Quote from: realnowhereman on July 21, 2011, 03:08:19 PM

Quote from: Anonymous on July 21, 2011, 11:31:01 AM

And the number of loaves of bread a bitcoin will get you is exactly as many as the USD you can trade that bitcoin for will get you. I love the idea of bitcoin, but I still don't see how they're more than bonds at this point, and any counterargument seems to involve the economics equivalent of "a wizard did it" followed by fantasy scenarios they view as inevitable (such as major retailers adopting bitcoin).

Here's a hypothetical: a baker accepts USD or BTC. However, given that transactions are more secure, and there are no bank fees, he is willing to offer 3% off the equivalent USD price for paying in BTC. What happens then? Bitcoins will buy you more loaves than the USD do. Is it still a bond?

Let's say there was a global payment system based on the internet that charged 3%. Would it not be worthwhile for a merchant to offer 2.5% off for paying in BTC?

Equivalent prices are not going to last long once merchants realise they can compete on price using bitcoins.

As a baker, I would say that this scenario is unrealistic. Bakers who wish to sell their products via mail, with transactions taking place over the internet, are poor bakers. Bread doesn't ship well.

So, instead, you're talking about a face-to-face transaction. Cash would be inherently simpler than BTC, free from bank fees, anonymous, instantaneous, and I pay my suppliers in it.

BTC would be preferable to credit cards, especially for small transactions, but currently transactions are verified so much more slowly that there might actually be a greater security risk involved. Plus, I can't pay my suppliers with it.

So, if anything, I would probably have to charge a small premium for BTC, although I might waive this if I'm confident that they'll be a more valuable asset long-term. This confidence is going to be based on the speculation marketplace which, hey surprise, is denominated in dollars.

So, as a merchant, my best bet is to peg my BTC transactions to the dollar exchange rate, making them function more or less like secure bonds.

I don't think OP's point was to criticize BTC or the technology underlying them-- nor is this my point-- merely to suggest that the value of that technology is limited by the social systems which accept them.

mmdough

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