Always appreciate your posts.
Just a thought, if a large merchant were to accept bitcoin and have a policy to immediately convert any bitcoin received to fiat - this would in theory create more selling volume?....however, who in their right mind would spend bitcoin instead of using fiat or credit to buy stuff at a merchant store?
It ended up being two thoughts but the second one negates the first, right?
Thank you.
1. Yeah, since Bitcoins are highly volatile it's not a reliable medium of exchange and because of that a good number of merchants who accept Bitcoin do instantly convert it to Fiat. Recently Overstock decided to keep 50% of all its Bitcoin payments as investments and the reason is quite simple, so far Bitcoin has proved to be a good store of value. So basically different perspectives, merchants who consider Bitcoin as too volatile and who consider it a long-term store of value. Bitcoin isn't going to attain stability overnight, but we will have more merchants who rather than converting to Fiat would retain Bitcoin and gradually more adoption would lead to price stability.
2. Store of value and medium of exchange. Right now there aren't many options available to spend Bitcoin. If you bought one Bitcoin @ $2000 and large scale merchant adoption happens when Bitcoin is around $10000. Wouldn't you be using it as a medium of exchange? Purchasing power, I would.
Bitcoin was primarily created as a peer-to-peer payment system, but it is more of a speculative asset now. There is high reservation demand/store of value, but the existing transactional demand is too low and that also being speculative transactions. But if you look at recession-hit nations like Venezuela and Zimbabwe, Bitcoin is used as a primary medium of exchange.
Bitcoin as an asset or currency, we don't know how it's going to evolve, but one thing is certain, the long-term potential, stability of Bitcoin depends on its usage as a censorship-resistant medium of exchange.
http://bitcoinppi.com