I'm pretty naive on the subject of Bitcoin so I might be missing something here, but can someone explain to me how it's used right now? Aside from treating BTC like a stock that is. The value of it fluctuates so much that actually buying/accepting it seems incredibly risky. The price can go down just as fast as it goes up.
As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase.
As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700?
My confusion really comes from the buying/selling of legal goods; I can see the risk being worth it if you're operating outside the law. But really; if I'm selling something then there's a pretty good chance I'm buying my supplies with a fiat currency. I have hard and set costs I need to cover. If I accept BTC, there's a chance that when it's all said and done the BTC isn't worth what I paid and now I'm losing money.
Are businesses just expected to accept that risk? If so, how many businesses are actually willing to accept that risk? Or do we have to wait for the price to settle down before seeing more widespread adoption?
Bitcoin purists will say that, eventually, there is no "cash out" phase. 1 BTC = 1 BTC and who cares about what the dollar equivalent happens to be. Once everything is in BTC you will never exchange it for dollars.
Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No, so why would you care what the dollar equivalent to a BTC is when everything you buy is priced in BTC?
This is long term obviously. The reason the price is "high" now is because there is a finite amount. ~21 million BTC is the max that can ever exist at once. So, theoretically if you replaced the world's currencies with BTC, having a single BTC would make you incredibly wealthy.
I'm sure there are some "bitcoin purists" who think someday bitcoin will be used to buy everything, but that's certainly a minority viewpoint.
There's a more pragmatic way to think about it.
Bitcoin can coexist just fine with national currencies, and with other cryptocurrencies, and with precious metals. Bitcoin doesn't need to "win" by replacing any of these.
Bitcoin is valuable because it's a secure way to store and transfer value between people.
If bitcoin is never used to buy your morning coffee, that's OK. If only 1% of the population finds bitcoin useful, that's OK, too.
Dollars, euros and yen are better than bitcoin in many use cases, and bitcoin can do things that dollars, euros and yen cannot do in other use cases.
The simple fact is that many people find bitcoin useful, and that's what makes it valuable.
Yeah, I think there's a strange amount of both fans and people who dislike bitcoin that think bitcoin can only be valuable if it's on a path to complete adoption, replacing other currencies.
I see it more like a decentralized PayPal alternative, and I keep seeing it pop up in more places that I buy stuff online and I've made personal transactions with it to other people, so it's providing value to me and seems to be on a reasonably successful path.
I know miners will hate me for saying this it will bring up the lightning network but I think the transaction costs are too high. They have to come down (close to zero if not zero) even if it means miners and node operators are working for no gain. I don't understand why it means that Bitcoin is insecure for people to be able to mine in their gpu.
Maybe we need to leave Bitcoin alone and come up with another currency for low value transactions that happen frequently? I'm thinking like buying coffee or groceries.
It doesn't need to be another currency. You could have a lower security blockchain tethered to the main one, with higher capacity and lower fees but still carrying Bitcoin transactions. In general those are called sidechains, and there is a particular proposal right now called drivechain that might be worth a second look.
There are several other ways of transacting in Bitcoin outside the main replicated-everywhere-forever blockchain, Lightning perhaps being the most well known (with the defining feature of instant transactions).
Most of these systems are hard to implement without unmalleable txids, so interest will likely pick up now that we have segwit on the main chain. Those systems never left the idea stage while transactions were free but there's significantly more interest now. There are lots of interesting developments going on.
>I don't understand why it means that Bitcoin is insecure for people to be able to mine in their gpu.
What do you mean? People can mine with a gpu, but they won't make much because of the many miners using much faster ASICs. If you think Bitcoin should have been made so that ASICs weren't possible: a number of altcoins agree with that idea, but there's an argument to be made that optimized hardware is always possible, and by making it hard to make, it makes it more likely that a single small group who manages to make optimized hardware will be the only one to do so for a large time period, will be able to make huge amounts of profits funding more hardware, and at that point will easily be able to get up to >50% of the network hash rate (which breaks Bitcoin's decentralization and allows rewriting the blockchain). By using a proof-of-work that's relatively straight-forward to optimize means that when the possible mining rewards eventually incentivize development of ASICs, it's likely that multiple groups will be able to build them.
