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Bitcoin Businesses The Almighty Buck Technology

Bitcoin's Rally Masks Uncomfortable Fact: Almost Nobody Uses It (bloomberg.com) 221

Bitcoin has a lingering problem that few people are talking about amid the renewed exuberance of the recent price surge. From a report: Hardly anyone is using the world's largest cryptocurrency for anything beyond speculation. Data from New York-based blockchain researcher Chainalysis show that only 1.3% of economic transactions came from merchants in the first four months of 2019, little changed over the boom and bust cycles of the prior two years. Even though marque companies such as AT&T now let customers pay with cryptocurrencies, the problem is that few speculators want to use the digital coins to pay for wireless services when the digital asset's price might surge another 50% in a matter of weeks. That's become the main dilemma with the cryptocurrency: Bitcoin needs the hype to attract mass appeal to be considered a viable electronic alternative to money but it has developed a culture of "hodlers" who advocate accumulation rather than spending.
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Bitcoin's Rally Masks Uncomfortable Fact: Almost Nobody Uses It

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  • for something that winds up 'n down like an old yoyo?

    • by iggymanz ( 596061 ) on Monday June 03, 2019 @07:30PM (#58704354)

      squeezing money out of a fresh batch of bagholders, again and again, of course.

      Bitcoin meets none of the definitions of money, and all the definitions of a horrible investment.

      • RIGHT ON TIME (Score:5, Insightful)

        by PopeRatzo ( 965947 ) on Tuesday June 04, 2019 @01:47AM (#58705458) Journal

        Bitcoin's Rally...

        Bitcoin has lost approximately $1000.00 in value since yesterday. It's lost half it's value in the past 18 months.

        This is what passes for a "rally" these days, I guess. Anything can mean anything now. I can deny saying what I am on tape saying over international television, AND YOUR LIBERAL FACT-CHECKING MEANS NOTHING. If you buy Bitcoin at $15,000 and it's under $8000 today, you're getting rich. Losing money is getting rich. Failing is succeeding. Lying means you're "telling it like it is". Bankruptcy is a sign of success.

        God bless America.

        • Bitcoin has lost approximately $1000.00 in value since yesterday. It's lost half it's value in the past 18 months.

          First I thought that this must be wrong because it is extremely little value lost, but then I understood that you probably mean per BTC. This doesn't mean anything on itself. The unit is arbitrary. One satoshi has lost approximately 0.00001 USD states the same. This kind of information is only sensible if you know how much BTC you have, or how much people typically have, or maybe how many BT

          • A person with a given amount of bitcoin lost half of what they could buy, lost have of what the dollar value was... it lost value.

            It means a lot in itself, it means bitcoin is a bad store of value, a bad investment.

          • This doesn't mean anything on itself. The unit is arbitrary.

            All units are arbitrary. Each bitcoin lost almost $1000 in last day and a half. What is that, about 13%? So if you have .0005 Bitcoins or if you have a thousand bitcoins, you lost 13% of the value of your holdings in less than a day and a half. That is not a rally.

        • Cherry picking timeframes will skew the results. (Months are defined as 1st of month)

          So, It's gained value in the past 14 months.
          It's gained value in the past 20 months.

          2 Months: +74%
          5 Months: +23%
          9 Monhts: +23%
          14 MonthS: +23%
          15 Months: -20%
          16 Monhts: -15%
          17 Months: -37%
          18 Months: -15%
          19 Months: +37%
          20 Months: +100%
          26 months: +709%
          32 Months: +1284%
          38 Monhts: +417%
          44 Months: +3494%
          61 Months: +1826%

          So, yes. excluding those that bought in the 14-18month-past range, it has been a net positive for everyone wh

          • So, yes. excluding those that bought in the 14-18month-past range, it has been a net positive for everyone who bought.

            No. If you bought on Sunday, you've already lost 13% of your value.

      • by grnbrg ( 140964 )

        Just out of curiosity...

        What do you feel defines what money is? If something like gold or silver meets your definitions as being a "medium of exchange" or "money", then Bitcoin (or other crypto currencies) probably meet them as well.

