Why compared to the dollar?

[Steve]

If people are only interested in what a btc is worth compared to an American dollar then what is the idea behind btc?

Why would you think that people are only interested in what Bitcoin is worth compared to USD?  Nobody is really interested in that except as a convenient way of conceptualizing the purchasing power of Bitcoin.

[1714770056]

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[1714770056]

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[cryptoanarchist]

Every asset has an exchange rate with every other asset. It is impossible to prevent this phenomenon.

Let's assume nobody traded BTC for USD. We'd still have an exchange rate between BTC and a loaf of bread. Perhaps 1btc = 3 loaves of bread. Of course, we also know that 1 loaf of bread = $3.50.  And then POOF there is now, automatically, an exchange rate between BTC and USD, even though we didn't start with one. The exchange rate in this case becomes 0.33 btc = $3.50

So the reason BTC is commonly priced in terms of USD, is because USD is the most purchased commodity with BTC. This should be expected, since both are money, and monies are those things which are the most commonly purchased goods in a society.

tl;dr- It's impossible to prevent an exchange rate from occuring between any two goods on earth.

I will offer you 10 chickens for your 3 hogs.

They'd have to be REAL BIG chickens.

[Stephen Gornick]

It is not like I can go out food shopping and pay with bitcoin. I'm just curious...what people have to say.

Everybody plans to spend their bitcoins eventually, therefore there will always need to be a gauge as to how valuable bitcoins are as far as their ability to purchase goods and services.  BTC/USD just happens to reflect the vast majority of trading (today) so it is seen as the most accurate and thus is the most widely used.  

[opentoe]

I suspect that in the early stages the main benefit of accepting bitcoins will accrue to those who already hold bitcoins. Basically the more places that accept them the more likely they are to succeed thus the more they are likely to be worth. Thus if you do much business, get a lot of the public walking through your store or browsing your site, it might be worthwhile to stash a bunch of bitcoins while they are cheap and start accepting them to help build up their popularity.

-MarkM-

As one person stated in a response above...profit. I guess that is what drives this.

[EnergyVampire]

I'm trying to grasp what benefit a merchant has if they start accepting btc?

I want to say the 2 major benefits are:
1. Customer demand
2. Merchant savings

The Visa/MasterCard/American Express marketing campaigns were very effective in my opinion (i.e. "Don't leave home without it." - American Express). Nowadays, you'll be hardpressed to find a retailer in developed nations that doesn't accept them. Of course, there are those that refuse to accept these credit cards but they probably lose sales because of it unfortunately the customer demand isn't there yet for bitcoins.

Merchant savings is probably the best sales pitch. Let's use a gas (petrol) station in the USA as an example. With $4 per gallon, 10 gallons per fillup, 100 credit card customers per day, and a 3% payment processing fee for Visa. so...

$120 USD in Fees per day or $3,600 USD per month. (30 days)

If the Bitcoin Payment Processors (BPP) makes it transparent for the merchant (merchant doesn't care about the BTC/USD rate) with all the cryptostuff and exchange rate handled solely between the customer and the BPP. Also assuming the processing fee is 0.05 BTC and BTC/USD=$9.00 then the fees drop to...

$45 USD per day or $1,350 USD per Month. (30 days)

...a savings of $2,250 per month! Yay, hire another employee.  

Of course I have no idea what the Bitcoin Payment Processors are charging. Visa/MasterCard/American Express have an extra advantage since they are offering loans (credit lines) which probably lets people spend more than they can afford.

[BkkCoins]

I thought the BTC payment processors were charging almost the same as CC processors. At least last fall when I checked that was the case and I didn't see that as a big reason for merchants.
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I think the reason to use bitcoin is the ability to take back control over your own money. Right now there's not many places to spend them directly - so you usually have to do some conversion. But imagine a world where more people say "FU" to the big banking cartels (who make fees and act as gatekeepers for every transaction) and govts (that think they are the arbiters of what people are allowed to do) and decide to keep their money privately in bitcoin. That would create a user base that would be more enticing to merchants. Eventually merchants could accept bitcoin for what they are because they could also spend them for what they need.

A money that doesn't pass thru the gatekeepers hands and lose a few percent every time ought to be a valuable thing but so far not too many people really understand that. The convenience of state currencies still has most people preferring them. I wonder if they added up how much money they gave the bank networks over the course of their life if they would feel the same. And when will people get tired of the system that screws them every day.

[dree12]

I've been thinking of creating a CPI index for Bitcoin, which would measure inflation without tying it to the dollar. Effectively, bitcoin merchant sites are scanned by bots every period of time, and categorized into categories. As the prices change, the CPI index is calculated. Many merchants will tie their price to the US dollar/Euro/CAD or whatever, while some would use round numbers (1 BTC). This CPI would then be an aggregate of price changes across many currencies proportional to importance while not using any outside currencies directly. (in this way, the CPI would directly be noticed by the "consumer").

[unclemantis]

I am still trying to figure out how to buy actual Chinese Yuan! I am a USA citizen.

