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Author Topic: Why Is Getting Bitcoin "Accepted" As A Form Of Payment So Important???  (Read 5567 times)
gigabytecoin
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March 12, 2011, 12:11:43 PM
 #1

That seems to be the general consensus around here at least, is it not? That we need to focus on making bitcoin an accepted form of payment at as many institutions as possible. And ASAP.

Gold is the world standard in terms of holding a value.

But nobody can take their bar of gold to a store and buy a pack of gum.

Most everybody's gold is held in a vault. You rarely get to touch it. But you don't have to. You know you can't take a bar and go buy a car. But you don't care.

These qualities of gold are quite similar to bitcoin and it's intangibility.

I think we need to start thinking about catering to a more... swiss-bank-account-holder-type so to speak.

Let the world know that you can securely store your net worth and access it at anytime, for the cost of an average banking transaction fee and I would assume that investment into the bitcoin platform would skyrocket.

Why try to change bitcoin from what it already is? A store of value.

I think it would be a much easier and saner a goal to achieve first (making bitcoin an accepted store of value), before we strain the community too much in trying to tackle an incredibly competitive payments market. I mean... those companies work on margins of fractions of a percent. They have ties with big banks and government, most of whom most likely won't want to deal with us - at first at least.

Besides, we need people to have money invested in bitcoin in order to spend it first, right?!
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gigabytecoin
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March 12, 2011, 01:49:44 PM
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Another major hurdle I foresee as plaguing bitcoin is it's irreversibility of transactions.

I was just imagining an ebay-like auction site for example... that promoted/accepted bitcoins as a form of payment.

Anyone buying from an ebay seller (or craigslist/etc) is told to never send payment via western union. Mainly because it is irreversible.

What can bitcoin do to avoid this payment pitfall?

Nevermind unscrupulous ebay sellers... I can picture many a "businessman" in the brick and mortar setting that when confronted about a refund might respond "what payment?"...
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March 12, 2011, 02:11:54 PM
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(1) Gold is store of value without being a currency because the commodity exchanges are very liquid. Currently BTC exchanges are fairly liquid (given its small size), yet that may not hold if it doesn't find a large transactional base. Its true that BTC *could* become just a speculative investment mechanism, but stocks have that market fairly saturated.

(2) Irreversibility. This is the same topic that comes up every 3 weeks on this board as new members join. The short version response is: "So what?". BTC is electronic cash, and as such its exactly like cash....if you meet someone off craigslist and give him $20 USD, its gone. Same here.

Having said that, if the market desires such features the equivalent bitcoin-visa, bitcoin-paypal services will eventually spring up....just as these meta-currency services appeared as a way to add new features to plain old cash.
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March 12, 2011, 02:14:21 PM
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Why try to change the steam engine from what it already is? A water pump. Taking the pumping market first is a much saner goal than trying to tackle the incredibly competitive motive power market. I mean, those horse breeders and stables work on margins of fractions of a percent. They have ties with big canal operators, stagecoach companies and government, most of whom most likely won't want to deal with us - at first at least.
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March 12, 2011, 02:28:21 PM
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Why try to change the steam engine from what it already is? A water pump. Taking the pumping market first is a much saner goal than trying to tackle the incredibly competitive motive power market. I mean, those horse breeders and stables work on margins of fractions of a percent. They have ties with big canal operators, stagecoach companies and government, most of whom most likely won't want to deal with us - at first at least.

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March 12, 2011, 02:33:29 PM
 #6

Gold has a long history of use as a store of value. Sheer cognitive dissonance will help it keep its value. Bitcoin doesn't have such a history and must therefore earn its place if it's to be seen as a long-term investment. Being able to actually use it for something is a big help.

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March 12, 2011, 03:25:56 PM
 #7

I think it would be a much easier and saner a goal to achieve first (making bitcoin an accepted store of value), before we strain the community too much in trying to tackle an incredibly competitive payments market. I mean... those companies work on margins of fractions of a percent. They have ties with big banks and government, most of whom most likely won't want to deal with us - at first at least.

In general, I share some parts of your view but...
Competitiveness? I don't know about your country, but in mine, I have to pay more than 20% to government if I sell something. I think we can do better.

