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Comment by atwebb | Hacker News Reader

Things brings up a side point I can't quite understand.

How does the price of BTC, which is almost infinitely divisible, affect usage?

I see comments like "We're early, price can still rise, etc". Outside of a store of value any usage / institutional use for transactions wouldn't matter right? The BTC is a proxy for the money / collateral on the sides.

If I buy a hamburger with BTC:

If it is settled in BTC then the burger price would adjust often.

If it is settled in anything else, I just adjust the sat / slice of BTC I use.

Am I missing something? Outside of a store of value.

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Deflation. The price of the burger in BTC has largely been falling. Why spend your appreciating* bitcoins when they will bu worth more tomorrow. If the price is stable this effect goes away and you might as well spend them.

* Who knows if this will continue

Even if BTC hadn’t had it’s ridiculous boom since October, it’s still deflationary from the simple fact every day there are fewer bitcoins as people lose keys.

If the price of BTC keeps increasing then you would be foolish to spend it, lest you lose out on gains from holding onto it. There are lots of people who "punch themselves" for not buying Bitcoin back in 2013 or something but they forget that they wouldn't have the hindsight necessary to follow this strategy. For all we know you could have spent 10 Bitcoin on a pizza. But once you understand the deflationary nature, it becomes obvious that you shouldn't buy pizza, just hold onto it and do absolutely nothing.

Because to complete a bitcoin transaction it needs to be accepted on the block chain.

That incurs a relatively high flat fee (somewhere between $5-$50 dollars in recent times).

It doesn't make sense to pay this fee for small amounts (though is great for large amounts).

You can get around this by using exchanges and the equivalent of credit cards where multiple transactions are rolled up into one wallet to wallet transaction. This comes at the expense of volatility or if your bullish it comes at the expense of having to float a growing bitcoin reserve.

This is not an option for a lot of businesses, basically you need a 3rd party provider for it to make sense for these businesses and realistically that means they're getting cash value at time of trade and it's the provider that is taking on the volatility risk/reward of waiting to trade there bitcoin.

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