Yes, but this way you're trading an elite made of hardware specialists and people that can afford to hire hardware specialists, with an elite made of people that can afford to fill datacenters with the most specialized hardware. Mining quickly becomes a game of "who can throw the most money into the problem" and ends up skewing the pool significantly because you are rewarded with money for winning the game, which means you can afford even more of the specialized hardware. That's the big thing with Bitcoin: All the miners are rich folks (these days, mostly Chinese) with huge datacenters and tons of cheap electricity. I have 12 of the USB ASIC miners that are many times unable to even pay for themselves in electricity costs because the difficulty is so high, which is the problem that squeezes out grandma's GPU miner and pushes even more people out of the mining game (not to even mention the ballooning size of the blockchain).
Sort of. There is a potential that if you take over the network that it all becomes worth nothing because users understand the trust problem and cash out in the lead up. Or the users elect to not use your currency, it could still hold value, as the blockchain until that point is valid, but it remains paused until the 51% is resolved. This encourages you to work covertly to organize the 51% stake and you have to hold it in secret or all your coin/power may become worthless. It's essentially the cold war and in the same way, it's in everyone's best interest to avoid destroying the value of the coin by being selfish in an attempt for differential advantage.
Sure, and to this point, there have been at least a handful of times when the 51% attack could have happened, as well-known, related mining pools could have combined their power to achieve the majority. It has been plausible before, and I'd imagine what you mention is the reason it still hasn't happened. It would destroy the coin, because who knows what happened while they had majority. There would probably be some kind of fork, and I'm sure the value would diminish. It would be messy for everybody.
The real value is in the underlying technology of the platform, the blockchain. Instant, secure transfers of value to anyone in the world at minimal cost with a publicly auditable ledger. There are also many cool things that can be built on top of the tech, including secure online voting: https://followmyvote.com/online-voting-technology/blockchain...
Instant as "as soon as miners picked it up and added a few chain segments". And so far no digital system offers all requirements for proper anonymous secure online voting: 1. you can only vote once; 2. you can verify your vote was properly counted; 3. others cannot find out how you voted, even with your cooperation.
We'll see whether someone will ever come up with some system satisfying them all...
Can you elaborate on how that is going to happen? Not trying to flame, I can see a world where people use BTC for everything, but I am confused at how that will happen with current valuation.
BTC is worth thousands of dollars, so if everyone starts using BTC will people pay irrational fractions of BTC for bread and milk at the supermarket? will there be some adjustment? How will other entities handle conversion and exchange? Will the general population have some compulsatory event to liquidate their own bank accounts into BTC funds?
Could this change asset valuation worldwide(Real estate, investment funds, etc)? If no government entity mediates currency value and printing can they tax your earnings if companies pay through some decentralized medium? What happens when nobody is paying taxes?
How about other cryptocurrencies, is there some kind of zero-sum game race to the top going on? Can they co-exist in the long term purist scenario?
Some of these questions are probably extremely stupid as I have little financial and economics knowledge and I am almost illiterate when it comes to Bitcoin, and I don't know how it works for the average joe if this purist scenario becomes true.
I'm not an expert on BTC or anything. In fact I'm not even long on BTC. I don't think it will work in the long term. That said I'm just answering questions as I understand them:
> BTC is worth thousands of dollars, so if everyone starts using BTC will people pay irrational fractions of BTC for bread and milk at the supermarket? will there be some adjustment?
The block chain supports values as small as 0.00000001 BTC (called a Satoshi). More terms will be coined as more common denominations eventually are used to buy things.
> How will other entities handle conversion and exchange? Will the general population have some compulsatory event to liquidate their own bank accounts into BTC funds?
There will be no single event, over time people will simply not use their local currency any more in favor of BTC. Slowly, over time, the population will lose trust in fiat and gain trust in BTC. This may occur over decades or more.
> Could this change asset valuation worldwide(Real estate, investment funds, etc)? If no government entity mediates currency value and printing can they tax your earnings if companies pay through some decentralized medium? What happens when nobody is paying taxes?
I'm not sure about these. Right now if you sell things for BTC I'm pretty sure you have to pay taxes on the "fair market value" of the BTC, which I have no idea what that would be (maybe the average price at the time of the payment?). I assume people long on BTC are hoping laws will adapt by the point when it is widely accepted.
> How about other cryptocurrencies, is there some kind of zero-sum game race to the top going on? Can they co-exist in the long term purist scenario?
I mean, a cryptocurrency is only as valuable as the trust people have in it. So all the same rules/theories apply to other cryptos the same as BTC. BTC just happens to be the most popular at the moment, and therefore has the highest market cap (not even sure if this term applies).
>There will be no single event, over time people will simply
not use their local currency any more in favor of BTC.
Slowly, over time, the population will lose trust in fiat
and gain trust in BTC. This may occur over decades or more.
The BTC network processes about 3 transactions per second. Bitcoin advocates will tell you this doesn't matter, or it can be improved with a future fork - which by then why not just make a newly designed protocol/altcoin network entirely ?
(Consider: is what they're telling you based on their current investments that they'll sell off after you've bought in? Now think of what happens when a hedge fund, or other early adopter who has acquired several thousand coins or if there's whales who've traded their way to now own %10 of the coin supply in the network. What happens if they divest and crash the 'value' of this coin 'investment'?)
The great thing about cryptocoins is you can create an improved protocol and if it's better then previous protocols, the users will migrate.
There's a lot of misinformation flying around because people are trying to spam their investments into their cryptocoin service networks which they've bought into (or engineered a marketing pump and dump scam, i.e. premined ICOs like antshares) in hopes that they can later sell at excessively inflated prices because of some arbitrarily limited "supply" which a programmer just typed into the software running their network.
> BTC is worth thousands of dollars, so if everyone starts using BTC will people pay irrational fractions of BTC for bread and milk at the supermarket?
This is moot until/unless BTC undergoes significant changes. It's not suited for this kind of transaction at all, IMO.
But let's say confirmation times were orders of magnitude faster and we wanted to cross the threshold to supermarket transactions. I think we'd still denominate the purchases in the local fiat currency anyways. The only way this would change is if producers and distributors had their costs anchored in BTC. But this seems very unlikely to occur in the next decade.
What is Bitcoin doing? The BTC network is a service. At the time of this writing, there are upwards of 30-100+ functioning cryptocoin networks which offer the same distributed ledger functionality of BTC wallets and a few with more unique features and trustworthy dev teams.
The arbitrary supply of and rules which define how minted coins are rewarded is an important aspect of each of these cryptocurrencies, and if the limited edition deflationary aspect was valuable then maybe we should all buy into that BTC clone with 42 coins in "circulation".
BTC isn't rare, it's just the AOL of cryptocoins right now. Slow and over priced. There are better alternatives.
>BTC is worth thousands of dollars, so if everyone starts using BTC will people pay irrational fractions of BTC for bread and milk at the supermarket? will there be some adjustment?
"1 bitcoin" is a truly arbitrary amount, just like "1 pound of gold" is arbitrary. They're both divisible.
Correct - you can increase the units in circulation without destroying the purchasing power of those who currently hold the asset, which is a huge advantage over traditional fiat currency.
> Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No
Actually, yes; there's plenty of countries where they use the USD or Euro instead of their local currency because the local currency suffers from high inflation or instability. There's other countries where the currency is tightly linked to the dollar. Both because the dollar is a stable currency, one that isn't influenced by supply / demand like BTC is - BTC is a finite resource, dollars are theoretically infinite.
But be careful about only mentioning the views of "Bitcoin purists." That sounds like a pretty extreme view, and will be dismissed as a straw man by the Bitcoin fans or optimists, who likely vastly outnumber the "purists."
> Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No, so why would you care what the dollar equivalent to a BTC is when everything you buy is priced in BTC?
Moving the analogy a bit: everything we buy is priced in Reais. However, we still care if tomorrow the Dollar is worth more or less, since it does impact the price of several kinds of goods. For instance, the Dollar increasing in value will lead to computers getting more expensive.
In the same way, even if everything were to be priced in Bitcoins, the exchange rate between Bitcoin and USD would still be significant, unless and until the USD ceased to exist.
But this is exactly the point - in countries where the local currency versus USD has had volatility comparable to BTC, it's been a big problem. E.g. in South Korea, where the volatility (and general upwards trend) in the Won last year was an order of magnitude less than BTC, the currency fluctuations have caused major losses and uncertainty for exporters. If you walk around Seoul, there are signs everywhere showing the current exchange rate.
Of course that will never happen in our lifetimes because in the real world people and companies have to pay taxes. The larger sovereign states — which exercise effective monopolies on violence over geographic areas — won't agree to accept payments in cryptocurrencies which they can't control. Even if you conduct transactions in BTC or something similar you'll eventually have to exchange it for the local fiat currency to pay taxes.
If/when the limit of 21 million is reached, the miners would/will increase the limit. Over time the incentives of BTC holders and BTC miners diverge. One of the many reasons a viable PoS is important, as it merges these two groups into one.
I know it doesn't specifically answer your question, but my understanding is that a majority of 'we accept bitcoin' businesses use a service to translate it in to their native currency at the time of sale (or very shortly after), and often will list their prices in the native currency (rather than BTC + constant adjustment).
As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase.
Why do you spend any currency when you can buy Bitcoins instead, let it grow and then sell them back into the original currency?
Any reason you can give applies to spending Bitcoin.
Not sure that really applies. You NEED to buy things. Rent/mortgage. Food. Transportation expenses. The guy's right - at this point, why would you ever spend BTC on those transactions when you can spend $ instead?
The reason why you spend any currency instead of buying BTC is because you need to. Not because you're willingly buying something unnecessary to forsake potential earnings in the future.
Right. I'm not in any disputing Gresham's law; if you have enough USD to cover an expense, you're surely spending it first.
But the idea that "the reason why you spend any currency instead of buying BTC is because you need to" is just plain wrong. You're essentially saying that people spend strictly what they need to live and save every penny beyond that, and can only wonder whatever led you to that conclusion.
Fascinating how many questions / comments in this thread question if crypto currency macro even has a use case in this world.
And for good reason.
Is it a currency? Yes and no.
Is it a store of value? Yes and no but sure is volatile.
Is primary use case illegal transactions? Definitely, sometimes.
Is it a anarchist mechanism to shelter wealth and detach from any nation state? Yes absolutely, probably most of the China money that drove the last price bump was getting cash out of China.
Is it a pyramid scheme? Absolutely in many cases, ICOs are making this way easier.
The answer I've arrived at, and why I am compelled by crypto is that in each use case above it has the potential to be the BIGGEST, at a scale never recognized before.
EG
Crypto could be the biggest currency. All it takes is adoption and figuring out scaling. Way easier to transact in a flat-world with a portable currency.
Crypto could be the biggest store of value. The beautiful math behind bitcoin (and others) is self-limiting creating real scarcity. With mass adoption will come stability.
Crypto could drive the majority of illegal transactions. If they figure out privacy more completely it's the perfect mechanism.
Crypto could become the "people's" wealth vault, and undercut nations ability to tax & control markets by truly privatizing wealth. All it takes is MOST of us to decide.
And finally, because it's entertaining to think about, Crypto could drive the biggest pyramid scheme the world has ever seen. There is absolutely no SOFTWARE of structural limitation to running a $1 trillion dollar end game pyramid on Crypto. In fact you figure out the privacy side, add in mass adoption and you could just leverage the current ICO structure for it.
I love crypto because it's boundless.
You have to have some imagination and blind faith to believe any of the use cases above will become true.
But the fun part is there is no limiter on any of those things becoming true.
>And finally, because it's entertaining to think about, Crypto could drive the biggest pyramid scheme the world has ever seen. There is absolutely no SOFTWARE of structural limitation to running a $1 trillion dollar end game pyramid on Crypto. In fact you figure out the privacy side, add in mass adoption and you could just leverage the current ICO structure for it.
Couldn't Crypto itself be the big pyramid scheme? It might never get adopted enough to become the defacto currency (can you imagine the gov't accepting BTC for tax payments?). In the meantime the SEC, or Congress, or maybe some big, multilateral "anti-money laundering" international agreement might do something that threatens it enough to start a run on the "bank", driving the exchange rate to nothing. Those who bought a ton a long time ago and who since cashed out would then be the winners. No?
Exactly. Though I think that so many people having invested so much money at such an early stage in this technology's development is the reason why the scrutiny is off the charts. Everyone, from naysayers to evangelists, need to cool off a bit and realize that this stuff is brand new. I'm 110% confident that cryptocurrency in general will yield some very interesting things in the next few decades. But I'm 0% confident that anyone today has a grasp on what those things will be specifically. We should all just be having fun with it and seeing what we can make.
What's weird is how often I see this argument and how loudly it contrasts with the speed of software development and the variety of preposterous things already being attempted in the space.
Even though Bitcoin was initially called a cryptocurrency, I think it's now becoming more clear that cryptocurrencies are more like "cryptoassets" [1] or crypto commodities.
Some of the people who started calling it digital gold a while back got it right. Using Bitcoin is more like using gold (not necessarily physical gold) to pay for stuff. Gold's value also fluctuates significantly over one year's time.
That's questionable. I believe there may be an issue with the economic model if there aren't sufficient transactions (once the issuance starts to slow). Not enough crypto for the miners. They then don't support the network. The network is then less secure. The price then reflects the lack of security.
There's thinking that the winning crypto(s) currency will be both gold + currency.
For an entire half-decade there have been payment processors that made it seamless for businesses to accept bitcoin and cash some or all of it out immediately if they wanted to.
If it takes a $100 million fund raise article for you to ask why everyone else isn't crazy, c'est la vie. People look for validation all manner of ways.
Coinbase also has merchant services that allow for immediate cash outs. This is probably one of cryptocurrency's smallest markets.
I'm not sure I follow what you're saying in the first two sentences? Neat to know that you can cash out immediately though; that makes more sense.
Are the vendors that accept BTC pricing their goods based on the current exchange rate for 1 BTC? ie. I price product A at $1500USD, I then say I accept BTC, so when someone puts it in the shopping cart it converts $1500USD to BTC and charges them that amount?
Sorry, just not familiar and trying to figure out how it works. I haven't came across anyone that accepts BTC (although I haven't looked either).
Some vendors and some listing sites show at least two exchange rates. National currency and the cryptocurrency of choice.
Stripe and Coinbase give the options of automatic conversion to the cryptocurrency exchange rate when displaying it.
Some merchants, usually more established ones like Microsoft, Newegg, Namecheap, typically won't show the bitcoin price until you chose that option and they generate the timed invoice.
Its also used to purchase other cryptocurrencies.
Trades ride the volatility of USD/BTC, as well as the XXX/BTC.
In extreme cases you have USD/BTC, BTC/XXX, XXX/YYY!
> When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer
Bitcoin Prices lists the exchange rate for many currencies on multiple exchanges.
When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis.
When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment. [1]
So it sounds like merchants accept Bitcoin and immediately convert to preferred currency based on the going BTC rate at the time of transaction.
It's the same as exchange rates, constantly being recalculated. Though crypotcurrencies are orders of magnitude more volatile. A seller will set their price in USD (or other established fiat), and convert the price to bitcoin at the time of transaction.
As far as cryptocurrencies are concerned, I personally view BTC as a good store of value; it's slow and expensive to transfer compared to other coins.
"As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase."
If it goes up so much, isn't it incredibly silly for you to not buy any? See, the reason why you haven't bought BTC yet is the same reason why BTC is still used to buy things. BTC might go down tomorrow, so why not spend it today and get more bang for your buck now.
Case in point: I've personally spent ~100 BTC over the years (buying domain names, Steam games, paying my CPA, buying on Newegg, eating at Charlie Shrem's bar in NYC, etc.)
>The value of it fluctuates so much that actually buying/accepting it seems incredibly risky. The price can go down just as fast as it goes up.
Why? If someone sends me 1BTC I'll just instantly sell 1BTC, it is tremendously unlikely that I'm gonna get screwed even if there's a 1-2 second delay.
>if the value of a BTC is going up, why would I use it to buy anything?
Because you want things and not numbers on the internet.
>As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700?
By being smart and not waiting to cash out. Your maximum loss will be the value of whatever buffer coins you hold, and I guess you could hedge around that too.
There is no 1-2 second delay tho; bitcoin transactions take 1 hour to confirm. At best, you might have 7 blocks between receiving, sending and being credited on the exchange.
Of course, this is possibly things like Litecoin are more stable as you can 'get in and out' in 15 minutes.
This was merchant payments. Essentially bitpay guaranteed the USD you would get at the point the transaction occurred. They didn't send the USD, that happened a day later.
So buyer pays in btc, bitpay handle the transaction, probably sell the same amount on an exchange at that point, tx confirms and they pay out the USD. The BTC then goes into the bitpay reserve for the next merchant.
