"Merchant acceptance is NEGATIVE for bitcoin"

[khme88]

I watched a talk on the economy between Peter Schiff and Joe Rogan; at the end they discuss Bitcoin, and Peter shares his criticism. He says, essentially, that the more merchants that are accepting bitcoin the more the price of bitcoin will fall, because they instantly convert it back to fiat (thus putting in SELL orders). So customers who own bitcoins and use them actually sell them onto the market, indirectly. This wouldn't be a problem if bitcoin was the main currency for merchants, customers, suppliers, etc, but that is not on the realistic horizon yet.

So, I was wondering, could this be part of the reason why prices have consistently gone down as merchant acceptance has gone up?

Reference: https://www.youtube.com/watch?v=8IHU42j3evQ (@2:36:15)

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[inBitweTrust]

Peter is a smart investor but wrong about Bitcoin due in part to not understanding the technology completely and partially to protect his investments in gold and silver which are being negatively impacted by Bitcoin.

Even if merchants immediately sell Bitcoin that doesn't drive down the cost of Bitcoin as the individuals spending bitcoins typically are re-buying on a regular basis or immediately. While it would be better if merchants kept bitcoins it still is beneficial for the eco-system because the larger amount of transactions floating around show the demand for this payment mechanism and temporarily tie up those funds causing more demand overall.

 

[solex]

There are three stages:

Merchants not accepting bitcoins.
Merchants accepting bitcoins but converting them immediately to fiat.
Merchants accepting them and keeping a bitcoin holding.

This is a progression which must be undergone before Bitcoin can reach a plateau as a widespread and significant currency and payments system. It says a lot that the argument is moving from the inane Bitcoin "scam/ponzi/laugh" to Bitcoin "can't be successful as it is swapped for fiat after use". It means that the detractors are losing ground.

[bryant.coleman]

He says, essentially, that the more merchants that are accepting bitcoin the more the price of bitcoin will fall, because they instantly convert it back to fiat (thus putting in SELL orders).

This is just BS. Don't these people have any common sense? From where will all those merchants get Bitcoin? Bitcoins are not created out of thin air. Their customers will convert fiat to Bitcoin (or just mine them) in order to pay for goods and services in BTC. So for every 10 BTC worth of sell orders, there will be an equivalent 10 BTC worth of buy orders as well.

[Melbustus]

Peter also likes to beat the tired "it's really volatile!" drum. Well, duh... We're bootstrapping the world's first decentralized currency from nothing to global scale. Of course is going to be a wild ride!

Peter's criticisms are almost always quite myopic. He basically resorts to saying bitcoin will never work because the ecosystem has flaws *now* (eg, his focus on volatility and merchants insta-converting). Anyone who says bitcoin is a bad idea because it doesn't go from nothing to global domination in one perfect binary step is either stupid or trying to manipulate the conversation.

FWIW, Peter's brother and business partner, Andrew Schiff, seems a little more open to bitcoin. I spoke with him after a debate with Jeffrey Tucker a couple months back. Andrew is clearly influenced by his brother's stance, but also had some criticism of some of Peter's opinions, and was far more content to basically say "let's wait and see; maybe it'll work" than Peter is. Too bad Peter's the more public celebrity, though.

[Bit_Happy]

Peter also likes to beat the tired "it's really volatile!" drum. Well, duh... We're bootstrapping the world's first decentralized currency from nothing to global scale. Of course is going to be a wild ride!

Peter's criticisms are almost always quite myopic. He basically resorts to saying bitcoin will never work because the ecosystem has flaws *now* (eg, his focus on volatility and merchants insta-converting). Anyone who says bitcoin is a bad idea because it doesn't go from nothing to global domination in one perfect binary step is either stupid or trying to manipulate the conversation.

FWIW, Peter's brother and business partner, Andrew Schiff, seems a little more open to bitcoin. I spoke with him after a debate with Jeffrey Tucker a couple months back. Andrew is clearly influenced by his brother's stance, but also had some criticism of some of Peter's opinions, and was far more content to basically say "let's wait and see; maybe it'll work" than Peter is. Too bad Peter's the more public celebrity, though.

