Quote from: evoorhees on October 08, 2012, 05:20:30 PM

Quote from: FLHippy on October 08, 2012, 05:15:47 PM

evoorhees has purchased very geek centric services I suspect. Bitcoin being geek centric currency, it wasn't hard to find a willing seller of geek services.

But, your average joe... what is he going to buy? Computer parts? probably not.. Speculation investments? probably not.... Drugs... More likely than not.

I then countered with the point that I've bought services from people which were not illegal (or anything close to it).

And the claim has NOT been made that BTC is currently useful for the "average joe". It is not useful for him... today. Just as the internet was not useful to the average joe in 1995.

I think people are totally underestimating the market's need for a safe, reliable payment system that is NOT subject to counter-party risk. Counter-party risk refers to the risk that a borrower will default on any type of debt by failing to make payments which it is obligated to do.

Let me illustrate this with an example from someone, Person A, who has been approaching me about implementing Bitcoin with their business.

Person A has a business with many blue collar employees. Person A is worried about the business's cash balances being kept in various US banks because they do not know which bank will fail next so Person A keeps most cash reserves in banks outside the US which are more solvant. But Person A is even worried about those banks due to the European sovereign debt crisis and would rather be managing their business instead of worrying on a daily basis about whether their cash balances are safe or not in institutions which are very murky with their finances.

About 2 years ago Person A sent wire instructions late Thursday night to the European bank to move $1,000,000 (the actual amount, not hyperbole) for payroll. Friday the funds had still not hit the US bank but this could be normal due to time differences and Person A thought nothing of it. The $1,000,000 was to be wired to Wachovia and Saturday morning Person A woke up and began watching the news that Wachovia had failed.

Because I knew Person A pretty well and know more about finance, or whatever, he called me frantically and asked, "Is my money safe?" I replied, "I don't know. If the wire transfer was sent off and the federal government does not bailout Wachovia then likely your money is not safe and you will have to wait in line at the FDIC to recover a fraction of the $1,000,000 and it may take many weeks to get the cash in your account." He responded, "This could seriously and materially impact my business and I may not be able to make payroll." I responded, "I know. It sucks."

It is important to keep in mind that with Bitcoin there is NO counter-party risk. Additionally, if the wallet is secured properly there is NO performance risk related to a trustee, fiduciary, etc. who may embezzle funds, etc. like MF Global and others.

When deposits are held at US banks the depositer becomes an unsecured creditor. For businesses the FDIC limits are in most cases extremely small relative to the working capital needs of the businesses.

So a question becomes: What is Person A's fiduciary duty to the corporation in the management of cash balances?

In this case, there is now an alternative available that completely eliminates both counter-party and performance risk. The only material issue with using Bitcoin then becomes ease of integration with employees and exchange rate fluctuations.

It is all fun and games until the average Joe doesn't get his paycheck because of failures in the current banking and payment system. If you were an average Joe and your employer were to say they were offering Bitcoin now because the current banking system is not safe and that corporate funds were almost lost due to a bank failure that would have prevented payroll being met then would you agree to take some or all of your paycheck in Bitcoin. Especially if there were an easy integration with the current banking system with a debit card, etc.?

Just some things to think about.