Bitcoin's dependancy on physical currency

[Anonymous]

One of the things I've noticed in an effort to start my Bitcoin-based business is that In order to build initial reserves of a retail-like stock, you need to pay in $/€/£/¥ or other such currencies. This creates a problem in that Bitcoin will always be dependent on hard-currency startup costs.

While I'm aware there isn't any realistic way around this, how can this problem be overcome at a theoretical level? It's not like I, as a retailer, can buy stock by going to a wholesaler and paying in bitcoins. And unless I'm willing to convert my coins back to hard currency I can't replenish my supply with my earnings.

I don't know how much discussion on this there has been, and I'm just curious on various opinions that people have with regards to this.

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[Joqer]

Bitcoin will only be dependent on physical currencies until it is accepted by a large enough group of people at each level of production. When you can buy raw materials, pay workers, ship goods, buy wholesale and retail, advertise etc. at reasonable prices with bitcoin in a majority of major markets bitcoin will no longer be dependent on physical currencies.

Until then the need to convert back and forth is just another frictional expense that needs to be accounted for.

[BitcoinPorn]

Current physical currencies were once represented by other currencies.  Things will evolve.  They will share the same timeline for a while before one knocks off another.

[Anonymous]

While I agree with both of you, neither of you actually said anything about how, you just rephrased my question in answer form. How can that bridge be crossed? And what do retailers have to do in the meantime?

[ellipsis]

While I agree with both of you, neither of you actually said anything about how, you just rephrased my question in answer form. How can that bridge be crossed? And what do retailers have to do in the meantime?

It would probably have to be (in this order of likelihood):

1. Be profitable in and of itself
2. Cost less than processing other payments
3. Customer demand

[BitcoinPorn]

While I agree with both of you, neither of you actually said anything about how, you just rephrased my question in answer form. How can that bridge be crossed? And what do retailers have to do in the meantime?

Ah, to answer theoretically.  The push would have to be in the form of benefits for using Bitcoin over cash.

If you have a physical store, you will have to produce some pretty good benefits for me to want to whip out my phone over just a few physical bills.

If I gained something more by using the Bitcoin instantly, I would use it.  So no coupons or savings or bullshit, it would have to be an instant positive.

[Einewton]

Get Wal-Mart, McDonalds, and Chevron to accept bitcoin, everyone else will follow suit.

[Dansko]

Eventually a wholesaler will popup that accepts bitcoin and most of the dependency issues will be resolved.

[Paul4games]

Just wait until bitcoin envolve and becomes more popular/used like for example LibertyReserve.

[petabytecoin]

It's not dependent if we use it all over the place instead of physical.

[Anonymous]

I'm not sure how "Get Wal Mart to accept Bitcoin" is a solution, and the most recent reply from Petabytecoin is circular logic. I'm genuinely curious, if we want bitcoin to be widely accepted, what must happen other than underpants gnome logic?

I would love to see bitcoin advance, I believe in it and think there is great potential, but at the same time I don't see enough realistic discussion compared to pie-in-the-sky stuff. I'm wondering if there's been some big general consensus I'm missing.

[Maged]

I'm not sure how "Get Wal Mart to accept Bitcoin" is a solution, and the most recent reply from Petabytecoin is circular logic. I'm genuinely curious, if we want bitcoin to be widely accepted, what must happen other than underpants gnome logic?

I would love to see bitcoin advance, I believe in it and think there is great potential, but at the same time I don't see enough realistic discussion compared to pie-in-the-sky stuff. I'm wondering if there's been some big general consensus I'm missing.

What needs to happen is more people need to ask their distributors if they can pay them in Bitcoin. I believe that the MemoryDealers' guy did this (I might be wrong) and it started working after a few times when they finally realized how much accepting Bitcoins is cheaper than an international wire. On a local level, ask the person you pay rent to (if you rent) if you can pay in Bitcoins. It worked for Bruce Wagner.

[Steve]

One thing you can do is you seek out vendors willing to be paid in bitcoins.  These forums are probably a good place to start looking!  Let people here know what you are in need of.

[Shinobi]

While I agree with both of you, neither of you actually said anything about how, you just rephrased my question in answer form. How can that bridge be crossed? And what do retailers have to do in the meantime?

Get used to this. They don't have an answer and just spout circular logic similar to religious zealots.

Get Wal-Mart, McDonalds, and Chevron to accept bitcoin, everyone else will follow suit.

