I've bought a few different domains on Namecheap using BTC, the first time just after they started supporting it. Back then their implementation (or their provider's) was a bit broken, I had to wait a few hours for enough confirmations before I could spend the money.
They have since changed that so payment is instant (the effort required to double spend a $15 domain would be far more expensive than the benefit). The experience is awesome I must say. I just love being able to whip out my phone, scan a QR code on the screen and confirm the purchase and have it instantly go through.
Much, much better than having to pull out my credit card, type in 16 numbers, make sure I use the right zip, then remember what crazy authorized by mastercard password I used. Especially for digital goods, not having to do all the address verification etc.., sure makes the transaction nicer.
I doubt they gain a whole lot from using BTC (though I think there is real potential in developing countries), but hats off to them for supporting it anyways. They were my registrar of choice before and this only strengthened that.
>Much, much better than having to pull out my credit card, type in 16 numbers, make sure I use the right zip, then remember what crazy authorized by mastercard password I used. Especially for digital goods, not having to do all the address verification etc.., sure makes the transaction nicer.
IMHO you are heavily exaggerating how complicated it is to use CC and/or other payment options and how easy it is to use btc.
I select paypal, which already has me logged in to my account (or lastpass automatically logs me in), click "Pay Now". Instantly done.
Same goes for google wallet and similar services. Lastpass even has my CC info which I can use to fill out forms if I don't have an account. Even without lastpass I know my CC number, and I never have to make sure I use the right zip (how complicated is that to remember, seriously?)
It's much easier than having to pull out my phone (which is god knows where), open app, enter PIN (because security...), scan QR code from the screen and pay.
Or log into web wallet like blockchain.info by entering wallet ID, password and 2FA code,copy/paste bitcoin address somewhere and send money to it and if I get one letter/character wrong the money is forever gone because fk chargebacks, right?
(Did I chose one of the more complicated scenarios? Yes, just like OP did in parent comment for CC payments)
It's good that they offer multiple payment options, but comments which highlight best case scenario when using bitcoin and worst case scenario(in terms of how easy it is) when using CCs/PP/etc are really annoying.
>though I think there is real potential in developing countries
I bet you that it's insanely easier to get CC than bitcoin in a lot of "developing countries", and average people from developing countries, which I assume have lower than most income, should really avoid bitcoin due to the price fluctuation. In theory it's great, in practice... not so much.
Agree that Paypal is pretty darn quick. I personally have issues with zip codes because I live abroad and always forget which zip code my credit card is on, but I agree that isn't typical.
The advantage is clearest when it is your first transaction, so not when using PayPal or Google Wallet. Because I live abroad (Rwanda) I have more hassle with credit cards than you might, specifically they are always getting flagged for fraud because I'm not where they expect. Yes, this isn't an issue if you live in the states at a permanent address.
> I bet you that it's insanely easier to get CC than bitcoin in a lot of "developing countries", and average people from developing countries, which I assume have lower than most income, should really avoid bitcoin due to the price fluctuation. In theory it's great, in practice... not so much.
Not sure why you are using quotes, but you are wrong on this one, at least in East Africa where I live. Getting a credit card is pretty annoying and expensive in Rwanda. The vast majority of people do not have bank accounts, much less credit.
I wouldn't suggest Bitcoin as a store of value, but I do think there is potential as a form of payment in these markets. IE, buying $15 of bitcoins (which yes, can be had in various ways here) to register the domain and spending it the same day. That is indeed easier than getting a credit card here.
>I have more hassle with credit cards than you might, specifically they are always getting flagged for fraud because I'm not where they expect. Yes, this isn't an issue if you live in the states at a permanent address.
I have lived, well more of a stayed for few months than lived for longer period of time, in various countries in EU and I only had one time paypal block my payment with credit card issued in Bosnia. That was when I installed new OS(W8), different browser(trying out FF) and different country(Italy) - it made complete sense to block the purchase. And that was resolved in about 15 minutes after I contacted their support.