        • definition includes agreed medium of exchange, "universally" accepted . a stable store of value.

          so U.S. dollars pass the test, near globally accepted.

          bitcoin is not, too illiquid and not universally accepted. value wildly unstable too. I'd even argue hardly accepted anywhere.

          gold and silver fail liquidity and acceptance test for most of us. I have been to places in the world (place in SE asia) where gold was/is accepted, tested and weighed on the spot, people wore it and used it. I can also circle a

          • by grnbrg ( 140964 )

            From: https://www.stlouisfed.org/edu... [stlouisfed.org]...

            Towards the end, there is a section "fiat money", which the USD certainly is -- the slips of paper have no intrinsic value. Interestingly, Bitcoin and other cryptocurrencies can in many ways also be considered fiat -- they have no intrinsic value, and are only worth anything because the people exchanging it for consideration agree that it does. In any event, the author there suggests there are 6 characteristics that "money" must satisfy. They are durability, por

      • agreed
    • I'm sure they could find a use for it in Venezuela.
    • Almost like stocks...

      • Almost like stocks...

        Except a stock certificate represents ownership in a company. Crypto currency is like a pretend stock market game being played with real money.

        • I own Apple stock. Does that mean I can stroll into their headquarters and check up on things? You own a piece of a company, what does that get you?

          • You should get a financial report at the minimum.
          • You own a piece of a company, what does that get you?

            A share of the profits.

            • by rtb61 ( 674572 )

              Bitcoin represents something else entirely, a public study of the functioning of the human mind. Bitcoin, there is nothing there, it is a straight up empty belief in a makebelieve currency, that belief fabricated by the digital fabrication process required to generate the entirely imaginary currency, there is no there, there, zero, nothing a straight up empty belief and yet many belief and risk real world currency backed by the notions of worth of entire nations, the land, it's resources and people. At leas

          • A dividend (usually, but not always), potentially a vote at any shareholder or annual general meeting, typically a say about who is on the board etc etc etc. Depends on the class of share you hold.

            But typically significantly more than you get with a cryptocurrency.

          • I own Apple stock. Does that mean I can stroll into their headquarters and check up on things? You own a piece of a company, what does that get you?

            Yes, sort of. You get to attend the shareholders meeting and vote. And if you own enough, yeah, you can probably just show up. Vanguard owns the largest chunk, their accountant can probably just show up and get to see Apple's senior accountants and get a look at the books.

      • Except bitcoin is not supposed to be an investment vehicle like equities, stocks to you, and is, in fact, a shitty investment because it is so unstable. It would be able to be listed anywhere but the pink sheets.

        Bitcoin was supposed to be a currency, money to you. But, it is shitty currency because it's value fluctuates so much and so rapidly. You pay for something with bitcoin one day and the next day it doubles in value, you have just paid double for what you purchased. You sell something for bitcoin an
  • by rsilvergun ( 571051 ) on Monday June 03, 2019 @07:29PM (#58704348)
    The gov't is finally catching up on the Money Laundering angle. As for drugs Marijuana is increasingly legal.

    I saw a story [pastemagazine.com] that said Pistachio farmers were lobbying for war with Iran because it would drive up the price of their Pistachio. It makes me wonder if some of the bitcoin folks might start doing something similar.

    I mean, legal drugs would make untraceable currency really only useful to hardcore privacy types and money launderers. Most folks don't care about the former and aren't doing the latter. And it's not expensive at all [quora.com] to buy a politician. Seems it'd be easy to do, especially with all that hard to trace cash...
    • Drugs & Money Laundering
      Yep. And when Bitcoin first hit the scene and I said precisely that, and I got flamed to death for it.
      Funny thing, turns out I was right.

      I also immediately called 'e-cigarrettes' and 'vaping', 'drug delivery devices', and got flamed into the next life over that, too.
      Funny thing, that was 100% correct, too.
    • I saw a story [pastemagazine.com] that said Pistachio farmers were lobbying for war with Iran because it would drive up the price of their Pistachio. It makes me wonder if some of the bitcoin folks might start doing something similar.