[notme]

I thought the BTC payment processors were charging almost the same as CC processors. At least last fall when I checked that was the case and I didn't see that as a big reason for merchants.
---

I think the reason to use bitcoin is the ability to take back control over your own money. Right now there's not many places to spend them directly - so you usually have to do some conversion. But imagine a world where more people say "FU" to the big banking cartels (who make fees and act as gatekeepers for every transaction) and govts (that think they are the arbiters of what people are allowed to do) and decide to keep their money privately in bitcoin. That would create a user base that would be more enticing to merchants. Eventually merchants could accept bitcoin for what they are because they could also spend them for what they need.

A money that doesn't pass thru the gatekeepers hands and lose a few percent every time ought to be a valuable thing but so far not too many people really understand that. The convenience of state currencies still has most people preferring them. I wonder if they added up how much money they gave the bank networks over the course of their life if they would feel the same. And when will people get tired of the system that screws them every day.

The lack of chargebacks is the biggest selling point.  Fees are lower too, but until there is more competition to bit-pay and paysius there isn't much reason for them to make them significantly lower than credit card fees.  They could operate with lower fees, but they are still getting enough business, so why not maximize profits at this stage?

[acoindr]

I suspect that in the early stages the main benefit of accepting bitcoins will accrue to those who already hold bitcoins. Basically the more places that accept them the more likely they are to succeed thus the more they are likely to be worth. Thus if you do much business, get a lot of the public walking through your store or browsing your site, it might be worthwhile to stash a bunch of bitcoins while they are cheap and start accepting them to help build up their popularity.

-MarkM-

As one person stated in a response above...profit. I guess that is what drives this.

Sure, profit is one thing, but not the only thing. There are many bitcoiners that do find it convenient to buy things with BTC, and I'm not only talking about drugs. There was a thread here I can't find where users listed different ways they use BTC. It was a decent length, and that will only increase.

Bitcoins are a better payment mechanism than current pay options for different reasons. That's what really drives this.

[acoindr]

Answering your original question another way, (why compared to the dollar)  the dollar has had a HUGE headstart on bitcoin

People now accept/love dollars, so bitcoins have to somewhat acknowledge that. It would be silly not to. That doesn't mean that can't change.

[SMTB1963]

OP's title of this thread may as well be "Why compared to $/€/£?".  The answer has nothing to do with any theories of money, chargebacks, fees, or "advantages over other payment methods" LOL.  IMO the real answer (for the time being) is that bitcoin speculators prefer to transact in $/€/£/etc.

Bitcoins are a better payment mechanism than current pay options for different reasons.

So why don't more than a precious few merchants accept them as payments for their goods/services?  Could it be because bitcoin is a foreign currency for everyone?  Ask yourself why a British merchant would be foolish to accept AUD coins as payent, and you'll have your answer.

Bitcoins aren't accepted as a medium of exchange for a whole hoist of reasons, all of which handily trump perceived advantages from no chargebacks/low fees/etc..  Today, the value of BTC is driven by speculation vs fiat alone (as has been alluded to earlier in this thread).

[acoindr]

So why don't more than a precious few merchants accept them as payments for their goods/services?

The shortened answer is because they don't know about it and neither do their customers. If both parties knew of bitcoins and saw how they could benefit by using them they might do so.

Could it be because bitcoin is a foreign currency for everyone?

There is really no such thing as a "foreign" currency. Things either have value as money or they don't. One key requirement of something being "money" is that people accept it. This means some things are money for some people while not for others. As people around you begin to accept whatever an item is as money then it automatically becomes money for you too.

Bitcoins aren't accepted as a medium of exchange for a whole hoist of reasons, all of which handily trump perceived advantages from no chargebacks/low fees/etc..

Bitcoin ARE accepted as a medium of exchange. For proof see here:

https://bitcointalk.org/index.php?board=5.0
https://en.bitcoin.it/wiki/Trade

Today, the value of BTC is driven by speculation vs fiat alone.

I agree that's largely the case, but not entirely the case. For example, the people who want to buy drugs on SilkRoad value bitcoins not because of speculation, but because they need them to exchange for something they want. This may apply to more and more people as time goes on (needing bitcoins to exchange for something they want, not buying drugs on SilkRoad).

[juggernaut76]

IMHO we (Americans) compare it to the dollar because that's how we make value comparisons. We think of commercial goods/activities in the sense of dollars and cents. Before "money" each person had to make a comparison respective of their own goods. A chicken farmer looked at a cow and thought to himself, "that's a 30-chicken cow, right there!" A cattle rancher, might've thought, "that acre of land is worth 15-cows." I'm currently job hunting and I look at each potential new job as a value comparison: how much am I willing to accept to do the work required and start there as the negotiating point with the employer.

This concept doesn't change for anyone, except for the particular currency being specified. Europeans might make the comparison to the Euro instead of the dollar. Everything else, above and beyond the simple value comparison is socio-political icing on the cake.