>Not sure why you are using quotes
I was quoting the scenario you named where bitcoin has advantages. I probably shouldn't have used quotes though...
>Getting a credit card is pretty annoying and expensive in Rwanda.
I don't know about Rwanda, but in most countries (even the developing ones) you do have access to CC. I'm pretty sure that everyone who can afford PC and internet access can also afford CC.
Of course there are exceptions, but those exceptions aren't really suitable for bitcoin either because it would be more complicated than just using cash - because you need phone or PC to make (normal) transaction.
>The vast majority of people do not have bank accounts, much less credit.
So how do you buy bitcoins? In person transactions? Isn't it worth it then, for someone who makes online payments frequently, to go through annoying process of getting the CC instead of finding people who are willing to sell bitcoins? Or go to a bank and make a wire transfer or WU transfer (which is, I assume, more expensive for large quantity of transfers than paying for CC)?
Sorry, that wasn't as good of a reference as I thought. Somewhere in the presentation for the paper, the authors mention that they worked with the bitcoin client devs (after publication) to get the notify neighbors on double-spend approach rather than silently ignoring. The result is that the information spreads through the p2p network very quickly and notifies both recipients that they are getting shafted.
I'm aware that bitcoin will have trouble succeeding if people don't start using it for normal transactions, but I wouldn't spend any bitcoins right now due to the price volatility. That $10 I use to buy a domain name could turn into $100, or maybe even $1000 dollars at some point.
That's the sunk cost fallacy talking. If you spend $10 on a domain name, you have $10 less with which to buy exposure to Google shares, bitcoins, yen, tulip bulbs, or Magic the Gathering cards. This is true regardless of how you decide to settle the transaction.
There are variants of your complaint which are much more dangerous to bitcoin. For example, suppose I hold no bitcoins and wish to either purchase or sell a domain name. Should I effect the transaction in dollars, or should I use something a little less boring, like Google shares, tulip bulbs, Magic the Gathering cards, or bitcoin? Well, most people wishing to buy domain names or sell domain names have access to dollars very quickly, but getting into or out of fractional alpha Black Lotuses depository certificates (FABLDC) takes a roundtrip of a few days and requires you to go either long or short FABLDC depending on whether you're buying or selling the domain name. You might, sensibly, not want to be either long or short FABLDC just to sell domain names, because a) price volatility, b) transaction costs (not just the vig you're charged when going to/from FABLDC by the various FABLDC exchanges but also the overhead of installing FABLDC payment code, explain FABLDC to your accountant, and self-insure for the risk that your FABLDC are stolen from the technology company you trust to manage them for you), and c) why worry about FABLDC in a world where money exists. (In a world where money didn't exist, FABLDC would be, quite literally, one of the most impressive achievements ever.)
n.b. I apologize to techies of my acquaintance who might assume, by construction, that I am comparing bitcoin to fractional Black Lotus depository certificates. Sorry for the implication -- it's mostly an extended rhetorical device. Like you, I also believe that alpha Black Lotuses are worth more than nothing.
Given that MtGox was the dominant USD bitcoin exchange for quite some time, it's a beautiful metaphor.
Except for miners, people who want to support the bitcoin ecosystem per se, and privacy buffs who prefer to buy their bitcoin in ways that minimize traceability, it's hard for me to get excited about using bitcoin to make online purchases right now. If you don't hold any bitcoin and just want to use it as a transfer mechanism, you have to have extra motivation to buy bitcoin and then send it (waiting for a few confirmations). This process takes longer than using a credit card, so generally it seems that one must have additional motivation to use bitcoin (at least in the US).
As a mechanism of money transfer, though, I do find it interesting.
There is no sunk cost for a cost that hasn't been made yet (buying the domain). If you're referring to the "cost" of buying bitcoin then that isn't a sunk cost either (actually no cost at all since it's an expense for a semi-liquid asset that you still possess). So the parent is right to take opportunity costs into account, especially in case of deflationary currency.
