Aftermath of Merchant Acceptance?

[BTCIndia]

Bitpay like company which process merchant payments, locks invoice at particular price with some time window to compensate volatility. So, whenever Bitpay successfully process payments means there is someone liquidating Bitcoin. If merchants acceptance is drastically increased then how will it effect price on exchange?

Will it move towards higher end or lower end? If cycle is perfect then, with every sell on exchange from payment process there is buyer out there. And price will remain constant. What if this is not true?

Various scenarios?  

[franky1]

bitpay do not trade as much as you think on exchanges. they do large private trades bhind the scenes away from exchanges. so the impact is not as big as you may think if growth was to increase really fast

[BTCIndia]

bitpay do not trade as much as you think on exchanges. they do large private trades bhind the scenes away from exchanges. so the impact is not as big as you may think if growth was to increase really fast

Ohhhh! 
Something new, I heard! Are you sure about this?
Okay! So, lets imagine a payment processor liquidates coins on exchange then how would large merchant acceptance affect price on particular exchange?

[minerpumpkin]

bitpay do not trade as much as you think on exchanges. they do large private trades bhind the scenes away from exchanges. so the impact is not as big as you may think if growth was to increase really fast

Are you sure? I always wondered about the exact procedure those service provider use to convert BTC to FIAT. Do they take a lot of risk or are they trying to keep things as predictable as possible? I don't think though that the current drop is due to the increased merchant adoption.

[ljudotina]

It wouldn't affect only one exchange, it would affect em all, as bots and traders are moving funds from exchange to exchange whenever there is a change in price. Let's say exchange A suddenly executes large sell order and price goes down, bots / traders would execute buy order and sell what they bought on another exchange. Price would go down on all exchanges but less than if there was 1 exchange in existance.

And of course "how it would affect"...well..that's pretty much simple, on every large buy, price would go down.
If buyer was early adopter, price would go down and stay down.
If buyer was someone who bought that BTC, than price would first go up (buyer buying BTC on any exchange for that buy order), and than down after order is executed.
Every buy / sell executed that way would leave little bit BTC in buyers wallet (you have to buy more than you will use bcause of price change) which would move BTC price bit by bit up.

[franky1]

ok to clarify. bitbay gets alot of FIAT from privat investors, NOT exchanges., the exchanges are used just for pricing, but not as the bitcoin drop zone

put it this way

if i want $30mill of bitcoins. i would not go through an exchange, i would talk to bitpay. and in less then a month. i would have $30m of coins all at roughly the same price.

if i however tried to get bitcoins buying on an exchange.. the bitcoin price would jump immensely..(but thats the opposite to the question being asked so ill leave you to research bitpays recent FIAT grabs that they are using for capital.)

i think the OP should have worded the question more about coinbase. to have got a better reply about what he is trying to ask

and to be honest, i know of alot of miners and bitcoin owners reluctant to sell coins below the $500=$550 as that is a loss to them, alot of every day people wont want to 'spend' bitcoins with merchants if the price went lower than this.. so there is a resistance point.. if it goes below this point then alot of bitcoin sellers/spenders are just dumb.

it does not need millions of merchants to cause a price crash, it needs alot of customers that fnd the bitcoins they hold to be in profit enough to deem them worth spending. which due to the stable bitcoin price since spring, and the mining costs.. bitcoin is not at a large profit to the current holders. as most paid probably over $500 to get them. most are holding out for $1000+

[minerpumpkin]

if i want $30mill of bitcoins. i would not go through an exchange, i would talk to bitpay. and in less then a month. i would have $30m of coins all at roughly the same price.

if i however tried to get bitcoins buying on an exchange.. the bitcoin price would jump immensely..(but thats the opposite to the question being asked so ill leave you to research bitpays recent FIAT grabs that they are using for capital.)

You could just go and buy the BTC in intervals without affecting the price that much. I don't really see the difference to trusting Bitpay to rake the BTC in for you. I mean, they will, but there's not that much of an advantage (if any)

[BitCoinDream]

ok to clarify. bitbay gets alot of FIAT from privat investors, NOT exchanges., the exchanges are used just for pricing, but not as the bitcoin drop zone

put it this way

if i want $30mill of bitcoins. i would not go through an exchange, i would talk to bitpay. and in less then a month. i would have $30m of coins all at roughly the same price.

if i however tried to get bitcoins buying on an exchange.. the bitcoin price would jump immensely..(but thats the opposite to the question being asked so ill leave you to research bitpays recent FIAT grabs that they are using for capital.)

i think the OP should have worded the question more about coinbase. to have got a better reply about what he is trying to ask

and to be honest, i know of alot of miners and bitcoin owners reluctant to sell coins below the $500=$550 as that is a loss to them, alot of every day people wont want to 'spend' bitcoins with merchants if the price went lower than this.. so there is a resistance point.. if it goes below this point then alot of bitcoin sellers/spenders are just dumb.

it does not need millions of merchants to cause a price crash, it needs alot of customers that fnd the bitcoins they hold to be in profit enough to deem them worth spending. which due to the stable bitcoin price since spring, and the mining costs.. bitcoin is not at a large profit to the current holders. as most paid probably over $500 to get them. most are holding out for $1000+

That leads to the next obvious Q. Do u see a crash at 1000 USD ?

[odolvlobo]

Bitpay like company which process merchant payments, locks invoice at particular price with some time window to compensate volatility. So, whenever Bitpay successfully process payments means there is someone liquidating Bitcoin. If merchants acceptance is drastically increased then how will it effect price on exchange?
Will it move towards higher end or lower end? If cycle is perfect then, with every sell on exchange from payment process there is buyer out there. And price will remain constant. What if this is not true?