Peter will change his tune as he sees BTC is overcoming the early growing pains. 

[jr3951]

Necessary evil for now

Why can't a business hold and use bitcoin as they do fiat? Because not enough business's accept bitcoin for everyday use (for rent, suppliers/manufacturers, payroll, and whatever other various bills) so the next step is creating bitcoin ecosystems

It would be great if Overstock or some other large company offered employee salaries and bitcoin as a form of payment to suppliers, I'm sure they could save a ton on money transfer fees for large orders so it could be beneficial to both

[jabo38]

There are three stages:

Merchants not accepting bitcoins.
Merchants accepting bitcoins but converting them immediately to fiat.
Merchants accepting them and keeping a bitcoin holding.

This is a progression which must be undergone before Bitcoin can reach a plateau as a widespread and significant currency and payments system. It says a lot that the argument is moving from the inane Bitcoin "scam/ponzi/laugh" to Bitcoin "can't be successful as it is swapped for fiat after use". It means that the detractors are losing ground.

If merchants don't accept bitcoin, we should all sell.  The hope is that someday merchants will accept and eventually keep.  Not just merchants, but everyone. 

[zimmah]

Merchants adoption is positive. I understand the point you are trying to make but merchants only drive the prove down because all of a sudden the amount of merchants increased a lot, while the number of bitcoin users did not increase nearly as much. So there's a lot of selling pressure. However we managed to break the negative downtrend even with all the selling pressure so we are fine.

Also, having more merchants makes bitcoin more legitimate, since it's more valueable as a currency if it can be used frictionless at more stores. And the selling is also a good thing because it adds liquidity to the market.

On top of that you can avoid dropping the price while paying with bitcoins, and in the same time really he'll the bitcoin market and it will not cost you anything, by the following method.

1) buy an item at the merchant using bitcoin
2) the merchant will likely instantly sell the bitcoins (automatically by bit pay), likely dropping the price slightly
3) you instantly buy back the value of the coins with dollars, the same amount of dollars that you just spent in the store
4) you haven't lost money, (maybe even made a very small gain), bitcoin gained some volume (1 sell from the store, 1 buy from you) and you still have the same amount of bitcoins. And the merchant received a bitcoin transaction, which makes them notice people actually like paying with bitcoin (so more merchant will accept it, and more users will use bitcoin once more merchants accept it)

So, it's a good thing.

[franky1]

the price drop was due to the FUD of china.

and as for the news that merchant adoption causing price drops. they have forgotten the crucial point. the customer adoption (buying coins) causes price rises.

for every customer buying a coin to use for retail, there is a merchant selling that same coin at a later date back to fiat. thus there is an equilibrium. not a drop.

take this last week for instance. imagine a customer buys 10 coins. the price was $400 each. the customer then looks around websites for a week and finally finds a product they want to purchase. they buy a product for $4000. which this week is 8 bitcoin (not 10btc as it would have cost the customer last week)

so now LESS bitcoin goes back to the market to give a merchant $4000. meaning the price does not tank, it rises as there is less bitcoin on the markets being sold.

so buying 10btc selling 8btc for the same exchange of fiat value between customer and retail. will help the price rise. help customers keep some wealth and for merchants, they will still get their fiat.

[jubalix]

There are three stages:

Merchants not accepting bitcoins.
Merchants accepting bitcoins but converting them immediately to fiat.
Merchants accepting them and keeping a bitcoin holding.

This is a progression which must be undergone before Bitcoin can reach a plateau as a widespread and significant currency and payments system. It says a lot that the argument is moving from the inane Bitcoin "scam/ponzi/laugh" to Bitcoin "can't be successful as it is swapped for fiat after use". It means that the detractors are losing ground.

this....I see early adopters cashing out some bitcoins which will push price down a bit....but long term it helps spread the coins, but in any event the real $$$ are not in retail.

[counter]

Yea but Peter seems to overlook the fact that the more merchants accepting Bitcoins means more people who will use/hold Bitcoins.  It's a rather backwards argument if you ask me.