Variance is a bitch!
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March 12, 2011, 03:59:50 PM
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Most everybody's gold is held in a vault. You rarely get to touch it. But you don't have to. You know you can't take a bar and go buy a car. But you don't care.

I expect if I walked into a car dealership able to pay for a car in gold they would gladly accept it if it meant a sale.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
Mike Hearn
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March 12, 2011, 05:30:33 PM
 #9

Another major hurdle I foresee as plaguing bitcoin is it's irreversibility of transactions.

You're only looking at it from the buyers side. What about the seller?

You can add escrow on top of BitCoin but it's hard to add irreversibility on top of credit cards.

There are several ways to do escrow. Look at ClearCoin for one example where you place your money in the trust of a third party until both sides agree the sale has gone OK.

But you can also set up BitCoin to support a form of escrow without needing a third party to hold your coins in the meantime. They only get involved if there's a dispute.

Chargebacks provide something a bit like escrow or mediation, except the CC companies always side with the buyer and not the seller - so it's not a very high quality mediation.

The reason people are told to never send via Western Union is because that form of payment is overwhelmingly used by scammers, partly because it's irreversible but partly because it's one of the few forms of payment that work in the parts of the world where the scammers live.
gigabytecoin
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March 12, 2011, 08:42:12 PM
 #10

Why try to change the steam engine from what it already is? A water pump. Taking the pumping market first is a much saner goal than trying to tackle the incredibly competitive motive power market. I mean, those horse breeders and stables work on margins of fractions of a percent. They have ties with big canal operators, stagecoach companies and government, most of whom most likely won't want to deal with us - at first at least.


I like your quip, but.... That's all it is, a quip.

Horse breeders did not work on fractions of a percent.

And...

This isn't the 1800s.
gigabytecoin
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March 12, 2011, 08:44:43 PM
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I think it would be a much easier and saner a goal to achieve first (making bitcoin an accepted store of value), before we strain the community too much in trying to tackle an incredibly competitive payments market. I mean... those companies work on margins of fractions of a percent. They have ties with big banks and government, most of whom most likely won't want to deal with us - at first at least.

In general, I share some parts of your view but...
Competitiveness? I don't know about your country, but in mine, I have to pay more than 20% to government if I sell something. I think we can do better.

Sorry for the double posts guys... But I am no good with multi-quote.

I don't believe that circumventing government taxes is going to help our cause at all. In fact I think it will be our downfall.

If your government charges too high of a tax bracket or other ridiculous fees there are already ways around this.
gigabytecoin
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March 12, 2011, 08:46:15 PM
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Most everybody's gold is held in a vault. You rarely get to touch it. But you don't have to. You know you can't take a bar and go buy a car. But you don't care.

I expect if I walked into a car dealership able to pay for a car in gold they would gladly accept it if it meant a sale.

Try it. Unless it's obviously 10x the car's value or something... they'll tell you to take it to a bank first.

Even if it was 10x the car's value. How would a car dealership know it was real 24k gold?
gigabytecoin
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March 12, 2011, 08:50:31 PM
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Another major hurdle I foresee as plaguing bitcoin is it's irreversibility of transactions.

You're only looking at it from the buyers side. What about the seller?

You can add escrow on top of BitCoin but it's hard to add irreversibility on top of credit cards.

There are several ways to do escrow. Look at ClearCoin for one example where you place your money in the trust of a third party until both sides agree the sale has gone OK.

But you can also set up BitCoin to support a form of escrow without needing a third party to hold your coins in the meantime. They only get involved if there's a dispute.

Chargebacks provide something a bit like escrow or mediation, except the CC companies always side with the buyer and not the seller - so it's not a very high quality mediation.

The reason people are told to never send via Western Union is because that form of payment is overwhelmingly used by scammers, partly because it's irreversible but partly because it's one of the few forms of payment that work in the parts of the world where the scammers live.

CC Companies do not always side with the seller in my experience. I have fond memories of a few hours spent on the phone to my company which confirm this.

Look, guys, I'm not trying to ruin your spirits or bash bitcoin in any way. I simply thought it would make more sense to add some value to the currency first, before we both with trying to get anybody to spend it.

