The idea is good, the way it works is fine, the cause is noble but why it doesn't and will not work as it is right now.
Just imagine the following scenario. I know it is extreme but this is how older or less crypto friendly might go at paying with Bitcoin. On a different point of view it might sound funny actually.
- Hey, Hi! I can’t see any price for the milk, how much is it?
- There are no price tags as we can't really put any.Hold on please. Let me check. So, that would be at this very moment 0.00027919 Bitcoins.
- How much is that in USD again? I try to not use it but this is what I've been used to since I am a child.
- I’m sorry I do not know sir, I know how much it is in Rupees if it can help...
- I think it is fine, so 0.00000023 Bitcoin for the milk, I will take it.
- Sir wait it is now discounted to 0.000079…
- What? Oh that sounds nice! But how come?
- Well you are buying your milk in volatile times...
- Oh ok… So can we make it quick, I will take it and pay now. I want to get back to my hot coffee. I just forgot I was out of milk.
- Yes but by the time I told you that the price had changed, your milk now cost 0.002219 Bitcoin
- What? The milk will cost more than 100 times more?
- Yes this is the ongoing value, oh wait it went down again.
- Ok so I need milk, can we just agree on a price.
- So this will be 23413 satoshis.
- Satoshis? What is that? We said bitcoin…
- Yes, it is bitcoin. Actually 1 millionth of a bitcoin or 0.000000001 Bitcoin if you prefer.
- Oh yeah right… It's not cents anymore for the little change… It's Satoshis…
- Well yes but only for Bitcoins, for Litecoins they call it Litoshis or Gwei for Ethereum or so if I remember well. I think all of them have their own...
- Ok let's get back to my milk. I will pay now. Can I scan your address QR code to pay?
- No sorry we don't have this support in our wallet yet or have a QR for the address. So you can pay at 14dXSnbX2tMnbYZmaskKiZKs4ZmxmzFedL Got it?
- Yeah I think so but wait. Let me recheck, is it this? Wait, you know what, Can I pay with any other crypto currency? It will be faster and easier.
- No sorry we only accept the real Bitcoin, no shitcoins....
- But it's also much cheaper for transfer than Bitcoin, are you sure it is only Bitcoin?
- Yes I am sure… Anyway, it doesn't matter to us, the cost is on your side...
- Err ok… Anyway. Here you go, payment is sent. I just want some milk and I'm a bit tired of this!
- Great thanks, you can now go wait for the required confirmations in our waiting area over there where all the chairs and the people are.
- Oh yeah… Not so quick… Well ok do you have any idea of how long?
- Don't know there is congestion on the network so something like 40 minutes
- Hey, I now see that the payment went through and got enough confirmations. You see that?
- No sir I don't see it. We didn't receive anything.
- What? How come? I did the payment already and it says confirmed and all.
- I do not know. Maybe you mistyped the address… Can you send it again please so you can have your milk.
- Really can we check again the address?
- Sure it is 14dXSnbX2tMnbYZmaskKiZKs4ZmxmzFedL
- Oh shit you are right. I typed it wrong somehow.
- That is not good for you sir.
- Yeah. Do you know how to revert this or who can I call to fix this?
- There is no way sir. This is the idea behind decentralization. There is nothing you can do. Better check it more carefully next time.
- Next time… Yeah… You know what for now. How much is the milk?
- Here I have the exact amount with this change here is my pocket. Thank you.
- You are welcome Sir. Thank you, Come again
Why so many numbers and digits?
So who wants to pay 0.00027919 BTC to buy milk? There is something in there that just doesn't work in most people's heads. Even after a few years looking at crypto and Bitcoin. Why such a big fraction and so many numbers or digits? We really just want to hear something like; Oh this is 2.31 Bitcoin only.
How much value and what cost that really is?
It will also take quite a while if the switch is done. People will always mentally convert it back to what they know. So they will every time try to make a conversion to see if a price is correct or fair. Be it in any Fiat they are used to. It's like learning a new language, until you are fluent you always kind of translate back to your main language before you assimilate the information. However, the more people are in contact with, the less relevant it is to them. And for whoever is born in the future with crypto currency payments, it will just be natural to them.
Why does the price keep on changing and will I get what I asked for?
Just for putting up prices tags on products or services, it is a problem. When you look at price tags in a store their prices are clearly written and wont be changing. At least not in the near future or not in an unpredictable way and likely will pretty much never go up.. But with cryptocurrencies other than stable coins it would have to be updated dynamically in real time to be accurate enough to run a business. Unless the seller is ready to take losses or maybe gains as well this is not viable. This is almost like trading but with selling or buying products.
Market volatility is a big problem as at any given moment; it can change value. From the time a product is sold to the time it is ordered through the supply chain the value could be as far as 15% off if not more in crashes or with bull runs. This is more than most pays for taxes and at higher volume is quite a bad thing.
Of course one thing that should and does set the price it's the cost of mining. The hardware required in the long run and in short terms the price of electricity. There is also the halving every now and then. The latter being much more predictable. But even with this it has never been stable as another layer of speculation came on top of that.
We also saw the appearance of stable coins that would still be better than Bitcoin for a transfer cost of a bigger amount. But it is their stability that makes them superior for day to day transactions and along the supply chain. If someone or a business is selling and just wants to use their coins for a later purchase or to pay a supplier, they do not want volatility. Profitability and productivity has become very fine tuned and just a slight variation can have a big impact in the supply chain.
