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Author Topic: Bitcoin won't succeed without your help.  (Read 899 times)
Ten98
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August 17, 2011, 12:04:13 PM
 #1

I don't understand why when people talk about the future of Bitcoin they either think about next week:

"OMG THE PRICE IS GOING UP / DOWN"

or 20-30 years time

"OMG WHAT ABOUT WHEN 1BTC IS WORTH $1M HOW WILL YOU SHOW IT ON A PRICE TAG IN A STORE"

The problem is we have a whole big chunk in the middle missing. If we want to run this thing like a business, we need to start thinking about the next 1-2 years.

At the moment we are still in embryo stage, sure it's a pretty huge embryo worth millions of dollars, but it's still pretty fragile and niche. If Mt Gox had their bank accounts frozen this could all be over in an instant. We need to get the law on our side, we need mass-market adoption and approval, and we need to start to diversify the currency exchanges.

Here's what I see as the 3 top medium term priorities for the success of BTC:

1: More places to spend BTC
More people than ever want to buy stuff with their Bitcoins. I'd love it if someone would start an eBay type site that deals only in BTC (in legal goods only), or more shops which sell items online in BTC as well as / instead of $. How about a storefront like Amazon but with a Bitcoin powered checkout, so that any seller can come along and add inventory to the site and gain rep, for a small fee?

2: Public knowledge and acceptance of the benefits of BTC as a currency, not an investment
If you want to try and drive the price up long-term, investment isn't the way. Get out there and spread the word, but focus on Bitcoin's use as a currency transfer system that can replace expensive and corrupt corporate alternatives like Paypal rather than an extreme risk investment opportunity... For example, many people would like to donate to Wikileaks, but can't because the banks block them. Explain to anyone in this position why using Bitcoin to donate is the best method and how to go about it?

3: More exchanges, legal ones.
There are many exchanges out there already but all of them are subject to the whims of the financial organisations they're working with. More is better. If you want to try to safegaurd Bitcoin's immediate future, set up a currency exchange and get solid agreements in place with the banks you work with.
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Steve
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August 17, 2011, 12:35:08 PM
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I've said this before, but I think it's worth repeating.  Growing the bitcoin economy is very simple.  Dedicate a portion of your earnings to buying bitcoin every week (however small that may be doesn't matter).  And never sell bitcoins on an exchange if you can possibly help it.  Instead, use those bitcoins to buy stuff (or pay people).  I think if everyone tried to do this, it would be the most effect way to grow bitcoin usage.  Trying to explicitly market bitcoin to people that may not know or care about it can backfire (but countering anti-bitcoin propaganda is important).

(gasteve on IRC) Does your website accept cash? https://bitpay.com
Ten98
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August 17, 2011, 01:11:26 PM
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I've said this before, but I think it's worth repeating.  Growing the bitcoin economy is very simple.  Dedicate a portion of your earnings to buying bitcoin every week (however small that may be doesn't matter).  And never sell bitcoins on an exchange if you can possibly help it.  Instead, use those bitcoins to buy stuff (or pay people).  I think if everyone tried to do this, it would be the most effect way to grow bitcoin usage.  Trying to explicitly market bitcoin to people that may not know or care about it can backfire (but countering anti-bitcoin propaganda is important).

Totally agreed, but right now the places you can buy stuff with BTC is extremely limited. So this cannot happen without the community really focusing on priority #1 above. Once the sites are created the trade throughput will automatically follow.

Personally, I'm sitting on a lot of stock that I want to sell for Bitcoins, but there's no site I can sell it on apart from black markets which also sell drugs, and want to charge me 15BTC to become a seller.  Angry I don't have the expertise needed to create a free-to-join ebay style site of my own, so I'm stuck.

I'm sure I'm not alone. The community as a whole has masses of stuff (especially miners getting out of the game selling graphics cards) that they want to sell but nowhere to do it.

I'm really impressed with your Bitpay site BTW, tools like yours will make it so much easier for merchants and auction sites to exist!
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August 17, 2011, 01:23:18 PM
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I agree with all your examples. But I would add the possibility that even without help, bitcoin will find a niche. Speculation has become an unintended center of the bitcoin economy. But maybe that is just going to happen. It does make a mean currency for arbitrage, for example.
Perhaps this will lead to wider adoption by those who see it's core benefits as "the money of the Internet"?

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August 17, 2011, 01:29:32 PM
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I've said this before, but I think it's worth repeating.  Growing the bitcoin economy is very simple.  Dedicate a portion of your earnings to buying bitcoin every week (however small that may be doesn't matter).  And never sell bitcoins on an exchange if you can possibly help it.  Instead, use those bitcoins to buy stuff (or pay people).  I think if everyone tried to do this, it would be the most effect way to grow bitcoin usage.  Trying to explicitly market bitcoin to people that may not know or care about it can backfire (but countering anti-bitcoin propaganda is important).
I totally agree with you on that.  If we start slowly using BitCoins more and more, then one day it can become a mainstream currency.  The world needs this, as government controlled currencies are the thing of the past and seem to only cause trouble nowadays.

Ten98
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August 17, 2011, 02:10:18 PM
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I agree with all your examples. But I would add the possibility that even without help, bitcoin will find a niche. Speculation has become an unintended center of the bitcoin economy. But maybe that is just going to happen. It does make a mean currency for arbitrage, for example.
Perhaps this will lead to wider adoption by those who see it's core benefits as "the money of the Internet"?

No, here's why:

1:
Any investment with the level of risk attached to Bitcoin is a huge turn-off for most people, so investment certainly should not be used a selling point to anyone unfamiliar with Bitcoin. That's not to say people shouldn't speculate and invest by any means, it certainly attracts interest in Bitcoin and can be extremely lucrative for investors.