      I looked at the article and your understanding of it is either flawed or you left out a key word. The California pistachio farmers lobby wants the trade war with Iran to continue because the US probably has 0 imports of pistachios from Iran and domestic production basically has the US market cornered as a result. While the lobby does support some very conservative Republican congressmen from California who are very much in favor of keeping up sanctions on Iran, that is not in and of itself "lobbying fo

  • 2nd Layer? (Score:5, Interesting)

    by killkillkill ( 884238 ) on Monday June 03, 2019 @07:30PM (#58704360)
    The last dozen or so purchases I've made with Bitcoin used the Lightning Network. They don't seem to be accounting for anything on a second layer that only settles many transactions with only one Bitcoin transaction. Of course, part of LIghtning's design is also to thwart big data analytics and preserve privacy, so it's not likely they could include it in their research.
    • Hush now, you're ruining the story.

      • Re: (Score:2, Informative)

        by Lanthanide ( 4982283 )

        Lightning Network itself is ruining bitcoin's story, because it is centralised, requires pre-funding and can be easily traced back to your IP address.

        Lightning Network is the sort of situation where the cure is worse than the original disease in the first place.

        • by Anonymous Coward

          Lightning is not centralized, anyone can run the Lightning node, if node is taken down network will find another path. Lightning network is streaming money. It is complicated solution to increase capacity and preserve decentralization (unlike simple block increase) and to keep blockchain small as possible.

    • by Anonymous Coward

      Just curious, who's providing the matching liquidity for you and what are they charging?

  • ... where it takes days to get someone to process a micro transaction, so your latte doesn't get cold before it's paid for?

    • Yes. Not only did they change the format to improve throughput (currently near all-time high number of transactions with minimal fees), but there are also near instant second layer payments over the Lightning Network. LN has some disadvantages, but it is essentially closer to what people expect for basic purchases.

    • No.

  • by Libro ( 1063058 ) on Monday June 03, 2019 @07:36PM (#58704388)
    This has been the fundamental problem with all cryptocurrencies.
    The point of a currency at its basic level is to facilitate exchange of goods and services. The principle being that: I will accept an amount of currency for giving you something, on the assumption that I will be able to exchange that amount of currency for something else of equivalent value (whatever that means) at any time in the future. Just to emphasise that last bit - AT ANY TIME IN THE FUTURE.
    That last bit is important if we want to save our currency in, say, a bank account, for long periods.
    Therefore one of the critical success factors for a currency is that its value is stable. That its value today will be roughly the same as its value in the future. Where a currency's value is as volatile as Bitcoin or any of the other ones, then they are as useless as Zimbabwean dollars.
    So why is anyone buying them at all ? The only reason people are buying them is because they think there will be capital growth - ie they can sell them in the future for more money. It's the old Dutch tulip speculation all over again. Buying and selling something that has an intrinsically low value for an inflated price as speculation.
    Of course there are some who are buying them because the privacy value of using bitcoin is worth this risk. But it would need to be a very risky transaction for that to be the case....
    Until we can have a market where the value of bitcoin is stable, where trading in bitcoin itself has the same effect as trading in ordinary currencies (ie. small movements driven by mostly external economic factors), then it will never be used widely to facilitate transactions...
    I don't know how you get there though. I wish I did ...
    • speculation is not capital growth.

      You need to learn what the word Capital means - i.e. the means of production.

    • Re: (Score:1, Insightful)

      Because for many of us, it's either that, or holding our money in banks that have been very open that during the next financial crisis, they are going to start scooping up the contents of savings accounts in "bail ins", leaving the depositor with little to nothing. They have already raided bank accounts in some parts of the world, the rest of us are just waiting for the next tech/RE bubble to pop. But bitcoiners, then, won't be affected. Bitcoin, of course is not without its problems: but it's a balanci
      • Because for many of us, it's either that, or holding our money in banks that have been very open that during the next financial crisis, they are going to start scooping up the contents of savings accounts in "bail ins", leaving the depositor with little to nothing. ... But bitcoiners, then, won't be affected.

        Do you not realize how exchanges work? If all the real banks disappear everyone's fiat, then there's no real money for someone to give you for your digital shitcoins.