And can I pay in another crypto currency, like any?
Many currencies are at this moment much more efficient than Bitcoin for payments. But since the inception of Bitcoin, it has been considered the father of them all and is by far the most known one. It also has the biggest market capitalization but sadly it is not used for transactions so much compared to the store of value meant for investments and profitability it has… This is why there are Bitcoin maximalists who believe it is the only one noteworthy and consider all the other ones “shitcoins”... At this moment Bitcoin is the only crypto currency with ATMs machines where you can withdraw fiat or cash from your bitcoin wallet at the current value. So even if far for adoption, it is already the one that is the closest to it in a way.
Be it in speed, cost or value stability. Even if I do like Bitcoin as the original that started it all, I try to avoid paying in it as much as I can. It doesn't make much sense for small transactions and is not very useful with its delay.
Why do I have to wait?
Another big problem which anyone who has been using crypto currency to some extent knows is that it is not instant. At least not for BTC. At this moment banks, credit cards and paying cash is pretty much instant. Even by accepting just a few confirmations which is less “safe” it is still not so fast. Pretty much everyone has been using other currencies for transferring between wallets or exchange. Faster AND cheaper than doing it in Bitcoin.
Can I cancel the transaction or get a refund?
That is one aspect which has 2 sides. It is very good and in mechanics a requirement. But I wonder how much money, bitcoins, shitcoins disappeared in this black hole. Some people might have got lucky and saw their wallet balance increased but I doubt there are many. I still feel the stress everytime I start a transaction. Is it the right address. But bitcoin is still isn't so bad compared to other cryptos with old and new address format, the ones that have either smart contracts or not or doing transactions that requires a memo tag.
Another problem with this is disputes. When a good or service is paid but not delivered, incomplete or any other problems that can arise. Once the transaction is done there is no way to cancel it and get refunded. This is one of the reasons Paypal cannot be used to buy crypto currencies.
So what can be done and how it could become one
I know there are solutions to some of the problems out there. Some are in development as others are already out and being used but require some learning or different softwares or wallets. These solutions, how good are they? Do they really solve the problems and help with adoption for the non-crypto savvy people? Are they scalable? Are they easy to use? Have they been implemented? Who use what?
Here are some of the solutions
Second layers and alternate networks.
Lightning Network or wrapped Bitcoin on a different chain as an example. They do work and solve some problems like speed or cost of transactions. But they are not native to Bitcoin so cant be considered core improvement. This is unless they are implemented in the future. Very doubtful about that part but who knows.
Value of Bitcoin
As far as the value it has, it has been over 3000$ for quite some time now so the value could be changed just like that. It could be divided by the last 2 years average or something similar. The value for anyone holding wouldn't change but it would make things a lot easier to calculate in a quick way. You hold 200 bitcoins at 10,000 well now you have 200,000 BTC and can pay your milk with 2.3 Bitcoin. No need for very small fractions or big amounts of satoshis. Many other crypto currencies did just that. Polkadot DOT did something like that just last week.
Making transactions is simple in a way for more tech savvy or crypto aware people. And online it is usually not a problem as one can just copy and paste the address. But to pay at a store or another person, it is a bit more complicated. Wallets have done a good job at using QR codes to provide addresses but they are not integrated in all wallets. And some wallets with good features have not so good fees to deposit or change crypto currencies afterward. Some wallets can be a good idea at the beginning only to come out with malware stealing funds.
POW or Proof of Work model
The proof of work model is what made the coin work. I won't get into details but to verify transactions blocks have to be mined. This model at this moment is quite energy consuming and now requires server farms. In the very beginning people were mining on home computers but this quickly became obsolete. Even if it is far there is also an end to this well at least BTC does have a limited supply. And there is halving that should support the price. Newer cryptos are moving away from this POW model for a Proof of Stake PoS model among others as POW does not scale well and is more restrictive. It is also vulnerable to 51% attacks but I would doubt something like this would be attempted on Bitcoin nowadays.
In the end
Diversity is good I think. Buying things at different places using different tokens or cryptos do not bother me in any way. It's actually quite nice to say there is some money specialized for some applications. As an example Travala accepts different cryptos but you can get more rewards if you pay in AVA, Travala native token. It's a bit like using different credit cards to get different rewards from different merchants. Enjin can allow cross payments between games so you can have only one currency for many games and even use it for a centralized market place. Gathering coins in one game and spending it on items for another one.
With all these new options does Bitcoin really have its place. I know many online casinos made good use of it in the beginning but nowadays, it could be any other crypto. In fact I think many new casinos now are not using BTC.
With all the good Bitcoin brought I do not think it will replace money anytime soon. It will stay as a speculative store of value just like business in the stock market. Bitcoin also does not have privacy options of other coins and is not private as many people believe. So it is not a selling point either for Bitcoin.
Also if you want, the BTC address in the scenario at the beginning is real… You could send some BTC donation there if you would like to...
And if you would like to learn about American Economics the South Park way here is the Margaritaville Episode:
So as the usual referral building and linking here are links to platforms I use, recommend or where you can also read my articles on scuba diving.
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A funny mining simulator
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Social media and other publishing platforms:
Exchanges to trade or learn about crypto: