The snowball effect of bitcoin-only sale

[johnyj]

I'm thinking about a very interesting possibility:

With people's knowledge of money increasing everyday, sooner or later some large producer with excessive amount of cash flow and big interest in bitcoin will provide bitcoin-only sale for part of their high-end product line

That will create a miracle in business history: The more he sell, the more valuable his income will become due to rising demand for bitcoin. This will result in a snowball effect, more and more merchant will join the bitcoin-only sale campaign, and it will create a self-sustainable loop, until one day most of their sales become bitcoin-only

The great thing is, in such a scenario, producers have higher and higher motivation to expand their bitcoin-only sale line since the value of their income rise continuously compared to their fiat-only sale

The size of bitcoin economy is relatively small, it is enough to have just a few large producers to start this whole process and the effect will be observable

Since the bitcoin value is rising continuously due to their bitcoin-only sale, they will not need to spend all of the coins they earned due to rising purchasing power, and the number of coins spent is always less than the number of coins earned, there will always be rising demand for bitcoin

The only negative effect is for fiat money, now there are less goods chasing fiat money, its value will drop, but since the fiat money economy is a much larger scale, at the beginning this effect is negligible

Is there any flaw in this reasoning? Critics are welcome 

[phillipsjk]

• Their suppliers and employees want to be paid in FIAT. Since all of their suppliers want to be paid in FIAT.
  
• The market cap of Bitcoin is now high enough that one high-end product line won't move the price much.
• If successful, they will run into Bicoin scaling issues.

[silvergoldandbitcoin]

• Their suppliers and employees want to be paid in FIAT. Since all of their suppliers want to be paid in FIAT.
  
• The market cap of Bitcoin is now high enough that one high-end product line won't move the price much.
• If successful, they will run into Bicoin scaling issues.

What he said.

Somewhere down the line, fiat is required.

Unless the business can convince their direct supplier to accept BTC, it will be darn near impossible to produce a product funded solely with BTC.

[abdada]

Actually, I am working on a side project at one of my businesses that will be 100% BTC funded.

What we're doing is offering to buy used but in good condition white cotton (bedsheets or old shirts, whatever), launder them by hand (no fiat), cut them down by hand (no fiat), re-sew them into new shirts, print on them and have them ready for pickup.

I'll pay my labor guy in BTC (he already approved), and we'll only buy the cotton with BTC from locals via word of mouth and craigslist.

I think I can keep the entire chain in BTC, especially since we're working on our own ink manufacturing, too.

Of course there are fiat-bought tools that are in the mix, but these were puchased for cash long before BTC arrived on the scene.

[johnyj]

• Their suppliers and employees want to be paid in FIAT. Since all of their suppliers want to be paid in FIAT.
  
• The market cap of Bitcoin is now high enough that one high-end product line won't move the price much.
• If successful, they will run into Bicoin scaling issues.

It's important that producer have excessive amount of cash flow so they don't worry about the fiat payment for the latest 5 years for that special part of their product line

Imagine an extreme case: Apple with their hundreds of billions of USD in cash account have one of their best high end retina screen mini tablet only payable in bitcoin, what will happen? Clearly, Apple is going to make huge amount of profit due to their sale could push bitcoin price by at least one magnitude. And all the other manufacturers will follow

For scaling part, that might be a little bit tricky. I think as usual, they will rely on some large wholesalers in each country to distribute the product, so one transaction per month is enough for them. And for the wholesalers, they could use several offline transaction hub nodes for small transactions from individual buyer

[johnyj]

I accept bitcoin-only sales.

I am the owner of http://www.knives4bitcoin.com

The reason I only accept bitcoin is the exact points you bring up. I want to make bitcoin flourish and succeed separate from other currencies.

Great site, I like some of the knives there, high quality build

[pwi]

Actually, I am working on a side project at one of my businesses that will be 100% BTC funded.

What we're doing is offering to buy used but in good condition white cotton (bedsheets or old shirts, whatever), launder them by hand (no fiat), cut them down by hand (no fiat), re-sew them into new shirts, print on them and have them ready for pickup.

I'll pay my labor guy in BTC (he already approved), and we'll only buy the cotton with BTC from locals via word of mouth and craigslist.

I think I can keep the entire chain in BTC, especially since we're working on our own ink manufacturing, too.

