More trade... more trust... more btc 'banks'...? It is such a great system. It just needs to go main stream.

Any thoughts?


4 Answers 4


Adoption is limited because of a chicken and egg program. People don't accept bitcoins because nobody else accepts bitcoins.

Normally, the way you solve a chicken and egg problem is to get the cycle going by finding a niche in which the technology works so much better than other available solutions that adoption is possible even without a critical mass -- that is, by finding a killer app. The problem with bitcoin getting started through these kinds of mechanisms is the lack of stability in the price of bitcoin relative to national currencies.

For a while, speculation and investment were the killer apps that were driving bitcoin. The problem is that if this is the driving force behind a commodity, there will inevitably be bubbles and crashes. These drive down the use of bitcoin as a medium of exchange. The adoption cycle only works if the killer app drives widespread adoption, it fails if the killer app works against it.

So that's where we're stuck. But there are a lot of really smart people working on the problem. They're working on getting ATM machines to sell bitcoins, adding the ability to accept bitcoins into widespread point-of-sale systems, solving the problem of having to wait for confirmations, and so on.


Ideally Bitcoin needs a functioning economy, ie. merchants to spend coins with, and a demand to hold BTC in order to buy those merchant products.

Since the "killer-app" so far has been investing, I think we need more financial ingenuity with BTC financial products. I'd buy a Bitcoin Bond or CD, or pay to receive an MtGox dividend. One idea might be to start a Bitcoin fund which invests in (real) high dividend companies. Some inital BTC would be sold to buy the high dividend stocks (eg. on margin), but the dividends would be repaid to the investors in BTC. After a while, net BTC holdings should go up. Probably a minefield of legal issues with this though Any lawyers want to comment?


A killer feature is the ability to send BTC to the other end of the globe almost instantly without (or with symbolic) transaction fees. There is nothing else that does this and this is huge. Sending money is not such a big problem inside USA/Canada and that's why, I think, it's not as obvious for most of the BTC users. For legal entity it's a bit easier, but say that I'm selling something on eBay and I've got a buyer from the USA. What are the ways to receive payment?

  1. Cheapest way is to send cash through mail. Of course, this is also the most unreliable way and not feasible for any significant amounts. This is the cheapest option, but not the fastest, and there are no guarantees that you'll get the money. You can pay extra for extra guarantees, but post office doesn't endorse sending money through mail. I'm citing this only for the sake of completeness; you probably don't want to do this.

  2. PayPal is probably the fastest and cheapest viable option: $0.30 USD plus 1.9%-2.9% of the amount received. However, in my country, PayPal has enabled receiving funds only in the last year. There are still many countries where PayPal doesn't have full presence. Also, you have to be at least 18 years old and have a Visa credit card. There is also a risk factor with PayPal; they can hold your money if they suspect anything and you're at their mercy.

  3. Western Union is probably the cheapest alternative if you don't have PayPal; starts with 10% fee for small amounts, and falls to 4% for large amounts (>$1000). Also, both parties need to physically visit Western Union subsidiary.

  4. And finally, there's wire transfer. Wire transfer is much cheaper inside the USA, but USA banks charge pretty fat fee for international transfers - usually around $25. Additionally, receiving bank charges extra. In my case it's 10 EUR. Since fees are fixed, this is usually a good way to transfer larger amounts and pretty bad way to transfer small amounts. You need foreign currency account. Depending on the banks involved, it takes from 1 to 5 days until you receive money.

  5. If the buyer is in the USA, he can write a check and mail it. It usually takes up to a week to receive mail (overnight carries additional fees); then I have to go to the bank and cash the check. It takes my bank few days up to two weeks to deposit a check to my foreign currency account, and an additional day to transfer it to my account so that I can cash it. For sending money to USA, checks are not an option; the rest of the world doesn't use checks as much, and it would be pretty hard to cash my check in the USA bank. This is the slowest option, and some banks charge extra fees (fixed or percentage), some don't charge anything, some don't even want to cash the check. If sender's bank has account in receiver's bank, this usually takes only a few days. Otherwise, all bets are off.

  6. If you're a legal entity (business), you have one more option - you can accept credit cards. This is the only no-fuss option for the buyer. In my country, bank fees start with 2-2.5% for very large companies, 4.5% for small companies, and go up to 6%. There are additional startup fees and monthly/recurring fees for payment processors and so on which can drive costs up. You get your money once a month, 1 month or more after the payment itself.

So, in summary, international money transfers are pain in the ass. PayPal (and similar services) are probably the best option. If you're a business, you'll want to accept credit cards. It will cost you either way. Apart from sending money in the envelope, you'll typically pay from 2-10%. There are exceptions; wire transfer can be less than 2% for larger amounts, and you can easily pay more than 10% if you don't know what you're getting into. You can have your money almost instantly with PayPal, or wait for more than a month.

BTC is faster, cheaper and simpler than any of the above methods. Of course, I must add - you can withdraw BTC with PayPal so PayPal limitations apply, or it can take time if you buy cash from your local BTC trader in person. Things get a bit more complicated when exchanging funds to or from BTC. But BTC<->BTC payment itself is a dream come true for international money transfer and a match made in haven for eBay and similar services.


In order for people to accept Bitcoins, some of them have to understand some basics on how it works. Currently there is one appealing video for Bitcoins that doesn't go into much details of underlying principles, and a number of precise sources on the nitty-gritty details, but not much in the middle. It should describe the protocol, its advantages and so forth, without focusing too much on "make your own money for free". There are enough miners already for this stage, but we still need more people doing other things with Bitcoins.

This brings me to the next point - in order to make Bitcoins more appealing, we need more things to do with them. One could probably start with some digital goods, like MP3s or other files like that, which have little cost to "make" per unit, so one could largely ignore Bitcoin price fluctuations. The items sold need not be mainstream, there are probably a lot of indie people that make music, games, art, etc. that could be interested in getting some exposure by trading off some profit margin. After all, if you can make money by giving your music out for free, one could probably do similarly with Bitcoins.

Third way to make Bitcoins more accepted is some PR. Support some charities, get good publicity, etc. For now a lot of people that hear of crypto-currencies associate them with hackers and what-nots. This works negatively for Bitcoin image when concerning non-tech-savvy people. If they started associating them with, for example, Child's Play, less people would be rallying against them, and more would want to know something about it.

Last notable way to promote Bitcoins is by discovering some niches that are stagnant under the current system, but could use improvement by using coins. Here you have to be conservative and creative. For example, are there any people that trade internationally often, require some non-reversable transactions, or want to remain anonymous with their donations? One could try financing some human-rights activists in some oppressive countries, support organizations like WikiLeaks, or try making solutions for such people.

  • 1
    +1 excellent observation about association with hackers - PR to promote uses in charity/education/health would do a lot to push it to the mainstream.
    – Gary
    Oct 21, 2011 at 8:23

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