Bitcoin Acceptance Among Retailers Is Low and Getting Lower

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Rodebaugh
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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby Rodebaugh » Thu Jul 13, 2017

silverpv wrote:
Rodebaugh wrote:So fees for small transactions are to blame?
How do fees compare to the 0.5-3.5% credit card companies charge retailers per transaction? Who does this fee go to and can it be avoided? Why were some retailers so keen on acceptance early on dropping off now?



Fee's are simple depending on the currency used. Bitcoin is not good for smaller purchases, it is getting more expensive and slow. On the otherhand there are other currencies where the fee is only a few cents to transfer decent amount of cash, say a < $3k. This fee goes to the computer network processing the transaction, so the people running the 'supernodes' or 'miner' or 'validators' or 'stakers' depending on what type of incentive mechanism they are using. That goes towards the cost of electricity and server cost. This type of cost can't be avoided because there is a cost to run machines, buy them, and the internet. Most CC companies charge a std of 2.9% + $0.30 is enough. The $0.30 is the same thing but nearly 10x the cost vs crypto. Ethereum will typically move blocks at $0.05c or so for several thousands. You can choose depending how fast you want it to get confirmed. This is specifically for crypto to crypto transfer. If you do crypto to fiat, there's a fee for taking out liquidity.

The problem for retailers is when there's a network slowdown the costs to transaction goes up and the price of the currency fluctuates. Just like the internet in the early 90's. Sometimes retailers aren't ready for it because their infrastructure is not ready, it doesn't fit their model, or the cost to rebuild everything from scratch is too high. The cost over time comes down as experience gets better and the costs come down. For instance, in the 90's what was the cost of internet, a phone line for 56k? Now what do you get for the same price for VOIP phone and internet?

Currently there's a batch of blockchains that aim for business. Bitcoin is a volatile currency, Ethereum adds business logic on the public network, newer blockchains are focused for business problems. Ethereum requires you code everything from scratch in a new language where there's not a lot of expertise. The newer chains recognize this problem and built compilers in the blockchain to build "off chain", "side chain", "private chain" logic. If a company runs it internally there are no fees. Developers can use a familiar programming language they already know so and the complier translates that to blockchain code there is a move in this direction in the works and where i'm investing. The question i'm asking is who will be the top companies that execute on point.


Thank you. I appreciate the response and time taken to type it out. I learned. :wave:

I have a ton more questions for another day....or some independent research to do first.

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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby Turtle » Fri Jul 14, 2017

This is a pot of crap from a bunch of fuddy duddies. There are two reasons for decline in adoption: 1) proponents dont keep evangelizing. They think once they convince a retailer, its done. No, things change, and they need reminders. 2) The transaction fee problem. This is caused by the software limits and the excessive demand for transactions that it was not built for (which was not foreseen unfortunately and oddly). Developers are working to resolve this, but there is a lot of debate, which is good, to make sure the right decision is made. Retailers are too terrified (unfoundedly given its rise) to hold Bitcoin, so they try to cash it out as soon as they get it. Because the transaction fees eat a lot of this, its expensive to cash out, so they drop out. Oh and I guess 3) the speculation value is making people hesitant. Ive received bitcoin a few dozen times as payment, but only spent it I think twice. Now, Im holding on even tighter.

Rik Bitter wrote:I think it's a valid observation. Bitcoin was designed as digital currency so it's rate of acceptance as a medium of exchange for goods and services is relevant. I know a lot of folks here are on board with cryto-currencies but clearly not everyone is convinced yet. It's volatility makes it questionable as a store of value or unit of account.

There has to be something called the present bias fallacy. People only seem to be capable of thinking about now, not about the grand picture. The dollar when it started was a volatile mess until we won the war, paid the debts, and settled in as a country. Bitcoin has only been around a few years and is a completely new concept. To expect it to be stable is ridiculous. Its only volatile if you dont understand it. People are freaking out about it bouncing between 2300-2900 for months now. You would think they would get it that its going to do that. Someone tells me it crashed to 2300 again. I say, oh ok. Unless you invested at 2900 and it dropped and you want to sell suddenly, you shouldnt care worth a damn. Ive seen it rise from $20 (when I shouldve bought at least one hehehe), and started buying in around $250. Im delighted where it is and where its going. I understand how it works and how its future is, so Im not worried one bit. The volatility will settle out when a few things are resolved and it gains more acceptance.

