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Author Topic: Bitcoin too valuable to spend  (Read 6462 times)
Jeremy West spendbitcoins.com
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July 03, 2011, 09:34:18 AM
 #61

Bitcoin, however, is not gold, in the sense that it's very easy to convert to and from fiat currencies. The problem with bitcoin is in the risk of having it. You don't know what the price of bitcoin will be tomorrow, whether it's going to be 2x its price today or 0. And until you do you'll want to store some of your money in bitcoin, while still keeping most of it in fiat currency, since you don't want to lose everything in one day because you were storing it in bitcoins, but you also don't want to be the loser that didn't invest into bitcoin early and become rich with little effort. In other words if one wishes to solve the hoarding problem of bitcoin, one needs to up the chances of bitcoin becoming mainstream. Built-in deflation has nothing to do with hoarding.

+1

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flug
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July 03, 2011, 10:19:19 AM
 #62

The OP is assuming that Bitcoin has survived its birth pains and now, a few years into the future, is a relatively stable deflating currency, and you can spend them widely and easily.

With this scenario in mind, the answer to the OP is: get paid in bitcoins.
FreeMoney
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July 03, 2011, 10:22:08 AM
 #63

Bitcoins: Too valuable to accept anything else as payment.

Seriously, it's merchants who decide what to accept as payment. I'd buy steaks with my dirty socks if I could.

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July 03, 2011, 10:47:34 AM
 #64

Seriously, it's merchants who decide what to accept as payment. I'd buy steaks with my dirty socks if I could.
If Bitcoin gets big merchants who are not politically driven will accept both their local currency and Bitcoin, assuming the cost is low enough. There will probably also be companies doing automatic conversion, just like VISA and MasterCard does for practically any fiat today.
ElectricMonk
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July 03, 2011, 11:37:42 AM
 #65

Bitcoins: Too valuable to accept anything else as payment.

Seriously, it's merchants who decide what to accept as payment. I'd buy steaks with my dirty socks if I could.

+1

This was my original thought when pondering the question.

If it's too valuable for the consumer to spend then it's too valuable for the vendor not to accept.

You don't get this with gold because - although it has an equivalent value to the thing you're buying - it's physically impractical for the vendor to accept. For this reason, Gold is (now) a poor choice for barter and trade but an excellent store of value - hence the hoarding. That's not true of bitcoin.

If widget is worth 1 USD, 15 BTC and 1/1500 oz of Gold then the only thing that effects your choice of which to pay with is which one is more practical. USD has the upper hand in that respect and that's still true today and that's why we hoard bitcoin. Hopefully, it won't be true in the future.

JoelKatz is correct.
BubbleBoy is incorrect.
HappyFunnyFoo
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July 03, 2011, 01:01:58 PM
 #66

Bitcoin is a digital commodity, not a digital currency.  It will increase in value until someone comes up with a better version of or replacement of bitcoin, then the value will collapse.
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July 03, 2011, 01:22:37 PM
 #67

To counter this, merchants might offer a 5% or 10% discount for payment in BTC (because hey, they prefer having bitcoin too).
That's the trouble - they don't prefer bitcoin currently, because their expenses are in USD or their local currency.

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JoelKatz
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July 03, 2011, 01:34:56 PM
 #68

That's the trouble - they don't prefer bitcoin currently, because their expenses are in USD or their local currency.
That's no reason not to take bitcoins if they can negotiate a very minimal commission on exchanges and charge very slightly above fair market value. (But still less than it would typically cost you to convert your local currency to bitcoins and then use that to pay them.)

As a bonus, they can take any fraction of their profit in bitcoins bought slightly below market value. And they make a slight additional profit on the exchange rate for their costs. This only works if the market depth goes up though. They have to be able to exchange most of their income for their local currency without excessively moving the market.

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July 03, 2011, 02:01:08 PM
 #69

This discussion should be moved to Economics.

oOoOo
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July 03, 2011, 02:06:20 PM
 #70


This is not entirely true.


Gresham's Law states that bad money drives out good only as long as there is a law requiring people to use the "bad" money.
Since the Bitcoin is decentralized and independent, and therefore by its very nature "lawless", it should drive out all the bad (fiat) currencies. So states Gresham's Law.

I think you reversed things mid-stream....yes, BTC is not being forced on anyone....but USD / EUR / etc *are* being forced on people (via Legal Tender laws).  Therefore this is why good money (like bitcoin / gold / silver) is being driven out of the market.

People will naturally choose to first spend all their 'bad money' in such situations and hoard the 'good' money. This is exactly what we see with regards to BTC.


Yes this is of course true. At one point however, the "bad" money will have become so bad, that merchants will refuse to accept it all together, requesting gold/silver/BTC instead. At that point in time, the "good" will have driven out the "bad"

I'm predicting the future here, but "bad" money is nothing but a paraphrase for worthless money, and history has shown that all fiats die in hyperinflation.
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