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Author Topic: Bitcoin is not used as money anymore  (Read 4443 times)
wobber
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May 12, 2011, 03:35:54 PM
 #1

I see that people are not using bitcoin as money anymone. Nobody really buys things with them, most of trades are MtGox trades. Sad, because bitcoin, as well as gold, is intended to be money, not an object for speculation. Because almost everyone has some bitcoins used as a mean to store value.

Anyway, look at this example. A chicken grower sells a chicken for $5. A bitcoin is also equal to $5. This means a chicken = 1 bitcoin. But since USD/BTC ratio is less constant than chicken/USD ratio, nobody will use that coin to buy chicken. They'll sell the coin for dollars, hoping for more than $5. If they'll get $6 for the coin, they can buy the chicken with 5 and also a coke for 1. So what do we do about that?


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Blitz­
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May 12, 2011, 03:40:57 PM
 #2

I see that people are not using bitcoin as money anymone. Nobody really buys things with them, most of trades are MtGox trades.
Evidence for this? I see more trades for real goods on this forum than ever.

Reminds me of the "deflationary spiral" argument – people won’t spend their money because it’ll be worth more. Nonsense imo, as there is a negative feedback response when people stop spending their Bitcoins: the economy shrinks and therefore demand shrinks too.

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BitLex
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May 12, 2011, 03:52:57 PM
 #3

where do you see that?

i spent more bitcoins for services recently, than i did before,
but i guess you haven't seen me doing it.

teppy
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May 12, 2011, 03:54:08 PM
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In the last week I've paid 3 different people for services using Bitcoins: One for advertising, and two for tech projects. Already I find Bitcoins quicker and more convenient than PayPal.

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Cusipzzz
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May 12, 2011, 04:03:27 PM
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Disagree. My site has become much more active with the BTC/USD growth.

The key is getting interest and demand from new users. Yes, that drives mtgox price up, but also provides a bigger universe for products/services.

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May 12, 2011, 04:08:31 PM
 #6

I have bought Coriander Seeds, Posters & Cards-
and donated to at least 3 organizations-

The coffee was just too much for shipping at 22 coins though...

It is just getting started in my opinion, payments are just so efficient and I get all giddy when purchasing in bitcoins;

AmpEater
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May 12, 2011, 04:26:54 PM
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I recently went to the Wiki and had my mind blown, bitcoin is accepted as money more than ever.

I have bought and sold physical goods using bitcoins more times in the last week than I have in the past 2 months.
Shortline
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May 12, 2011, 04:30:59 PM
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One hosting service, one donation-accepting activist website and one btc lottery added to the wiki in the 24 hours. Day before that four new services/businesses listed. Also check out Silk Road, last time I took a look there were 1200 members, tough to gauge how many are active but assuredly some are, and they don't mess with anything other than bitcoin.

To answer your question "what do we do about that?" just start up a business that accepts btc for goods or services. It's a smarter move than buying bitcoin, that's for sure - you reinforce the overall economy and obtain coins with a safety margin, your profit.
divergenta
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May 12, 2011, 04:56:06 PM
 #9

I kind of agree with wobber. Even though I don't either have any actual evidence to support this claim. It's more like a feeling. I have bought a lot of things and services using bitcoin and I'm happy with every single one of those transactions. But since coinpal died it's a bit troublesome for me to buy new bitcoin.  Well, it's not hard but it's a longer process.
But in my case I think it's a combination of the jumpy price, the fact that I still think of bitcoin in terms of USD (and then SEK) and the inconvenient and troublesome process of buying new coins.

The auctions on Biddingpond is a pretty good example IMO. Let's say that I find an auction I'm interested in and I place a reasonable bid and let's say that it goes out 3 weeks later. If you win that auction it can result in that you actually are paying twice the price you were willing to pay in the first place becuase of the jumpy market. This is of course only a problem if you think about the price in USD, 1 btc is always = 1 btc but I think it's hard not to think about it that way to. I ended up paying a small fortune (relatively to my total amount of btc and income) for a stupid torrent invite and sure it's not a bid deal in the long run but at least I feel kind of discouraged buying stuff becuase of these kind of things. But on the other hand. What could you do about this? You can't really "force" the market stabilize? But I guess it would perhaps benefit the bitcoin community in the perspective of traders and buyers if the market were a bit more stable.
One alternative could be to have a function when setting prices to convert the price from USD -> btc but kind of the thing with bitcoin is to get away from using dollar so it maybe doesn't make any sense.

I think I'll remove my mtgox script from conky and ignore the rallys in order to stop thinking about bitcoin in terms of any other currency.

