Why Bitcoin is not as global as you might think

[JayB]

How can a virtual currency traded over the internet not be a global currency you might ask? keep on reading...

If we look at how Bitcoins have been created over the past couple of years, it will not be long before we notice that it logically entails that the currency today will be concentrated in certain geographical areas in the world. To see how this is so, think about the dynamics and the rules of how Bitcoins are created:

- Bitcoins are mined by users having a certain type of hardware
- Total Bitcoins mined on a daily basis decrease in a increasing fashion (i.e. total Bitcoins mined today will be more than the ones mined tomorrow)
- The more users mine Bitcoins, the less share each of those users will get
- As time progresses, it becomes more difficult to mine each unit of Bitcoin, as the codes to solve becomes more difficult

Following those rules, it then becomes logical to notice that since Bitcoin spreads faster in the earlier days of its creation, the geographical areas where Bitcoin miners emerged (where Bitcoin started to spread), are the areas with the largest concentration of Bitcoins; not only that, but it's now extremely difficult to get those Bitcoins out of those areas, here's why:

1- For Bitcoin to become widely used in a given geographical area there first must be an abundance of Bitcoins in that area; that is, a sufficient supply of Bitcoin in that area. Since it is now much more difficult for a user to mine a "new" Bitcoin, it is unlikely that supply will take off in currently virgin areas. This in return creates a supply problem (i.e. no enough users having Bitcoins in certain geographical area).

 2- The lack of sufficient supply of Bitcoins in a certain area, will create a demand problem of Bitcoins as well, since the whole ecosystem in that given area will either not be familiar with Bitcoin as a traded currency, or will not be willing to take the risk and start accepting Bitcoins as a means of payment in fear of getting stuck with those Bitcoins and not being able pay with it in return.

This is the network effect at play. To give you another example portraying the same effects think about the following:

If you were to acquire the first telephone in the world, how much would you be willing to pay for it? not much, since it will be nearly worthless (you cannot call anyone with it), but the more telephones in circulation, the more desirable a telephone will become. The reason why Bitcoin first took off in certain areas is because they were easily and freely (nearly freely) distributed (mined). This is like giving out telephones for free. But once Bitcoins started to become more and more available and popular, people started to become more willing to pay for them, since they started acquiring more value (Like paying for a telephone after it became more widely available). Problem is, this network effect is only present in certain geographical areas and not in others, and since now one has to pay a large amount of money to acquire a "New" Bitcoin, it is only worth acquiring it in those areas where it already has value (Network effect value that is).

So what are the implications of that?

It simply implies that Bitcoin is not as global a currency as you might think! It will remain in certain geographical areas (At least in the short to medium term). Try to spend a Bitcoin in the US and it will be a relatively easy task, but try to spend it in the Middle East, and I will wish you good luck with that.....


How can this problem get solved?

Well the only solution I can think of is to make it cheaper for people in virgin areas to acquire Bitcoins, and progressively make it more and more difficult as time goes by as they catch up with the areas having an abundance of Bitcoins. This can be done in 3 different ways:

1- Make it easier to mine Bitcoins in Virgin areas.

2- Create a new currency in Virgin areas that undergoes the same evolution as Bitcoins, and make those different currencies exchangeable at a certain rate

3- Create a flow of Bitcoin donations to users in virgin areas. Not only will this introduce Bitcoins to new areas, but it will in return strengthen the value of Bitcoins worldwide. The more traded Bitcoin becomes, the higher it will go in value and so the net effect will probably become an increase in the total Market Cap of Bitcoins, enough to get back in value what is donated.

Hope this makes sense

[niothor]

If you were to acquire the first telephone in the world, how much would you be willing to pay for it? not much, since it will be nearly worthless (you cannot call anyone with it), but the more telephones in circulation, the more desirable a telephone will become.

When cars , telephones , computers appeared they were extremely pricey , only a few managed to get them.
It happened with internet access it happened with plane tickets.
So , you're very wrong on this one.

Also ,this:

- Total Bitcoins mined on a daily basis decrease in a increasing fashion (i.e. total Bitcoins mined today will be less than the ones mined tomorrow)
you're contradicting yourself.

