Here's a potential scenario as some food for thought:
Apparently, the process was so simple for you because both you (the buyer) and Overstock (the seller) operate via Coinbase. Clearly, the process would have been less smooth if you had had to use your own wallet.
Now suppose that for this reason, Coinbase (as a placeholder for any service like it) manages to establish itself as the go-to payment provider via BTC.
Then, one day, they decide that since they always have to convert back to USD for the merchant, maybe it would be interesting to allow their customers to just keep a USD balance with them. It reduces their exchange rate risk, and they could pass some of the savings on to you, making this a tempting offer.
Suddenly, BTC is not in the loop any more, though in the end all parties would still be better off (lower fees than in the current credit card system).
Such scenarios are why I'm doubtful that BTC will "take over the world" in the sense that many proponents think. I doubt it will become a predominant means of payment in any industrial nation, and there won't be a Bitcoin-standard (analogous to a gold standard) either.
Let me explicitly clarify: That does not mean that I believe BTC's value will necessarily drop to zero within the next 100 years. It might, but it might not.
That's why I always have to laugh when I hear about such-and-such a company "now accepting bitcoin!". They don't get bitcoin, they get USD, so they don't care. Want to buy something from Overstock? Take your USD, buy some bitcoin, put it into your Coinbase account, Coinbase sends USD to Overstock. It's like buying an Amazon giftcard for yourself--just an extraneous step between your original USD and the USD that go to the merchant's account.
Astute observers will note that this is very similar to the credit card situation: Overstock does not accept USD, they accept Visa. (and MasterCard. etc.)
If I go to Europe and buy something with my Visa debit card, my account is denominated in USD, but they do some forex and the merchant gets Euro.
If I go to Overstock and buy something with my Coinbase wallte, my account is denominated in BTC, but they do some trading and the merchant gets USD.
Except you can use any bitcoin wallet so they accept bitcoin not coinbase. As absurd as it sounds when snapCard (a site that orders from other sites for you) first started they would only work with Coinbase. Enough customers complained that they had to offer a second option to accept bitcoin payments from anywhere.
Not necessarily. You can chose to receive Bitcoin directly although most companies opt to convert to USD instantly given Bitcoin's high volatility. If the volatility goes down, more companies will decide to keep their balance in Bitcoin.
It's just as simple to use a variety of other services to pay.
With any BTC payment service (including Coinbase), you also get the option to pay by QR code (if using a mobile wallet is easiest) or copy/pasting an address (if you're using a desktop/web client) which is at least as easy as redirecting to Coinbase, signing in (if you aren't already), and then redirecting back to the merchant's site.
The difference is that USD is inflationary while bitcoin is deflationary. If you have $10k in spending money sitting around would you rather it be appreciating by 2% every year or depreciating by 2% every year? Right now bitcoin is too volatile for this use case, but eventually adoption might settle the price down to the point where this makes sense.
That's only possible if the economy stops growing, the population stops growing, no new people use bitcoin, and no one loses any bitcoins, otherwise bitcoin will always be deflationary.
Deflation is better for holders of a currency. Price deflation means that the value of your currency is rising as compared with goods you want to buy.
The world is naturally deflationary. The price of things falls over time with increases in production efficiency, economies of scale and return on investment from capital stock.
It's only with persistent antics of rulers and governments that the current case of persistent inflation is the lived experience of most people. Going back through history, many generations on earth lived in a time when 'things weren't cheaper back then', but then all the other generations have suffered through a time when rulers/governments have granted themselves a monopoly on the monetary system, usually for the purposes of waging war or building grand monuments to themselves.
What is different about bitcoin is that it is essentially un-monopolisable like gold, but much more suited to high frequency, remote transactions. I don't have a dog in the fight but I set fascinated on the sidelines.
No it isn't, you're forgetting that with deflation comes less wages as well. Deflation is the whole economy, not just a few sectors.
> Price deflation means that the value of your currency is rising as compared with goods you want to buy.
Which is meaningless when you're getting paid less as well.
> It's only with persistent antics of rulers and governments
Alright, tinfoil hat guy, we're done. I need no lessons in Bitcoin from you, I hold them and actively trade them, you don't know anything about them I don't already know.
>> It's only with persistent antics of rulers and governments
>Alright, tinfoil hat guy, we're done. I need no lessons in Bitcoin from you, I hold them and actively trade them, you don't know anything about them I don't already know.
A strange comment. I read a lot on the history of monetary systems and currencies, and I'm yet to come across an instance where widespread inflation (and a severe decline in economic activity and living standards) wasn't caused by a ruler or a government deciding to debase a currency to either fight a war or an attempt to fix mistakes they had already made with public spending. That was true 2,000 years ago, it's been true in most centuries since, and it's certainly true now. It would take a particularly odd view of history to conclude that rulers and governments manipulate currencies to help out their citizens, rather than to appropriate from them.
Note that I am interested in Bitcoin precisely because of this history, because it represents something genuinely new.
Inflation isn't the devil, severe inflation is; predictable mild inflation is stimulative to an economy. The devil you should be paying more attention to is deflation, even mild deflation makes the economy sluggish. People might like cheaper things, but they don't like lower wages and retailers certainly don't like lowering prices continually.
Your comment leads me to believe you confuse money with wealth. If inflation is stealing your savings, you're saving wrong. Cash is not for saving, it's for spending. Save assets, not cash.
Well first off, no one has wages denominated in BTC, it's far too unstable to do that yet. People are being paid their USD equivalent in BTC, but their salaries in still denominated in USD.
> Why would you get paid less?
Because you are not an island, when an economy suffers from deflation the prices of goods and services have to be dropped and salaries get dropped as well because that's how business works. Your employer isn't going to sell his stuff for less but keep paying you more.
> Deflation means the wage you get paid is worth more. Inflation means the wage you get paid is worth less.
Yes, I know what the words mean. But the effects of inflation and deflation are far more complicated than just the meaning of the words.
Apparently, the process was so simple for you because both you (the buyer) and Overstock (the seller) operate via Coinbase. Clearly, the process would have been less smooth if you had had to use your own wallet.
Now suppose that for this reason, Coinbase (as a placeholder for any service like it) manages to establish itself as the go-to payment provider via BTC.
Then, one day, they decide that since they always have to convert back to USD for the merchant, maybe it would be interesting to allow their customers to just keep a USD balance with them. It reduces their exchange rate risk, and they could pass some of the savings on to you, making this a tempting offer.
Suddenly, BTC is not in the loop any more, though in the end all parties would still be better off (lower fees than in the current credit card system).
Such scenarios are why I'm doubtful that BTC will "take over the world" in the sense that many proponents think. I doubt it will become a predominant means of payment in any industrial nation, and there won't be a Bitcoin-standard (analogous to a gold standard) either.
Let me explicitly clarify: That does not mean that I believe BTC's value will necessarily drop to zero within the next 100 years. It might, but it might not.