[on9isrock]

well something must have value
if you want to use bitcoin without value give me your kidney

[SMTB1963]

The shortened answer is because they don't know about it and neither do their customers. If both parties knew of bitcoins and saw how they could benefit by using them they might do so.

Well, that's a great answer for bitcoin advocates with their blinders on.  But if you think a little harder, I bet you'll find some serious hurdles to BTC adoption for the avg merchant.

There is really no such thing as a "foreign" currency.

I'm not sure how to respond to that, except to say that the rest of the world disagrees with you.   

Bitcoin ARE accepted as a medium of exchange. For proof see here:

https://bitcointalk.org/index.php?board=5.0
https://en.bitcoin.it/wiki/Trade

 

If you think those links provide proof of anything, you might want to lay off the Silk Road purchases for a while.

Snarky comments aside, I never said bitcoin wasn't accepted by some business for goods & services(you know, stuff that actually creates value).  IMO, the primary use of BTC is as a speculative plaything - at least for the time being.

ps - why don't you click through some of those links listed on the wiki?  I'm finding several no longer work, and some of those that do no longer appear to accept BTC.   

[notme]

As a private contractor I greatly prefer being paid in BTC to Paypal.  It's quicker to get it to my bank account when I need the funds and I don't lose 3%.  Handing over my bank details is even less appealing, and most people don't like sending checks.

[acoindr]

The shortened answer is because they don't know about it and neither do their customers. If both parties knew of bitcoins and saw how they could benefit by using them they might do so.

Well, that's a great answer for bitcoin advocates with their blinders on.  But if you think a little harder, I bet you'll find some serious hurdles to BTC adoption for the avg merchant.

If you read what I wrote you will see I said:

"The shortened answer is because they don't know about it and neither do their customers."

I don't know if you're being intentionally obtuse, or you're just not reading carefully.

There is really no such thing as a "foreign" currency.

I'm not sure how to respond to that, except to say that the rest of the world disagrees with you.  

Why didn't you also quote my very next sentence? I said:

"Things either have value as money or they don't. "

Take a look at this article from 2008 when many shops in New York began accepting euros.

http://www.reuters.com/article/2008/02/06/us-newyork-euros-idUSN0655798320080206

Just read the headline and very first sentence...

In the latest example that the U.S. dollar just ain't what it used to be, some shops in New York City have begun accepting euros and other foreign currency as payment for merchandise.

"We had decided that money is money and we'll take it and just do the exchange whenever we can with our bank," Robert Chu, owner of East Village Wines, told Reuters television.

(emphasis mine)

Again, I'm not sure if you're intentionally trolling or just not reading carefully.

Bitcoin ARE accepted as a medium of exchange. For proof see here:

https://bitcointalk.org/index.php?board=5.0
https://en.bitcoin.it/wiki/Trade

 

If you think those links provide proof of anything, you might want to lay off the Silk Road purchases for a while.

Umm, okay. Now I'm the one that doesn't know how to respond.

Snarky comments aside, I never said bitcoin wasn't accepted by some business for goods & services(you know, stuff that actually creates value).  IMO, the primary use of BTC is as a speculative plaything - at least for the time being.

ps - why don't you click through some of those links listed on the wiki?  I'm finding several no longer work, and some of those that do no longer appear to accept BTC.  

Yes, I do think the wiki could really benefit from some regular curation. I was just thinking now would be a good time to start. Bitcoin popularity is growing and many people will visit that page.

[SMTB1963]

I don't know if you're being intentionally obtuse, or you're just not reading carefully.
...
Again, I'm not sure if you're intentionally trolling or just not reading carefully.

Maybe I'm accidentally trolling.   

See?  There are other possibilities outside your either/or way of thinking - if you'll just open your mind to them.

Look, I'm not really interested in carrying this thread further OT by debating the utility of bitcoin payments with you.  Unquestionably, bitcoin has some advantages over alternative electronic payment methods (in some cases).   But if you can't acknowledge any of the distinct disadvantages that accepting bitcoin payments pose for your typical merchant, then I think you're being...erm, what's that word?  I just read it a second ago...

(I guess I should learn to read more carefully) 

[acoindr]

I don't know if you're being intentionally obtuse, or you're just not reading carefully.
...
Again, I'm not sure if you're intentionally trolling or just not reading carefully.

Maybe I'm accidentally trolling.  

See?  There are other possibilities outside your either/or way of thinking - if you'll just open your mind to them.

Look, I'm not really interested in carrying this thread further OT by debating the utility of bitcoin payments with you.  Unquestionably, bitcoin has some advantages over alternative electronic payment methods (in some cases).   But if you can't acknowledge any of the distinct disadvantages that accepting bitcoin payments pose for your typical merchant, then I think you're being...erm, what's that word?  I just read it a second ago...

(I guess I should learn to read more carefully)  

I don't have a problem acknowledging there are disadvantages now for typical merchants. For example, one disadvantage would be accounting for volatility of bitcoins...