Sizing and detailing the bitcoin economy by segments

[countryfree]

When it comes to a country, we have plenty of economic indicators to tell where the wealth is created. Gross domestic product is usually divided between the agricultural sector, the industrial sector and the service sector. There are many more detailed data regarding industrial classifications and manufacturing activities, and I think bitcoin could benefit if it had something similar.

What are the biggest segments in the bitcoin economy?

There's gambling, there's selling drugs, there's mining and converting it to fiat currencies...

Any idea on how to quantify those activities? And which are the others? Shall we consider writing software as a segment?

[countryfree]

I'm quite surprised, no one has any idea nor a comment about my subject.
Please, think again about it, I'm sure BTC could gain from information regarding the wealth it creates.

[Erdogan]

There is no bitcoin economy. There is really no distinct economy for each country either, however governments have created some fences around local economies and money systems. The fences will have to go down.

[goozman96]

There's also the money transmission service. Sending bitcoins to anywhere in the world costs a fraction of Western Union, etc.

[panju1]

I guess bitcoin gambling accounts for a significant portion of the bitcoin economy. It is tough to quantify this though. I remember reading that Satoshi Dice accounted for 25-50% of all bitcoin transactions last year. According to reports, the gambling industry is poised to grow further.
https://www.cryptocoinsnews.com/bitcoin-will-revolutionize-gambling/

I think major sectors in the bitcoin economy would be
- Mining
- ASIC Manufacturing (Aren't these purchased primarily using bitcoins)
- Gambling
- Trading (Bitcoin exchanges)
- Bitcoin Mixing
- Remittance
- Pornography (Girls Gone Bitcoin, among others  )
- Illegal activities (Buying drugs, Ransomware, etc)
- Ancillary Services (Legal, Compliance, Bitcoin software, etc)

[countryfree]

I guess bitcoin gambling accounts for a significant portion of the bitcoin economy. It is tough to quantify this though. I remember reading that Satoshi Dice accounted for 25-50% of all bitcoin transactions last year. According to reports, the gambling industry is poised to grow further.
https://www.cryptocoinsnews.com/bitcoin-will-revolutionize-gambling/

I think major sectors in the bitcoin economy would be
- Mining
- ASIC Manufacturing (Aren't these purchased primarily using bitcoins)
- Gambling
- Trading (Bitcoin exchanges)
- Bitcoin Mixing
- Remittance
- Pornography (Girls Gone Bitcoin, among others  )
- Illegal activities (Buying drugs, Ransomware, etc)
- Ancillary Services (Legal, Compliance, Bitcoin software, etc)

Thanks for your input. I know gambling is big, and somehow this is worrying. BTC deserves better. I wish a car manufacturer could sell its products and accepts only BTC as a payment.

[pawel7777]

I guess bitcoin gambling accounts for a significant portion of the bitcoin economy. It is tough to quantify this though. I remember reading that Satoshi Dice accounted for 25-50% of all bitcoin transactions last year. According to reports, the gambling industry is poised to grow further.
https://www.cryptocoinsnews.com/bitcoin-will-revolutionize-gambling/

I think major sectors in the bitcoin economy would be
- Mining
- ASIC Manufacturing (Aren't these purchased primarily using bitcoins)
- Gambling
- Trading (Bitcoin exchanges)
- Bitcoin Mixing
- Remittance
- Pornography (Girls Gone Bitcoin, among others  )
- Illegal activities (Buying drugs, Ransomware, etc)
- Ancillary Services (Legal, Compliance, Bitcoin software, etc)

Thanks for your input. I know gambling is big, and somehow this is worrying. BTC deserves better. I wish a car manufacturer could sell its products and accepts only BTC as a payment.

I don't have a problem with gambling being a large % of BTC economy, it's not like they're taking away from other segments.

The "big 3" that comes to mind is: mining, gambling and altcoin/fiat speculative trading. Not sure whether the 'standard' purchases (overstock, dell, newegg etc) have more volume of trade than any of those 3.

On the positive side, remittance services (using bitcoin for transfers) seem to be on the rise. I've seen some recent news about 2 or 3 new companies starting up. This could be pretty important sector and think it's underestimated by many.

[panju1]

I guess bitcoin gambling accounts for a significant portion of the bitcoin economy. It is tough to quantify this though. I remember reading that Satoshi Dice accounted for 25-50% of all bitcoin transactions last year. According to reports, the gambling industry is poised to grow further.
https://www.cryptocoinsnews.com/bitcoin-will-revolutionize-gambling/

I think major sectors in the bitcoin economy would be
- Mining
- ASIC Manufacturing (Aren't these purchased primarily using bitcoins)
- Gambling
- Trading (Bitcoin exchanges)
- Bitcoin Mixing
- Remittance
- Pornography (Girls Gone Bitcoin, among others  )
- Illegal activities (Buying drugs, Ransomware, etc)
- Ancillary Services (Legal, Compliance, Bitcoin software, etc)

Thanks for your input. I know gambling is big, and somehow this is worrying. BTC deserves better. I wish a car manufacturer could sell its products and accepts only BTC as a payment.