Rik Bitter wrote:Perfect unit of account? How the hell can you use Bitcoin to represent the real cost of goods, services, assets, expenses, liabilities, etc when a 20% shift in it's value against the dollar (an accepted unit of account) are routine. You can't expect people to need a set of brass ones to deal with crypto and have any real level of acceptance in business and the general population.

I suspect that what you've laid out will happen, however not until there is a simple and accepted interface for both retailers and customers. Are there people out there working on such an interface? Who are the big players in that space?

How do you use silver when it shifts by 5-20% at a time (it has and you know it)?

Its a lot easier than it used to be. There are many simple apps and loads of exchanges unlike when Mt Gox was the main player and the only bitcoin ATM in the world (which I saw and laughed at) was a bunch of parts in a box. If you would like some recommendations, let me know. Unfortunately, the days of cheaply sending you a dollars worth are over due to the transaction fees. :(

Rodebaugh wrote:So fees for small transactions are to blame?
How do fees compare to the 0.5-3.5% credit card companies charge retailers per transaction? Who does this fee go to and can it be avoided? Why were some retailers so keen on acceptance early on dropping off now?

There seems to be a minimum fee right now. It used to be comparable across the board, but now to send a dollar in BTC (~0.0005 BTC) costs another dollar, so only large transactions make sense. The fee goes to the "miners" who process the transactions (which is how new bitcoin is made--it solves a math problem which verifies the transaction). It might be theoretically avoidable between two miners, but Im not sure about that because they would still need confirmations. Thats why, the transaction fees have gone up too high, so its expensive for them to cash out. Unfortunately, retailers want to squeeze every unit of value out asap, so they dont understand the idea of holding on to it as an investment.
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BotanicusRex
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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby BotanicusRex » Fri Jul 14, 2017

>>Unfortunately, retailers want to squeeze every unit of value out asap, so they dont understand the idea of holding on to it as an investment.<<

Possibly it's due to that ancient business necessity called cash flow.

Disclaimer: I subscribe to old school business economics, and am not enlightened to the "it's different this time" methods of crypto currency business accounting.
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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby dae2dae » Fri Jul 14, 2017

BotanicusRex wrote:>>Unfortunately, retailers want to squeeze every unit of value out asap, so they dont understand the idea of holding on to it as an investment.<<

Possibly it's due to that ancient business necessity called cash flow.

Disclaimer: I subscribe to old school business economics, and am not enlightened to the "it's different this time" methods of crypto currency business accounting.

it's hard to replace inventory sold with wishes that an "investment will flourish" :duck:
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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby Long John » Fri Jul 14, 2017

Transaction fees: Credit card processors charge retailers 2-4%, so stores are quite used to that cost of doing business. It's built into their prices.

Transaction speed: Now that is a real problem with Bitcoin, currently. It can never be a mainstream POS form of payment while it can take hours to wind its way through the blockchain ... even half a day, in my own experience. That has to be fixed. Preloaded BTC cards would help, but doesn't really address the network problem.

Have you ever had the woman at the counter say "I'm sorry but our credit card computer is updating, we can only take cash." If you don't have enough cash in your pocket or a check, you put your items back and walk out to the car, fuming. The problems foreseen with BTC exist to some extent with credit cards.

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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby dae2dae » Fri Jul 14, 2017

Long John wrote:
Have you ever had the woman at the counter say "I'm sorry but our credit card computer is updating, we can only take cash." If you don't have enough cash in your pocket or a check, you put your items back and walk out to the car, fuming. The problems foreseen with BTC exist to some extent with credit cards.

or they make the call and enter the info manually, although most retail workers could give two sh*ts and just lose the customer
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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby SilverDoge » Fri Jul 14, 2017

dae2dae wrote:
BotanicusRex wrote:>>Unfortunately, retailers want to squeeze every unit of value out asap, so they dont understand the idea of holding on to it as an investment.<<

Possibly it's due to that ancient business necessity called cash flow.