Of course there are fiat-bought tools that are in the mix, but these were puchased for cash long before BTC arrived on the scene.

I like this idea and may borrow and mold it to fit my needs if that's OK? It is genius on so many levels. Good luck with your endeavor.

[Vince Torres]

If they have the money to put into a successful product there is no reason they would limit themselves to bitcoin commerce solely unless they were selling a product market towards bitcoin such as asics.

[johnyj]

If they have the money to put into a successful product there is no reason they would limit themselves to bitcoin commerce solely unless they were selling a product market towards bitcoin such as asics.

The main obstacle here is that fiat money has already occupied the position of transaction medium, people have little motivation to use another transaction medium if the seller does not accept bitcoin exclusively

You are buying something from an europe online merchant, they only accept Euro, you pay with your credit card, and the credit card company do the conversion: Buy euro at foreign currency exchange and pay the seller. So if more US people are buying europe products, then Euro's exchange rate will rise

It's the same for bitcoin economy, if more people are buying goods/services that only payable in bitcoin, then bitcoin's value will rise. On the contrary, if more people use bitcoins to buy products payable with fiat money, bitcoin's value will drop. For example the recent price drop is related to that kncminer was converting lots of coins to fiat money to pay their chip manufacturer who only accept US dollar

[atomium]

I agree with everyone's point in this thread, I think our main goal would be to get fully BTC funded businesses. The higher the demand the higher the price will go. It would be genius for a large company to only sale a product in bitcoin only, it will be the smartest move they could ever do. My idea is that if anyone ever does it it will be something in the technology space since it will have easier adopters.

[jaywaka2713]

If you want to buy gasoline in Bitcoin, you need to get Coal mining companies to accept it. Gasoline is refined using Coal. If the base resource of anything accepts Bitcoin, mass-adoption is bound to happen.

http://www.sciencedaily.com/releases/2011/07/110725190044.htm

As you can see here, an idea expands like wildfire once 10% of any population agrees with you. So, if we get 10% of online business to accept Bitcoin, the cycle begins on its own. If we get 10% of "base" companies like Coal mining companies or other resource companies (Iron refineries, metal mines, etc.), then the businesses above are bound to start accepting Bitcoin as well. It's all about the "target audience".

[atomium]

If you want to buy gasoline in Bitcoin, you need to get Coal mining companies to accept it. Gasoline is refined using Coal. If the base resource of anything accepts Bitcoin, mass-adoption is bound to happen.

http://www.sciencedaily.com/releases/2011/07/110725190044.htm

As you can see here, an idea expands like wildfire once 10% of any population agrees with you. So, if we get 10% of online business to accept Bitcoin, the cycle begins on its own. If we get 10% of "base" companies like Coal mining companies or other resource companies (Iron refineries, metal mines, etc.), then the businesses above are bound to start accepting Bitcoin as well. It's all about the "target audience".

+1

[Lethn]

I don't know if this is old news to you lot but you might still be interested, I think this is already happening, at least for the startups and such, there is a startup miner recently that popped up onto Bitcoinfunder.

https://bitfunder.com/asset/Kenilworth

[johnyj]

Just had this thought: Like German producers only accept Euro and Japanese producers only accept Yen, those producers who only accepting bitcoin will essentially form A COUNTRY, a country with its own currency, without government but exists everywhere on the planet 

[Francesco]

• Their suppliers and employees want to be paid in FIAT. Since all of their suppliers want to be paid in FIAT.
  
• The market cap of Bitcoin is now high enough that one high-end product line won't move the price much.
• If successful, they will run into Bicoin scaling issues.

What he said.

Somewhere down the line, fiat is required.

Unless the business can convince their direct supplier to accept BTC, it will be darn near impossible to produce a product funded solely with BTC.

That's where Ripple comes in. If you can convert your bitcoins on-the-fly to pay others who don't accept it -then it works.

[BitBank]

Here's a challenge:

Q:  How do we make large companies more willing to accept bitcoin?
A:  They need to be able to use them.  Employees must willingly accept them, and/or they could be used in the company's supply chain.

Q:  How do we get employees to accept bitcoin as payment?
A:  The would if they could buy groceries with them (something everyone needs weekly).

Q:  How do we get grocery stores to accept bitcion
A:  Make conditions such that employees would accept them, and they could be used in the company's supply chain.

