Bitcoin growth challenges

[Deckard]

The way I see it, there are several large problems that will prevent Bitcoin from becoming a widely accepted.

1. It's really hard to buy BTC and when you do, fees are prohibitively expensive. There simply is no easy, fast, automated, and cheap way to get it. Are people working on this? Will Mt Gox one day be able to withdraw from your bank account via ACH?

2. Lack of instantaneous transactions. Is this even possible without either centralization or fraud being introduced?

3. Single point of failure with regard to market data. Once the Feds decide they've had enough and charge the guy running Mt. Gox with laundering, BTC growth will be in trouble.

4. All the major growth opportunities right now are in black markets (drugs, gambling, etc). I have no problem with this per se, but it's a problem if BTC ever wants to gain legitimacy.

5. They're not called credits!! Unbelievable!

I feel that the big one is definitely #1. BTC is getting the press it needs, but just lacks the ease of use and is really expensive (1-3% USD->MTG, .65% + bid-ask MTG->BTC). I feel that the only reason people would put up with the costs is because it gains you access to stuff previously not accessible (black markets), which is bad.

[tomcollins]

The way I see it, there are several large problems that will prevent Bitcoin from becoming a widely accepted.

1. It's really hard to buy BTC and when you do, fees are prohibitively expensive. There simply is no easy, fast, automated, and cheap way to get it. Are people working on this? Will Mt Gox one day be able to withdraw from your bank account via ACH?

2. Lack of instantaneous transactions. Is this even possible without either centralization or fraud being introduced?

3. Single point of failure with regard to market data. Once the Feds decide they've had enough and charge the guy running Mt. Gox with laundering, BTC growth will be in trouble.

4. All the major growth opportunities right now are in black markets (drugs, gambling, etc). I have no problem with this per se, but it's a problem if BTC ever wants to gain legitimacy.

5. They're not called credits!! Unbelievable!

I feel that the big one is definitely #1. BTC is getting the press it needs, but just lacks the ease of use and is really expensive (1-3% USD->MTG, .65% + bid-ask MTG->BTC). I feel that the only reason people would put up with the costs is because it gains you access to stuff previously not accessible (black markets), which is bad.

1- MtGox lets you do do "Direct deposit" for withdrawals in the US:

"If you live in the US or EU we can send it to you by direct deposit.
Minimum withdraw amount in the US by direct deposit is $800. There is no fee."

2 - not a huge problem for its purpose. 

3 - There are other markets than mtgox.

4 - true

5 - Don't get it.

MtGox lets you deposit using ACH for free.  Sure, there are transaction costs right now.  I don't think were even close to ready for mainstream adoption, but that doesn't mean it won't be possible.  It's a chicken and the egg problem.  If more merchants accepted it, then it would lower transaction costs (because you could actually spend bitcoins rather than eat transaction costs of converting them).  But no one accepts them because no one else does.  Something needs to give first.  So the first targets will be areas where BTC is actually superior even with the costs.  Some might be illicit things.  Some might be international payments that already have high fees.  But as that grows, there will be more use for them, and more people might accept them.

I agree that making it easier for merchants to interact with Bitcoins (make it painless and costless for them) might be a good first step.

[Deckard]

1- MtGox lets you do do "Direct deposit" for withdrawals in the US:

"If you live in the US or EU we can send it to you by direct deposit.
Minimum withdraw amount in the US by direct deposit is $800. There is no fee."

2 - not a huge problem for its purpose. 

3 - There are other markets than mtgox.

4 - true

5 - Don't get it.

MtGox lets you deposit using ACH for free.  Sure, there are transaction costs right now.  I don't think were even close to ready for mainstream adoption, but that doesn't mean it won't be possible.  It's a chicken and the egg problem.  If more merchants accepted it, then it would lower transaction costs (because you could actually spend bitcoins rather than eat transaction costs of converting them).  But no one accepts them because no one else does.  Something needs to give first.  So the first targets will be areas where BTC is actually superior even with the costs.  Some might be illicit things.  Some might be international payments that already have high fees.  But as that grows, there will be more use for them, and more people might accept them.

I agree that making it easier for merchants to interact with Bitcoins (make it painless and costless for them) might be a good first step.

1. That's great, but the problem is getting bitcoins in the first place.

2. For its present purpose, I agree, but not as a general currency

3. Yeah and what're their volumes?

5's a bad joke.

[stillfire]

It'd be fun if the smallest unit of BTC was called a credit (0.00000001 BTC = 1 credit) - that which some now call 'Satoshis'. Of course the smallest unit might become smaller with time but then we could have millicredits (or millicreds in street lingo). It'll be a long time before that happens though.

[tomcollins]

1- MtGox lets you do do "Direct deposit" for withdrawals in the US:

"If you live in the US or EU we can send it to you by direct deposit.
Minimum withdraw amount in the US by direct deposit is $800. There is no fee."

2 - not a huge problem for its purpose. 

3 - There are other markets than mtgox.

4 - true

5 - Don't get it.

MtGox lets you deposit using ACH for free.  Sure, there are transaction costs right now.  I don't think were even close to ready for mainstream adoption, but that doesn't mean it won't be possible.  It's a chicken and the egg problem.  If more merchants accepted it, then it would lower transaction costs (because you could actually spend bitcoins rather than eat transaction costs of converting them).  But no one accepts them because no one else does.  Something needs to give first.  So the first targets will be areas where BTC is actually superior even with the costs.  Some might be illicit things.  Some might be international payments that already have high fees.  But as that grows, there will be more use for them, and more people might accept them.

I agree that making it easier for merchants to interact with Bitcoins (make it painless and costless for them) might be a good first step.

1. That's great, but the problem is getting bitcoins in the first place.

2. For its present purpose, I agree, but not as a general currency

3. Yeah and what're their volumes?

5's a bad joke.

1 - there are lots of ways to get them.  For small transactions, coinpal works.  There's a fee, yes.  For medium transactions, there's OTC.  For large transactions, wire mtgox, eat the $30 fee (which is nothing on a $1000 transaction).  Yes, there are fees.  Yes, it makes little sense to move in and out of btc and back into USD.

2 - Sure it does.  If you need instant transactions, you do it the same way mastercard/visa do it.  Current banks take 3-5 days to do big transactions.  These pieces are not in place, but that's not to say they couldn't be put in place.  There's just little need for it now.

3- nothing because mtgox is the primary place.  So if something happened to mtgox, then everyone moves somewhere else.  Sucks for anyone who has money stuck there, of course.