I believe patio11's point is that the opportunity cost of a domain name is the same regardless of which currency you use to buy it. If you use Bitcoins, you have less Bitcoins. If you use dollars, you have less dollars to convert into Bitcoins if you think they will appreciate. Your net position in Bitcoins need not be affected by your choice of currency for this particular transaction.
I think that's right. But then, if you don't want your bitcoin position to change, and you have no need for its other features in this transaction, then why use bitcoin? The OP's point stands.
>So the parent is right to take opportunity costs into account, especially in case of deflationary currency.
If that were a valid concern, why would anyone ever spend bitcoins when they could spend cash? If the price is guaranteed to rise as you imply, why isn't it already reflected in the market price? In other words, why are there people even selling it?
The question might also be if the transaction cost to do the deal in BTC is higher, lower, or the same as using a credit card. When you use a CC the seller eats the fees.
It is not a fallacy, but it is a speculative risk.
And, it is treating BTC as "an investment" or "a store of value" rather than "a medium of exchange".
So it is a subtle but important change in a person's view of why they would buy and hold BTC. Whether it is the right view, no one knows at this point.
There's a reason why a currency that is rapidly appreciating in value encourages hoarding. It's not a fallacy - if you have reason to believe your currency will be worth more tomorrow, you shouldn't spend it unless you absolutely have to.
On the other hand it makes a lot of sense for vendors to accept BitCoin for the very same reason. If you are a vendor, why wouldn't you want to accept something that could appreciate in value 10-fold, 20-fold tomorrow? Unless, of course, you instantly convert it into dollars.
This is why BitCoin will eventually be useful as a currency. This produces a network effect. More vendors will accept currency because it is so valuable so the currency will become more and more useful to consumers as time goes on. The value of being in the network is enough of a reason to join the network, until some plateau is reached.
I don't think BitCoin will be particularly useful as a currency until it stabilizes in value. Until then from a consumer's perspective it is probably most used as an investment.
nope. Unstable currency is just not very conductive to business. Speaking from experience with inflation. As any transaction has 2 ends, i suspect that high deflation has the same effect as high inflation. This is why Bitcoin as a currency has major built-in defect, while it seems to be wonderful value storage like Picasso or Ferrari California.
Do you have $10? In dollars, euro, yen, or whatever? Is a domain name worth $10 to you? Then buy it. If not, don't.
Your decision shouldn't depend on whether your $10 worth of money is denominated in dollars or in bitcoin.† Why not? Because if you have $10 worth of dollars, you can spend it on a domain name, or you can turn it into bitcoin. If you have $10 worth of bitcoin, you can spend it on a domain name or turn it into dollars. (And in an economist's perfect world, you could just as easily sell your domain name for $10 worth of dollars or bitcoin.)
All you have to decide is what relative allocation of dollars, bitcoin, and domain names (and everything else) you want. Then you just exchange one for another to get there. This is the basic idea behind opportunity cost [0]. You have to consider all your alternatives at once, and those alternatives are the same whether your money happens to be in dollars or bitcoin at the moment.
† — Except to the extent that prices differ with the currency of denomination (i.e., there are arbitrage opportunities), or transactions costs hinder your ability to exchange one currency or good for another.
If I buy something with bitcoin, that means I'll have that much more USD to reinvest in bitcoin if I so choose. Besides, if the price goes up x1000 then I'm not going to complain.
What I need is the ability to automatically reload my wallet with the same amount of Bitcoin I spend as I spend it, so I always have X amount. I want to save at least a certain amount for years, so of course I don't want to spend it, but I have no problem using the USD I would have used to purchase something to buy Bitcoin to offset BTC based purchases. This just needs to happen seamlessly so I don lose money because of volatility.
Yup, totally agree. If there was a seamless way to ensure my bitcoin wallet always auto-reloaded after I spend, I'd have no problem using bitcoin as an actual currency.
This seems like a pretty simple & awesome feature for coinbase to implement.
Just sent Brian at Coinbase a note about this. I'd use the feature constantly if they added it. It could be as simple as selecting a funding source when you send; your wallet or an option to purchase what you're sending.
