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I've noticed lately that more vendors/companies are accepting Bitcoin: Microsoft being one of the latest and largest.

As far as I can tell, though, these companies seem to (mostly) immediately convert the currency into "real" money at the current exchange rate, and the transaction is often only completed once your Bitcoins are sold.

Again as far as I can tell (with my limited knowledge of economics), this will increase the Supply of BTC on the open market (more coins being sold) without particularly increasing the Demand (people without BTC are likely to just pay cash, rather than going through the hassle of buying BTC with cash to use with the vendor)

Does this mean that as more companies accept BTC, the value will drop?

  • This isn't really a question, more of a discussion point, with no real right or wrong answer. What you have to bear in mind is that even though some companies may convert back to fiat, the consumer must have first acquired bitcoin, and that must occur before everything. Often people forget this point and only look at the conversion as affecting market price in a downward way, but that is balanced by the prior purchase. – T9b Dec 12 '14 at 14:57
  • Perhaps my question is "Is there any evidence to show this?", rather than "Is it a thing?" - and I'm not forgetting it, it's part of my original query: people seem to only spend BTC if they already have it either as an investment or from mining, people don't go out of their way to acquire it to make a purchase: ie they don't convert fiat to BTC and make a purchase, they just pay with fiat (note this isn't a "never", just that it seems to be the trend) – Jon Story Dec 12 '14 at 15:00
  • No there is no evidence one way or the other. This is pure speculation. People do go out of their way to get bitcoin. – T9b Dec 12 '14 at 15:05
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    Of course there's evidence one way or the other: whether it's known to be empirical or circumstantial evidence is a different question, but there is certainly a history of Bitcoin value and a way to find that value compared to Bitcoin adoption in large organisations. The question is speculative, for sure, but the answer need not be. – Jon Story Dec 12 '14 at 15:07
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    There are no guidelines limiting Bitcoin.SE to technical questions. While this question might not be easy to answer definitely either way, arguments and expert opinions can be given on the points of the question. As with any other question, however, low-quality answers should be downvoted, flagged, and/or removed. – Murch Dec 12 '14 at 15:36
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The point you bring up is fundamental to understanding how the bitcoin market operates.

The majority of companies that have grown quickly in the space help merchants accept bitcoin. As you mentioned, these merchants generally end up selling bitcoin for fiat currency. Companies that provide bitcoin payment processing have grown more quickly over the past year than consumer wallet companies (which help consumers purchase bitcoin). Consequently, the bitcoin price has experienced downward price pressure over the past year, since we find more market participants selling bitcoin than buying it.

As regulation and banking becomes more attainable for bitcoin businesses over the coming year, we should see consumer wallet companies grow, which would lead to more people buying bitcoin. Until then, expect to see continued downward pressure on the bitcoin price.

PS: I'm the CEO of bitcoin exchange Coinsetter.

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Yes, you are right. I think situation can change if people start accepting payments for their work in bitcoins. Everyone interested in bitcoins should ask boss to get part (or whole) of his wage in bitcoins. It could make the market more balanced.

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