What's the most important next step for a better functioning bitcoin economy?

[Thanak]

I'm a newby but since I discovered bitcoin two weeks ago, the thing I notcied more is the relative pain you have to go through to get your initial bitcoins.

- Mining is not for everyone, but as of now, it's probably the most user friendly way of getting some coins (download a client, join a poll, leave your computer on).

- Buying coin... way too many hoops to go through.  It needs to be as simple as putting your credit card number and receive the coin... I understand the problem with the chargeback, but still this is where it hurt.

- Working for coin... Sure, I'd do that is I could find someone that want a service that I could offer. But as with real cash, most people are not entrepreneur. They will look at job posting and take jobs, but they don't have the skill to actually maket themselfs as a product and find clients.


Now comes the spending bitcoin...

A good part of the offer seems to be Lotto/Ponzi junk or web services. I don't buy porn or drugs.  So right now I have very limited use for the coins I have.

If the economy move to the next level, you need an easier way to find jobs that pay in bitcoin and find real value goods and services for bitcoin.

[Timo Y]

most people could care less about the underlying principle of bitcoin, 99.99% of people don't care about some tinfoil conspiracy theory about currency manipulation by the fed.

99.99% of people in the USA perhaps. Please remember that USA != World and that Americans may be a large minority, but a minority nonetheless among Bitcoin users.

Today, many countries in the world face the threat of a currency crisis, including America.  This isn't some crackhead dystopian fantasy. This is a real threat. How do I know this? Because even big corporations' CFOs are taking steps to be prepared for a possible collapse of the EUR for instance. Money doesn't lie.

I have experienced a currency crisis first hand when I was a child, where people lost more than half of their cash savings overnight.  It is a traumatic experience that scars people for life.  Those kind of people are emotionally attracted to a currency that can't be manipulated.  Currency crises happened as recently as 2001 in Argentina and 1998 in Russia. Those aren't exactly small countries.

Americans perhaps don't feel that way because they live in a bubble.  They feel that just because something has never happened it will never happen. If (when?) a currency crisis hits the US, it will take everyone by surprise, and it will be ugly, and then ordinary people will come flocking to alternative currencies.

[kjj]

bitcoin must be safer and easier for any user to use, that means that transactions have to be reversible in the cases of frauds or mistakes. People here do like to complaint about charge back frauds from buyers/consumers, but most (volume and amounts) of ebay's early frauds were perpetrated by sellers (and large volume of small sum frauds are still from the sellers - personal experience).  ebay's (and amazon) really took off when it adopted the aggressive buyer protection program at the small expenses of the sellers, but that policy helped accelerate the adoption of online purchases by the consumers. 

most people could care less about the underlying principle of bitcoin, 99.99% of people don't care about some tinfoil conspiracy theory about currency manipulation by the fed.  most people on this forum are interested in bitcoin because they hope that bitcoin will gain value and they will benefit from it as early adopters, most don't subscribe or care about crazy conspiracy theories. 

bitcoin has a long way to go before real adoption can occur, it is now not easy or safe to use for by any standard.  it will likely be replaced with a better version of digital currency.  like they say, pioneers get slaughtered, second/third wave of settlers get the land.

If you can reverse a transaction for a good reason, you can reverse a transaction for a bad reason too.  And since there is no central authority, your options are "anyone can take back their coins at any time for any reason" or "no one can take back their coins ever".  One of these options is useful in the real world, the other is not.

Transaction risk, which is real, will be handled in the bitcoin world just like it is in the real world.  By third parties that are paid to manage that risk.

[bittencoin]

If you can reverse a transaction for a good reason, you can reverse a transaction for a bad reason too.  And since there is no central authority, your options are "anyone can take back their coins at any time for any reason" or "no one can take back their coins ever".  One of these options is useful in the real world, the other is not.

Transaction risk, which is real, will be handled in the bitcoin world just like it is in the real world.  By third parties that are paid to manage that risk.

True you can reverse transactions for bad reasons too, some charge backs are frauds, some are just careless judgements by the arbitrators. But fraud is a business cost that is a part of any serious business calculation.  The question here is the acceptance and growth of bitcoin, without consumer's adoption, there is no bitcoin (practically speaking, not niche underground population).  

The introduction of a third party to manage transaction risks will involve fees, which party will shoulder the cost?  Right now, mtgox is eating the 25cents cost for accepting dwolla transfer, while tradehill makes the user eats the cost (which is really miserly and reflect their underlying mentality, which is why only a little faith should be placed on tradehill for responding to a crisis of their own).

99.99% of people in the USA perhaps. Please remember that USA != World and that Americans may be a large minority, but a minority nonetheless among Bitcoin users.

Today, many countries in the world face the threat of a currency crisis, including America.  This isn't some crackhead dystopian fantasy. This is a real threat. How do I know this? Because even big corporations' CFOs are taking steps to be prepared for a possible collapse of the EUR for instance. Money doesn't lie.

