Why I Won’t Encourage Businesses to Accept Bitcoin

There are several reasons taken together that lead me to conclude that I should not promote bitcoin to businesses.  Here in New Hampshire there are several businesses that accept bitcoin and I have taken advantage of this fact.  The environment that I want to live in would have even more businesses accepting bitcoin.  However, I won’t promote that businesses accept bitcoin.

Businesses exist for one reason

Businesses exist for only one reason, that is to make money.  As with any voluntary exchange, all parties should benefit.  If you sincerely believe that any extra business that accepting bitcoin would bring in would cover the costs associated with accepting bitcoin, have at it.  Large businesses with many employees might incur a significant training cost however.  Efficiency is difficult to obtain for any business, and introducing outside factors could disturb that efficiency.  It’s hardly ever clear that an extra $100 or even $1000 of sells would make the transition worth it.  This is even more dramatic for low margin businesses such as food service.

Bitcoin cannot support more use

Even with only small 300 byte transaction, bitcoin can only support 175 million transactions in a year.  This means that about half the U.S. population (or 2.5% of the world population) can use bitcoin at most once a year.  This is a hard cap, there is no more capacity without changes to bitcoin that are slow to be rolled out, in my view years late.  As bitcoin gets more use, this problem only gets more severe.  Without being a business that appeals to bitcoin users, this is a small number of possible transactions to promote a business try to capture.

Network congestion makes fraud more likely

During peak use bitcoin blocks can be full.  This results in transactions with lower fees not being confirmed.  In the worst case a transaction will never be confirmed.  This creates an environment where double spends are possible.  What’s worse is that accidental double spends are possible.  What used to be the result of a malicious individual can now happen without trying.  “No double spends” used to be a selling point of bitcoin.  Now it can no longer be assumed.  It does not seem that a solution to this problem will be forthcoming.

Technical knowledge is daunting and helpful

When promoting bitcoin to a business owner, there should be a desire to provide full disclosure.  Two years ago, it could be said that there are reasons payments could not go through, but that’s unlikely.  Today this statement cannot be honestly made.  Given enough time, it’s certain that a business will run into business will run into problems.  Having the technical knowledge can help.  Rebroadcasting a transaction paying the business could help mitigate this problem.  However, this puts the onus on the business owner.  Because the bitcoin network is unstable, explaining the technical facts becomes more important and more difficult.

Bitcoin may be right for some businesses

Of course this argument does not apply to every business.  Businesses based around bitcoin probably will still need to accept bitcoin.  Also online businesses may want to accept bitcoin because of the ease of payment it offers customers.  Online businesses without instant shipping can avoid pitfalls of the bitcoin network congestion quite easily.  The internet remains the natural habitat for bitcoin.  I also feel that a business owner that likes bitcoin for ideological reasons may want a customers bitcoin expertise.  Most hurtles are removed if a business owner finds value in bitcoin independent from their business.

Consider the merchant expierence

If a merchant integrates bitcoin now, and has a bad experience.  It is less likely that the merchant will be open to adopting bitcoin or bitcoin-like payments in the future.  Perhaps it would be best for sustainable scalable solutions to be introduced before promoting integration into the crypto economy.  Bitcoin has given us a glimpse of what is possible, and it’s likely that more streamline technology will be available in the future.

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Episode 162–The Brexit Happened, Now What?

The Brexit happened, now what?  Negative interest rates take hold in Switzerland.  No clear crypto leader.

 

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Notes:

Traditional Markets

Gold $1341.9

Silver $19.75

Oil  $49.28

Dow Jones 17,949

30 Year US Treasury Yield 2.24%

Crypto Markets

BTC $658

LTC $4.18

DASH $7.05

Ethereum $11.09

 

News:

Brexit:  It happened now what?

http://www.bbc.com/news/business-36699642

Swiss interest rates go negative (even the 30 year)

http://www.wsj.com/articles/swiss-national-bank-keeps-interest-rates-steady-1466063646

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Episode 153–FOMC, QE4, and Shapeshift Hack

Bitcoin NG white paper, Federal Reserve meeting next week, is QE4 on the horizon?  BTCC deploys more nodes,  ShapeShift Hacked is it an inside job?

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Traditional Markets

Gold: 1232.20
Silver:  16.95
Oil 43.75
DJIA 18003
30 year.  2.70

Crypto Markets

Bitcoin  462 up over 10%
Litecoin 3.51
Ether 8.09
Dash 6.59

News

ShapeShift an inside job?

http://news.softpedia.com/news/shapeshift-bitcoin-trader-hack-was-inside-job-says-ceo-503057.shtml

Bitcoin NG

http://hackingdistributed.com/2015/10/14/bitcoin-ng/

FOMC meeting

http://www.bidnessetc.com/67733-federal-reserve-bank-april-meeting-expect/

WSJ

http://www.wsj.com/articles/streetwise-markets-putting-faith-in-qe4-1455581461

Node Centralization

http://themerkle.com/btcc-deploys-more-servers-and-announced-bilingual-mining-pool-website/

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Episode 152–Legal Conference and Brazil Prime Minister Impeached?