This will *not* happen. As Bitcoin is open-source and given the existing infrastructure of the above-mentioned companies, they are far more likely to create their own version of Bitcoin, with the branding, polish, control and ease that Bitcoin lacks. I don't understand why this is so hard to see.

[julz]

Get Wal-Mart, McDonalds, and Chevron to accept bitcoin, everyone else will follow suit.

This will *not* happen. As Bitcoin is open-source and given the existing infrastructure of the above-mentioned companies, they are far more likely to create their own version of Bitcoin, with the branding, polish, control and ease that Bitcoin lacks. I don't understand why this is so hard to see.

I'm not seeing it.  Many such companies have implemented rewards systems that operate as a sort of limited currency - and these don't seem to stand any chance of becoming a widespread currency controlled by one company yet used by the masses.

If they take the bitcoin decentralised approach, using the open-source software to start a new blockchain - they cede most control over it anyway, so aside from assigning themselves the early-adopter bounty - what do they gain, and why would the world like that any more than the one that already exists?

The uphill battle they'd be fighting is getting up the momentum and trust that the existing blockchain has.   They'll have trouble getting their peers (other major corporations) to accept their version.  
I don't see how a spiffy interface will let them leapfrog bitcoin..   and I'm sure the bitcoin interface and wallet management will make great strides soon anyway.

Would 'branding' a new currency as being associated with a particular company or even consortium of companies really allow it to gain acceptance?

I guess 'corporate-currency' has as much chance as 'hacker-currency' in the fight for credibility - but I suspect bitcoin can shift from being perceived as 'hacker-currency' to something more like "the people's currency".

EDIT: ...and *everyone* wants a slice of the people's money.

[flug]

While I'm aware there isn't any realistic way around this, how can this problem be overcome at a theoretical level?

It can't be overcome.

You're importing goods from the Dollar economy to the Bitcoin economy and must take the hit.

[Anonymous]

Company currencies were a popular resource in great-depression era America, just look at Ford. There's nothing saying that if bitcoin became popular and was somehow deemed legal tender that Wal-Mart could just implement their own. There is absolutely historical precedent.

Actually, this is an interesting comparison. The company currencies were designed to be privately controlled and to limit spending so as to maximize profit for it's creator. Bitcoins seems to have a similar effect, but with an ideology instead of profit mindednedness.

Still, I doubt many vendors are holding on to their bitcoin profits rather than just cashing out, at least for the actual retail storefront vendors as opposed to some of the locals here.

[qikaifu]

I suggest a "Groupon" model. Ask a local vendor provide some discount for the bitcoiners. For example, a cup of coffee was sold 5 dollars, and if someone can pay 0.05 bitcoins to the store, he can buy the coffee at 4 dollars. If we can convince to the vendors that the number of bitcoin adopters is huge enough, then they will accept the offer just like the accept the offer from Groupon.

The point is:

It's easier to persuade a vendor to accept bitcoin as only a part of the payment at first.
They will just think that since my gross profit a this deal is 2 dollars, it's absolutely OK for me to take 4 dollars in my pocket and just put only 1 dollars in risk and get some new customers to enjoy my product, why not?

When they get familiar with bitcoin, they will more likely to adopt bitcoin as a full payment method, just like VISA.

[BitcoinPorn]

I suggest a "Groupon" model. Ask a local vendor provide some discount for the bitcoiners. For example, a cup of coffee was sold 5 dollars, and if someone can pay 0.05 bitcoins to the store, he can buy the coffee at 4 dollars. If we can convince to the vendors that the number of bitcoin adopters is huge enough, then they will accept the offer just like the accept the offer from Groupon.

I agree, more things need to be in place that help promote the stores if the stores cannot do it themselves.

People who were going to be investing in starting up their own loan, bank, or whatever institution because they have extra Bitcoin, should instead try and do something like http://metaco.in does.

[dan_a]

There's no way to overcome this problem at a theoretical level without people up the supply chain accepting Bitcoin.
People up the supply chain will accept Bitcoins if it is in their business interests to do so - so the question becomes "under what circumstances is it going to be in a supplier's interest to accept Bitcoins?"

For a startup, the initial barrier to trading (especially internationally) in Bitcoins might be lower than other forms of payment.  The costs may be lower so they can sell goods for a lower price than their competitors while making the same profit.  If you are the only supplier accepting Bitcoins then that might bring you some extra sales too.