The paradox of Bitcoin adoption

[Vannie12]

I think time will show us what is to be concluded. Still cryptocurrencies are growing. Continuously being famous, people do get themselves involve and accept crypto into their lives as much as possible. For now, activities using cryptos are still limited but we could tell what have cryptos achieved from the day it existed right?

[1715625454]

1715625454

[Welsh]

Merchants will adopt it when it's within their interest to adopt it. They don't need customers initially using cryptocurrencies, they need to know that Bitcoin is accessible enough, that if they start selling products for Bitcoin, it can be easily enough acquired, and used by its customers. I suspect if Bitcoin continues to appreciate in price, then the amount of merchants wanting to accept Bitcoin will adopt it, but not only adopt it, but offer discounts if you purchase with cryptocurrencies, which then creates that intrigue from their customers.

The customers will then purchase Bitcoin, and purchase products from the merchants at a reduced rate, therefore getting their product for less than they would with fiat. Then, the merchants don't entirely lose out by accepting Bitcoin if the price of Bitcoin continues to appreciate in price, which is something I think a lot of us believe it will do.

That's just one example of a way to break this "paradox" as you say. Plus, I believe this is already being done in some merchants. They offer a 5-10% discount, and then continue to hold it until the price goes up. Rinse, and repeat. Obviously, there's a risk factor with this, and not all merchants will be willing to accept that risk, but that depends if they're interested in Bitcoin outside of their business, it might be enough to spur the change.

[witcher_sense]

I will continue to spend my bitcoin, even though it will be worth more in the future, because if nobody ever spent it, then it would be worth nothing.

Your words only prove my point: you have been exchanging your bitcoin, or at least part of it, for something you consider more important than ever-growing decentralized digital currency. The idea you have and are promoting, which is, if I get it right, that bitcoin can and should be used as a medium of exchange, matters much more to you than getting maximum wealth. That all also made me think that currently Bitcoin is also undervalued in terms of possible use cases. Bitcoin is mostly seen as a speculative asset, an investment, a store of value, but almost no one considers it a means of payment. However, if you've read the right economic books, you should know that a medium of exchange is a primary function of money, whereas the others, a store of value and a unit of account, are derivatives from the main function. So, we probably must focus more on a medium of exchange part of Bitcoin because if it is not used as that medium, it is not real money.

[o_e_l_e_o]

I suspect if Bitcoin continues to appreciate in price, then the amount of merchants wanting to accept Bitcoin will adopt it, but not only adopt it, but offer discounts if you purchase with cryptocurrencies, which then creates that intrigue from their customers.

There are a couple of small merchants I shop at who offer a small discount for paying in bitcoin. When discussing this with one of them, he says it is because he gets to avoid credit card fees by accepting bitcoin, and he is interested in bitcoin and would be wanting to buy it anyway, so he essentially "buys" it directly from his business and this lets him avoid exchange/trading/withdrawal fees. But that is because he is interested in holding bitcoin as a private individual, and not as a business. It's a different story to start offering discounts for bitcoin which are being held by your business, as price fluctuations could have a significant impact on how you pay your staff, suppliers, bills, etc. This is partly the reason that most businesses which currently accept bitcoin to do through a payment processor which converts directly to fiat for them. Such businesses are also the least likely to offer discounts since they are replacing credit card fees for their payment processor fees and they are never actually holding bitcoin at all.

It would certainly be a nice outcome of the price increase if more business wanted to hold bitcoin, since it would facilitate the move away from centralized payment processors to more businesses accepting bitcoin directly.

The idea you have and are promoting, which is, if I get it right, that bitcoin can and should be used as a medium of exchange, matters much more to you than getting maximum wealth.

Absolutely. The things which attracted to me to bitcoin in the first place - having full control over my own money without requiring third parties to hold it for me, decide where and when I am allowed to access it or spend it, monitor or even censor my transactions, etc. - are still the things which make me keep using it today. I obviously won't lie and say the price increase hasn't been incredibly nice over years, but even when bitcoin was worth the same or less than what it was when I first got involved, I've still been buying it and using it.

[kryptqnick]

Merchants don't adopt Bitcoin because their clients don't use it. Clients don't adopt it because merchants don't support it, and people want to have a payment method that can be used anywhere they go. How can this vicious circle be broken? Who will make the first move?

And by adopt I mean adopt for payments, not hodl it as an investment.

Isn't it easier for merchants to see if their customers are interested in a Bitcoin payment option than for customers to individually express their wish for this? Most brands nowadays have presence online, so they can easily at least make polls on Twitter or something to learn if their audience is interested. Then there's also an option of actually choosing a way of making Bitcoin a payment option in your shop and placing a sticker with "Bitcoin accepted here" on the counter. Individual people are not likely to talk to people in a shop and ask them about Bitcoin. It's also way less efficient than making a public poll because it's hard to understand the demand by the number of people who actually say something.

[teosanru]

Merchants don't adopt Bitcoin because their clients don't use it. Clients don't adopt it because merchants don't support it, and people want to have a payment method that can be used anywhere they go. How can this vicious circle be broken? Who will make the first move?

And by adopt I mean adopt for payments, not hodl it as an investment.

Customers have to make the first move Obviously, when the customers or clients would feel the need of crypto payments no matter how small proportion of customers, it will always drive the merchants to add this as a payment method. It's because merchants see everything based on their profitability and cost, therefore, customers have to drive this change always. I think paradox is when you have customers who want to pay in bitcoin but you have a supplier who doesn't wants to receive in bitcoin, this leaves you open to a great extent of risk.

[stompix]

That's not really the paradox behind Bitcoin and doesn't get to the root cause of the problem. The real paradox is - as Bitcoin is adopted by more people, the transaction fees goes up and the network takes longer to process the increased levels of transactions while also burning a lot more electricity than comparative payment networks.

The burning of electricity is debatable, if the price doesn't go up enough to make miners add more gear fees alone will not be able to make such a dent that will trigger a lot more power usage. Besides, the halving will take care every 4 years of a doubling in price, so at one point the consumption will be caped, by price, by ROI as the length grows, and by the prices in electricity.

Besides the fees can be bypassed with LN, and if you look right now at the chain, the fees are not the problem.

As for the paradox itself, it resembles what I've always said:

Yeah, just like the electric car dilemma.
You don't buy a car because there are no charging stations and there are no charging stations because people don't buy electric cars.

If poeple don't want to spend their coins merchants will not offer the solution for 1 client a month.

Merchants cannot accept Bitcoin legally if their government does not accept it as legal tender. A lot of these merchants are doing this via Payment processors to bypass these restrictions. 

Just have a look at what happened in El Salvador when their government accepted Bitcoin as legal tender.... the Merchants quickly started to accept Bitcoin as a payment option... even the large food chains like Mc Donald and Burger King. 

This is just wrong, there are merchants accepting bitcoins as payment all over Europe and bitcoin is not legal tender here.
Besides those merchants were not accepting bitcoin because they wanted to but because under the law of Salvador you must accept everything that is legal tender. Merchants in the US for example don't have this obligation.

Speaking of Salvador, has anyone any data on transactions made by day via that Chiva wallet?