid price is on Mt. Gox will actually help drive the valuation lower.  We need more speculators and big investors putting the money up to counterbalance this with an upward trend.

The blindness is bizarre. How can you ignore the fact that the BTC used in the transaction also has to be bought with fiat? In order for the BTC to be sold on Mt. Gox by the merchant, it first has to be bought by the customer (on Mt. Gox perhaps). The two currency transactions balance each other perfectly.


I guess you missed the part where I went on to say

Quote
I guess I would also argue that buying BTC with fiat then immediately spending and having bitpay convert it back is basically a zero sum game.

They do indeed balance each other out going this route; my initial thought you quoted above was for the way bitpay functions in general, which is to take BTC already in circulation and process them when they are spent at bitpay merchants.  I probably didn't explain that line of thought fully... these days my brain seems to be all over the place.  Tongue

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gopher
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April 11, 2013, 07:15:55 PM
 #32

This is the issue I struggle with ATM.  Realizing that every transaction that goes through Bitpay results in an immediate sell order at whatever the current best bid price is on Mt. Gox will actually help drive the valuation lower.  We need more speculators and big investors putting the money up to counterbalance this with an upward trend.

The blindness is bizarre. How can you ignore the fact that the BTC used in the transaction also has to be bought with fiat? In order for the BTC to be sold on Mt. Gox by the merchant, it first has to be bought by the customer (on Mt. Gox perhaps). The two currency transactions balance each other perfectly.


You are not right.

I've never invested a single cent of fiat in Bitocoin, yet I have plenty of them "precious" in my wallet, I've also spend many of them in the past on buying various stuff, mostly computer parts, GPUs, FPGAs and ASICs, FYI I always paid in BTC, admittedly not knowing what the merchant will do with them.

Currently I am contemplating to buy some high-ticket non-Bitcoin related stuff, just waiting for the right moment (i.e. when the markets are more robust, calmer and traders full of confidence), then I will find some time , sit down and make couple of hundred sell orders (to follow the trend).

That's because I care for the economy!
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