The hidden cost of using bitcoin to buy things
Want to read Slashdot from your mobile device? Point it at m. Philosophical debate on reality aside, there is nothing less real about Bitcoin than other fiat currency. The design and process used to exchange BTC is probably deeply flawed, if these experiences are any indication.
I can certainly whip out examples of currency systems through out history that were flawed in some way, and in many cases led to their eventual abandonment. I see no reason that we should assume that BTC will remain with us forever as an exchange medium, one day it will be a footnote in history and perhaps something similar but vastly improved will be available instead.
The US government has a law that says that businesses must accept US dollars. The fact that other people are legally required to accept it makes it "real money". Now you can get all hypothetical and theoretical and say, "fiat money is always made up", but you said you wanted to put aside the philosophical debate on reality.
Being very practical, there's not really anything to stop the value of bitcoin from dropping to zero tomorrow. There are a lot of things that will stop the value of the US dollar from dropping to zero tomorrow. I do not believe there is a US federal law that requires private businesses or individuals to accept currency from the Federal Reserve Bank.
We all choose to do so because it is incredibly convenient and there are many laws and statues that encourage it. But as far as I know, I can choose to refuse cash money and only accept my payments in barter.
I mean if I really don't want to run a successful business I will have to find some US currency to pay the tax man though, they quit accepting bushels of wheat as payment some long time ago.
You are correct [treasury. While it is legal the hidden cost of using bitcoin to buy things for all debts, it is not a requirement to accept it. Furthermore, the word "debt" implies repayment. There is a difference between a straight-up trade buying something at a registerreceiving goods in advance eating dinner, then paying the billand financing a debt buying a car using a loan.
There are nuances between those scenarios that affect legal requirements for payment, and furthermore, an additional consideration is payment in dollar equivalents such as using a credit card to purchase something using dollars, but not physical currency.
The long and short of it is you are correct, most transactions have no requirement to use U. When I was in college I managed a convenience store before there where atms everywhere and before bars took debit cards people would pump a little gas on Friday night and try to break a big bill. There where signs everywhere that we didn't keep large amounts of money on hand and wouldn't accept large bills to keep this from happening because if they already pumped the gas then you had no choice but to break the large bill.
Today you can pay at the pump with a debit or credit card as well as inside and atms a. They have to accept the large bill don't have to provide change on the spot. Depends where you live. Where I live bartering livestock for various goods and services is pretty common. I have a neighbor who just paid some number of cows to have a well drilled to water his cattle. In California, businesses like restaurants can refuse to accept money from anyone for any reason.
They are not required to do business just because you have dollars or legal tender. If they don't like the fact that you are trying to pay in pennies, they don't have to accept it. Therefore, some business could legally refuse dollars but accept bitcoin if they wanted to. This is not true. Businesses are not required to accept US currency.
They do so because that's the currency everyone uses in the US. My bank notes have a promise to pay the bearer the face value from the Bank of England, the hidden cost of using bitcoin to buy things bank of the world's fifth richest nation. GDP of California - 2. I'm comparing numbers from two different sources. IMF and World Bank respectively. Bank notes, from actual banks, that means both public or private banks, typically offer to pay the bearer. That Bank of England is a national bank doesn't mean only government supported banks have issued notes with t.
Because I read somewhere, that the fifth richest nation has an economy roughly about as big as California's. That's not something to brag about? WTF planet are you on, where California's economy would be considered smallfry?
Oh yes there is. If you think a country's government and central banks don't have real power then you haven't been paying attention. Start messing around with the US dollar and see how long it takes before you get sanctioned, invaded or both. The US dollar is a fiat currency. Suggesting that bitcoin is just as likely to be exchanged for its fiat value as a US dollar only denotes your utter lack the hidden cost of using bitcoin to buy things perceive reality.
When bitcoin becomes the transactional currency of a top ten international bank, and yet be readily transacted at a street corner, and can trigger military invasions from other countries, that's when you can say bitcoin is as real as a US dollar. The US Treasury has not produced a single fiat dollar, released to the public, which has not been transacted for its face value or declared counterfeit.
