I’m aware that there are places which accept bitcoins as payment. But my question is how many of these places are actually pricing their products in bitcoins. Meaning, if the bitcoin>dollar exchange rate changes, that the bitcoin price for that product would remain the same and the dollar price would change, versus the other way around.
The reason this is relevant is that ISTM that the bitcoin exchange rate is extremely volatile. So that anyone who holds on to more bitcoins than they need in the immediate short term is essentially gambling on a very volatile investment. If there were products whose long-term prices was tied to bitcoins, then that would not be the case to nearly the same extent.
If there are businesses which only accept bitcoins then that would qualify too. But I’m not aware of such entities other than ransomware and the like.
I don’t know of any 100% legal business that only accepts bitcoin. There are a couple businesses I know of that commonly accept bitcoin that are grey area, marijuana seed distributors are the best example. Its also one with immense markup. Common seed prices can easily exceed the market value of selling the marijuana from the same mature plant. So variability in pricing of bitcoin can be a minor concern vs the margins involved.
It seems like if your business depends on changing exchange rates then you would purchase derivatives as a hedge. This begs the question of whether or not there is a proper derivatives market in bitcoins. If not, then you have a problem unless all of your suppliers accept bitcoins as well.
its all a dodgy as and the recent ransomware event may well break bitcoin.
I went to a site which says it sells in bitcoin prices. Problem is, it isn’t really the merchant, its just a front for other sites it thinks it might be able to get the item through.
basically an extra middle man to add more risk and overhead to trade.
I’m skeptical of bitcoin myself, but I wouldn’t hold that per se against bitcoin, or take it as evidence that something dodgy is going on. It’s perfectly normal for businesses to act as middle men between the ultimate purchaser and another business (manufacturer or yet another middle man) through which they think they might get the item. Much of our economy is based on that concept, and a lot of economic activity revoöves around buying and selling items which the seller does not yet have at the time of sale.
But it’s a terrible comparison. An troy ounce is an arbitrary unit. You can also price gold in grams or whatever. And an ounce of gold isn’t a similar thing to a Bitcoin.
While you can compare things based on quantity, e.g., the price of a gallon of water vs. a gallon of gasoline, going from concrete to abstract with unrelated units is weird. E.g., the price of a gallon of water vs the value of the British Pound in dollars. Um, what?
It’s a jarring as comparing the price of a pound of hamburger and the mpg of a Corolla.
And bitcoins are also fairly “fluid”, since you can transact in such small fractions of one. The price of a bitcoin isn’t inherently any more relevant than the price of a millibitcoin or the price of a microbitcoin.
My guess is that probably all merchants would change the price in bitcoins as the bitcoin value fluctuates. Take the already mentioned ounce of gold. In early March if you were selling gold for bitcoins, you would have sold roughly one ounce of gold for one bitcoin. I doubt anyone today would purchase an ounce of gold for one bitcoin. If they did they would be losing about 50% of their money. A gold dealer that accepts bitcoins would have to lower their prices in half since bitcoins have doubled in value.
“Arbitrary” in terms of options. Something like weight depends on the physical world and different people can independently come up with terms for the same physical concept. And they did.
But the unit of a given cryptocurrency, once defined, pretty much eliminates the ability of others to come up with their own units for that same crytptocurrency without referring to the original unit. As mentioned, you can define milli-Bitcoins etc., but those refer to the original unit.
Your options are quite limited.
An humorous example of an arbitrary physical unit is the Smoot. Set as the height of Oliver Smoot, later head of ANSI and involved in setting standards in more serious ways. Not really defined in terms of inches or centimeters.
There is no comparable way of defining a “Smoot-coin” in Bitcoin-space without using the term “Bitcoin”.
Or just create a new crypto-currency and call it a Smoot-coin. The value of a Smoot-coin in bitcoins can change, but then, if a Smoot length is defined as the height of Oliver Smoot, then the value of a Smoot-length in centimeters can also change. Unless, of course, you’re using a standardized Smoot, which is defined as 67 inches.
The amount of what? Right, Bitcoins. Avoiding saying the word doesn’t mean you’re excluding it from the definition.
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Or just create a new crypto-currency and call it a Smoot-coin.
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Which is something I clearly excluded. “… the unit of a given cryptocurrency, once defined, pretty much eliminates the ability of others to come up with their own units for that same cryptocurrency* …”
Different cryptocurrencies would be independent measures, much like the prices of silver and gold are.