FatherMcGruder
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May 12, 2011, 05:02:08 PM
 #10

Sad, because bitcoin, as well as gold, is intended to be money, not an object for speculation.
Who intended that for either thing, and why should we care?

Quote
Anyway, look at this example. A chicken grower sells a chicken for $5. A bitcoin is also equal to $5. This means a chicken = 1 bitcoin. But since USD/BTC ratio is less constant than chicken/USD ratio, nobody will use that coin to buy chicken. They'll sell the coin for dollars, hoping for more than $5. If they'll get $6 for the coin, they can buy the chicken with 5 and also a coke for 1. So what do we do about that?
I expect that vendors will start selling at a floating average. If they do so with enough bitcoins, we'll see more stability in the price of bitcoins with respect to other currencies.

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kiba
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May 12, 2011, 05:04:20 PM
 #11

The marketplace had to be split up into buy and sell because there were so much economic activities.

deadlizard
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May 12, 2011, 05:05:36 PM
 #12

most of trades are MtGox trades.
[citation needed]

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gpg fingerprint:DD1AB28F8043D0837C86A4CA7D6367953C6FE9DC

divergenta
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May 12, 2011, 05:18:37 PM
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When I read my post I see now that it sounds very pessimistic. That was not my intention. I don't want to rain on the parade, I love bitcoin. But I think the great fluctuations of the market is kind of a little (meta?)-problem.

bearbones
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May 12, 2011, 05:36:30 PM
 #14

That little (meta?)-problem has given me much pause.  I am actually surprised by the number of people willing to let go of their bitcoins.  It is certainly attractive to hold them.  On the other hand, I think that Blitzboom is correct.

Reminds me of the "deflationary spiral" argument – people won’t spend their money because it’ll be worth more. Nonsense imo, as there is a negative feedback response when people stop spending their Bitcoins: the economy shrinks and therefore demand shrinks too.

Before launch, I expected bitmunchies to do very low volume of transactions.  Because of the interest, I've been able to lower prices and offer more products.

Greater offerings are really, in my opinion, the best measure of the direction and stability of the bitcoin market.  If more people set up shop every day and offer new services/goods, it is clear that the customers are there.  If existing bitcoin businesses expand, we may draw the same conclusion.  It seems that every day a half dozen new sites are announced on this forum.

I am working on another project this month, which should be a great boon in signing on new companies.  The goal is to bring new products to the bitcoin community at prices lower than USD.  If products are cheaper in BTC, confidence and circulation will both improve.  Hopefully, this creates a feedback loop with increasing economies of scale.

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unfinishe
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May 12, 2011, 05:55:32 PM
 #15

It may seem profitable to just speculate and hoard as many coins as possible, but the only way that Bitcoins gain lasting value is when people start actually using them as a currency, so it may be worth it to part with a few to get the ball rolling.

Check out the results from my Bitcoin Survey Project!
https://bitcointalk.org/index.php?topic=88927.0
nster
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May 12, 2011, 06:08:00 PM
 #16

Most of the volume is MTG trades :/ I've done thousands of dollars on MTG, but none to buy something

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Garrett Burgwardt
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May 12, 2011, 06:13:31 PM
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Most of the volume is MTG trades :/ I've done thousands of dollars on MTG, but none to buy something

That's just you then, I've bought a bunch of stuff.
nster
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May 12, 2011, 06:18:54 PM
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Most of the volume is MTG trades :/ I've done thousands of dollars on MTG, but none to buy something

That's just you then, I've bought a bunch of stuff.

Thing is, most of the things you can buy with BTC is overpriced unless you are in the US

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May 12, 2011, 06:31:26 PM
 #19

Thing is, most of the things you can buy with BTC is overpriced unless you are in the US

The problem is that there are a minuscule number of merchants compared to potential customers right now. And, since physical goods can't be sent over the internet, consumers must pay shipping costs if they want to buy a product from someone outside their area. As the number of bitcoin businesses grows, however, we'll see more who are able to tap into their local market.

Still around.
nster
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May 12, 2011, 06:36:34 PM
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Thing is, most of the things you can buy with BTC is overpriced unless you are in the US

The problem is that there are a minuscule number of merchants compared to potential customers right now. And, since physical goods can't be sent over the internet, consumers must pay shipping costs if they want to buy a product from someone outside their area. As the number of bitcoin businesses grows, however, we'll see more who are able to tap into their local market.

yes thats my point though, BTC is very US oriented, especially when it comes to goods... There should be more European based commerces IMO

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