Israel Bitcoin Meetup Group Message Board › Spending bitcoins

Spending bitcoins

Meni R.
user 32089742
Group Organizer
Khadera, IL
Post #: 2
Meni wrote:
PS Nobody took me up on my offer to be a proxy for Bitcoin payment, I guess next time I need to be clearer about how I envisioned this would work. My idea was that people would return home and, at a convenient time, check the rate (say buy/sell average from Bitcoil) and send coins to the above address. I think it's a bit more convenient than fishing for cash, and people should be excited to pay with Bitcoin, even by proxy.

Ron wrote:
Meni,

Right now it took me 10 seconds to fish my wallet for a 10 NIS coin.
Much less hassle than paying via Bitcoin.

Also, I'm a bull, and so I'm looking to increase my Bitcoin holding, not spend it (some call that "hoarder").

When/if 1 BTC = $5,000,000, I'll be happy to pay via Bitcoin - it will probably be more convenient as well.

Andrew wrote:
:) I'm with Ron...

Meni R.
user 32089742
Group Organizer
Khadera, IL
Post #: 3
Your market position has very little to do with this. Presumably your current Bitcoin holdings are such that you are indifferent on the margin between bitcoins and fiat at the going rate - otherwise you would have bought more. If friction is what's holding you, then your preference for bitcoins is too small to be a major consideration.

There's no problem with holding bitcoins as a long-term investment. The only problem is when this becomes an excuse not to use Bitcoin the way it was intended. Bitcoin will not succeed if people keep a tight fist on their bitcoins and never pay for anything with them.

It's a cycle. If even the most hardcore Bitcoin enthusiasts can't even be bothered to pay with bitcoins, no business will have a reason to start accepting them. Then no commerce will be done in Bitcoin and their fundamental value will be close to 0. It will have some speculative value because of the expectation that its fundamental value will increase, but as long as the value is mostly speculative we'll have bubbles and price swings. This makes it even more difficult to accept Bitcoin as payment or to use it as a store of value. Eventually people lose faith that Bitcoin will ever become more than a nice theoretical idea, and bitcoins will not even have speculative value.

That instance of payment for the cafe was of course trivial and you could argue that cafes are not yet the best application for Bitcoin, but people need to get in the habit of preferring to pay (and be paid) with Bitcoin when possible.
Zev T.
user 34159352
Ma'ale Adummim, IL
Post #: 2
Cash and my IsraCard work fine for paying at a cafe- the cafe pays the 2% when a I use the IsraCard (this is factored into the prices- so everyone pays).

I will use bitcoin for a retail purchase when I receive the "pay with cash" discount or when I want to make a transaction anonymously- and when there is a liquid market (thin spread between buy and sell) and depth (trading volume) and it becomes a stable currency.

Or, when I- as a seller- do not want to pay the 2% to IsraCard.

It is the chicken and the egg- which comes first - a perfect currency or people that want to use it? It's only perfect if people use it (which creates liquidity and stability) and people will use it when it's perfect (liquid, stable, etc.).

A futures and options market will increase the liquidity.
A former member
Post #: 2
:) I'm with Zev...
Meni R.
user 32089742
Group Organizer
Khadera, IL
Post #: 4
Cash and my IsraCard work fine for paying at a cafe- the cafe pays the 2% when a I use the It is the chicken and the egg- which comes first - a perfect currency or people that want to use it? It's only perfect if people use it (which creates liquidity and stability) and people will use it when it's perfect (liquid, stable, etc.).
That's what early adopters are for. We are the ones supposed to pave the way, to use the currency even when it's not mature and doesn't offer a tangible benefit, to support the businesses that try to join the emerging Bitcoin economy. If we fail to do our part we shouldn't be surprised if Bitcoin never takes off the ground.
Zev T.
user 34159352
Ma'ale Adummim, IL
Post #: 3
Can we expect merchants to take the currency risk (and associated costs of conversion into their local currency) that comes with bitcoin?

Local (and many international) merchants don't have prices in rubles, dollars, shekel and euro. Can they be expected to to want to make this effort with bitcoin?

How about a bitshekel and a biteuro and an bitdollar?

Presuming that there is will be an options and futures market (to hedge bitcoin against another currency)- is there a way to sell a "private" bitcoin (or a fraction of a bitcoin)- i.e., a 'bitdollar'- backed by the "sellers"guarantee of it's value against a specific currency?
Meni R.
user 32089742
Group Organizer
Khadera, IL
Post #: 5
Can we expect merchants to take the currency risk (and associated costs of conversion into their local currency) that comes with bitcoin?
No, and we don't need to. Bit-Pay offers merchant solutions that automatically and immediately convert to dollars, for a small fee. The merchant barely needs to know that he's accepting Bitcoin. And I have an understanding with Bit-Pay that in collaboration with myself we will offer the same option in ILS at some future point.