        • I wasn't talking about exchanges. They don't have to disappear everyone's savings at once - merely taking out my account is enough. But even if they did - I'd still be able to pay my rent, utilities, and pay for groceries with cryptocurrency. And if I was the only one who could pay for such things with something valuable on an international level... other people would clue in pretty quick.
      • Re: (Score:2, Informative)

        by Anonymous Coward

        Because for many of us, it's either that, or holding our money in banks that have been very open that during the next financial crisis, they are going to start scooping up the contents of savings accounts in "bail ins", leaving the depositor with little to nothing.

        What in the blue fuck are you talking about? Even if a bank goes poof over night and there isn't another bank to buy its deposits, the FDIC (for example) guarantees every depositor for $250K, and retirement and checking/savings accounts are counted separately (so that number is really more like $500K). Canada's CDIC is something like $100K per account class.

        Your shady Bitcoin exchange of choice is far more likely to get hacked than your bank deciding to just suddenly clean you out of cash.

        • by pyrrho ( 167252 )

          not to mention a huge crash destroying banks will have a destructive effect on the value of bitcoin as people won't have actual legal tender to overpay for it with.

          • This part is totally false. Every financial crisis has pushed the value of bitcoin up - because huge crashes destroying banks causes people to flock to save investments far more than they cause the opposite.
        • Your shady Bitcoin exchange of choice is far more likely to get hacked than your bank deciding to just suddenly clean you out of cash.

          This is why you should NEVER EVER LEAVE ANY LARGE AMOUNT OF MONEY ON AN EXCHANGE FOR AN EXTENDED PERIOD OF TIME UNLESS YOU ARE WILLING TO LOSE IT. It was a bad idea in the mtgox days, and it's a bad idea now. Exchanges are for *exchanging value*, and for people who want a high level of risk:reward *not* for people who want to save - that's what private wallets are for.

          What in the blue fuck are you talking about? Even if a bank goes poof over night and there isn't another bank to buy its deposits, the

    • by Anonymous Coward

      Therefore one of the critical success factors for a currency is that its value is stable. That its value today will be roughly the same as its value in the future. Where a currency's value is as volatile as Bitcoin or any of the other ones, then they are as useless as Zimbabwean dollars.

      Yes US Dollar currency has depreciated 95% in the last 100 years. How's that for stability?

    • The principle being that: I will accept an amount of currency for giving you something, on the assumption that I will be able to exchange that amount of currency for something else of equivalent value (whatever that means) at any time in the future.

      Where the hell did you get that from? No currencies don't have any connection to the future, and no currency currently used anywhere in the world actually meets that definition. The exchange for currency can only ever consider a point in time because regardless of what you base your currency on the perceived value of that base continuously changes. It's one of the reasons people speculate on the value of currencies in the first place.

      I agree with most of the rest of your comment but then you also landed in

      • I donâ(TM)t disagree with what you say. However, for a currency to work, it needs to be accepted by everybody as a medium of exchange. If I donâ(TM)t have confidence that the value is stable, and will be stable into the future, I wonâ(TM)t accept it as payment. Because I will be using the currency I receive in the future, not now. This is about perception and opinion, but a perception and opinion about what itâ(TM)s value will be in the future.
        • However, for a currency to work, it needs to be accepted by everybody as a medium of exchange. If I donâ(TM)t have confidence that the value is stable, and will be stable into the future, I wonâ(TM)t accept it as payment.

          That's non-sequitur. There's no need to hold on to any currency once a transaction is completed for any longer than it takes to convert that currency to something else. This is a process that is achieved in near realtime on many platforms, e.g. when I pay for something in USD and end up with EUR taken out of my account.

          To be clear Bitcoin is completely worthless as a currency, but not for the reasons being discussed here ... well with the exception of the first sentence you said. Yes to be a currency by def

  • by Anonymous Coward

    lmao "no third party intrusion". With bitcoin you depend on third parties for everything... well if you want to buy it, use it, store it, or sell it. Oh and lets not forgot how these required third parties are virtually all unregulated, reside in foreign countries, and a majority are run anonymously. Truly shocking why that is not appealing to anyone beyond scammers and dumbass libertarians.

    • I rely on a third party for buying because it's convenient. There are plenty of ways to buy without a third party. And I definitely don't rely on a third party to store it.

