171101 Bitcoin Isn’t Doing Its Thing Yet

Bitcoin is the currency of the future. But the future isn’t here yet. Bitcoin should be the workhorse that facilitates trading.  It should be the currency to use for all online purchases, for transmitting value across borders and great distances, for storing value in troubled times, for making trusted trade between strangers possible, and growing one’s nest egg. However, it is at present, a speculative bubble.  Its skyrocketing valuation is breathtaking and not for the faint-hearted.  How can anyone looking to invest, purchase something that is 137% the price it was just four months ago?  A Bitcoin, in June, was $2450, and on November 1, 2017, is $6650. If tomorrow morning we woke up to Bitcoin prices at $5800, down $850 or -13% from today’s stratospheric prices would we still consider Bitcoin a good investment?  No. Yet, here we are.

For things to right themselves, more of bitcoin’s real potential must materialize.  People have to recognize that Bitcoin is here to stay, has no intrinsic worth but for its ability to facilitate trust, help accomplish the conveyance of wealth, and its ability to be converted to any other acceptable form of currency.  This morning there was an article about an Amazon subsidiary purchasing the domain names amazonethereum.com and amazonlitecoin.com.  Amazon already has owned amazonbitcoin.com since 2013.  If Amazon were to announce its acceptance of Bitcoin as a payment method option on its website, that would be huge and go a long way to improving Bitcoin’s worth.  The value of Bitcoin would grow as significantly as if JP Morgan Chase were to announce their acceptance of Bitcoin as a currency.

The marketing of Bitcoin would instantly see 2X growth.  Bitcoin going to $13,000.00 would happen immediately.  Visa and Mastercard would take a big hit as their fee-based transactions gave way in favor of feeless Bitcoin payments.  Businesses which work on tiny margins, such as the grocery business, would rush to become Amazon vendors.

There are laws on the books which prevent merchants from displaying two-tiered pricing.  Nowhere in the United States will you see merchandise displayed with two-tiered pricing: one price for cash purchases and another for purchases with credit cards except, of course, at the gas pump.  There are Merchant/credit card/bank agreements which prohibit that.  It’s a matter of semantics.  Purchases must not have a credit card surcharge.  However, it’s ok to have a cash discount, if that law is understood correctly.

3-tier pricingImagine three-tiered pricing: Bitcoin, cash, or credit.  Bitcoin would be cheapest.  Ask any merchant if they’d rather have their employees handling Bitcoin transactions or taking cash for 2% more.  Bitcoin means instant payments, no fraud, no theft, no loss, no credit card/debit card processing, no bank fees and no delays.

There is much to be done before we get from here to there, but we’d best begin.  Don’t get me wrong.  I love when my investments jump 15% overnight.  But I’d rest a whole lot better knowing Bitcoin’s price was based on its being used to facilitate trade and add trust, than as a speculative bubble.

 

7 thoughts on “171101 Bitcoin Isn’t Doing Its Thing Yet

    1. How can someone like I, with maybe $1k to invest – and that only rarely, participate in the bitcoin market?

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      1. You can purchase as little as $75 worth of Bitcoin. I believe the smallest purchase amount is .01 Bitcoin (BTC) on most exchanges. Coinbase and Kraken are two popular exchanges. Kraken does not operate in New York yet. They are most reliable. It takes a few days to get set up and be vetted but I would suggest doing it. These are still the early days of Bitcoin.

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  1. Hmmmm reading the Kraken website and confused by your statement “Kraken does not operate in New York yet.” I can’t find that anywhere on the site but am hesitant to set up an account. Can we talk offline about this so I can ask some more questions?

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    1. If you’re in a state where Kraken isn’t licensed to operate, you may not see a warning about it until your application is in progress (I think they don’t want to scare people away). I have a Kraken account in California – and am in the process of opening a Coinbase account. Coinbase seems way simpler to use – but way more expensive. It may be worth it if you don’t intend to do much trading.

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