Buy and sell limits prevent using coinbase to trade BTC like a stock unless you're talking extremely low limits or extremely long term (like a retirement fund, which I wouldn't recommend)
So the liquidity is weird, I can turn less than $15K into USD in a few moments, but $15001 will take me two weeks and is scary given volatility. I would argue this intentional as in this is why coinbase isn't very useful for drug money laundering.
I once bought a commemorative Swiss Army knife with Debian Linux branding and spent like $200 on nickel and time fees to buy a $100 knife. The numbers are only slightly exaggerated. Transferring money is incredibly expensive.
It is possible for a business to accept bitcoin and immediately have it converted to dollars so they are not exposed to the currency risk but get the benefits of irreversible payments, so little chance for fraud.
That's what 99% of the businesses that accept Bitcoin (that aren't themselves crypto-coin based businesses) do. Overstock is a counter-example. They keep 50% of the BTC they collect now as investment.
Can I get a bank account which works like a normal bank- accepts EFTs in dollars, has a debit card which pays in dollars, but where my balance is stored in BTC and everything is exchanged to/from BTC at the current rate on the fly? With enough of a balance, it seems like I'd be able to weather any fluctuations in the exchange rate and my funds would for the most part appreciate at a much greater rate than the measly interest on a savings account. Does that exist? Would that be a terrible idea?
Something like Bitpay guarantees the exchange rate for 15 minutes between invoicing the customer and conversion to USD.
More generally, you'd outsource those risks to dedicated finance companies and handle USD: Exchange rate risk, fee calculation risk, confirmation/double-spending risk, etc. Just like in how there is an entire shell game of risks being offloaded between companies when you accept credit cards, and no merchant directly accepts credit from an unknown customer.
Don't get hung up the price fluctuations if all you want to do is use it for transacting. You will only be exposed to BTC price fluctuations for a few seconds or minutes. There's a bilateral parasitic relationship between those who want to use it for transactions and those who want to speculate on its value.
>As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700?
You can accept BTC and convert it to cash instantly upon acceptance if you want.
Bitcoin transactions in which the payee retains the currency instead of immediately exchanging it for USD, EUR, GBP, or another usual currency are largely done for illicit purchases, especially those involving narcotics.
This is done because Bitcoin is extremely easy to launder through "tumblers". Unlike, say, paper currency, an individual 'unit' of Bitcoin (insofar as that exists) is not tracked with a serial number.
Additionally, in the US, the IRS is underfunded and prolific sellers are smart. Unlike banks, Bitcoin does not inherently have names attached to accounts/wallets, and so it is much easier to evade taxes than with typical currencies.
futures + debt based investing are the two canaries of market crashes. It was true in 2008, 2000, 1987, 1929, 1873, ... heck all the way back to tulip mania or arguably the financial panic of 33AD.
The question of "who's buying, how many of them are there, how long do they intend to hold for, and how are they buying?" you can't answer for sure, but when the capital to buy starts getting more scarce and people start leveraging other assets to continue buying...you'll get to a point where market velocity surpasses speculative velocity and the leveraging ability of the buyer.
In the physical world, this is a vendor of widgets on the street and a buying frenzy. Buyers spend money on the widgets and turn around and open up their own widget shop as sellers to feed the craze. Eventually enough buyers are converted into sellers, not enough buyers remain and the price crashes.
Futures contracts are a form of credit in this model. Bitcoin's crashed 4 times in 6 years - don't think it won't happen again.
Initially people did use to to buy stuff, but it there isn't really an advantage over credit cards. Now people just want to buy it because it keeps going up in price. Classic Pyramid get rich scheme.
As a someone looking make purchases with BTC; if the value of a BTC is going up, why would I use it to buy anything? It's gone up $700 in the last week; up $200 in the last 24 hours alone. I'd feel incredible silly spending bitcoin in a growth phase.
As someone looking to accept BTC for purchases, how do I do so with confidence that when I accepted $3400 today that by the time I cash out it's not worth $2700?
My confusion really comes from the buying/selling of legal goods; I can see the risk being worth it if you're operating outside the law. But really; if I'm selling something then there's a pretty good chance I'm buying my supplies with a fiat currency. I have hard and set costs I need to cover. If I accept BTC, there's a chance that when it's all said and done the BTC isn't worth what I paid and now I'm losing money.
Are businesses just expected to accept that risk? If so, how many businesses are actually willing to accept that risk? Or do we have to wait for the price to settle down before seeing more widespread adoption?