Local (and many international) merchants don't have prices in rubles, dollars, shekel and euro. Can they be expected to to want to make this effort with bitcoin?
With or without immediate exchange back to dollars, it is generally agreed that at this stage prices are to be denominated in dollars, and the software uses the current exchange rate to calculate the required amount of bitcoins on the spot.

How about a bitshekel and a biteuro and an bitdollar?

Presuming that there is will be an options and futures market (to hedge bitcoin against another currency)- is there a way to sell a "private" bitcoin (or a fraction of a bitcoin)- i.e., a 'bitdollar'- backed by the "sellers"guarantee of it's value against a specific currency?
You can't have a decentralized bitdollar, but you certainly can have a dollar balance with a payment processor that can accept and send bitcoin payments. So if the user wants to send 10 bitcoins, the service deducts $70 from the balance and sends 10BTC to the beneficiary. So the customer can pay with bitcoins without being subject to fluctuations in their value.

The point is that the buyer can protect himself from volatility in a way which is completely transparent to the seller, and the seller can protect himself from volatility in a way which is completely transparent to the buyer.

You might also be interested in the discussion here.
A former member
Post #: 3
Meni, you are absolutely correct - services like Bitpay are compulsory for Bitcoin in my vision of future.

Regarding spending using Bitcoin everywhere even if it is not convenient - I have other point of view on this.

Person should not FORCE himself using bitcoin - this roads leads to nowhere because nobody will follow you in forcing themselves.

Instead, try to improve process so it will be preferable to use Bitcoins.

When you say "but somebody need support Bitcoin" I can answer you that I do support it by -
expending ecosystem with my projects, buying/selling BTC, mining and donating to Bitcoin development. I believe that what I do has biggest impact per dollar effect.

I hope I will be able to buy coffe with BTC someday, but it's not my primary concern about Bitcoin adoption.
Meni R.
user 32089742
Group Organizer
Khadera, IL
Post #: 6
Person should not FORCE himself using bitcoin - this roads leads to nowhere because nobody will follow you in forcing themselves.
Of course. But my main point is that people should be happy to use Bitcoin, if it feels forced that's a conceptual problem.

Also, it's quantitative. If you can buy the same product with Bitcoin or with shekels, and with Bitcoin it costs 10% more then don't do it, it's not worth it. But if it's only 1% or 2% more (or the inconvenience equivalent), the extra cost is justified by the vote of confidence in the Bitcoin economy.

Instead, try to improve process so it will be preferable to use Bitcoins.
Not instead, both should be done in parallel. By using Bitcoin you gain a better understanding how to improve it.

When you say "but somebody need support Bitcoin" I can answer you that I do support it by -
expending ecosystem with my projects, buying/selling BTC, mining and donating to Bitcoin development. I believe that what I do has biggest impact per dollar effect.
Your contributions are of course welcome, and all of these things are important, but I don't think they're the main thing missing now. The Bitcoin infrastructure isn't ready for mass adoption but it's ready for much more use than currently exists. Doing this kind of projects without directly supporting Bitcoin commerce seems like grinding water to me.

So, at this point I'd say spending $1 on using Bitcoin for a $100 purchase is better than most other causes.
Zev T.
user 34159352
Ma'ale Adummim, IL
Post #: 4
If a disruptive technology (i.e, e-mail, online shopping, gaming) does not gain traction on it's inherent benefits no amount of early-adopter enthusiasm will effect it's adaptation and everyday-user acceptance.

A shopper in Israel wants to by a 3000 NIS product on ZAP.co.il with bitcoin...
It will cost him:
a) 1-3% (best case) to by Bitcoin
b) 1% to use Bit-Pay
c) It will cost the merchant 1-3% (best case) to buy NIS.

That's 7%, vs 2% with Isracard (a 90 NIS difference).

If Bitcoin becomes a massively-traded globally traded currency- buying bitcoin will cost, say 1/2 % and will cost the merchant 1/2 % to buy NIS and 1% to Bit-Pay- the same 2% as Isracard. Yes, when the Israeli economy runs on bit-coin this will not be the case.

In the meanwhile, how will Bitcoin deliver an economic advantage vs. Isracard for a 3000 NIS purchase?
What needs to happen?















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