[WayTooGosu]

Some countries in the middle East have local Bitcoin trading areas. It is not as hard to use them there as you might think.

[PenAndPaper]

1- Make it easier to mine Bitcoins in Virgin areas.

2- Create a new currency in Virgin areas that undergoes the same evolution as Bitcoins, and make those different currencies exchangeable at a certain rate

3- Create a flow of Bitcoin donations to users in virgin areas. Not only will this introduce Bitcoins to new areas, but it will in return strengthen the value of Bitcoins worldwide. The more traded Bitcoin becomes, the higher it will go in value and so the net effect will probably become an increase in the total Market Cap of Bitcoins, enough to get back in value what is donated.

Hope this makes sense

You do understand that bitcoins are data that exist on the internet right? It can't get any more global than that so geographical limitations don't exist in the first place to try and remove them.
If you talk about services around bitcoin then yes there is some imbalance but the market alone will balance things out.

[Arksun]

You don't have to be a miner or even near a miner to use Bitcoins, so I've no idea what the OP's point is. As long as you have an internet connection, you can transfer Bitcoins to anyone else in the world with an internet connection.

[niothor]

1- Make it easier to mine Bitcoins in Virgin areas.

2- Create a new currency in Virgin areas that undergoes the same evolution as Bitcoins, and make those different currencies exchangeable at a certain rate

3- Create a flow of Bitcoin donations to users in virgin areas. Not only will this introduce Bitcoins to new areas, but it will in return strengthen the value of Bitcoins worldwide. The more traded Bitcoin becomes, the higher it will go in value and so the net effect will probably become an increase in the total Market Cap of Bitcoins, enough to get back in value what is donated.

Hope this makes sense

You do understand that bitcoins are data that exist on the internet right? It can't get any more global than that so geographical limitations don't exist in the first place to try and remove them.
If you talk about services around bitcoin then yes there is some imbalance but the market alone will balance things out.

He want's to say something else , I guess. Also , you're a bit wrong with your assumption.
Bitcoin might exist on the internet , but they are owned by people , people who reside somewhere.

That's why a restaurant where you can pay only with bitcoins might exist in London or NY , but it will go out of bussiness in Monrovia.

[JayB]

If you were to acquire the first telephone in the world, how much would you be willing to pay for it? not much, since it will be nearly worthless (you cannot call anyone with it), but the more telephones in circulation, the more desirable a telephone will become.

When cars , telephones , computers appeared they were extremely pricey , only a few managed to get them.
It happened with internet access it happened with plane tickets.
So , you're very wrong on this one.

Also ,this:

- Total Bitcoins mined on a daily basis decrease in a increasing fashion (i.e. total Bitcoins mined today will be less than the ones mined tomorrow)
you're contradicting yourself.

I don't see how I'm contradicting myself.

Anyways, in every technology there are early adopters that will get it even if its costly, the problem is always crossing the chasm to get the technology to the mass population, for technology it works when the technology becomes cheap enough. When I mentioned the telephone example, it's the average person that I was referring to who will not be willing to pay much for it, unless he see's the real value (when the network becomes big enough).

Now the problem with Bitcoin is that it's evolving in the reverse direction as to how usual technology evolves. That is, it's getting harder to acquire every day (And here I'm talking about mining), whereas for usual technology what happens is that it becomes easier to acquire with time. This is the real problem IMO. The early adopters as in many technologies already got it cheaply, and now the mass population, especially in virgin areas can only get it at a high cost....this is in my opinion where the chasm is created.

You do understand that bitcoins are data that exist on the internet right? It can't get any more global than that so geographical limitations don't exist in the first place to try and remove them.
If you talk about services around bitcoin then yes there is some imbalance but the market alone will balance things out.

I understand that, physical boundaries are not the issue, the issues here are "awareness" and "return on investment" boundaries..This is the whole point of my post

[niothor]

If you were to acquire the first telephone in the world, how much would you be willing to pay for it? not much, since it will be nearly worthless (you cannot call anyone with it), but the more telephones in circulation, the more desirable a telephone will become.

When cars , telephones , computers appeared they were extremely pricey , only a few managed to get them.
It happened with internet access it happened with plane tickets.
So , you're very wrong on this one.

