I recently spent some Bitcoin. Kind of a birthday gift for myself.
Part of me really hates to spend Bitcoin, I much prefer to HODL... but another part of me knows that spending it-- making it a useful medium of exchange-- is what will, in the long run, make it more likely to increase in value. Sitting on it doesn't do that.
It's kind of like hoarding ammunition and never "spending" any for shooting practice. It doesn't do you much good.
Back when I first got into Bitcoin, I spent some on silver. Multiple times. Now I look at the amount I spent on silver and realize it's as if I paid thousands of dollars per ounce. Ouch! I try not to think about it that way.
But back then my thinking was that if Bitcoin became worthless at least I'd have some silver to show for it. I suppose that's still true, even though I think the chance of Bitcoin becoming worthless-- short of a Carrington Event-- is tiny.
So I'm doing my small part in making the price of Bitcoin go up over the long term. To keep gaining more acceptance as money. You're welcome.
And I still have my smallish nest-egg of Bitcoin. It would be nice to see it get much larger due to the price of Bitcoin going "to the moon". I also accept donations in Bitcoin, too, in case you have some you no longer want.
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Thank you!
Sounds like you and I have been over the same ground, left the same footprints, reached the same destinations, etc.
ReplyDeleteI don't consider myself a "speculator" -- I don't watch the markets like a hawk and buy/sell crypto every time there's a profitable differential. What I do is hold on to it and, every once in a while when I want or need something but don't want to spend FRNs, I spend crypto on it. I try to arrange such spending around times when the crypto I have is worth more in FRNs than it was when I got it.
I've also bought silver with it, although not at nearly as much of a subsequent "loss" as you describe. Every once in a while, when crypto is way up and silver is down or at least not up very much, I'll buy a few ounces. Maybe when I'm 90 I'll sell it all and go on a cruise or something. And if there's ever a real "oh, shit, I need cash I don't have and I need it TODAY" moment, it's there and I can go to a pawn shop / metals dealer. Or if there's a societal monetary breakdown, I'll be in better shape than I would have otherwise.
I check in on the prices pretty often. Just out of curiosity. The price doesn't have a lot to do with whether I spend some or not-- although there have been times when the price was really low that I just couldn't bring myself to spend any.
DeleteI think crypto is kind of fun to have and spend. Even it I'll never get rich with it.
I’m a big believer in Bitcoin, but there are definitely some problems. One of the biggest is the one you describe, i.e., that there’s no circular economy, so if you want to spend it in the real world, you often have to exchange it for some other medium like fiat or gift cards. One of the problems with gift cards is that there are only a few convenient and reputable distributors, so if it were a big enough threat, the government could impose barriers just like they have with fiat on-off ramps.
ReplyDeleteDuring the Canadian trucker strike in Ottawa last year, the government/payment processors managed to mostly shutdown fiat donations to support the truckers. They were not able to shut down bitcoin donations. However, the truckers needed to spend it on things like fuel and food, and there weren’t any local merchants who would exchange actual goods and services for it.
Competition for limited block space means that fees will be too high for many kinds of daily transactions to be practical. For on-site retailers, waiting for confirmations can also be a problem. The Lightning Network is a second layer on top of Bitcoin, which makes it possible do transactions with Bitcoin without each transaction being recorded on the Blockchain, and mostly solves both of these problems. There is no limit to the number of transactions that can be processed, and they are processed instantly, and fees are extremely low, and it improves privacy.
However, there are still some problems to be solved and a lot of infrastructure (both technical and legal – think accounting and taxes) that need to be developed before Lightning will be fully practical for wide use by ordinary users, businesses, and websites. It seems to me that these problems can be solved, but it remains to be seen how well it will work on a wide scale in the real world.
I've managed to talk a few people into accepting Bitcoin directly, just as I have talked them into accepting silver when that's what I'd like to spend. It doesn't always work, but I think it's worth a try. Then I hope those people will go on to spend some of their alternative-to-fiat, giving the alternative a boost.
DeleteI guess I need to look into the Lightning Network-- but I'm not really looking to spend anymore Bitcoin for a while..
I have confidence that the problems will be solved-- I am hopeful government will stay locked out.
I like Lightning and don't understand what the technical barrier is to:
ReplyDelete1) A point of sale system that grabs price data (including sales taxes) from a register and generates a QR-code invoice so that people can pay with their phones just like they do with e.g. Google Wallet, Apple Pay, etc. (hell, in theory, I could pay with my WATCH now); and
2) An optional service a la Bitpay for Nervous Nellies who want their crypto immediately turned into FRNs instead of holding BTC.
That's all it would take for BTC/Lightning to be viable for a hot dog and soft drink at the local convenience store ... and to me, adoption at that kind of scale is the whole ballgame.
Maybe the barrier isn't technical.
DeleteI mostly agree except there's a lot I dislike about Bitpay.
DeleteAbout a month ago, I saw a demo of a Lightning operated vending machine, where the vending machine presented a QR code for you to scan with your wallet and when you pressed the submit button, it was approved in under a second and it dispensed your product.
I don't like BitPay very much either ... but something LIKE BitPay in the single respect that it pays the retailer in FRNs at the rate prevailing when the transaction occurred would likely spur quicker adoption, since the retailer wouldn't have to hold BTC and hope its FRN value didn't suddenly drop (while it remained on the hook for sales taxes at the initial FRN value of the transaction).
DeleteYes, I understand that inflation of the fiat money supply causes FRNs to continuously be worth less and less, but absent hyper-inflation the continuous relatively slow loss is presumably less scary to people trading in volume than a more widely moving volatility where one remains tied to the slowly inflating fiat for tax purposes.
Resolving that particular dilemma is only one of so, so many good reasons to abolish the state. Or at least force it out of the money business.
Agreed. And as you say, at least Bitpay is an option for the Nervous Nellies.
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