Retail adoption hurts bitcoin price it doesn't help it and here's why

[johnyj]

I see where you are going but your not looking at the big picture.

Lets say one million new people start to use bitcoin and on average of those million keep 1 BTC in their wallet at any particular time (average, some more some less).  In the grand scheme of things I think you will agree that is tiny.

In effect though, that has taken 1,000,000 BTC out of circulation at any particular time, that is just under 5% of the total bitcoins that will ever exist, it is close to 9% of what is in circulation.  

Neil

P.S. If you want to really blow your mind, think what would happen if 21 million people (still a tiny number) wanted to keep an average of 1 BTC in their wallet at any one time.

Exactly, it is saving reduce the coin supply on market and cause price to rise. The reason for saving using bitcoin comes from the fact that it can be spent at any place, with a long term rising purchasing power. If it becomes more widely accepted, more people will start to save using bitcoin. If you have a good saving and spending plan, you will accumulate bitcoin reserve, have a good life, while still helping it to appreciate

[MineForeman.com]

I see where you are going but your not looking at the big picture.

Lets say one million new people start to use bitcoin and on average of those million keep 1 BTC in their wallet at any particular time (average, some more some less).  In the grand scheme of things I think you will agree that is tiny.

In effect though, that has taken 1,000,000 BTC out of circulation at any particular time, that is just under 5% of the total bitcoins that will ever exist, it is close to 9% of what is in circulation. 

Neil

P.S. If you want to really blow your mind, think what would happen if 21 million people (still a tiny number) wanted to keep an average of 1 BTC in their wallet at any one time.

Exactly, it is saving reduce the coin supply on market and cause price to rise. The reason for saving using bitcoin comes from the fact that it can be spent at any place, with a long term rising purchasing power. If it becomes more widely accepted, more people will start to save using bitcoin. If you have a good saving and spending plan, you will accumulate bitcoin reserve, have a good life, while still helping it to appreciate

The idea with my equation is that no one is saving anything, it is just 1 million people that have (on average) one bitcoin to spend, that is a ridiculously small number in the scheme of things.

If you added savings (say 1 million people want to save, on average, 1 bitcoin each, still a tiny number) that is 2,000,000 taken out of the available pool!

Numbers start to get crazy very quickly, especially if take into account that in the last rough guess there is something like 8,000,000,000 people in the world all contending for their share of the 21 million coins that will ever exist.

Neil

[Lauda]

You're forgetting that with retail adoption, global awareness and adoption comes along. Bitcoin is still limited to a small number of people, that's the issue here. Not all merchants are going to dump directly, partially or at all. Some will hoard these coins.
I'm sorry OP but you have actually got it wrong.

[ShameOnYou]

The point it that Bitcoin is being adopted by big players, I think anyway.  I think people are thinking in the short term price of Bitcoin too much.  What matters is Bitcion gains trust of the average person and if they see big companies testing the waters it's worth dips in the price.  They say all press is good press and I think that is a suitable way of looking at the retail adoption at this time.

This is right on. When large companies start to accept bitcoin, it will give bitcoin a better image and will start to be associated with bad things like illegal activity less. As more people see bitcoin in a positive light and that there are many ways you can use bitcoin, more people will use it and the price will rise over time.

[spooderman]

"using bitcoin hurts bitcoin"

blah.

"People making a website for their business hurts the internet! They're only going on there to find phone numbers, or physical addresses of the business!"

[botany]

You're forgetting that with retail adoption, global awareness and adoption comes along. Bitcoin is still limited to a small number of people, that's the issue here. Not all merchants are going to dump directly, partially or at all. Some will hoard these coins.
I'm sorry OP but you have actually got it wrong.

Here is one very good example.
http://www.coindesk.com/malaysian-online-retailer-accepts-bitcoin-wont-convert-fiat-currency/

[anderl]

Will the stores always sell the bitcoin they receive right away?

How do customers get bitcoin they use to give to the store?

Most of the big companies who accept BTC will immediately convert to fiat so there is no risk (or upside).

I would say most of the companies accepting BTC do so as a gimmick and have no intent to hold on to it.

overstock do a $1mill a month in bitcoin.. and guess what, they only value the bitcoin in dollar. but never actually convert it to dollar. they are hoarding.

secondly bitpay do not throw bitcoins onto exchanges to sell for dollar. they just use the dollar value of exchanges for establishing prices. but the whole btc-fiat. is done privately through private investment/capitol funds.

its only coinbase that are swapping the coin on an exchange that is being measured by the community. so relax about companies dealing with bitpay. but your half right in regards to companies using coinbase.... well maybe a 3rd right. as even in coinbases case not all merchants sell 100% back to fiat.

I never said all merchants sell back to fiat.

I don't know who you are kid and I don't know what I want but your following a dangerous path.

[GrandmaJean]

"using bitcoin hurts bitcoin"

blah.

"People making a website for their business hurts the internet! They're only going on there to find phone numbers, or physical addresses of the business!"

This actually is a good point and a good analogy. IMO more businesses accepting bitcoin will increase the overall useage of bitcoin by society, regardless of if the business sells the bitcoin they earn right away.

[botany]

"using bitcoin hurts bitcoin"

blah.

"People making a website for their business hurts the internet! They're only going on there to find phone numbers, or physical addresses of the business!"