Also ,this:

- Total Bitcoins mined on a daily basis decrease in a increasing fashion (i.e. total Bitcoins mined today will be less than the ones mined tomorrow)
you're contradicting yourself.

I don't see how I'm contradicting myself.

You do understand that bitcoins are data that exist on the internet right? It can't get any more global than that so geographical limitations don't exist in the first place to try and remove them.
If you talk about services around bitcoin then yes there is some imbalance but the market alone will balance things out.

I understand that, physical boundaries are not the issue, the issues here are "awareness" and "return on investment" boundaries..This is the whole point of my post

Bitcoin mined today 10 , mined tomorrow 5.
Total bitcoins mined today are more than the one mined tomorrow.

[JayB]

You don't have to be a miner or even near a miner to use Bitcoins, so I've no idea what the OP's point is. As long as you have an internet connection, you can transfer Bitcoins to anyone else in the world with an internet connection.

I know that already, but it will still cost money to get a Bitcoin right?

I mean if I want to pay for a Bitcoin now it will cost me a good sum of money (Whether to pay for it directly or to mine it), so unless I think it has value in the area where I reside, I won't take the initiative and do it.

If supply is not widely available in my area, there will be a demand problem as well, since the whole ecosystem here will not be familiar with Bitcoins as a traded currency (i.e. no business and individuals asking for Bitcoins, because of the lack of the network effect).

If you were to acquire the first telephone in the world, how much would you be willing to pay for it? not much, since it will be nearly worthless (you cannot call anyone with it), but the more telephones in circulation, the more desirable a telephone will become.

When cars , telephones , computers appeared they were extremely pricey , only a few managed to get them.
It happened with internet access it happened with plane tickets.
So , you're very wrong on this one.

Also ,this:

- Total Bitcoins mined on a daily basis decrease in a increasing fashion (i.e. total Bitcoins mined today will be less than the ones mined tomorrow)
you're contradicting yourself.

I don't see how I'm contradicting myself.

You do understand that bitcoins are data that exist on the internet right? It can't get any more global than that so geographical limitations don't exist in the first place to try and remove them.
If you talk about services around bitcoin then yes there is some imbalance but the market alone will balance things out.

I understand that, physical boundaries are not the issue, the issues here are "awareness" and "return on investment" boundaries..This is the whole point of my post

Bitcoin mined today 10 , mined tomorrow 5.
Total bitcoins mined today are more than the one mined tomorrow.

My bad typo mistake...I mean to say total bitcoins mined today are more than the ones mined tomorrow.... (typo corrected)

It's just a typo, I'm not contradicting myself, my point is still the same!

[DannyHamilton]

- Bitcoins are mined by users having a certain type of hardware

In general, correct.  Keep in mind though that mining isn't the only way to acquire bitcoins.

- Total Bitcoins mined on a daily basis decrease in a increasing fashion (i.e. total Bitcoins mined today will be more than the ones mined tomorrow)

Incorrect.

On average, there will be approximately 3,600 BTC mined every day for the next 3 years.  Tomorrow won't have significantly less or more, nor will any other day until late 2016.

- The more users mine Bitcoins, the less share each of those users will get

Not exactly, each miner gets a share proportional to the amount of hashing power they are supplying to the network (not proportional to the number of people mining).  As such, an individual can increase the amount of hashing power they are supplying relative to the total network hashing power and in that way can get more of a share (not less).

- As time progresses, it becomes more difficult to mine each unit of Bitcoin, as the codes to solve becomes more difficult

Not always, it can also get easier.  It all depends on how the total network hashing power changes.  As more hashing power is added, the difficulty increases to make sure that blocks continue to be mined approximately once every 10 minutes.  If some miners shut off their equipment and the total network hashing power decreases, then difficulty decreases as well.

Following those rules, it then becomes logical

Since your initial assumptions are incorrect, perhpas we can disregard as unreliable any conclusions you draw from those assumptions?

1- For Bitcoin to become widely used in a given geographical area there first must be an abundance of Bitcoins in that area; that is, a sufficient supply of Bitcoin in that area.

You may have the cause and effect backwards.  Perhaps for there to be an abundance of bitcoins in an area, bitcoin must first become widely used in that area?