I emailed them about this idea a few weeks ago and they replied with this:
"Thanks for your feedback - that's a great idea! I'll pass this on to the team so we can look into implementing that!"
Thanks for pointing this out. If there was an automatic way to have my wallet reloaded after I spend some bitcoins, I wouldn't think twice about using bitcoin for regular purchases.
If he spends BTC instead of USD to buy the domain, he still has his USD he didn't spend on the domain to buy the same amount of Bitcoins right away, if he chooses. His Bitcoin holdings don't have to change just because he paid a merchant that accepts Bitcoin.
Somebody is forgetting about exchange/purchase fees associated with acquiring bitcoins in the first place (assuming you don't mine them - most people don't). It isn't free to just buy more bitcoins. However it is free to just buy domain names with USD - at least from a consumer perspective.
With Gyft cash back at 3% and Coinbase fee at 1% it's cheaper to buy stuff on Amazon via USD->BTC->Gyft->Amazon than even a rewards credit card directly on Amazon
Sure, but it could also go to 0. It sounds like you're saying that you believe bitcoin is undervalued by the market, in which case you should buy bitcoin until it's a significant percentage of your assets (based on your risk tolerance and other factors).
People spending bitcoin can also consider their purchase an investment into proving bitcoin actually has value as a currency, along with supporting those retailers helping from the other side.
The biggest part of the network (imo) is that it is also a payment processing network. You buy something with BTC? You can then repurchase that same amount of BTC with USD.
Or you can hold zero BTC in reserve, and only buy BTC when you need to spend it.
On the merchant side, you can instantly cash out to USD, making it a simple transaction over a payments network, using BTC as a unit of value specifically to transfer.
I feel like most people do use it as a payments network.
That makes me feel uneasy about the conversion rate of bitcoins to dollars. What is that really based on? The rate doesn't affect people who use it as a transaction network because they cash in / out on demand. So who really sets the price? If mtgox said tomorrow that a bitcoin is worth 1$ or 10,000$ it seems like they would be right.
The bids and offers made in the market set the price, just like all currencies. Right now the market is too small to be stable like most currencies (not enough inertia, too many events if large relative significance, not enough arbitrageurs), but the wild swings you see are not due to the free will whims of the exchange managers, they're due to the market's youth and size.
This is true regardless of whether you're looking at $10 worth of Bitcoin or 10 actual US dollars. If you use actual US dollars to buy something, that's money you could have used to buy more Bitcoin!
Probably won't go up 10x overnight. Even doubling in less than 24 hours has maybe happened twice in the history of bitcoin.
If you're concerned about your btc position, you just buy more after you spend it. Your probably exposing yourself to about 10-20% risk max. On $10, that's... $2. $2 is not worth supporting the bitcoin community?
Everyone says "nobody will spend bitcoin because it could go up in value." But I own bitcoin, and I'm willing to spend it, and others are of the same mindset, so this really isn't true.
If others were willing to spend it wouldn't that bring the price and volatility down? It seems it is in very high demand and commanding a high price because (most) everyone is hoarding, no?
It's like buying something with Apple shares, sure you could.. but you are paying transaction fees each time which doesn't make financial sense.
Finally I think there is a mental hurdle with the value of ONE bitcoin being worth so much. I know it is silly, but if a bitcoin was worth 10cents and people hand thousands of bitcoins I bet there would be more flow
I think bitcoin is at a price right now that people should be pricing things in milibitcoin which would put each mBTC at about .8 dollars.
Edit: This includes whatever you use to view your wallet and send coins with. Your wallet should display in mBTC so you send 1 mBTC instead of .001 BTC and pretty much never actually have to do conversions.
Or they could end up having zero value, so there are plenty of people looking to spend some of their btc. It seems unwise to spend all of your btc at this point, but if I had a bunch I'd be happy to spend some right now.