This actually is a good point and a good analogy. IMO more businesses accepting bitcoin will increase the overall useage of bitcoin by society, regardless of if the business sells the bitcoin they earn right away.

Yes, the network effect will kick in.

In economics and business, a network effect is the effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it.

http://en.wikipedia.org/wiki/Network_effect

[AlPutino]

This is pretty much common knowledge here, but you are missing a few points. After the first rush to buy things with Bitcoin, everyone is free to fill up their accounts with more Bitcoin (maybe even cheaper after a little sell-off) and having a Bitcoin payment option and its logo on the page of a merchant may lead people to inform themselves about it and get into and maybe buy a few.

[AlPutino]

Most merchants are not interested in new technology apart from their own core business and only look for ways to get money fast and easy. As soon as those report less costs, more consumers and less problems, more merchants will jump on the train making it more efficient for everyone.

[FlowerMatt]

I love how every other post here ends with "here's why". This place is so full of 100% truth and facts. So many geniuses here.

[ChuckStrawberry]

It's not about the price, it's about adoption, get your head out of your ass

[Intaryna]

You can't see the wood for the trees. Merchant adoption is good for bitcoin adoption and in the long term bitcoin adoption drives price.

[Lauda]

You're forgetting that with retail adoption, global awareness and adoption comes along. Bitcoin is still limited to a small number of people, that's the issue here. Not all merchants are going to dump directly, partially or at all. Some will hoard these coins.
I'm sorry OP but you have actually got it wrong.

Here is one very good example.
http://www.coindesk.com/malaysian-online-retailer-accepts-bitcoin-wont-convert-fiat-currency/

Exactly, one shouldn't worry about this. A big retailer does not need that money right now anyways, they make up for it easy.
Overclockers said that they would keep the coins as well, did they not?

[botany]

You're forgetting that with retail adoption, global awareness and adoption comes along. Bitcoin is still limited to a small number of people, that's the issue here. Not all merchants are going to dump directly, partially or at all. Some will hoard these coins.
I'm sorry OP but you have actually got it wrong.

Here is one very good example.
http://www.coindesk.com/malaysian-online-retailer-accepts-bitcoin-wont-convert-fiat-currency/

Exactly, one shouldn't worry about this. A big retailer does not need that money right now anyways, they make up for it easy.
Overclockers said that they would keep the coins as well, did they not?

Overstock is even planning to give bonuses to its employees in bitcoins. 

[michaelwang33]

The point it that Bitcoin is being adopted by big players, I think anyway.  I think people are thinking in the short term price of Bitcoin too much.  What matters is Bitcion gains trust of the average person and if they see big companies testing the waters it's worth dips in the price.  They say all press is good press and I think that is a suitable way of looking at the retail adoption at this time.

This is right on. When large companies start to accept bitcoin, it will give bitcoin a better image and will start to be associated with bad things like illegal activity less. As more people see bitcoin in a positive light and that there are many ways you can use bitcoin, more people will use it and the price will rise over time.

I think the association that bitcoin has with illegal activity is hampering its price. I agree that big, legit merchants accepting bitcoin for payment will, over time, take away this association, thus causing the price to rise.

[Phildo]

Exactly, it is saving reduce the coin supply on market and cause price to rise. The reason for saving using bitcoin comes from the fact that it can be spent at any place, with a long term rising purchasing power. If it becomes more widely accepted, more people will start to save using bitcoin. If you have a good saving and spending plan, you will accumulate bitcoin reserve, have a good life, while still helping it to appreciate

The idea with my equation is that no one is saving anything, it is just 1 million people that have (on average) one bitcoin to spend, that is a ridiculously small number in the scheme of things.

If you added savings (say 1 million people want to save, on average, 1 bitcoin each, still a tiny number) that is 2,000,000 taken out of the available pool!

Numbers start to get crazy very quickly, especially if take into account that in the last rough guess there is something like 8,000,000,000 people in the world all contending for their share of the 21 million coins that will ever exist.

Neil
[/quote]

People need to stop throwing around this 21 million coins 8 billion people nonsense. It doesn't matter unless there is a reason to use the coins. You can reduce the supply all you want, but if there is zero demand, the price is zero. Bitcoins will not have value unless there is a reason to use them, like retail adoption.

to end this 8 billion people nonsense, there are only 20 Phildo in 5th grade baseball cards in existence and 8 billion people. How much are they worth?

[AGD]

Funny how most people only see the price of BTC as if it was the most interesting part of it. Most of you guys will hold when it reaches highs, hoping for it to go even higher and later you panic sell it for 350$. Don't waste your time...

[davidgdg]

When a big company or even a little shop starts to accept bitcoin people start to get excited and think this adoption will result in the bitcoin price shooting up. Well I'm here to tell you the exact opposite is what actually happens. If a store or big company accepts bitcoin that's all fine and great but they're not holding on to it they're immediately dumping it in most cases and this will just result in the price getting lower. Places that keep the Bitcoin they get are keeping the price higher but they are a minority most just instantly dump upon receival of the bitcoin. We don't need to just get stores to accept bitcoin we need to show them the true value of it and why they should even themselves use it as a currency and not just dump it as some worthless commodity which some believe it to be. If we do this we will see a real increase in price.

Utter rubbish. So when Dell and others announce they are no longer accepting BTC then that will be a good thing ?