Is the majority of the usage pattern currency-like, where people are getting paid in BTC and buying things with BTC?
Or is the majority of the usage pattern that of a commodity, where people are mostly buying and selling it for fiat currency, and trying to do so at a profit?
I would strongly suspect the latter: the vast majority of BTC transactions (other than transfers between personal wallets) are the buying and selling of BTC for fiat currency.
Even most "Pay with Bitcoin" businesses are this way: in reality, all you're doing is selling your Bitcoin to an exchange who will convert it to USD and pay the USD-denominated price of the item you're buying. Gold certainly can't do this so conveniently, but the principle is the same: I want to buy something, so I sell some gold and use the USD to buy things.
Similarly, I'm not entirely sure that the "Pay with Bitcoin" approach, where an exchange converts the currency for you is that far removed from this idea. Before Bitcoin, my options for payments were pretty limited. Either credit card or Paypal -- both of which are convenient in the US, but at the time very inconvenient (to the point of impossibility) for people living in poorer countries.
I've read the early mailing list archives for Bitcoin to see if I could understand Saotoshi's intent in creating Bitcoin. Interestingly, he doesn't seem to discuss it much at all. It seems to be all about the tech. I think the "bitcoin is going to replace fiat currency" narrative is something that was adopted by overenthusiastic people who arrived on the scene later.
I think Bitcoin (and potentially other digital currencies) still has a number of hurdles to get over, but it's succeeded at wresting the payment industry from the banking monopoly (plus Paypal) far better than I originally suspected it might. I certainly hope it can continue.
That doesn't mean regulators should treat it like currency when, practically, the real world doesn't use it that way.
The answer could be here:
Thus, bit gold will not be fungible based on a simple function of, for example, the length of the string. Instead, to create fungible units dealers will have to combine different-valued pieces of bit gold into larger units of approximately equal value. This is analogous to what many commodity dealers do today to make commodity markets possible. Trust is still distributed because the estimated values of such bundles can be independently verified by many other parties in a largely or entirely automated fashion.
In summary, all money mankind has ever used has been insecure in one way or another. This insecurity has been manifested in a wide variety of ways, from counterfeiting to theft, but the most pernicious of which has probably been inflation. Bit gold may provide us with a money of unprecedented security from these dangers.
The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.
Also the text in the Genesis block suggests bitcoin was a response to the failure of banks in the GFC:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
And she most likely converts her bitcoins into whatever local currency she needs to pay for her goods.
Yes, it also points to the utility of bitcoin, but this specific example also points to it's use as a commodity, IMO. As it gains in popularity, I think it will gain more utility as a currency, but until then it's a currency of limited use (limited in that there are limited venues that accept it) except as a commodity.
Bitcoin seems quite promising for foreign currency transactions.
What people miss is that commodity and currency are not exclusive. And the difference between them does not really matter all that much.
Yes. It is a commodity. People trade in it every day.
> I could not get anything with USD, so it is not a currency?
For your use at that location, apparently not.
> What people miss is that commodity and currency are not exclusive.
Yes, and I said as much in a separate reply.
> And the difference between them does not really matter all that much.
Except for when they are classified as one and not the other and taxed differently.
(I work for Coinbase)
It only lists 4 countries.
(I also work at Coinbase)
She probably takes 10-20% more with BTC than with bank wire.
I'm not privy to her financial transactions, but I believe she holds some BTC for online purchases and transferring money between her and her husband. Clearly the bulk of her money is converted to a fiat currency because that is the most useful at the moment (though I'm willing to bet dollars to doughnuts that the fiat currency she most often chooses is not that of her home country).
The benefits of bitcoin are out there, its up to stores to offer it as an option. There should be a strong pressure to eliminate credit card processing fees though, since most companies are paying ~10% of revenue just to credit card companies, sometimes worse.
Perhaps a small Mom & Pop store that has tiny volume.
Any company of decent size would be paying significantly less than that in practically all circumstances
TL/DR: shop around the money transfer companies and you can save a fortune, their fees vary wildly. Online companies can be very cheap indeed. Comparisons with bit-coin mostly cherry-pick the expensive companies to make themselves look competitive.
The insurance policy is there because of a lack of security. Plus you pay it back anyways. E.g. if you pay with your credit card abroad they make money on the currency conversion plus they charge the merchant significantly more. Hidden costs that you don't notice. The bank cards / Meastro system is way cheaper.
If you stay within the EU you can just pay with your bank/debit card. Only if you travel outside of the EU you'd really need a credit card. Not too many people need that, so someone having a credit card is not that common (though IIRC Rabobank automatically gives you one).
Plus the whole confusing difference between credit card and the bank cards. I'd highly prefer things to go out of my bank account immediately. My bank card doesn't have the credit card number and isn't accepted. I'd wish my bank provided a better (integrated) overview.
If they take BTC? Click a QR code/link, put password into wallet. Done.
If you're a US taxpayer, you are required to report the profit/loss of every single purchase made with bitcoin.
Which means that you need to dutifully look up and record the current price of bitcoin every time you make a purchase, so you can properly report the fair market value, and then copy that information over to Schedule D in the proper format.
And according to the tax rules, if you've made several purchases of bitcoins over time, then you have to separate the purchases into lots. So if you bought 0.3 bitcoin on Mar 1st and 0.2 bitcoin on Mar 31st, and you bought a video card for 0.4 bitcoin on May 2nd, then you have to decide from which of the previous lot(s) you want to take bitcoins on to report the profit/loss at the time when you bought the video card. For each separate lot, a separate line needs to be created (or you may put VARIOUS, and figure the correct gain/loss and just add that to the form, its up to you)
Of course, if its been more than a year between the time you made some of those purchases, you need to separate out the gain/loss into long-term vs short term gains.
And then, if you decide to refill your bitcoin account within 30 days before or after a purchase, and the bitcoin price went down from the time you bought it until the time you made your purchase, then wash sale rules come into play. In those cases, you need to report the sale, and then further mark it as a wash sale, reverting the loss on the form. Then those bitcoins that you sold and rebought have to be put back into your lots of bitcoins to use for further purchases, adding together to the final sale in the future the total loss and gain made by all the wash sales those bitcoins may be a part of (all while respecting the long term/short term gain split).
Yea, what a dream! :/
I have a box of foreign money at home which I use every time I am abroad. I bet most people have something like it.
If I were to trust you on this, I'd have to record the price of that currency with every cup of coffee in every airport I buy. In practice nobody has done that, ever. I'd say that's safe.
Should I suddenly pay cash for new sports cars or houses out of my little box that would be different of course. I doubt the difference between a cup of coffee and a sports car is really encoded in law, but the difference is there and should you find yourself in a grey area (old used car perhaps?) there are people specializing in this very matter that can help.
This is not true.In the US there is a tax exemption for small denomination purchases in foreign currency's(I think $200) . I can't find a source right now...
*Edit updating citation: User icebraining cited this source in this discussion.
Note that this relates specifically to changes in value of the US currency in relation to the commodity or foreign currency. In this sense there is a difference between a sports car and a cup of coffee encoded in law. If the euro you bought for $1 is suddenly worth $1.02, and you buy a 1 euro coffee, you'll only realize $0.02 in gains, and not hit the $200 threshold. If you buy a 100,000 euro sports car, you will realize a $2000 gain, and have to report that on your taxes.
Since bitcoin is a commodity, it doesn't matter if the value moves 2 cents or 2 dollars or 2 million dollars, all gains are capital gains.
So if you buy a coffee with euros you specifically don't need to report that, but with bitcoin you do. Whether the IRS is going to notice that you don't record every single capital gain arising from a bitcoin transaction is another question, but there is a major difference between foreign currencies and bitcoin as far as the IRS goes.
I guess if you wanted to get brownie points with your accountant, you can record all transactions, but if you don't you certainly aren't breaking any laws.
Would you happen to have a link to where you got this information yourself?
I did, my account got insta-blocked and I could not complete my transaction. I would have been perfectly happy to risk losing my money instead of having a 100% chance of not receiving the thing I want because of PayPal's paranoia.
If I made a similar transaction I'd be up set if it didn't at least trigger a fraud alert.
Can't make this stuff up.
Now, we just need to get some data on whether these transactions occurred due to commerce in bitcoin, or due to trading for a profit. We can't see this on the blockchain directly; however payment processors like Bitpay and Coinbase have access to this information. Coinbase, in particular, operates both an exchange and payment processor. It knows what percentage of transactions (within its market segment) are due to buys and sells vs. ordinary commerce.
Luckily, Coinbase has gone on the record answering this specific question!  Brian Armstrong, the CEO, said specifically at Techcrunch that the majority of bitcoin uses are for buying and selling things -- actual payments. 
So the answer to your question surprises you -- the majority of usage is very currency-like!
My rational side thinks that this ecosystem is just starting and there are killer use cases. For example minors offering their services (e.g: web design, software development) for bitcoins where in the real world they can't handle their own credit card or bank accounts without permission.
Another killer use case is loans, in developed countries you can pay more than 60% of annual interest, cryptocurrencies are a way to normalize these numbers worlwide.
Good old regulatory arbitrage. (Hey, it works for Uber.)
Furthermore, the largest use of Bitcoin volume-wise is
indeed trading against other currencies. However, the same holds for the USD. US GDP is below 20 trillion per year, while global forex trading is 5 trillion per day, with the majority of trades involving USD.
I think it delineates a threshold where no other financial transaction can go. I think it's very beneficial even though comparatively few transactions go through Bitcoin.
Straight gold without it is a questionable commodity as the usage, at least for the time, was ornamental at best.
But once measured up and stamped you had an item that would not lose its weight much over years of storage (even it if was down a hole or at the bottom of a lake etc).
What made it money was not the metal itself, but the process.
Bitcoin's supply is strictly limited. Most cash these days can be printed at will. So the comparison to digital gold coins is apt.
These days, "paper" notes etc do just as well.
This sentence would make sense if you had said "that of a security"!
I think you forget that the defining aspect of wheat is that eventually it ends up in people's mouths! (i.e. has some actual usage.) Futures contracts are an afterthought on top of what the definition of a commodity is, in my opinion.