> but I wouldn't spend any bitcoins right now due to the price volatility
I don't understand this argument. Unless your entire savings is already in bitcoin just keep a small account separate from your investment (if any) that's meant to be spent, and top it off whenever the balance gets low.
I recently saw a suggestion that Coinbase should let you do this automatically, and I think that's an awesome idea. Exactly like how my transit card automatically purchases more credit when the balance drops below a certain threshold.
If it actually were Iranian, then paying in bitcoins would be an effective way around the sanctions. If only Iran were more tech savy, then they could cater to the bitcoin early adopters and provide VPS, domain services, and the like.
Wait, let me get this straight. So in Iran where most people are tech savy enough to use external VPN or proxy services to bypass the government firewall you suggest that they offer VPS and domain services to anonymous bitcoin users.
It's awesome that they are accepting bitcoins BUT I wouldn't pay with bitcoins. Why? Well last week I bought some bitcoins through coinbase. The rate I paid would have be $65 for .1 BTC. Coin base takes 4 days to process your order. (I know right can you believe it?) but by the time I got the BTC credited to my account (yesterday) .1 BTC = $85. So the cool thing is I made $20 for nothing for each .1 BTC so why would I let some COMPANY make that instead of me?
I'll be happy to spend bitcoins after six months of small price variation (which I bet is a year after they run out of new coins) but until then they are staying air gapped on my rasb-py SD card.
I used Namecheap's Bitcoin option to purchase a domain. The instructions were straightforward, and after your transaction is approved by the network your balance will appear on their site.
Why did I use Bitcoin? Partly as an experiment and partly to avoid questions at work, I registered http://SecureDropDemo.org under a pseudonym. It's a demo of what you see if you leak documents through the SecureDrop whistleblowing platform, usually only accessible over Tor.
So, I think bitcoin sort of shot itself in the foot with the low number of total bitcoins. I think if the actual $ value per bitcoin was more in line with the dollar, people would be more willing to spend them. Yes, you can spend fractions of bitcoins, but for instance here namecheap wants at least .1 bitcoins deposited. Currently, that's what, $80? why do I want to give them $80 when all I really want is 1 $10 domain? How about a 100/1 split :-)
I think a split would motivate speculators currently mentally deterred from the idea that this virtual thing is "so expensive". They'd rather own 60 coins than 0.6 of a coin.
Here's this virtual coin that a low level speculator can't even buy a full instance of. That has to put off a few people.
To achieve similar effect, some people are proposing changing the default unit to mBTC, uBTC, or satoshi. While it is not splitting, it should have similar effect. Instead of saying they own 0.6 BTC, they'll say they own 600 mBTC.
That's entirely a psychological issues. There have been efforts to try to get people to switch to mBTC or whatever, but I don't think it will happen until the price is significantly over $1000 (and thus $1 == 1 mBTC)
Great that they are supporting bitcoin but encouraging people to deposit coins to build a balance at namecheap is the wrong way to go about it. Bitcoin's sweet spot is in making payments trivial, no need for a balance held on their servers.
If you want to use bitcoin, you cannot trust third parties to hold your coins for you.
They do have deposits for USD too. And I like this feature. I have a small deposit with namecheap (around $100) and it's good if I want to register my next domain instead of going through the CC transaction thing.
Deposits for USD are fine. If that gets stolen then their insurers and their bank's insurers will rectify the situation. Perhaps namecheap are offering the same protections for bitcoin deposits, I haven't looked at their TOS.
They have since changed that so payment is instant (the effort required to double spend a $15 domain would be far more expensive than the benefit). The experience is awesome I must say. I just love being able to whip out my phone, scan a QR code on the screen and confirm the purchase and have it instantly go through.
Much, much better than having to pull out my credit card, type in 16 numbers, make sure I use the right zip, then remember what crazy authorized by mastercard password I used. Especially for digital goods, not having to do all the address verification etc.., sure makes the transaction nicer.
I doubt they gain a whole lot from using BTC (though I think there is real potential in developing countries), but hats off to them for supporting it anyways. They were my registrar of choice before and this only strengthened that.