I think the big advantage that gambling has is that payouts are its primary expense and these can be denominated in Bitcoin. A car manufacturer would have to pay for materials, components, wages, utility bills, etc. which are necessarily fiat denominated. Unless you have these being paid in Bitcoin, it would be very difficult for a car manufacture to sell its products and accept only BTC as payment.

[goozman96]

I guess bitcoin gambling accounts for a significant portion of the bitcoin economy. It is tough to quantify this though. I remember reading that Satoshi Dice accounted for 25-50% of all bitcoin transactions last year. According to reports, the gambling industry is poised to grow further.
https://www.cryptocoinsnews.com/bitcoin-will-revolutionize-gambling/

I think major sectors in the bitcoin economy would be
- Mining
- ASIC Manufacturing (Aren't these purchased primarily using bitcoins)
- Gambling
- Trading (Bitcoin exchanges)
- Bitcoin Mixing
- Remittance
- Pornography (Girls Gone Bitcoin, among others  )
- Illegal activities (Buying drugs, Ransomware, etc)
- Ancillary Services (Legal, Compliance, Bitcoin software, etc)

Thanks for your input. I know gambling is big, and somehow this is worrying. BTC deserves better. I wish a car manufacturer could sell its products and accepts only BTC as a payment.

I think the big advantage that gambling has is that payouts are its primary expense and these can be denominated in Bitcoin. A car manufacturer would have to pay for materials, components, wages, utility bills, etc. which are necessarily fiat denominated. Unless you have these being paid in Bitcoin, it would be very difficult for a car manufacture to sell its products and accept only BTC as payment.

They could use Coinbase and never have to deal with Bitcoins if they don't want to. They accept Bitcoin, but they will receive dollars.

[Q7]

Number of actual users (which so far haven't been able to really quantify) or I would say acceptance rate
Number of hashrate
Number of transaction - probably no here or not accurate as transaction could also be taking place when a user transfer to the same account
Number of stores accepting bitcoin
Number of giant corporation declaring that they will use bitcoin

[scarsbergholden]

I guess bitcoin gambling accounts for a significant portion of the bitcoin economy. It is tough to quantify this though. I remember reading that Satoshi Dice accounted for 25-50% of all bitcoin transactions last year. According to reports, the gambling industry is poised to grow further.
https://www.cryptocoinsnews.com/bitcoin-will-revolutionize-gambling/

I think major sectors in the bitcoin economy would be
- Mining
- ASIC Manufacturing (Aren't these purchased primarily using bitcoins)
- Gambling
- Trading (Bitcoin exchanges)
- Bitcoin Mixing
- Remittance
- Pornography (Girls Gone Bitcoin, among others  )
- Illegal activities (Buying drugs, Ransomware, etc)
- Ancillary Services (Legal, Compliance, Bitcoin software, etc)

Thanks for your input. I know gambling is big, and somehow this is worrying. BTC deserves better. I wish a car manufacturer could sell its products and accepts only BTC as a payment.

I think the big advantage that gambling has is that payouts are its primary expense and these can be denominated in Bitcoin. A car manufacturer would have to pay for materials, components, wages, utility bills, etc. which are necessarily fiat denominated. Unless you have these being paid in Bitcoin, it would be very difficult for a car manufacture to sell its products and accept only BTC as payment.

They could use Coinbase and never have to deal with Bitcoins if they don't want to. They accept Bitcoin, but they will receive dollars.

I don't think merchants that convert the bitcoin they receive from sales to fiat immediately should really truly be considered to be part of the 'bitcoin economy' as they are both pricing their goods in terms of fiat and receiving their goods in fiat. The only real exception would probably be overstock who only converts a portion of their revenue to fiat and is active in the bitcoin related economy/community

[panju1]

I don't think merchants that convert the bitcoin they receive from sales to fiat immediately should really truly be considered to be part of the 'bitcoin economy' as they are both pricing their goods in terms of fiat and receiving their goods in fiat. The only real exception would probably be overstock who only converts a portion of their revenue to fiat and is active in the bitcoin related economy/community

I agree with that view. While merchants accepting bitcoin helps us increase the popularity of Bitcoin, we really shouldn't be considering it as part of the Bitcoin economy.

I think a bottom-up approach will be the way forward for companies to start accepting bitcoins. In a supply chain, a manufacturer who produces basic goods from commodities may find it easy to accept bitcoin. You could then move up the supply chain, with other manufacturers accepting bitcoin. The car manufacturer would probably be the last to accept bitcoin, doing so after everybody else accepts bitcoin.

This scenario doesn't incorporate manufacturers accepting bitcoin through coinbase and converting it immediately into fiat.

[scarsbergholden]

I don't think merchants that convert the bitcoin they receive from sales to fiat immediately should really truly be considered to be part of the 'bitcoin economy' as they are both pricing their goods in terms of fiat and receiving their goods in fiat. The only real exception would probably be overstock who only converts a portion of their revenue to fiat and is active in the bitcoin related economy/community

I agree with that view. While merchants accepting bitcoin helps us increase the popularity of Bitcoin, we really shouldn't be considering it as part of the Bitcoin economy.

