Comment by sharpneli | Hacker News Reader

Comment by sharpneli | Hacker News Reader

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> So the author ought to explain to us why he thinks such increases would suddenly stop

Because they have already stopped. The price of bitcoin has only dropped for the last year. You should give a reason why the drop should stop and it would start to rise again.

> The author completely ignores the economic incentive of transactions within the Bitcoin economy itself. When I give 1 BTC to my father, he can spend 1 BTC on Dell.com. No fiat conversion takes place.

Dell does not accept bitcoin. Dell accepts dollars from bitpay. The expense is paid by bitpay having a worse exchange rate than the normal bitcoin exchanges.

So yeah there is fiat transfer happening.

Out of curiosity do you know any single big retailer that actually accepts bitcoin in the sense that they are not being actually paid in fiat?

> Yet 100,000 merchants are using Bitcoin...

Merchants might use bitcoin. But customers unfortunately are not. Wordpress just stopped accepting bitcoin because they got only 2 purchases per week using it. Data from overstock suggests that it's far more common phenomenon.

Thanks to bitpay there is not really any reason for merchants not to accept it though. They get paid in fiat and they don't get any expenses from accepting it.

> Because they have already stopped

No, tx/block certainly NEVER stopped increasing: https://blockchain.info/charts/n-transactions?showDataPoints...

And price is cyclical. After the bubble of June 2011, it took 21 months to surpass its previous high of $30. What makes you think this bubble and price correction is different? In fact, Bitcoin is on the rise since its $150 bottom on January 14th so it would indicate the drop in fact did stop.

> Dell does not accept bitcoin

This is irrelevant to the point the OP was making: transactions that remain within Bitcoin incur no fiat exchange fees. I sell something on craigslist for bitcoins, I use these bitcoins to pay back lunch money to my coworker, he gifts the bitcoins to his brother, his brother sends the bitcoin to his son overseas for remittance, etc. All this with zero fiat exchanges.

> But customers unfortunately are not

Growth is not through-the-roof, but it certainly is there: http://avc.com/2014/10/bitcoin-adoption-metrics/ You cannot quote 2 anecdotes and infer an industry-wide trend. The plural of anecdotes is not data. Anyway it's again irrelevant to the point the OP was making: the blog post's argument is flawed, not everybody who uses Bitcoin is doing it for illegal purposes.

tx/block did not stop increasing. But the transaction volume in USD has been flat recently due to the falling price: https://blockchain.info/charts/estimated-transaction-volume-... The amount of value transferred in bitcoin network has seen no growth at all lately. On the other hand it has not diminished either.

I simply wanted to point out that you cannot cherry pick the time periods. Right now on a 6-12 month timescale bitcoin has been absolutely terrible investment.

You are right that transactions that remain within Bitcoin do not incur transaction fees. However those transactions do not include the big merchants, which you did use as an example. So yeah you can give bitcoins to your friend without a fee but you cannot buy anything from a shop that 'accepts' bitcoin in practice without a fee.

The annual revenue of the merchants in those slides is the total annual revenue. There is no mention whatsoever on how many purchases they have that is being made with bitcoin. So it's useless data in that sense.

Do you happen to have any data about the purchases made specifically with bitcoin?

> But the transaction volume in USD

This is again irrelevant to the point the OP and blog post author were making. If the number of tx/block continues to increase, then the current level of network security will increase, all else being equal (eg. USD price of Bitcoin staying flat).

> on a 6-12 month timescale bitcoin has been absolutely terrible investment

Absolutely, but long price downtrends have happened multiple times in the past. That's why I asked "what makes you think this bubble, as opposed to the last N bubbles, is clearly different and clearly marks the end of Bitcoin?".

> which you did use as an example

Well I didn't, the OP did :)

> There is no mention whatsoever on how many purchases they have that is being made with bitcoin.

I was pointing to these slides because they show a multitude of metrics increasing. It seems unlikely bitcoin purchases would be declining given everything else is increasing: number of bitcoin startups, number of wallets, number of merchants, number of daily tx, etc. Individually these metrics mean little, but all combined... Heck we went from 0 to 100,000 merchants since 2009, so it is certain bitcoin purchases have increased in that time frame. Why would you doubt that?

> Do you happen to have any data about the purchases made specifically with bitcoin?

Very few merchants publish their bitcoin metrics. But 2 come to mind: Gyft and Newegg said that their 2014 Bitcoin black friday sales were the best ever: http://blog.bitpay.com/2014/12/09/bitcoin-black-friday-2014-...

OP made the argument that it's enough for the price to go 10x and transactions 25x. That's why I pointed out the price. If the price stays down the transactions must go 250x.

I didn't say this is necessarily the end of bitcoin. There are intermediate stages between "to the moon" and total crash. Personally I think it's quite likely that bitcoin will simply stagnate and remain little used.

I don't doubt that the bitcoin purchases have increased since 2009. It's just that the raw numbers which we do have (your link did not have any hard numbers) show that it's not really doing that well when absolute sales figures are taken into account.

The fact that only hard numbers which we do have show poor adoption indicates that it's the same elsewhere, otherwise we'd see bitpay and others jumping up and down and telling the great numbers to everyone to increase the adoption even more.

> If the price stays down the transactions must go 250x.

I understand you now. That's right. But my point was the price is unlikely to stay down... Anyway this debate of whether the price will go down or up is a little silly: even assuming the price stays down it will literally take DECADES for the network to "need" to increase the tx/block by 250x to maintain the same level of security. The bitcoin reward is halved every ~4 years, so we only need the tx/block to double every ~4 years to maintain the same level of security. So far Bitcoin as MORE than met this need: the tx/block has more than doubled every year since its creation.

> I didn't say this is necessarily the end of bitcoin

You were saying you did not believe the price drop would stop. Now you are saying it will quite likely stagnate. That's quite a different statement.

> It's just that the raw numbers which we do have show that it's not really doing that well. > [...] > The fact that only hard numbers which we do have show poor adoption indicates that it's the same elsewhere.

Yes we know that for merchants accepting Bitcoin, it represents an incredibly tiny fraction of their total sales. But why do you think this means Bitcoin is not doing well? A brand new payment technology unlike anything else going from zero to representing 0.1% of the sales of 100,000 merchants worldwide is a significant accomplishment in my opinion. I say 0.1% because 0.x% seems to be approximately what the average merchant reports. For example Overstock reported 0.2% of their sale revenues were in bitcoins for 2014.

Also why do you extrapolate your single anecdote (WordPress shutting down Bitcoin sales) to an industry-wide trend? Why do you ignore 3 other anecdotes that contradict your opinion (Overstock consistently doing 0.2% of their sales in bitcoins = $3 million/year so they are far from stopping to accept bitcoin, Newegg reporting their best bitcoin black friday sales in 2014, Gyft reporting the same)? Why do these 4 anecdotes, whether positive or negative, matter at all, when I showed you more indirect metrics (avc.com) that obviously show strong overall adoption? The avc.com metrics may not show actual bitcoin sales figures, but clearly they indicate something.

To answer your question: I think BitPay and Coinbase don't release current numbers of Bitcoin payments processed because this is sensitive financial data for competitors. But surely VCs wouldn't be pouring tens of millions of dollars in them if they showed no growth, don't you think?

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