  • by Anonymous Coward

    The idea that nobody uses cryptocurrencies is downright misleading and manipulative. The fact is there is a growing number of businesses that are taking cryptocurrencies and people spending cryptocurrencies. My company accepts a few cryptocurrencies and we do see people regularly purchasing computers, peripherals, and accessories, and other swag with it from us.

    50 years ago credit cards weren't widely accepted either and yet at least in the United States they are widely accepted. Maybe not everywhere. There

    • People use credit cards because they offer a myriad of benefits that cash doesn't.

      What does your business do when it gets a crypto payment? Probably immediately convert it to fiat, unless you're running absurd profit margins where you can afford to absorb the instability (selling stolen goods, or something along those lines).

    • 50 years ago nobody used credit cards either

      Interestingly, 50 years ago credit cards were common enough to make into a joke [youtube.com].

    • by perpenso ( 1613749 ) on Tuesday June 04, 2019 @12:35AM (#58705318)

      The idea that nobody uses cryptocurrencies is downright misleading and manipulative. The fact is there is a growing number of businesses that are taking cryptocurrencies and people spending cryptocurrencies. My company accepts a few cryptocurrencies and we do see people regularly purchasing computers, peripherals, and accessories, and other swag with it from us.

      That is misleading. The vast majority of business that "accept" crypto never see nor touch crypto. They farm the transaction out to a crypto payment processor. The company does all their pricing in fiat (USD, EUR, etc) and all their accounting in fiat. The company tells the processor the fiat amount of the product or service, the processor does a real time conversion, gives the buyer a payment address and if and when the coins are confirmed as received at that address the payment processor notifies the company the transaction occurred and immediately credits the company's account for the exact fiat amount they originally specified. The processors takes on the risk of volatility. The company never saw a crypto coin, was never exposed to volatility, etc. In short, no, the company never accepted crypto.

      50 years ago credit cards weren't widely accepted either and yet at least in the United States they are widely accepted.

      Credit cards are still using fiat, they create no addition accounting and tax reporting responsibilities. The person above who "bought" that goods or service with crypto, if in the US or any other jurisdiction that treats crypto as an asset ... did the person note the difference in coin price from when they acquired the coins just "spent" to the coin's value at the time of transaction? They need to do so to record the capital gain or loss on those coins and to report that gain/loss on their taxes. Just like they do when with other assets, such of stocks, are sold. Now to be fair wallet software could help with such reporting, but they don't. And either way it is an additional burden and responsibility that you do not have with credit cards, since they are using fiat.

  • by Anonymous Coward

    The fact that Bitcoin enthusiasts focus on how many dollars you can get for bit coins kinda undermines the idea that dollars are the lesser currency.

  • The problem with crypto currencies is you don't need them. If you want to do business in the USA you need American dollars, in the EU you need Euros. This need guarantees a market for their currency. It guarantees a value for their currency.
  • There are way, way more BTC sitting in wallets for years than there are active traded BTC. I'd say it's a lot less speculation and a lot more wealth preservation, a la gold.

    • by Anonymous Coward

      There are way, way more BTC sitting in wallets for years than there are active traded BTC. I'd say it's a lot less speculation and a lot more wealth preservation, a la gold.

      I'd say that's BTC that nobody has access to because they've either forgotten about it, or otherwise lost access.

    • by Anonymous Coward

      It's merely long term speculation, not wealth preservation, considering that bitcoin was only invented 10 years ago. Nobody knows whether it will be around in 2029, let alone 3029. Therefore the wealth preservation angle is a bit absurd.

      And the comparisons with gold come from the false marketing illustration of bitcoin as a shiny gold coin, as seen in just about every promotional bitcoin story. Bitcoin has exactly one thing in common with gold: limited supply. On the other hand there are many differences, s

  • The dollar has been the world reserve currency for a long time. Certainly since WWII. Some day, something else will replace the dollar as the world currency. People holding bitcoin are hedging to preserve some wealth in the event that the dollar is de-throned and something (maybe bitcoin) replaces it.