Individuals can acquire bitcoins in ways other than mining.  An individual start an internet based business and accept bitcoins as payment.  They can offer those bitcoins for sale locally to others that desire them.  This brings bitcoins into the area.  As bitcoin becomes more widely used in the area an ever increasing number of people in the area become aware of the existence and usefullness.  The resulting desire drives an increase in acquisition eventually resulting in an abundance of bitcoins.

Since it is now much more difficult for a user to mine a "new" Bitcoin, it is unlikely that supply will take off in currently virgin areas.

That would only be true if mining was the only way for people to acquire bitcoins.  There are currency exchanges, locals willing to trade, and internet based businesses and charities.  All of these are sources of bitcoins for a community that doesn't have profitable access to mining.

2- The lack of sufficient supply of Bitcoins in a certain area, will create a demand problem of Bitcoins as well, since the whole ecosystem in that given area will either not be familiar with Bitcoin as a traded currency

Because the lack of local bitcoin supply prevents them from reading magazines, and newspapers?  The lack of local bitcoin supply prevents then from watching TV?  It keeps them from accessing blogs, forums, and youTube?  I don't understand why this would be.

or will not be willing to take the risk and start accepting Bitcoins as a means of payment in fear of getting stuck with those Bitcoins and not being able pay with it in return.

Fortunately, currency exchanges provide a method of eliminating that risk.

It simply implies that Bitcoin is not as global a currency as you might think! It will remain in certain geographical areas (At least in the short to medium term). Try to spend a Bitcoin in the US and it will be a relatively easy task, but try to spend it in the Middle East, and I will wish you good luck with that.....

Or perhaps it simply implies that you don't understand how mining works, and you haven't thought very carefully about what the potential is for bitcoin in areas that didn't get involved in mining early on.

Well the only solution I can think of is to make it cheaper for people in virgin areas to acquire Bitcoins, and progressively make it more and more difficult as time goes by as they catch up with the areas having an abundance of Bitcoins.

But if they aren't made cheaper, then they will be more desireable increasing the incentive for people in those areas to put the necessary effort into acquiring them.

1- Make it easier to mine Bitcoins in Virgin areas.

You have a suggestion on a reliable way to make a protocol aware of where it is?

2- Create a new currency in Virgin areas that undergoes the same evolution as Bitcoins, and make those different currencies exchangeable at a certain rate

How exactly do you keep people from exchanging at a rate that is different than the "certain rate" that you want the exchange to occur at?

3- Create a flow of Bitcoin donations to users in virgin areas. Not only will this introduce Bitcoins to new areas, but it will in return strengthen the value of Bitcoins worldwide. The more traded Bitcoin becomes, the higher it will go in value and so the net effect will probably become an increase in the total Market Cap of Bitcoins, enough to get back in value what is donated.

Great!  Feel free to buy up and donate as many as you like.  Nobody is stopping you.

[odolvlobo]

JayB,

I congratulate you for your effort. This is an excellent first post. Not many newbies jump in like you have. Please don't let these criticisms deter you. The response has been overwhelmingly negative, but the fact that you weren't flamed means that your post was worth reading.

I agree with your idea that bitcoin adoption is concentrated in geographic areas and that there could be ways to increase adoption in the areas that lag, but like the others I feel that the reasons that you give for the uneven adoption are not very good. I suggest that you use the criticisms here to improve your idea.

[JayB]

- Bitcoins are mined by users having a certain type of hardware

In general, correct.  Keep in mind though that mining isn't the only way to acquire bitcoins.

- Total Bitcoins mined on a daily basis decrease in a increasing fashion (i.e. total Bitcoins mined today will be more than the ones mined tomorrow)

Incorrect.

On average, there will be approximately 3,600 BTC mined every day for the next 3 years.  Tomorrow won't have significantly less or more, nor will any other day until late 2016.

- The more users mine Bitcoins, the less share each of those users will get

Not exactly, each miner gets a share proportional to the amount of hashing power they are supplying to the network (not proportional to the number of people mining).  As such, an individual can increase the amount of hashing power they are supplying relative to the total network hashing power and in that way can get more of a share (not less).

