Posted on 11/03/2015 10:08:42 AM PST by Another Post-American
One last ping for a while...
One thing about bitcoin, is change happens fast. Since I posted the OP a few minutes ago:
1. The price of Bitcoin has increased over $22 to $416.
2. Bitcoin has been banned in Taiwan, as a knee-jerk reaction to the kidnapping of a Hong Kong billionaire by criminals who demanded the ransom be paid in bitcoin. The ruling was made by an unelected Financial Supervisory Commission, not lawmakers. (So if they’d ask to be paid in cash... ?)
Have you used any coin-tumbling service? Altcoins?
Nice summary. Thank you.
In one case an ordinary guy noticed that some stolen coins were being sent to a mixer. So he threw a couple cents worth of bitcoin into the mixer at the same time. It laundered his money with the stolen funds, and allowed him to tracked the outbound funds. The thief tried to mix his stolen coins dozens of times, and the guy just kept pace with him, tracking it with pennies at a time. Eventually the thief just gave up. People who think they are a guarantee of anonymity are kidding themselves.
Oh, as regards altcoins, I mined dozens of them all through 2014. I still hold small positions (very small) in Dash, Litecoin, Dogecoin, Monero, Bitcoindark, NXT, Pesetacoin, EFL and a few others. And so far as I can tell, I’m the largest holder of Piggycoin outside the development team. ;-)
I’m just hedging my bets, and I use Piggycoin to pay my kids for chores and as an incentive for various things.
Bitcoin looks good, from a technological standpoint. But I still can’t see bitcoin ever really taking off as a currency. If people believe that bitcoins will hold their value better than another currency, they have no incentive to spend them. They will spend dollars, and horde bitcoins. If people don’t believe that bitcoin will hold their value, then it has no pressing advantage over other, more widely accepted, currencies. Why take the risk on a new currency, that may or may not ever become widely accepted, if I also believe that the new and risky currency will go down in value?
I am sure that you have run into this argument before. What is the generally accepted response to this, in the bitcoin community?
I can empathize; best I can suggest is to wait for a pullback or some negative news that causes an over-reaction in the opposite direction.
Can I have bit coin pings for 100, wink?
Merchants have an incentive to encourage their customers to spend bitcoins with them, because bitcoin is the most trouble-free method of payment. There is no counterfeiting with bitcoin. No forged or bounced checks. No credit card chargebacks or investigations. No credit card fees! Verification that a spend has been accepted by the network (as distinct from confirmation of X blocks) is achieved within seconds. No need for armored cars or other security.
This all saves merchants real money. So I anticipate that as they get used to using bitcoin and the benefits are proven, they'll begin to offer small discounts to anyone paying with bitcoin. I estimate this will be in the range of 3% (slightly more than what you get with a rewards credit card). That will incentivize people to spend their bitcoins.
This is already happening on a small scale, and folks like me already shop with bitcoin regularly. I get 2-3% off with my rewards credit cards, but that pales in comparison with the savings I get at Purse.io buying anything I want at Amazon using bitcoin. (Typically 15-20% off.)
Yep, you are added!
Thanks for you answer. I was hoping you would say something like this. I would really like to see bitcoin thrive, and if there are tangible savings at the merchant-level, then that may just be part of the answer. Two follow ups, if you don’t mind:
First, do those savings scale up? Is Walmart going to see an advantage similar to a small store?
Second, are there any advantages to employers paying wages in bitcoin? Better yet, are any companies already paying wages in bitcoin?
If you have a Bitcoin ping list, please add me. Thanks
Me too? Thanks
You guys are added!
Heh, the price just dropped $20+. I should list whiplash from watching the price changes today as part of the risks. :-)
Well, I'm an engineer not someone involved in corporate finance, so I feel out of my depth tackling that one. I am confident there would be savings at both ends of the scale, but where the greatest advantage would lay, I can't say.
Second, are there any advantages to employers paying wages in bitcoin? Better yet, are any companies already paying wages in bitcoin?
There is a 3rd party payment processor that was announced some months ago. I remember because they were going to make their service free for a while. It let employees choose to have some portion of their paycheck be converted to bitcoin automatically. Wish I could remember their name.... Bitwage! That's it. Bitwage.com
Besides them, I know there are various small outfits paying employees here and there in bitcoin. Of course mostly these are bitcoin-focused companies themselves. And there are a few people who are living entirely on bitcoin, though that clearly takes some effort and creativity at this point.
Apart from using Purse and a few other opportunities, I'm still more of a saver than a spender with bitcoin myself. I expect that's how it is for most people within the bitcoin ecosystem. Which goes to your point about bitcoin hoarding vs. spending.
I can only speak for myself. New currencies often have legitimacy crisis. If a large country, seemingly acting reasonably, introduces a new currency, it is easier. Euro is one such example. If an individual, who keeps his true identity secret, introduces a currency and keeps some for himself, this becomes a much dicier proposition.
Some of the key factors that a customer considers are:
One desired quality of money is that the tokens themselves should have minimal cost; preferrably zero. Paper money comes close to that, as paper is reasonably inexpensive. Electronic money as they exist today in banks and on our credit cards have zero cost. This is good because the token itself should not be an expensive good. You do not want to pay for your cup of coffee with an original painting by a famous artist - even if the nominal value of that "coin" is one cup of coffee. This issue also affected gold coins, as they had value close to their face value - and that resulted in debasement of coins.
Unfortunately, BTC is not free. BTC costs a lot of money (electric power) to produce. This is a waste. This also results in a situation when nobody can offer BTC as a handy replacement for barter items, as you have to purchase the coin first - and the act of purchase of a coin has nothing to do with the exchange that the coin facilitates.
Here is an example, with barter and with BTC.
BARTER. Bob built a chair and wants to sell it. Alice wants to buy that chair. Bob needs a loaf of bread, and Alice just baked one. They exchange goods. Bob now has bread, and Alice can sit on her new chair. All the work was exchanged, and none were leaking to 3rd parties.
BTC. Bob built a chair and wants to sell it for 1 BTC. Alice wants to buy that chair for 1 BTC. However Alice does not have 1 BTC. Each BTC costs, in whatever money, close to its face value. Alice takes one loaf of bread to the exchange and procures one BTC from the miner Mike for that bread. Now Alice comes back and gives the 1 BTC to Bob, and collects her chair. Bob still wants his bread, and Alice doesn't have her bread anymore.
What would happen now in our "normal" economy? Bob would go to Mike the miner, give him 1 BTC, and take the bread. This would complete the exchange because the value of the token (paper money or iron/nickel coins) is nearly zero.
This is different in the BTC world. When Bob goes to Mike and offers him his BTC, Mike says that he already gave one half of his bread to the power company, and another half to the company that made a BTC mining machine for him. He has no bread to sell anymore!
You can see now that the high cost of the token is now sunk into tokens themselves. The society has to bear the extreme expense of calculating otherwise pointless and valueless numbers, just so they could be exchanged for very inexpensive goods. This is one of many issues that plague digital coins. To put it simply, digital money must be very inexpensive to generate and to process. BTC does not offer either - minting of coins is very expensive, and transfers of BTC require massive worldwide calculations. Compare with cash, which costs nothing to print and the only person who counts it is the clerk at the store. Plastic cash (cards) costs even less.
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