    It makes sense because there will only ever be 21 million bitcoins. So the POTENTIAL value (in purchasing power) of bitcoin if it should become the world reserve currency, is all the money in the world divided

  • A reflection. In Sweden, almost nobody uses cash anymore. Cash is almost gone and fewer and fewer stores accept it even. Will that make SEK (swedish money) worthless? Likely not, but probably bitcoin will be worth more.
  • by ElizabethGreene ( 1185405 ) on Monday June 03, 2019 @10:59PM (#58705098)

    The average transaction fee is >$5. That is a big tax to record a transaction on a (slow) ledger that's arbitrarily limited in size and throughput.

    • The transaction fee has spiked recently. As it did during the crazy price spike in December. But here is a graph to put it in perspective.
      https://bitinfocharts.com/comp... [bitinfocharts.com]

    • Bleh. I've been trying to pay a bill with bitcoins, since I don't have any other method available. I'd be happy to pay a $5 fee at this point, it's way better than the $50 fee that my bank wants for a wire transfer. I'm struggling to buy the bitcoins though, every exchange wants two-factor authentication via text messaging and I can't do it via text messaging.

      There's apparently a bitcoin purchasing kiosk about an hour's drive away. At this point, I may end up doing that.
  • BTC is censorship proof and is a hedge against state currency. For example you live in one of many country's with a currency/debt crisis you can invest in BTC and avoid something like whats happened to the value of peoples savings recently in Venezuela, Iran, Turkey etc
    • by jeremyp ( 130771 )

      If you bought BTC when it was at $15k and you need the money now, then you have failed to avoid what happened to people's savings in Venezuela, Iran and Turkey.

  • With darknet markets being decimated and Bitcoin exposed as traceable after all, the USP has disappeared. It's unwieldy to use and expensive for small purchases. It might be ok for sending wage packets home to a family in Nigeria but it is pretty crap for buying coffee on the high street!
  • Said it 6 years ago, saying it now. It's not a feasible currency IMHO.
    You need to be online to veryfiy it, it can be traced quite easily and there is no single authority controlling it. That's a disadvantage, not an advantage. A crypto-token based currency with sensible offline transfer buffers and asychnronous transfer verfification by a central service that has the sole job of managing the transactions in said currency would be way easyer to implement and adapt in the real world.

    Blockchain is mostly a hyp

  • Of course very few people use it as a currency. It's basically a pump and dump where existing owners try and hype up the value of the "investment", so they can sell out and leave some other idiot holding the bag when the price collapses.

    Combine that with its stupidly volatile value and transaction fee and very few people use it. I reckon even criminals and money launderers are becoming leery of it because its not as untraceable as they once thought.

  • What?
    Bitcoin is not designed for this, and can never fill this role. The maximum possible number of transactions per day is something like 1/3500th of what Visa currently does, and $30 per transaction at peak load is so ridiculously high it makes it useless for the vast majority of uses, and even if $30 is peanuts compared to the amount you are transferring, their will still almost always be better alternatives that will save you the majority of that figure.

  • I had the same problem with my tulips [wikipedia.org], dang it!
  • It's fair because very few merchants accept lightning payments because it's so risky and limited (i.e. always needing to have a node online to accept payments, hiring watchtowers, $50 maximum reliably liquidity, KYC issues, etc.) There are custodial options but there goes your privacy.

    With Core's 1MB blocks, just opening Lightning channels for the intended audience will take nearly a decade at 7TPS.

    Meanwhile the Bitcoin community hardforked away from this disaster in 2017 and continues to upgrade for the f

  • by X!0mbarg ( 470366 ) on Tuesday June 04, 2019 @08:56AM (#58706786)

    If a single bitcoin was worth, say, $10, it would be much more practical.
    People could easily wrap their head around something being worth 20bc, or about $200.
    With it being so huge, people can't think of it in real world terms, and wouldn't really consider using it for day-to-day transactions.
    After all, what's the price of a loaf of bread in bitcoin?
    How about milk, or other daily staples?
    Maybe a car could be expressed that way, but if you can't get the general populace to think about it, then it will go the way of the dollar coin.

  • I call BS. Bitcoin is used for speculation *and* facilitating illegal activities.

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