I have experienced a currency crisis first hand when I was a child, where people lost more than half of their cash savings overnight.  It is a traumatic experience that scars people for life.  Those kind of people are emotionally attracted to a currency that can't be manipulated.  Currency crises happened as recently as 2001 in Argentina and 1998 in Russia. Those aren't exactly small countries.

Americans perhaps don't feel that way because they live in a bubble.  They feel that just because something has never happened it will never happen. If (when?) a currency crisis hits the US, it will take everyone by surprise, and it will be ugly, and then ordinary people will come flocking to alternative currencies.

The education of the average american or citizens of other developed countries is shockingly disappointing compares to the technical advancement of modern man.  With that said, the technical sophistication of an average American is still vastly superior to the citizens of the developing countries.  If an average American can't use bitcoin easily, what makes you think an average russian/argentinian can do better?  If an average American who makes $50K/yr worries/bitches about losing a $20/1btc due to fraud that can't be reverse, I am sure an average argentinian who makes $20K/yr would worry more than an average American if the same 1btc is at risk.

You say that bitcoin can't be manipulated, but how can you say that knowing (or reasonably suspect) that 2 or 3 early adopters have control of at least 10% of the total float?

And so far, bitcoin has been proven to be risky and unpractical in its current framework.

[kjj]

If you can reverse a transaction for a good reason, you can reverse a transaction for a bad reason too.  And since there is no central authority, your options are "anyone can take back their coins at any time for any reason" or "no one can take back their coins ever".  One of these options is useful in the real world, the other is not.

Transaction risk, which is real, will be handled in the bitcoin world just like it is in the real world.  By third parties that are paid to manage that risk.

True you can reverse transactions for bad reasons too, some charge backs are frauds, some are just careless judgements by the arbitrators. But fraud is a business cost that is a part of any serious business calculation.  The question here is the acceptance and growth of bitcoin, without consumer's adoption, there is no bitcoin (practically speaking, not niche underground population).  

The introduction of a third party to manage transaction risks will involve fees, which party will shoulder the cost?  Right now, mtgox is eating the 25cents cost for accepting dwolla transfer, while tradehill makes the user eats the cost (which is really miserly and reflect their underlying mentality, which is why only a little faith should be placed on tradehill for responding to a crisis of their own).

I think you missed my point.  A transaction can be reversed be the sender, the recipient, or someone else.  In bitcoin, there is no someone else, and the recipient can already reverse transactions by sending the money back.  All that is left is a way for a sender to recall their own coins.  Why would anyone accept what amounts to a loan from you in exchange for anything of value?

All fees are always paid by the buyer.  This is true even if the seller claims to be paying them, since the seller really has no choice but to pass the costs on the the buyer in the form of higher prices.  Note that this is the model currently in use around the world for virtually every non-cash transaction.

[w1R903]

For a better functioning economy, the early adopters need to start really spending and cashing out their bitcoins.  It's never going to be a currency if it doesn't circulate.  If Bitcoin doesn't take off, it will be because of its deflationary properties, not (in the end) because of any security flaws and/or user interface issues.  Those issues can be solved relatively easily. 

If I had a stash of Bitcoins, I'd be spending them like crazy.  There's a huge labor arbitrage opportunity for people with large stashes.  There are skilled developers who are accepting them and pricing their services low in bitcoins.  So if you have a stash, start cashing it out and spending it instead of leaving it sitting around unwatched in an easily-breached account.  Don't led greed make you wait until it's at $100 a bitcoin -- you're already a millionaire.  And the chances of it reaching $100 a coin are small if more people don't start buying and spending it.

That said, I'm still optimistic.

[bittencoin]

If you can reverse a transaction for a good reason, you can reverse a transaction for a bad reason too.  And since there is no central authority, your options are "anyone can take back their coins at any time for any reason" or "no one can take back their coins ever".  One of these options is useful in the real world, the other is not.

Transaction risk, which is real, will be handled in the bitcoin world just like it is in the real world.  By third parties that are paid to manage that risk.

True you can reverse transactions for bad reasons too, some charge backs are frauds, some are just careless judgements by the arbitrators. But fraud is a business cost that is a part of any serious business calculation.  The question here is the acceptance and growth of bitcoin, without consumer's adoption, there is no bitcoin (practically speaking, not niche underground population).   

The introduction of a third party to manage transaction risks will involve fees, which party will shoulder the cost?  Right now, mtgox is eating the 25cents cost for accepting dwolla transfer, while tradehill makes the user eats the cost (which is really miserly and reflect their underlying mentality, which is why only a little faith should be placed on tradehill for responding to a crisis of their own).

I think you missed my point.  A transaction can be reversed be the sender, the recipient, or someone else.  In bitcoin, there is no someone else, and the recipient can already reverse transactions by sending the money back.  All that is left is a way for a sender to recall their own coins.  Why would anyone accept what amounts to a loan from you in exchange for anything of value?

All fees are always paid by the buyer.  This is true even if the seller claims to be paying them, since the seller really has no choice but to pass the costs on the the buyer in the form of higher prices.  Note that this is the model currently in use around the world for virtually every non-cash transaction.

I understood your point, what I am saying is that the consumer/buyer does not have the protection of a legitimate charge back, the sender can't reverse the transaction.  The bitcoin sender is at the mercy of the receiver.  A less nefarious example, you send btc to a business, the owner dies in an accident, there is no way for the buyer to reverse the charges. 

Also regard to tradehill, businesses exist to make money, good businesses make money without resorting to nickle and dime-ing their customers.  Passing on the 25cents for deposit is nickle and dime-ing, especially when they can make up that amount back with a $30 transaction.  I suspect that they won't be easy to deal with if there are future monetary disputes.  I do have an acct with them btw.

[kjj]

I understood your point, what I am saying is that the consumer/buyer does not have the protection of a legitimate charge back, the sender can't reverse the transaction.  The bitcoin sender is at the mercy of the receiver.  A less nefarious example, you send btc to a business, the owner dies in an accident, there is no way for the buyer to reverse the charges. 

This is where the third party comes in.

Also regard to tradehill, businesses exist to make money, good businesses make money without resorting to nickle and dime-ing their customers.  Passing on the 25cents for deposit is nickle and dime-ing, especially when they can make up that amount back with a $30 transaction.  I suspect that they won't be easy to deal with if there are future monetary disputes.  I do have an acct with them btw.

The end result is the same.  You are paying the fee one way or the other.  Option A is to pay the fee, and know that you are paying the fee.  Option B is to pay the fee, but think that you are not.

[fellowtraveler]

IMO the Bitcoin community needs:

--- Anonymity. This will drive new businesses that were not possible before, and thus enlarge the Bitcoin economy. (Such as darknet hosting...)
--- Instant finality of settlement. (Necessary for e-commerce.)
--- Security. Wallets and Exchange Accounts should not continually be hacked.

IMO my own OT software goes a long way towards solving the above issues.

Additionally needed are:
--- "iPhone-easy" user interface. My own client Moneychanger is meant as a reference implementation using the OT-API; it is not meant as the best possible interface. I'll predict right now that whichever one of you writes the slickest wallet software is going to clean up. This software still does not exist in the Bitcoin community and it is sorely needed.
--- An easy e-commerce API that can be consistent across merchants. Such a system could be built on top of the OT-API. (OT does transfers, cheques, cash, and receipts. YOU have to use those tools to build your e-commerce.)
--- I think there is also a big opportunity for such an ecommerce app to provide more safety and reversibility, similar to services the credit card companies provide, except as a voluntary system. For example, escrow. (Although escrow will eventually be added to OT itself.)

[bittencoin]

This is where the third party comes in.

how can the third party force the reverse of the charge under the current framework?

the credit card companies can reverse the charges because they control the accounts.  Are we suggesting a bitcoin banking system?

[Vinnie]

Black Markets

Silkroad is a good start, in my opinion. As fellowtraveller mentioned, anonymity (or as much as anonymity as bitcoin provides, with a little bit of effort) is one of bitcoins edges in the market. It's a reason people will go through the trouble of transferring their government issued cash through the pain in the ass process of converting it to bitcoins. As long as this process, along with the purchase of drugs, is reasonably or comparably easier than going through traditional black markets, then people will continue to use Silkroad. Providing better tools to help maintain anonymity and spreading good, solid information on how to utilize them will help.


Goods and Services to Miners

Miners are the ones who have bitcoins, right? If you're starting a brand new business in the bitcoin economy (rather than adding bitcoins to the forms of payment you accept at an existing business) then miners should probably be your target market. I've heard a lot of people call them hoarders, but that might just because they have very few things that they can buy with their bitcoins. They expect to have better and/or more options in the future to spend their bitcoins on than exist today, so they're not spending. One major service that miners utilize on a consistent basis is exchange services. Also think about their input costs and equipment requirements. I know there are folks who are already starting businesses in this area. Another category would be consumer goods for miners. Bitmunchies is a great example.


Local Meetups

A lot of people believe in Bitcoin and would gladly trade locally. I'm looking for a second hand weight set, used work boots, and a deer rifle, for instance. If there were an active meetup community then there's a good chance I'd be able to find one of the aforementioned items. Plus, there's plenty of stuff in my garage that I'm no longer using that I'd like to offload. Classifieds probably aren't the best venue for this, because there simply isn't a large enough market for people to bother checking bitcoin classifieds sites. A meetup, on the other hand, would be a great, locally oriented venue for sales of used and second hand items.


This is just off the top of my head. Personally, I think it is too early to expect brick and mortar businesses and established websites to adopt bitcoin.

[qikaifu]

THE ONLY WAY BITCOIN WILL EVER FUNCTION AS AN ECONOMY WILL BE IF IT IS REGARDED AS A CURRENCY, RATHER THAN A VOLATILE BUBBLE COMMODITY.

Reasonable. But I do feel that the bubble help bitcoin find its way to be widely accepted.