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Author Topic: Article: Bitcoin is an "opt in" community currency, here's how to get it at a...  (Read 2618 times)
Trader Steve
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March 18, 2012, 10:57:32 PM
 #21

Yes, it is incorrect to say that by selling goods for bitcoin one is getting bitcoin at 50% off. A vendor sells his trinket either for $10 or $10 worth of Bitcoins, and in both cases he's obtained assets equal to $10.

There are many reasons to sell things for Bitcoin, but "obtaining Bitcoin at half price" is a fallacious one.

If your cost of goods is 50% of your retail price then the cost of the item you trade for is your cost of goods. Seems pretty simple to me. I see no fallacious argument here. Leave out the "dollar price" terminology and you simply have a situation where one good is exchanged for another. In the candy bar example, the candy bar is a medium of exchange which the person uses to acquire bitcoin instead of paying cash directly.

Sorry to beat a dead horse but here it is put another way:

The holder of cash used the candy bar as a medium of exchange to acquire the bitcoin.
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March 18, 2012, 11:01:30 PM
 #22

If I were nitpicking, I would point out that "sowing" would be clearer word than "sown" but I'm not. I understand your message perfectly.  Roll Eyes

The question was, "what have I done" not "what am I doing." I used the proper conjugation in response to the question. /nitpick a nitpick

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March 18, 2012, 11:04:38 PM
 #23

but pointing this out is like saying the sky is blue, it is something that makes everyone who reads it dumber

I may be walking out on a deductive limb him here, but it looks to me like notme's post was a direct response to somebody else explicitly stating that they didn't understand what was quoted in the OP.  I don't think notme was trying to give you, or the community in general, a powerful and intriguing lessong in math or economics or whatever.

I wasn't saying anything about notme's response, just the article in general. It provably made me dumber.

Trader Steve
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March 18, 2012, 11:04:47 PM
 #24

If I were nitpicking, I would point out that "sowing" would be clearer word than "sown" but I'm not. I understand your message perfectly.  Roll Eyes

The question was, "what have I done" not "what am I doing." I used the proper conjugation in response to the question. /nitpick a nitpick

I stand corrected.  Smiley
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March 18, 2012, 11:09:09 PM
 #25

Yes, it is incorrect to say that by selling goods for bitcoin one is getting bitcoin at 50% off. A vendor sells his trinket either for $10 or $10 worth of Bitcoins, and in both cases he's obtained assets equal to $10.

There are many reasons to sell things for Bitcoin, but "obtaining Bitcoin at half price" is a fallacious one.

If your cost of goods is 50% of your retail price then the cost of the item you trade for is your cost of goods. Seems pretty simple to me. I see no fallacious argument here. Leave out the "dollar price" terminology and you simply have a situation where one good is exchanged for another. In the candy bar example, the candy bar is a medium of exchange which the person uses to acquire bitcoin instead of paying cash directly.

If you're able to sell your trinket for $10 worth of Bitcoins, and you bought it for $5 worth of Bitcoins, then you've made a good trade and have earned profit. But what you're forgetting is that you could have similarly sold it for $10 worth of USD, and then bought BTC with that.

In both scenarios, you're getting $10 worth of Bitcoins. If you think of this like you're getting the Bitcoins at half price, then it's also true that when you sell for $10 in USD you are getting the USD at half price.

The point is you've made no value gain by choosing to accept BTC in lieu of USD. In both cases, you've obtained $10 in assets and if this is on a $5 cost basis you made 100% profit rate no matter if you accept BTC or USD to pay for it.

Stated differently, choosing to sell in BTC gives you no special benefit in profitability. It's equally profitable to sell for BTC or USD (ignoring the fees issue, for the sake of argument).
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March 18, 2012, 11:11:16 PM
 #26

Yes, it is incorrect to say that by selling goods for bitcoin one is getting bitcoin at 50% off. A vendor sells his trinket either for $10 or $10 worth of Bitcoins, and in both cases he's obtained assets equal to $10.

Ok, but how much did the vendor buy his trinket for?  Let's assume he isn't an idiot.

No matter what price he paid for it, he earned X% in profit, and X will be equivalent whether it's BTC or USD which he accepts.
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March 18, 2012, 11:34:01 PM
 #27



Quote
The point is you've made no value gain by choosing to accept BTC in lieu of USD. In both cases, you've obtained $10 in assets and if this is on a $5 cost basis you made 100% profit rate no matter if you accept BTC or USD to pay for it.

Stated differently, choosing to sell in BTC gives you no special benefit in profitability. It's equally profitable to sell for BTC or USD (ignoring the fees issue, for the sake of argument).

Actually, you have made a value gain because you've opened your trading opportunities to a new market - the bitcoin community - where you are likely to have less competition for your goods and services. Your goods and services may have remained unsold had you not exposed them to this new market. You were partaking in arbitrage - the essence of entrepreneurship.