You can look at it like this:

Increasing merchant acceptance will cause the price to fall (assuming that merchants do not keep all of their bitcoins). People with bitcoins will use them and merchants will sell them for dollars.

On the other hand, increasing consumer acceptance will cause the price to rise (assuming that consumers don't spend all of their bitcoins). People that want to buy things with bitcoins have to buy the bitcoins first.

In the end, it is a balance. But in general, overall acceptance will cause the value to rise.

[franky1]

if i want $30mill of bitcoins. i would not go through an exchange, i would talk to bitpay. and in less then a month. i would have $30m of coins all at roughly the same price.

if i however tried to get bitcoins buying on an exchange.. the bitcoin price would jump immensely..(but thats the opposite to the question being asked so ill leave you to research bitpays recent FIAT grabs that they are using for capital.)

You could just go and buy the BTC in intervals without affecting the price that much. I don't really see the difference to trusting Bitpay to rake the BTC in for you. I mean, they will, but there's not that much of an advantage (if any)

you do realise that deals like bitpay involving hge investment are not based on 'trust' right? theres these things, you may not have heard of.. they are called contracts.

and as for throwing the funds into an exchange slowly,
1: the pain of all the KYC of your bank, an exchange and the exchanges bank is a headof of a headache of aheadache, compared to what a bitpay contract/investment offers.
2: most investors wont want to put funds into an exchange and be sat there day and night for oppertune moments to sell.. again bitpay ontracts are better priced and stable. and yea dont require monitoring
3: trying to then mov out that crap tonne of bitcoins from an exchange.. in coinbases new feature would take days to request before withdrawal. again with bitpay you can pretty much know the exact time you'll get the funds.

[SOAD]

Does anyone know if these payment processors keep hold of some of the coins as an investment? Like maybe it would be a wise idea to keep some of their money from the profits in coins. They could hold out for am hefty price rise then sell and make a killing.

[odolvlobo]

Does anyone know if these payment processors keep hold of some of the coins as an investment? Like maybe it would be a wise idea to keep some of their money from the profits in coins. They could hold out for am hefty price rise then sell and make a killing.

... or they could lose everything when the price drops.

My guess is that they hold BTC and dollars in reserve, and they probably hold as little as they can.

[securityguy]

Does anyone know if these payment processors keep hold of some of the coins as an investment? Like maybe it would be a wise idea to keep some of their money from the profits in coins. They could hold out for am hefty price rise then sell and make a killing.

Bitpay does, I have heard in an interview where Tony Gallippi said they have Bitcoin on their balance sheet.

[MegaHustlr]

Does anyone know if these payment processors keep hold of some of the coins as an investment? Like maybe it would be a wise idea to keep some of their money from the profits in coins. They could hold out for am hefty price rise then sell and make a killing.

... or they could lose everything when the price drops.

My guess is that they hold BTC and dollars in reserve, and they probably hold as little as they can.

Well it obviously is as risk, but so is any investment. If they keep some of their profits in bitcoin then it cant hurt, especially if it's just a small ammount as an investment. I think most people here realize that bitcoin is going to be worth much more than it is now at some point in the near future so maybe the risk is worth it.

[franky1]

again not a risk

(facepalm)
if the price tanked, bitpay can actually make ALOT of money with their private trades.. if you cant work out how, then your not in the business to need to know how.

[Soros Shorts]

again not a risk

(facepalm)
if the price tanked, bitpay can actually make ALOT of money with their private trades.. if you cant work out how, then your not in the business to need to know how.

I like the fact that there are no laws regulating dark pool trading in BTC markets. I can make largish trades with other private individuals off exchange without some stupid SEC or CFTC or whatever requirement forcing me to report the trades.

[AliceWonder]

again not a risk

(facepalm)
if the price tanked, bitpay can actually make ALOT of money with their private trades.. if you cant work out how, then your not in the business to need to know how.

How patronizing.

Why not just explain it?

I bet 99% of the shit you think is obvious now, you had to be taught or you heard it somewhere else or you read examples.

[haploid23]

Merchant adoption theoretically shouldn't affect price. People that spend their btc on merchants will most likely replenish their btc again. If you don't have btc to begin with, then you'd have to buy them in the first place, then bitpay/coinbase cashes them back out to fiat. The net change is zero.

However, over long term, then it should have a positive effect on price because new money is entering into the crypto realm as more merchants adopt bitcoin. With a hard cap on the supply, it's bound to increase.

[ChuckStrawberry]

The most likely scenario at the current stage would be Bitpay and Coinbase liquidating most of the Bitcoin sold through merchants pretty quickly, leading to a limited downwards pressure in short term.

Assuming consistent figures, they provide almost the same supply to the market as miners on a daily basis (Bitpay speaks of $1m/day, Coinbase probably comparable).

[ChuckStrawberry]

In the mid and long term there probably will be consumers rebuying the same amount or more Bitcoin than they spend (through increased certainty in Bitcoin's success) and new users getting their feets wet and experimenting with buying things with Bitcoin or choosing it as an investment.

If merchants closed the loop (holding Bitcoin and pay their supplier with it) this would take away the initial downward pressure and enforce the following upward pressure.

[666uazan]

Yep, said it for months but got downvoted for it - Adoption without closing the loop brings massive downward pressure due to BTC>USD conversion by merchants.
Adoption, at first, drives down the price.

[Tenarlty]

Most people spend horizontally