2:
Speculation and the huge variances in value of a Bitcoin actually detract from the usefulness as a transmission currency and make it more difficult for people who want to use it as such. To trade effectively in Bitcoins, I must adjust my prices in real-time and sell the coins immediately after receiving them, incurring a loss equal to the current market spread. If the spread is larger due to speculation, I lose more. If I wait a while to sell my coins I may lose or I may gain, depending on the whims of the market. This unpredictability is a problem for web shops looking to cash out in dollars in order to re-invest in more stock, for example.

On the other side of the coin, (sorry I couldn't resist) it's good for my customers when the price of a Bitcoin is going up, but bad for them if it's going down. Such variances in price would make it exciting, but somewhat of a gamble to shop on a site that accepts bitcoins but pegs the price to a fixed dollar amount, as you could literally watch the price of an item change price every time you refreshed the page and wait for the best time to buy.

Eventually, enough money will be invested in Bitcoin such that the changes in price are .1% per day instead of 10% per day, which negates a lot of the problems above, but at the moment no, speculation does us no favours at all.
Ben Walsh (beamer)
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August 17, 2011, 02:28:48 PM
 #7

Have you looked at http://bidbitcoins.com and http://www.biddingpond.com ?

BTC Difficulty Avg Change Google Gadget - http://bit.ly/nWZLkr
How many Bitcoins can I expect to mine ? - http://bitcoindetailedcalculator.appspot.com
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Ten98
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August 17, 2011, 02:37:54 PM
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Both sites look very promising (and empty lol).

The fees on bidbitcoins are extortionate, even higher than ebay Huh certainly won't be using that.

Biddingpond looks to have exactly the right idea, simple site, free to list but you can pay for listing upgrades if you wish. I shall add some stuff to that for sure..

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August 17, 2011, 02:46:25 PM
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Speculation and the huge variances in value of a Bitcoin actually detract from the usefulness as a transmission currency and make it more difficult for people who want to use it as such. To trade effectively in Bitcoins, I must adjust my prices in real-time and sell the coins immediately after receiving them, incurring a loss equal to the current market spread. If the spread is larger due to speculation, I lose more. If I wait a while to sell my coins I may lose or I may gain, depending on the whims of the market. This unpredictability is a problem for web shops looking to cash out in dollars in order to re-invest in more stock, for example.
With bit-pay.com, our merchants can set prices in USD (and soon other currencies) and receive payout in USD...if they elect to receive payout in BTC, they receive whatever price they set minus a flat 2.99% (which is substantially lower than the total fees they would likely incur with credit cards and no chargebacks to boot).  They are not exposed at all to the volatility of bitcoin (however we would certainly prefer more merchants to accept bitcoin payout instead of USD).

Quote
On the other side of the coin, (sorry I couldn't resist) it's good for my customers when the price of a Bitcoin is going up, but bad for them if it's going down. Such variances in price would make it exciting, but somewhat of a gamble to shop on a site that accepts bitcoins but pegs the price to a fixed dollar amount, as you could literally watch the price of an item change price every time you refreshed the page and wait for the best time to buy.
Setting prices in a more stable currency actually helps stabilize bitcoins prices...consider that when the value of bitcoin falls, people have to spend more bitcoin to purchase the same goods and services.  To the extent that the demand for the good or service remains constant, this increases the demand for bitcoin and thus counteracting the decline in value.  On the other side, as the value of bitcoin rises, you get more for your bitcoins and (again assuming relatively stable demand for the good/service) the demand for bitcoins is lowered.

As distasteful as it is to have to set prices in some other currency, I think it's a necessity in the near term given the volatility of bitcoin.  Perhaps we need mechanisms to set prices in gold or silver terms for those that find fiat currencies distasteful.

(gasteve on IRC) Does your website accept cash? https://bitpay.com
Ten98
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August 17, 2011, 02:58:58 PM
 #10


With bit-pay.com, our merchants can set prices in USD (and soon other currencies) and receive payout in USD...if they elect to receive payout in BTC, they receive whatever price they set minus a flat 2.99% (which is substantially lower than the total fees they would likely incur with credit cards and no chargebacks to boot).  They are not exposed at all to the volatility of bitcoin (however we would certainly prefer more merchants to accept bitcoin payout instead of USD).


Nice, so you take the currency exchange difficulties away from the seller for a fee. I think 3% is relatively high given the leap of faith customers have to make to use coins as payment, but I'm sure many will have enough in their margin to be able to afford it. It's certainly a lot cheaper than Paypal, and a heck of a lot cheaper if you take Paypal chargebacks into account.

Quote

As distasteful as it is to have to set prices in some other currency, I think it's a necessity in the near term given the volatility of bitcoin.  Perhaps we need mechanisms to set prices in gold or silver terms for those that find fiat currencies distasteful.


Not a great idea, all you do then is compound the volatility of BTC with the volatility of the gold price.

I don't think any serious shop can set their prices in BTC right now and expect to survive as a business. I don't have the option to reject all fiat currencies *just* yet... There are no suppliers I can buy stock from in Bitcoins, and no courier services I can pay in Bitcoins either, in fact all of my costs will be in my local currency, so that's what I have to base my prices on.

Many years down the line we will have shops who say "This item costs 10BTC no matter what the exchange rate is", but we are a long, long way off from this being a smart thing to do.
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August 17, 2011, 05:52:26 PM
 #11

I'd love it if someone would start an eBay type site that deals only in BTC (in legal goods only)

You mean like Bidding Pond?
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