Q:  How do you get employees to accept bitcoin?
A:  Get grocery stores to accept bitcoin

...
...

Catch-22.  Chicken-and-egg.

The real solution is to create micro-economies.  

1)  Get a local grocery store to accept bitcoin

2)  In theory, employees of that store would accept payment in BTC, at least partially, since they could use them to shop at the grocery store where they work.  This is also adventageous to the grocery store, since they will likely have a good portion of their own employees to shopping at their store.    

3)  Business A in town is approached to start accepting bitcoins.  Business A is informed that the grocery store is accepting bitcoins, so Business A knows that they could pay their employees partially in bitcoin, and the employees would accept it.

That is the real snowball effect.  It's not top-down, it's bottom up.  That's actually what we're working on at BitBank.  

[BitBank]

• Their suppliers and employees want to be paid in FIAT. Since all of their suppliers want to be paid in FIAT.
  
• The market cap of Bitcoin is now high enough that one high-end product line won't move the price much.
• If successful, they will run into Bicoin scaling issues.

What he said.

Somewhere down the line, fiat is required.

Unless the business can convince their direct supplier to accept BTC, it will be darn near impossible to produce a product funded solely with BTC.

That's where Ripple comes in. If you can convert your bitcoins on-the-fly to pay others who don't accept it -then it works.

It's not like you can just send ripples in company A's direction and they magically appear in that company's bank account.  There seems to be a large barrier to entry, even larger than if we tried to get businesses to use bitcoin.    

[silverfuture]

There is no reason a large company can't  accept bitcoins and exchange enough for suppliers and anyone else who doesn't take bitcoin.  Bitpay's service will exchange them on a daily basis at whatever ratio of bicoin to fiat is needed.  There are big incentives for first movers to start accepting them as any savings that company owns will likely shoot up in value as soon as the public announcement is made. The incentives are there, it's just a matter of time.

[johnyj]

Here's a challenge:

Q:  How do we make large companies more willing to accept bitcoin?
A:  They need to be able to use them.  Employees must willingly accept them, and/or they could be used in the company's supply chain.

Q:  How do we get employees to accept bitcoin as payment?
A:  The would if they could buy groceries with them (something everyone needs weekly).

Q:  How do we get grocery stores to accept bitcion
A:  Make conditions such that employees would accept them, and they could be used in the company's supply chain.

Q:  How do you get employees to accept bitcoin?
A:  Get grocery stores to accept bitcoin

...
...

Catch-22.  Chicken-and-egg.

The real solution is to create micro-economies.  

1)  Get a local grocery store to accept bitcoin

2)  In theory, employees of that store would accept payment in BTC, at least partially, since they could use them to shop at the grocery store where they work.  This is also adventageous to the grocery store, since they will likely have a good portion of their own employees to shopping at their store.    

3)  Business A in town is approached to start accepting bitcoins.  Business A is informed that the grocery store is accepting bitcoins, so Business A knows that they could pay their employees partially in bitcoin, and the employees would accept it.

That is the real snowball effect.  It's not top-down, it's bottom up.  That's actually what we're working on at BitBank.  

Even every merchant accept bitcoin, it does not automatically encourage people to get it and use it, the consumer just don't see the benefit of using bitcoin

When I travel to another country, I still prefer to pay with the currency of my own country, but most of the people there only accept their currency, I have to exchange and pay the exchange fee etc... For me, this is an extra step and always cause some loss during the exchange process

But, if that is a special product/service I really want from that country, then I will exchange the currency and pay for it without feel uncomfortable. Currently the main motivation that people exchange for bitcoin is the hope of bitcoin's price will rise and they will benefit from it, pure speculation. There are almost no real good products only exclusively sold in bitcoin so far (ASIC miners is an exception)

It's very funny that if you ask chinese people, most of them think this is a digital collection item, since collection item is always a hot topic in china

[PiaggioCaptain]

I run a small forum with 150 or so dedicated members. The site renewal came up and instead of asking for cash donations I posted my BTC wallet and only accepted BTC.

I received 0.00BTC.

Guys posted complaining that they wanted to give but couldnt figure out how to get BTC. I had posted links to various methods but it was too much of a PITA for anyone to do.

I think that's the barrier...it's too hard to convert your government money into BTC. Too hard and takes too long and costs too much.