Disclaimer: I subscribe to old school business economics, and am not enlightened to the "it's different this time" methods of crypto currency business accounting.

it's hard to replace inventory sold with wishes that an "investment will flourish" :duck:

Cash flow for business is the biggest constraint in this space. Businesses need to hold crypto and then pay their vendors, wholesalers, distributors, etc in crypto instead of cashing back to fiat, but we aren't there yet due to volatility and the cash flow issue.
What it will take is either big companies with a comfortable free cash flow, riding the swings and demanding their business partners transact in crypto. Not sure how likely that is. The other (and more likely) option is that innovative businesses that want to cater to crypto adopters will use it and transact business to business where possible and slowly but surely more adopt it. Its a slow process while you're living it, but one day we'll look back and see how quick it really all happened.
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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby silverpv » Fri Jul 14, 2017

SilverDoge wrote:
dae2dae wrote:
BotanicusRex wrote:>>Unfortunately, retailers want to squeeze every unit of value out asap, so they dont understand the idea of holding on to it as an investment.<<

Possibly it's due to that ancient business necessity called cash flow.

Disclaimer: I subscribe to old school business economics, and am not enlightened to the "it's different this time" methods of crypto currency business accounting.

it's hard to replace inventory sold with wishes that an "investment will flourish" :duck:

Cash flow for business is the biggest constraint in this space. Businesses need to hold crypto and then pay their vendors, wholesalers, distributors, etc in crypto instead of cashing back to fiat, but we aren't there yet due to volatility and the cash flow issue.
What it will take is either big companies with a comfortable free cash flow, riding the swings and demanding their business partners transact in crypto. Not sure how likely that is. The other (and more likely) option is that innovative businesses that want to cater to crypto adopters will use it and transact business to business where possible and slowly but surely more adopt it. Its a slow process while you're living it, but one day we'll look back and see how quick it really all happened.



Yes, old school economics fits blockchain perfectly, no missing records, 100% accountability, no fuzzy math. What doesn't fit is bitcoin as a daily currency. There are problems like getting it to be fast enough and stable enough for the population and # of transactions we have. There are companies out there that are trying to solve this very problem. To stabilize currency they peg it to fiat. You get the benefit of lower cost transactions, but you are still using fiat. For main stream adoption, i see this as a necessary evil. The gain is cheaper transactions and a more secure network.

Mainstream does not care about anonymity, I want to collect my points and help me when i need it, like returns. There's a lot of 'training' that has to happen, a lot of it is undoing the credit addiction we have and consumerism. We're so trained to 'borrow' money going back to a cash based (hold it you own it) system. Credit cards are all based on leverage. It's the thing people love to complain about but are so addicted its hard to get off of it. So it will take time. We're in the very early stages still of people running around trying to figure things out in a very short amount of time. The tech is at LEAST 2 years out for solid apps to get built and gain adoption. a year ago btc was $600 and alt-coins was under the radar. Now its more mainstream but it isn't. So, its okay if folks aren't ready for it. The tech itself is not ready for the spotlight but its getting there and a lot of very passionate people will build careers building it.

One huge problem is the fight for control over bitcoins direction. Because there is no 'real' leadership, there's a power struggle which is causing the instability. This affects the entire ecosystem because it looks like the community can't get their sh!t together and they can't. There' so much infighting it makes Dems v Re look like a different team in the same sport. It's pretty ugly man. The inability to make decisions that push the technology forward is what is really hampering growth for bitcoin in my opinion.