I think a bottom-up approach will be the way forward for companies to start accepting bitcoins. In a supply chain, a manufacturer who produces basic goods from commodities may find it easy to accept bitcoin. You could then move up the supply chain, with other manufacturers accepting bitcoin. The car manufacturer would probably be the last to accept bitcoin, doing so after everybody else accepts bitcoin.

This scenario doesn't incorporate manufacturers accepting bitcoin through coinbase and converting it immediately into fiat.

You describe the ideal bitcoin economy, which is unlikely to happen for at least a very long time. I would say the next step in the direct of the above is to start seeing business to business bitcoin transactions, which are very rare now. The only real b2b bitcoin transactions are possibly between mining manufacturers and corporate mining farms

[panju1]

I don't think merchants that convert the bitcoin they receive from sales to fiat immediately should really truly be considered to be part of the 'bitcoin economy' as they are both pricing their goods in terms of fiat and receiving their goods in fiat. The only real exception would probably be overstock who only converts a portion of their revenue to fiat and is active in the bitcoin related economy/community

I agree with that view. While merchants accepting bitcoin helps us increase the popularity of Bitcoin, we really shouldn't be considering it as part of the Bitcoin economy.

I think a bottom-up approach will be the way forward for companies to start accepting bitcoins. In a supply chain, a manufacturer who produces basic goods from commodities may find it easy to accept bitcoin. You could then move up the supply chain, with other manufacturers accepting bitcoin. The car manufacturer would probably be the last to accept bitcoin, doing so after everybody else accepts bitcoin.

This scenario doesn't incorporate manufacturers accepting bitcoin through coinbase and converting it immediately into fiat.

You describe the ideal bitcoin economy, which is unlikely to happen for at least a very long time. I would say the next step in the direct of the above is to start seeing business to business bitcoin transactions, which are very rare now. The only real b2b bitcoin transactions are possibly between mining manufacturers and corporate mining farms

Yes, B2B transactions will be the way forward. The first step would have to be taken by some Bitcoin evangelist. I hope Overstock would be able to convince some of its suppliers to accept Bitcoin. They have already taken the lead in expanding acceptance among their employees. If I am not wrong, they pay their employees a little bit extra if the employees choose to receive their bonuses in bitcoins.

[desertfox470]

It's a cool idea to  be able to do that. There is one problem people would look at the bad side of btc. 20% of the market is for drugs, and another percent for scammers. A lot would say they don't want to invest in that.

[countryfree]

I don't think merchants that convert the bitcoin they receive from sales to fiat immediately should really truly be considered to be part of the 'bitcoin economy' as they are both pricing their goods in terms of fiat and receiving their goods in fiat. The only real exception would probably be overstock who only converts a portion of their revenue to fiat and is active in the bitcoin related economy/community

I believe quite the opposite. To help the BTC economy, we need big names to accept it. Microsoft accepting BTC is more important for raising awareness than all the gambling websites.

[panju1]

I don't think merchants that convert the bitcoin they receive from sales to fiat immediately should really truly be considered to be part of the 'bitcoin economy' as they are both pricing their goods in terms of fiat and receiving their goods in fiat. The only real exception would probably be overstock who only converts a portion of their revenue to fiat and is active in the bitcoin related economy/community

I believe quite the opposite. To help the BTC economy, we need big names to accept it. Microsoft accepting BTC is more important for raising awareness than all the gambling websites.

I agree with that view. In the short term, increased merchant acceptance and conversion of those bitcoins into fiat results in downward pressure on the price of bitcoin. However, this is good as it shows that bitcoin is a great means of transferring value. In the long term, it probably will result in more people using bitcoin and have a positive impact on the price due to network effects.

[deluxeCITY]

I don't think merchants that convert the bitcoin they receive from sales to fiat immediately should really truly be considered to be part of the 'bitcoin economy' as they are both pricing their goods in terms of fiat and receiving their goods in fiat. The only real exception would probably be overstock who only converts a portion of their revenue to fiat and is active in the bitcoin related economy/community

I believe quite the opposite. To help the BTC economy, we need big names to accept it. Microsoft accepting BTC is more important for raising awareness than all the gambling websites.

I would disagree. We don't need major companies to accept bitcoin, we just need enough of a variety of companies to accept bitcoin. These companies will have a competitive advantage as they will have lower payment processing costs and as a result will grow

[countryfree]

I don't think merchants that convert the bitcoin they receive from sales to fiat immediately should really truly be considered to be part of the 'bitcoin economy' as they are both pricing their goods in terms of fiat and receiving their goods in fiat. The only real exception would probably be overstock who only converts a portion of their revenue to fiat and is active in the bitcoin related economy/community

I believe quite the opposite. To help the BTC economy, we need big names to accept it. Microsoft accepting BTC is more important for raising awareness than all the gambling websites.

I would disagree. We don't need major companies to accept bitcoin, we just need enough of a variety of companies to accept bitcoin. These companies will have a competitive advantage as they will have lower payment processing costs and as a result will grow

Most small shop owners still aren't sure about BTC. When they see that Microsoft accepts it, it's a huge boost. We shall never underestimate the power of opinion leaders.