[goregrind]

so now LESS bitcoin goes back to the market to give a merchant $4000. meaning the price does not tank, it rises as there is less bitcoin on the markets being sold.

so buying 10btc selling 8btc for the same exchange of fiat value between customer and retail. will help the price rise. help customers keep some wealth and for merchants, they will still get their fiat.

Customer buys 8BTC at 500 and in a week when he's ready to shop the btc price is down to 400 he now needs to buy more btc to make his initial purchase. oops.

[gagalady]

That doesn't sound right. Logically price should go up not down.

[franky1]

so now LESS bitcoin goes back to the market to give a merchant $4000. meaning the price does not tank, it rises as there is less bitcoin on the markets being sold.

so buying 10btc selling 8btc for the same exchange of fiat value between customer and retail. will help the price rise. help customers keep some wealth and for merchants, they will still get their fiat.

Customer buys 8BTC at 500 and in a week when he's ready to shop the btc price is down to 400 he now needs to buy more btc to make his initial purchase. oops.

wrong.
if a customer buys 8BTC at 500 ($4000) and a week later the price was 400 each. a smart customer would not use his bitcoin. he would keep the bitcoin in cold store and use his fiat.. thus no bitcoins would be sold.

why would anyone be stupid enough to sell bitcoins at a loss just a week later!!!

[haploid23]

He says, essentially, that the more merchants that are accepting bitcoin the more the price of bitcoin will fall, because they instantly convert it back to fiat (thus putting in SELL orders). So customers who own bitcoins and use them actually sell them onto the market, indirectly.

And where would the customers first get bitcoin to pay the merchant? Oh that's right, the customer has to buy the bitcoin first. On a global scale, the amount of bitcoins that customers would have to buy, would equal the amount of bitcoins that merchants will sell.

[franky1]

He says, essentially, that the more merchants that are accepting bitcoin the more the price of bitcoin will fall, because they instantly convert it back to fiat (thus putting in SELL orders). So customers who own bitcoins and use them actually sell them onto the market, indirectly.

And where would the customers first get bitcoin to pay the merchant? Oh that's right, the customer has to buy the bitcoin first. On a global scale, the amount of bitcoins that customers would have to buy, would equal the amount of bitcoins that merchants will sell.

exactly the person that bought 1BTC at $30 last year, would only need to sell 0.06btc now
meaning the customer has taken 1btc off the market, and only put 0.06 back on the market to buy a $30 item today. thus there are less bitcoins on the market, meaning demand is higher.

[goregrind]

wrong.
if a customer buys 8BTC at 500 ($4000) and a week later the price was 400 each. a smart customer would not use his bitcoin. he would keep the bitcoin in cold store and use his fiat.. thus no bitcoins would be sold.

why would anyone be stupid enough to sell bitcoins at a loss just a week later!!!

Because said customer just wants his console or whatever and doesn't want to turn into a btc speculator.
I was just pointing out that your argument was based on circumstantial evidence and it can go the other way around as well.
Basically what you're saying is: buy bitcoin and hope its value doesn't depreciate by the time you're ready to shop or
don't use bitcoin.

[Paashaas]

"Merchant acceptance is NEGATIVE for bitcoin"


Dont feed the trolls!

[testigodehumanidad]

Both extremes are off here. Peter Schiff is correct in saying that if 10x more businesses accepted bitcoin today, we might have a surge of sell orders creating downward pressure. He just leaves it there, however. If the sell orders push down the price, (as other people are noting here) there are millions of bitcoin investors, some of them very wealthy, ready to pounce on purchasing opportunities. This creates serious upward pressure.

The end result?

A huge increase in volume and a stabilizing effect.

Which debunks his other notion that it is too volatile. The more merchants accept bitcoin, the more the price will stabilize for the reasons stated above.

This is why bitcoin moves slower in comparision to the rest of the alt coin market. This will only continue, imo, as the currency becomes more widely accepted. Once the market cap reaches 100 billion...i think the 10% plus or minus moving days like the one we just saw recently will struggle to max out at 3%.

Also FWIW, I think Peter Schiff's brother is smarter than Peter. I spoke with Andrew at Occupy wall st while his brother was making an ass out of himself and he was having genuine conversations with occupy people. Much cooler guy, imo.