Yes, you're right. We could try to create our own banks, our own bitcoin credit cards, we could integrate bitcoin with visa, mastercard and all of the local debit cards in the world... but I think we will die trying. Without any real value in the system at least... why would visa/banks/anybody even look at us when the average value of the entire currency is only a few million bucks?
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March 12, 2011, 09:42:13 PM
 #14


Most everybody's gold is held in a vault. You rarely get to touch it. But you don't have to. You know you can't take a bar and go buy a car. But you don't care.

I expect if I walked into a car dealership able to pay for a car in gold they would gladly accept it if it meant a sale.

Try it. Unless it's obviously 10x the car's value or something... they'll tell you to take it to a bank first.

Even if it was 10x the car's value. How would a car dealership know it was real 24k gold?

If it was recognized gold bullion coins and I walked in there and had a plausible reason for why I wanted to do the transaction that way, why should they say no and lose a sale?  They would do a thousand jumping jacks on the showroom floor upon request, or bring in a masseuse to rub you down while you signed the papers, if you seriously convinced them that's what it took for you to buy the car from them, as silly as it sounds.

How would the car dealership know it was 24K gold?  How do they know that when they hand me the keys for a test drive, I'm not going to just drive off and never return?  I'm sure they'd make sure they had some sort of recourse before accepting such a deal (after rolling their eyes etc.)

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
mndrix
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March 12, 2011, 10:27:29 PM
 #15

Why try to change bitcoin from what it already is? A store of value.

Personally, I'm not looking for a store of value.  I want a low-cost, non-reversible, resilient means of Internet payment.  Bitcoin does that better than gold or silver, so that's why I work towards its success.
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March 12, 2011, 11:01:47 PM
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Before something can be a store of value, it needs to have value. Gold gained this initially through being wanted for use in jewelry. The only way bitcoin can gain value, is by proving its worth as a useful (or even best) means of electronic payment.

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March 13, 2011, 12:31:38 AM
 #17

Before something can be a store of value, it needs to have value. Gold gained this initially through being wanted for use in jewelry. The only way bitcoin can gain value, is by proving its worth as a useful (or even best) means of electronic payment.

Gold is useful for lots of other things, like plumbing, ductwork, electrical wire, and as a general anti corrosive coating.  It is useful for lots of things just like any other metal.  Only because of its high price does it not make sense to use gold for everyday things, and that high price is due to its rarity and value as money.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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March 13, 2011, 04:55:56 AM
 #18

Why try to change bitcoin from what it already is? A store of value.

Personally, I'm not looking for a store of value.  I want a low-cost, non-reversible, resilient means of Internet payment.  Bitcoin does that better than gold or silver, so that's why I work towards its success.

Indeed.  Currencies, in general, make for poor forms of savings.  That's not why they exist.  Bitcoin exists as an Internet cash equivalent, and if performs that function very well.  If you are looking for a store of value, there are much better choices.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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March 13, 2011, 01:54:36 PM
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Before something can be a store of value, it needs to have value. Gold gained this initially through being wanted for use in jewelry. The only way bitcoin can gain value, is by proving its worth as a useful (or even best) means of electronic payment.
This is a good point. Can bitcoin be a reliable store of value (as it currently is) without being supported by its use as a highly convenient electronic payment method? Can something be established solely as a store of value? Where does the value come from? I'm guessing it being a highly convenient store of value... But I can't wrap my head around it to be convinced that it can be enough...
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March 13, 2011, 02:34:39 PM
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Before something can be a store of value, it needs to have value. Gold gained this initially through being wanted for use in jewelry. The only way bitcoin can gain value, is by proving its worth as a useful (or even best) means of electronic payment.
This is a good point. Can bitcoin be a reliable store of value (as it currently is) without being supported by its use as a highly convenient electronic payment method? Can something be established solely as a store of value? Where does the value come from? I'm guessing it being a highly convenient store of value... But I can't wrap my head around it to be convinced that it can be enough...


Bitcoin can be a reliable store of value, as can gold, silver, US Savings Bonds, or many other things.  There are investment vehicles that exist specificly as a store of value, such as US Savings Bonds, but even that isn't a certainty, and I can think of no such intentional structures that do not have counter party risk.  Commodities do not have counterparty risk if one takes delivery, but there are storage risks.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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