The dollarization of bitcoin

The dollarization of bitcoin

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Bitcoin should lead the world bitcoinization; the contrary, I think the world is being Bitcoin

The success of the media will be used for the exchange of four types of participants: retailers, consumers, financial intermediaries and speculators. In the case of Bitcoin, the inherent volatility cryptocurrency of speculators were not hinder any of its adoption, so that the US dollar as the default option.

Let's start with the first bit of the equation; retailer or merchant. Entrepreneurs who have been trying to mainstream Bitcoin has been found, although like so that consumers pay with Bitcoin idea businessman, businessmen treated his refusal things. In contrast, received Bitcoin, a businessman bitcoin payment processor, likes Bitpay or intermediary Coinbase, businesses will instantly convert Bitcoin dollars representatives. Retailers Choose dollar, rather than fluctuations in bitcoin bitcoinize is afraid of, and justifiably so forth.

The next bit of the equation is the consumer. I think in my previous articles, it is doubtful whether the payment to mainstream consumers to pay any benefits relative to the dollar in Bitcoin. In the form of people who use Bitcoin purchase must bear the cost of increased transaction costs, if they want to move from dollars to bitcoin. They must also bear the burden of volatility Bitcoin until make a purchase at that moment.

In order to promote the use of Bitcoin mainstream consumers, those who are later to provide service agency will have to start providing the same kind of bitcoin payment providers currently offer services to businesses shielding fluctuations. Permanently shielded wallet, for example, will allow consumers who want the opportunity to buy, store value in dollar terms, until the last moment, when the current Bitcoin agency risk, improve transaction. Of course, this is just something further pivot towards dollarization, not bitcoinization.

The inevitable product of emerging solutions will be just time Bitcoin. Buyers holding US dollars until they press the Buy Now button at the moment, when the agency took over and sold their dollars Bitcoin benefits. Pay from $ rail to rail Bitcoin exchange is only momentary. After receiving instant bitcoin payments, merchants pay suppliers will sell Bitcoin immediately available to businesses and the US dollar. As buyers and sellers choose to dollarization, neither affected from Bitcoin volatility. However, they still get any cost savings are quickly just in time used bitcoin rail provides enjoyment. Only speculators and intermediaries, who now also take responsibility for the response from consumers and retailers Bitcoin, avoiding dollarization.

But wait a minute. If all the parties to the transaction only want money, why not just cut all of the equations bitcoin? Instead, just in time for the exchange of Bitcoin, intermediary agencies involved, buyers of bitcoin wallet providers and businesses bitcoin payment processor can get together and agree to exchange dollar IOU contrary, they save operating bitcoin trouble. Gone are the transaction costs, payment obligations Bitcoin bid-ask spread, if Bitcoin prices woven trading is experiencing delays that may occur. Rao details the reader, the following footnote explains how Bitcoin intermediaries may create one US dollar IOU trading network.

This is no longer part of the Bitcoin universe, rather strange position, these Bitcoin intermediary. Conversely, intermediary institutions have become like interlinked Paypals, providing consumers and US dollar account payment solutions to merchants.

Thus, efforts to promote large-scale application of bitcoin, we have a little bit unusual to reach the opposite, things should go all out to dollarization is a bitcoin retail payments network. The buyer and the merchant only holding dollars, while the so-called Bitcoin wallet and payment processor as something no longer trading intermediaries. This allows only the speculators hold bitcoins bag. Personal PayPals This system will be based on very basic facilities, Bitcoin was designed to be removed, that the existing rail dollars to support the incumbent banks and the Federal Reserve over.

This is not to say that bitcoin is a failure as a retail payment options. But I have trouble seeing it has become mainstream. Even if Bitcoin remains a mystery niche payment system like-minded community of consumers and retailers, which still constitute a considerable success, although it did not live up to the dream of many.

In writing this, I happened to be closed in an earlier post that has come to a similar conclusion. If you've read his article, I apologize for wasting your time, so you see me.

The details: bitcoin transaction to resolve its payment between consumers and retailers, the agency can simply change the dollar IOUs. Costs should be lower than settle in Bitcoin. First, Bitcoin agency will have to maintain the United States and all other intermediary Bitcoin in US dollars account. In the course of a trading period, the dollar amount will flow into one of these clearing accounts. At the end of the day, the account of each agency will be arrested and clear account of all other intermediaries. As a result, some agencies will be owed money, others less. The balance will be settled in the evening all the books in the underlying commercial bank, said Citigroup, all agencies also maintain accounts. Because of Citigroup's settlement account books, intermediaries without incurring costly interbank wire transfer fees. Citigroup, has actually become a bit currency-based payment system, the central bank, SAN bitcoin.

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