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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby Tractor Man » Sat Jul 15, 2017

Sorry if this i a dumb question. I don't really know anything about it, I'm a headline-reader of sorts. I just don't get it. Don't the bitcoin miners have warehouses full of the most powerful computers in the world? It is astonishing to me that one of the main problems is that they can't handle the calculations involved to make simple transaction at whatever volume. That tech is already here, I used my debit card twice today in practically an instant both times.
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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby SilverDoge » Sat Jul 15, 2017

tractorman wrote:Sorry if this i a dumb question. I don't really know anything about it, I'm a headline-reader of sorts. I just don't get it. Don't the bitcoin miners have warehouses full of the most powerful computers in the world? It is astonishing to me that one of the main problems is that they can't handle the calculations involved to make simple transaction at whatever volume. That tech is already here, I used my debit card twice today in practically an instant both times.


Short answer: bitcoin was programmed with a 1MB limit on the block size. Not a problem when the network had fewer transactions per second. The Bitcoin protocol can be changed, but it takes a near consensus between all interested parties to change it. Miners, users, programmers have different interests, goals, and visions so they aren't always aligned. While everyone wants to see bitcoin succeed, the definition of success varies. Some want to be able to buy the proverbial cup of coffee with bitcoin, others want it to be the crypto store of wealth, etc. This is what happens in a decentralized governance structure where no one person is in charge, and why many alts are seeing success with differing governance structures and methods of compensating those maintaining the network. Bitcoin will be fine, but it is about to go through a bumpy ride over the next 4-6 weeks. Hold on for the ride.
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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby silverpv » Sat Jul 15, 2017

tractorman wrote:Sorry if this i a dumb question. I don't really know anything about it, I'm a headline-reader of sorts. I just don't get it. Don't the bitcoin miners have warehouses full of the most powerful computers in the world? It is astonishing to me that one of the main problems is that they can't handle the calculations involved to make simple transaction at whatever volume. That tech is already here, I used my debit card twice today in practically an instant both times.


It's not dumb at all, it is good to ask these questions. The difference is night and day between the two debit/crypto network. I actually wanted to do a video on this subject because i think it is quite intriguing. Crypto currency is literally people like us going up against elite gov't and corporations because the people/citizens keep getting taken advantage of. Since revolution of the past of overthrowing gov't is no longer feasible, this is the first iteration of a global peoples revolution in its infancy. That description might be a bit over the top but if you look at the spread of crypto, it is global and what really differentiates it from the dot bomb. Its one of the first times the people of the world are getting behind something at the same time and not nationalistic.

You might ask, why can the equipment be so different? The difference is the security is built into the protocol itself. Everything is taken care of for you with blockchain protocol when it comes to security, authorization, and transfer. All these things make it slower, from the level of encryption to the safeguards against cheating the network. In the debit/credit world, you offload that to the credit card company. What seems like an instant transaction is really not. This is why you see the word "pending" on statements right when you use your card, similar sending bitcoin payment. The key difference is the cc gateway, visa authorizes the payment first for the 2.9% fee (+/- negotiated rate), the settlement follows. The bank doesn't actually get the money until settlement which usually posts a day later. So in essence you borrow first, this is why over-drafting exists and banks just slapped a fee on it. Hence my post above it, we've become conditioned to borrowing money without realizing it. I made a video at the bottom to illustrate the differences at a very high level.

This is the datacenter of the VISA credit card facility.



This is a Chinese bitcoin mining outfit.



The difference between a crypto payment vs. a credit payment


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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby natsb88 » Tue Jul 18, 2017

Related article that came out today:

https://fee.org/articles/how-i-paid-for ... n-bitcoin/

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Re: Bitcoin Acceptance Among Retailers Is Low and Getting Lower

Postby SilverDoge » Wed Jul 19, 2017

natsb88 wrote:Related article that came out today:

https://fee.org/articles/how-i-paid-for ... n-bitcoin/


Nice article. Thanks for the link.

A great point the author made in regards to a cool feature of spending bitcoin on his card, was about educating others who haven't heard of it or making new friends who are already into it. Our day to day transactions can become monotonous, and this type of interaction can brighten the day and help educate the public.
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