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Author Topic: Bitcoin ecosystem  (Read 615 times)
rjcesq
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July 01, 2012, 07:11:36 PM
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It seems to me that Bitcoin at present is problematic because it lacks an economic ecosystem.  In other words, there isn't much economic activity save buying and selling in Bitcoins and a few outlier services where one can earn minimal or buy with Bitcoin.  To truly succeed, Bitcoin must reach sufficient levels of acceptance to allow people to live wholly within the Bitcoin economy.  Currently consumers spending Bitcoin must purchase Bitcoin with fiat currency and then purchase their product and service then the accepting business must turn around and sell those Bitcoin in order get fiat currency to pay the electric bill.  This is completely inefficient. 

The question is can a non-Bitcoin based business transact solely or primarily in Bitcoin? By non-Bitcoin based, I mean the business merely uses Bitcoin as a medium of value exchange and doesn't exist to promote or sell Bitcoin related products or services.  Can such a business exist without the necessity of it's customers acquiring Bitcoin prior to purchase and the business immediately cashing out into another form of currency?

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edd
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July 01, 2012, 07:39:25 PM
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Technically, these businesses exist. I sell coffee at BitBrew to several bitcoin based business owners and I, in turn spend some of my profits in the form of BTC for goods and services. I haven't bought or sold any bitcoins through an exchange in months.

Unfortunately, I'm still forced to pay my day to day living expenses in USD, however. Until I can easily pay for gasoline, groceries, my mortgage, utility bills, and other necessary items with bitcoins, I'll keep my day job.


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rjcesq
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July 01, 2012, 07:56:14 PM
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edd,

Thanks for letting me know that you are able to subsist partially on Bitcoin.  What you are saying is spot on.  Unless you can pay the majority of your living expenses with Bitcoins you're going to have to earn a fiat currency or do an exchange. I'm actually a landlord and would accept Bitcoin for my rental property but then we end up with the coincidence of wants situation.  I really down any Bitcoin early adopter is going to want to live where I have my rental unit and further more they are going to have to earn enough in Bitcoin to afford paying month after month. 

Jason

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July 05, 2012, 08:55:52 PM
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then the accepting business must turn around and sell those Bitcoin in order get fiat currency to pay the electric bill.  This is completely inefficient. 

There are goods and services in which the best (or only) payment method is bitcoins.  If you are doing market research on your competitors, you might want to use an anonymous VPN, for instance.  You would want to pay using a digital currency that can be used anonymously then.

Other times bitcoin  is the only payment method the seller accepts.  Expect this to become more common as merchants in certain categories realize they can ditch their high risk merchant accounts:
 - http://bitcointalk.org/index.php?topic=73694.0

So in these instances, a merchant will acquire bitcoins just like a consumer does -- using cash deposit at 7-11, or a bank transfer (e.g., through Dwolla).

It takes time for a payment method to gain traction and without Bitcoin being a corporation (e.g., no marketing budget, no 1-800 # for support, etc.) it will take longer than many of us would like, but it also is unlike any other payment system.

There is no payment system that technically works in every single country in the world    en Español?  Si Habla.  As well as German, Portugese, Chinese, yes even Greek!
 - http://www.bitcoinmoney.com/post/24492713017

There is no widely accepted payment system that can be used anonymously.

There is no payment system that is technology agnostic.  Want to send a bitcoin to someone through e-mail?   Coinapult, Blockchain.info, and others will do that.   How about to a mobile?  Several options for that as well.  Physical (offline) method/  Check.  Escrow?  Check (well, someday -- use a third party until that happens.)

So yes, while a merchant that accepts bitcoins might be leaving money on the table by cashing out, they are already half-way there to being prepared for when the goods and services they buy can be paid for using bitcoins.

That will happen.

The reasons pointed out in this Bitcoin Business Primer will help to explain why Bitcoin is better:

 - http://blog.bitinstant.com/blog/2012/7/5/a-business-primer-on-the-bitcoin-ecosystem-erik-voorhees.html

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