By definition, a US dollar cannot be counterfeit. Entities outside of the US Treasury can create paper facsimiles for the purposes of theft, but that does not make the US dollar counterfeit. Bitcoin, on the other hand, has enabled perhaps millions of bitcoins "worth" of fraudulent transactions; it is not unique to fiat currency in that sense.
I get that there are exchanges. But that doesn't mean there are always buyers. Or would it be a slog with smaller buyers? With my current coinbase sell limits, it would take me ten weeks. That could be improved apparently, but I can't imagine how I could get to the point where that would matter.
Alternatively, there are probably other major organizations that could absorb that level of transaction. Bitcoin is backed only by demand for Bitcoin, and therefore can drop to absolute worthlessness on a whim, versus a complete collapse of governing authority. Not just a currency, I would say an institution. Sure there are multinational entities and pseudo-governments like the eu but my point is -- bitcoin being floated as an arbitrary currency will always be more fragile than something backed by a sovereign, because at least a sovereig.
A lot of stuff doesn't have to do with any real or perceived value. Prices can be driven by speculators speculating what other speculators will speculate. That is, it's gamblers betting on what they think other gamblers will bet on, knowing the hidden cost of using bitcoin to buy things those other gamblers are also betting on the hidden cost of using bitcoin to buy things other gamblers will bet on.
Even if they're pretty sure that Bitcoin is all hype and will eventually collapse, they're placing a the hidden cost of using bitcoin to buy things that the bubble won't burst quite yet. So it's like a sadistic game of chicken with your money?
It's a pyramid scheme combined with the hidden cost of using bitcoin to buy things game of hot potato. Just don't be the last one holding the Bitcoin. That's why larger investors have gotten more friendly with smaller investors in the 21st century. They realized they can make even more money if they blow the bubbles up big and stick a bunch of suckers with the dynamite just as the last bit of fuse burns down. Those who fail to learn from history are doomed to repeat it.
Possibly the most well-remembered example is Tulip Mania [wikipedia. Basically you attach the notion of immense value to some object which has little or no actual value, then sell limited shares in that object and let the hype train do the rest. Bitcoin will never have the core feature of a desirable currency, which is stability. The only people who transact in volatile currencies are those who must -- namely the citizens of the countries that issue them.
If you own BTC, there's little incentive to spend it because you likely believe it will be the hidden cost of using bitcoin to buy things more of a "real" currency in the future, so you're holding it. If you believe it's going to depreciate, then you're probably going to liquidate by selling all of it, not by buying a pizza and paying transaction fees.
And if you believe it's going to remain relatively stable, then I want some of what you're smoking. The retail problem the hidden cost of using bitcoin to buy things easy to fix. Look as a building estimator I had unreasonable clients who would ask for massive penalties, for delays or work quality and so I would simply adjust the mark-up to allow for those penalties to occur.
I would win the job and not be concerned for losses because those penalties were already allowed for, if they did not occur lots of profit, if the quote was to high and I did not win the job, meh, at least no risk of major losses those clients were always arse holes so it was. So back to problem 1 - why should I agree to sell you something today when I can make more money by waiting and selling it to you tomorrow?
Oh, so you admit that BTC has no real value because even you want to peg it the hidden cost of using bitcoin to buy things some other fiat currency. You just proved why BTC will never become a standard. If people were planning on keeping BTC, everyone would be flocking to BTC to use it as a long term store of value and everyone would be thinking how many BTC their government issue fiat currency could buy them.
After all, it has already been pointed out that BTC keeps gaining value. So only a fool would not want to store say their life savings in BTC. People don't though - why is that? Because they know the hidden cost of using bitcoin to buy things BTC's exponential growth is speculative only. Funny I just bought stuff at the corner store and the checkout girl's eyes glazed over when I asked if I could pay in BTC.
Then I ordered some delivery from a fast food joint and once again the dude on the phone said "what? Some standard you have there. The first proper bitcoin purchase - where 2 pizzas was purchased for 10, bitcoins - comes to mind here.
We've got plenty of data that shows what happens when your currency is deflating: That's one reason why central banks are so afraid of deflation. I would rather people rationally hold their money than irrationally spend it But by all means, lets let the central banks control monetary policy