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March 18, 2012, 11:57:22 PM
 #28

Here is what I find interesting about this article:

All currencies are "opt in" with the exception of those that are mandated (forced) by the State. Where currencies are forced by the State, black markets emerge. Fortunately, bitcoin has not (yet) been pushed into the black market. Bitcoin is an "opt in" currency much like Linden Dollars or Ithaca Hours. They are all accepted in specific communities. Some communities are bigger than others. The community for US Dollars is, of course, one of the largest communities.

To what extent the bitcoin community grows or shrinks we can only speculate. Proponents can only sell the benefits and work to make it easier to use. One way to promote bitcoin is to readily accept it for your goods and services.

Since every commodity is also a currency (each can be traded - some more efficiently than others), I see a world where we will continue to see multiple, parallel currencies. Exchange services will continue to exist in order to help people move between communities.

Creating value and trading it for the created value of others improves the standard of living of everyone. Money lubricates the process. I love commerce - it gives flavor to life. Bitcoin makes it even more interesting.
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March 19, 2012, 02:29:46 AM
 #29

Quote
1. Buy candybar for $0.25, you normally sell this for $0.50 in your store.
2. Sell candybar for $0.50 worth of BTC.
3. You just acquired $0.50 worth of BTC for $0.25.

1. A charitable group just received 1,000s of Big Mo' candy bars for $0.00.
2. They sell them for $0.50 worth of BTC each.
3. They just acquired $0.50 worth of BTC for $0.00


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March 19, 2012, 02:31:40 AM
 #30

Quote
1. Buy candybar for $0.25, you normally sell this for $0.50 in your store.
2. Sell candybar for $0.50 worth of BTC.
3. You just acquired $0.50 worth of BTC for $0.25.

1. A charitable group just received 1,000s of Big Mo' candy bars for $0.00.
2. They sell them for $0.50 worth of BTC each.
3. They just acquired $0.50 worth of BTC for $0.00




I really wish we had an exploding head emoticon.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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Phinnaeus Gage
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March 19, 2012, 02:36:49 AM
 #31

Did you see that we now have two exploding head emoticons to choose from?
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March 19, 2012, 03:21:49 AM
 #32

Yes, it is incorrect to say that by selling goods for bitcoin one is getting bitcoin at 50% off. A vendor sells his trinket either for $10 or $10 worth of Bitcoins, and in both cases he's obtained assets equal to $10.

Ok, but how much did the vendor buy his trinket for?  Let's assume he isn't an idiot.

No matter what price he paid for it, he earned X% in profit, and X will be equivalent whether it's BTC or USD which he accepts.

I agree with you on that.
notme
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March 19, 2012, 04:27:24 AM
 #33

Did you see that we now have two exploding head emoticons to choose from?

But those are both angry... I'm looking more for a mind-blown explosion.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
12jh3odyAAaR2XedPKZNCR4X4sebuotQzN
pastory99
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March 19, 2012, 05:13:12 AM
 #34

Yes, it is incorrect to say that by selling goods for bitcoin one is getting bitcoin at 50% off. A vendor sells his trinket either for $10 or $10 worth of Bitcoins, and in both cases he's obtained assets equal to $10.

Ok, but how much did the vendor buy his trinket for?  Let's assume he isn't an idiot.

No matter what price he paid for it, he earned X% in profit, and X will be equivalent whether it's BTC or USD which he accepts.

I agree with you on that.
Either way he's making profit and that's what counts yes?

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March 19, 2012, 07:56:00 AM
 #35

We should spend more time analyzing the semantics of this article.

realnowhereman
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March 19, 2012, 10:18:20 AM
 #36

There is no 50% discount.  Bastiat will tell you why.

That which is seen is the purchase of $0.50 worth of bitcoins for assets that only cost $0.25.

That which is not seen is the non-sale of those same assets for $0.50 worth of dollars (as other have pointed out).  When you add that opportunity cost, the 50% discount vanishes.

That being said, we should bear in mind that business people will always prefer to pay bills in kind rather than in cash.  For example: when Microsoft got fined billions and billions of dollars, they were very pleased to be able to pay part of that fine in the form of Windows installation CDs, which they were able to value at full retail.

The trick of course is that it doesn't have to be the same customer purchasing in dollars and in bitcoins.  If the merchant offers to sell in both then he can increase his market share because the person who wanted to buy in bitcoins can be satisfied as well.

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notme
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March 19, 2012, 03:35:39 PM
 #37

There is no 50% discount.  Bastiat will tell you why.

That which is seen is the purchase of $0.50 worth of bitcoins for assets that only cost $0.25.

That which is not seen is the non-sale of those same assets for $0.50 worth of dollars (as other have pointed out).  When you add that opportunity cost, the 50% discount vanishes.

That being said, we should bear in mind that business people will always prefer to pay bills in kind rather than in cash.  For example: when Microsoft got fined billions and billions of dollars, they were very pleased to be able to pay part of that fine in the form of Windows installation CDs, which they were able to value at full retail.

The trick of course is that it doesn't have to be the same customer purchasing in dollars and in bitcoins.  If the merchant offers to sell in both then he can increase his market share because the person who wanted to buy in bitcoins can be satisfied as well.

+1

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
12jh3odyAAaR2XedPKZNCR4X4sebuotQzN
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