Lisa reports on a Digital Currency and Blockchain Technology National Institute conference out of Washington DC.  Brazilian prime minister might be impeached today.  IMF will try to spur more economic growth.  Can they really outlaw math?

 

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Show Notes:

Traditional Markets

Gold: 1234.10
Silver:  16.22
Oil 40.40
DJIA 17897
30 year.  2.56

Crypto Markets

Bitcoin  427
Litecoin 3.24
Ether 9.57
Dash 6.44

News

Mycelium Pulled from Apple

http://bitcoinx.io/news/articles/mycelium-removes-their-wallet-from-the-app-store-temporarily-stops-support-for-ios/

Lisa Reports on DC

Impeach Brazil’s Prime Minister

http://www.ft.com/intl/cms/s/0/36ba7be6-02f9-11e6-af1d-c47326021344.html#axzz467D1IR00

IMF to Spur Economic Growth?

http://www.reuters.com/article/imf-g20-lagarde-idUSS0N17400X?feedType=RSS&feedName=usDollarRpt

Outlaw Math?

https://rietta.com/blog/2016/04/08/feinstein-burr-encryption-bill/

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Episode 151 – Open Bazaar Developer Chris Pacia

Open Bazaar Lead Back-end Developer Chris Pacia joins us in-studio to talk about OB and his viral video about the 1.4 Million dollar TSA app. The Panama Papers drop a bombshell on the elite. Senate Bill seeks to destroy strong encryption in the United States. Japan runs out of Bonds to sell.

 

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Continue reading

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Matt Whitlock and Chris Pacia Debate Replace by Fee Proposals.

Darren moderates while Chris Pacia and Matt Whitlock discuss the merits and drawbacks of four different Replace by Fee proposals.  This is educational as well as a spirited civil discourse.

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Episode 122 – Interview from Ghana, No Rate Hike From the Fed

We interview the leaders behind BitUnit in Ghana, Africa and talk about their upcoming conference. The Federal Reserve decides not to raise interest rates this month – hype has already begun that they will do so next month. Debt ceiling woes are clamoring once again. 9 big banks look to the blockchain technology.

 

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Show Notes:

Traditional Markets
Gold up $1140
Silver up $15.18
Dow down to 16,384
Oil up $44.98
30 year US Treasury down slightly to 2.934%

Crypto Markets
BTC steady at $230
LTC $2.83
ETH $0.95

Schedule

Stay tuned for discussion about the FEDs recent decision and what it might mean for the markets. First up we have an interview from

http://www.bloomberg.com/news/articles/2015-09-17/bitcoin-is-officially-a-commodity-according-to-u-s-regulator

THE FED
http://www.econotimes.com/Bitcoin-price-vis-a-vis-US-Feds-interest-rate-decision-89767
Discussion about interest rate non-hike

Debt ceiling

http://www.huffingtonpost.com/entry/debt-ceiling-will-be-hit-by-end-of-october-obama-administration-warns-congress_55f1ec69e4b03784e27897f2

Nine of the World’s Biggest Banks Form Blockchain Partnership
http://recode.net/2015/09/15/nine-of-the-worlds-biggest-banks-form-blockchain-partnership/

Closing

https://www.indiegogo.com/projects/bitunit-2015-bitcoin-seminar
http://bitunit.cryptoavenue.com/

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Score One for Consensus, Maybe?

Today it was announced by eight major players in the bitcoin space that they would be running software that is comparable with BIP101 by December of this year. If BIP 101 is adopted, then the capacity of the bitcoin network would octuple, and be followed by scheduled capacity increases.

Of the five main developers, Pieter Wuille of Blockstream supports a modest network capacity increase in 2017 long after a transaction backlog is expected. Gregory Maxwell also of Blockstream also opposes BIP 101. Jeff Garzik promotes his BIP 100 but is concerned about inaction if BIP 100 isn’t accepted. Wladimir J. van der Laan also has a BIP proposal that is not numbered yet. While Gavin Andresen has helped release software called Bitcoin XT that will implement BIP 101 not before January 2016 only if the network supports the change.

There are other developers that have weighed in on this topic. There’s Mike Hearn who originally wrote Bitcoin XT. When Bitcoin XT was first written, it did not change the capacity of the bitcoin network. BitcoinXT was the first client that would support the lighthouse project which allows crowd funding campaigns with bitcoin. It was Mike Hearn who agreed to implement BIP101 in Bitcoin XT with the help of Gavin Andresen.

Other developers currently against BIP 101 include Peter Todd, and Luke-jr.  With so much division it has been impossible for Bitcoin Core to adapt to bitcoin’s expected growth. This fact is probably responsible for the hundreds of Installations of Bitcoin XT and  a few BIP101 blocks that were mined last week.  Some reaction to this divergence from Bitcoin Core spurred many comments about consensus.  There was a growing concern that this sequence of events would lead away from consensus.

Alas, these concerns may not be valid. As there is now a workable, and fairly convenient solution to allow for the growth of the network. This could serve as a rally point. People may now see a path to the next generation bitcoin network. There seems to be no indication the bitcoin core team will not break out of its division and inaction that has plagued that team for over two years. In fact Luke-jr has even suggested that he might change his mind. Could this be the very beginning of the building of a consensus that some people have been clamoring for? Time will tell, time will tell.

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