- As time progresses, it becomes more difficult to mine each unit of Bitcoin, as the codes to solve becomes more difficult

Not always, it can also get easier.  It all depends on how the total network hashing power changes.  As more hashing power is added, the difficulty increases to make sure that blocks continue to be mined approximately once every 10 minutes.  If some miners shut off their equipment and the total network hashing power decreases, then difficulty decreases as well.

Following those rules, it then becomes logical

Since your initial assumptions are incorrect, perhpas we can disregard as unreliable any conclusions you draw from those assumptions?

1- For Bitcoin to become widely used in a given geographical area there first must be an abundance of Bitcoins in that area; that is, a sufficient supply of Bitcoin in that area.

You may have the cause and effect backwards.  Perhaps for there to be an abundance of bitcoins in an area, bitcoin must first become widely used in that area?

Individuals can acquire bitcoins in ways other than mining.  An individual start an internet based business and accept bitcoins as payment.  They can offer those bitcoins for sale locally to others that desire them.  This brings bitcoins into the area.  As bitcoin becomes more widely used in the area an ever increasing number of people in the area become aware of the existence and usefullness.  The resulting desire drives an increase in acquisition eventually resulting in an abundance of bitcoins.

Since it is now much more difficult for a user to mine a "new" Bitcoin, it is unlikely that supply will take off in currently virgin areas.

That would only be true if mining was the only way for people to acquire bitcoins.  There are currency exchanges, locals willing to trade, and internet based businesses and charities.  All of these are sources of bitcoins for a community that doesn't have profitable access to mining.

2- The lack of sufficient supply of Bitcoins in a certain area, will create a demand problem of Bitcoins as well, since the whole ecosystem in that given area will either not be familiar with Bitcoin as a traded currency

Because the lack of local bitcoin supply prevents them from reading magazines, and newspapers?  The lack of local bitcoin supply prevents then from watching TV?  It keeps them from accessing blogs, forums, and youTube?  I don't understand why this would be.

or will not be willing to take the risk and start accepting Bitcoins as a means of payment in fear of getting stuck with those Bitcoins and not being able pay with it in return.

Fortunately, currency exchanges provide a method of eliminating that risk.

It simply implies that Bitcoin is not as global a currency as you might think! It will remain in certain geographical areas (At least in the short to medium term). Try to spend a Bitcoin in the US and it will be a relatively easy task, but try to spend it in the Middle East, and I will wish you good luck with that.....

Or perhaps it simply implies that you don't understand how mining works, and you haven't thought very carefully about what the potential is for bitcoin in areas that didn't get involved in mining early on.

Well the only solution I can think of is to make it cheaper for people in virgin areas to acquire Bitcoins, and progressively make it more and more difficult as time goes by as they catch up with the areas having an abundance of Bitcoins.

But if they aren't made cheaper, then they will be more desireable increasing the incentive for people in those areas to put the necessary effort into acquiring them.

1- Make it easier to mine Bitcoins in Virgin areas.

You have a suggestion on a reliable way to make a protocol aware of where it is?

2- Create a new currency in Virgin areas that undergoes the same evolution as Bitcoins, and make those different currencies exchangeable at a certain rate

How exactly do you keep people from exchanging at a rate that is different than the "certain rate" that you want the exchange to occur at?

3- Create a flow of Bitcoin donations to users in virgin areas. Not only will this introduce Bitcoins to new areas, but it will in return strengthen the value of Bitcoins worldwide. The more traded Bitcoin becomes, the higher it will go in value and so the net effect will probably become an increase in the total Market Cap of Bitcoins, enough to get back in value what is donated.

Great!  Feel free to buy up and donate as many as you like.  Nobody is stopping you.

Sure you can live in your dreams, but reality is it's getting more and more difficult to extract each MARGINAL Bitcoin, which is what leads to my conclusion. The givens I have talked about can be broken "theoretically" that's for sure, but reality is, it never will... (I suggest you try reading a little bit more about economics and the science of human behaviors...to get out of your dreams).

Until then, sweet dreams.

[freakying99]

How can this problem get solved?

Well the only solution I can think of is to make it cheaper for people in virgin areas to acquire Bitcoins, and progressively make it more and more difficult as time goes by as they catch up with the areas having an abundance of Bitcoins. This can be done in 3 different ways:

1- Make it easier to mine Bitcoins in Virgin areas.

2- Create a new currency in Virgin areas that undergoes the same evolution as Bitcoins, and make those different currencies exchangeable at a certain rate

3- Create a flow of Bitcoin donations to users in virgin areas. Not only will this introduce Bitcoins to new areas, but it will in return strengthen the value of Bitcoins worldwide. The more traded Bitcoin becomes, the higher it will go in value and so the net effect will probably become an increase in the total Market Cap of Bitcoins, enough to get back in value what is donated.

Who will decide where Virgin areas are ?

About the donations, I guess free faucets already doing exactly this.

[alphainvested]

It takes long time to realize decentralization of virtual currencies like bitcoin.

You would have asked a right question.

People like you are thinking about it and taking enough to make it viable everywhere.

My point is I have to stand and listen to every move now.

[DannyHamilton]

Sure you can live in your dreams, but reality is it's getting more and more difficult to extract each MARGINAL Bitcoin, which is what leads to my conclusion. The givens I have talked about can be broken "theoretically" that's for sure, but reality is, it never will... (I suggest you try reading a little bit more about economics and the science of human behaviors...to get out of your dreams).

Until then, sweet dreams.

Ok, I'll try reading a little bit more about economics and the science of human behaviors to get out of my dreams.

In the mean time, I suggest you read a bit more about how bitcoin works before you try to make guesses and give advice on how to fix what you think is broken.

Deal?

[JayB]

Sure you can live in your dreams, but reality is it's getting more and more difficult to extract each MARGINAL Bitcoin, which is what leads to my conclusion. The givens I have talked about can be broken "theoretically" that's for sure, but reality is, it never will... (I suggest you try reading a little bit more about economics and the science of human behaviors...to get out of your dreams).

Until then, sweet dreams.

Ok, I'll try reading a little bit more about economics and the science of human behaviors to get out of my dreams.

In the mean time, I suggest you read a bit more about how bitcoin works before you try to make guesses and give advice on how to fix what you think is broken.

Deal?

We got a deal bro.......

BTW this post is a hands on experience I am facing at the moment. I personally live in the Middle East in a country where Bitcoin is not at all well known.

Now how Can I convince people to start using Bitcoin here?

1- I can ask them to mine it, their response will be: We will be spending months and months for mining a ridiculously low amount of Bitcoins, and it will probably cost us more money in the process.

2- I can ask them to buy Bitcoins in the open market, their response will be: Why would I pay thousands of dollars for Bitcoins if I can't even use them here? if we walk into a restaurant and ask to pay with Bitcoins the owner will probably laugh at us.

If everyone thinks like that, then Bitcoins will never take off here.

To break this resistance I think the area should be cheaply introduced to Bitcoins, so their reaction then becomes: well if it costs me nearly nothing to get it, then yes why not....give me some. And then if enough people start "having some", then the network effect starts building up, and the currency starts acquiring some value.

This is exactly what happened in the first countries where Bitcoin started, the first adopters were getting it very cheaply. Now off-course some people really believe in it and they were getting it because of this strong emotional bond to it, but the vast majority of people got it cheaply hoping it will one day be worth something. They were speculating with low risk and high return potential.

Problem is, now the risk is higher and the return is lower.....

[imamanandyou]

This is exactly what happened in the first countries where Bitcoin started, the first adopters were getting it very cheaply. Now off-course some people really believe in it and they were getting it because of this strong emotional bond to it, but the vast majority of people got it cheaply hoping it will one day be worth something. They were speculating with low risk and high return potential.

I would say high risk and high return potential

Problem is, now the risk is higher and the return is lower.....

I would say now the risk is lower and the return is lower.

Exactly how economy teaches us.
Bitcoin success was much less likely years ago than bitcoin success likelihood today

[JayB]

This is exactly what happened in the first countries where Bitcoin started, the first adopters were getting it very cheaply. Now off-course some people really believe in it and they were getting it because of this strong emotional bond to it, but the vast majority of people got it cheaply hoping it will one day be worth something. They were speculating with low risk and high return potential.

I would say high risk and high return potential

Problem is, now the risk is higher and the return is lower.....

I would say now the risk is lower and the return is lower.

Exactly how economy teaches us.
Bitcoin success was much less likely years ago than bitcoin success likelihood today

Risk & Return are two side of the same coin. You mentioned early adopters were taking HIGH risk for a potentially high return, but what were they risking? a couple of cents of electricity bill? I don't call that a high risk.

If you want to buy a Bitcoin today it will cost you more than 1000$, now this, I would surely not call a low risk. Think about it....

Also supposedly what you are saying is correct, people will still look at things from a biased point of view.

The fact that you could get 1 Bitcoin so cheaply in the past, made it look like a good investment even if on papers it was not. Same thing happens when you take a chance at lottery. On paper lottery is one of the worse investments you could ever make, people still make them because the amount you pay upfront is tiny compared to the amount you can be making if you win. Try to sell a lottery ticket for 1 Million dollars with more than 1 million times better winning odds than the ticket you sell for 1$ and chances are no one will buy it (even though it makes more sense from a risk return POV).

[DannyHamilton]

1- I can ask them to mine it, their response will be: We will be spending months and months for mining a ridiculously low amount of Bitcoins, and it will probably cost us more money in the process.

Mining requires specialized hardware.  Unless you have access to the latest hardware at a reasonable price and cheap electricity, I'd never recommend mining to anyone.

2- I can ask them to buy Bitcoins in the open market, their response will be: Why would I pay thousands of dollars for Bitcoins if I can't even use them here?

Why should they spend thousands of dollars?  They can buy $25 dollars of bitcoins if they want.  Why would you push someone to spend so much if they can't afford it?  That's just silly.  3 years ago, if you bought $25 worth of bitcoins, you could use those bitcoins to buy about $25 worth of stuff.  Today, if you buy $25 dollars worth of bitcoins you can use those bitcoins to buy about $25 worth of stuff.  Nothing has changed here.

if we walk into a restaurant and ask to pay with Bitcoins the owner will probably laugh at us.

And that was true in all the "early adopting" areas as well.  It took the courage of the early adopters to risk being laughed at when most of the world thought that bitcoins was "imaginary money" or a "ponzi scheme".  Slowly people came to understand.  It will be the same everywhere.

If everyone thinks like that, then Bitcoins will never take off here.

That's no different than it was in the beginning.  Fortunately, not everyone thinks like that.  There are innovators, and entrepreneurs who are able to see the potential and are willing to take a risk for the potential reward.

To break this resistance I think the area should be cheaply introduced to Bitcoins, so their reaction then becomes: well if it costs me nearly nothing to get it, then yes why not....give me some. And then if enough people start "having some", then the network effect starts building up, and the currency starts acquiring some value.

I agree.  You should offer to sell cheap amounts of bitcoin so that people will do that.  Perhaps sell in $5 quantities.

This is exactly what happened in the first countries where Bitcoin started, the first adopters were getting it very cheaply. Now off-course some people really believe in it and they were getting it because of this strong emotional bond to it, but the vast majority of people got it cheaply hoping it will one day be worth something. They were speculating with low risk and high return potential.

And this is still true today.  The only thing that has changed is the position of the decimal point.  Today you can get 1 millibitcoin (mBTC) for somewhere between $1.00 and $1.20.  How is this any different than when you could get 1 BTC for somewhere between $1.00 and $1.20?

Problem is, now the risk is higher and the return is lower.....

I suspect that you are going to be wrong about that.  Lets take another look at this post in a year or two and see.

If BTC could go from $1 per BTC to $1000 per BTC in 2.5 years, it is quite possible that mBTC could go from $1.00 to $1000 in 2.5 years.

[DannyHamilton]

Risk & Return are two side of the same coin. You mentioned early adopters were taking HIGH risk for a potentially high return, but what were they risking? a couple of cents of electricity bill? I don't call that a high risk.

If you want to buy a Bitcoin today it will cost you more than 1000$, now this, I would surely not call a low risk. Think about it....

You clearly don't understand the concept of risk.

I think I've just lost patience for this conversation.  I'll be moving on now.