The Value of Bitcoin – Part I

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The price of Bitcoin is always swinging high and low. In December 2017, we witnessed an all-time high of close to US$20,000 per Bitcoin, and a market capitalization of slightly over US$300 billion.   

Then the market went bearish in the following months as the crypto winter set in. The price rolled down, and it reached slightly above US$3,000 in December 2018. The market capitalization bled to under US$100 billion.

Right now we seem to be on the edge of another rally that could take us to new all-time highs in price and market capitalization.

The cycle of low and high has become part of Bitcoin. However, the general trend is the increase in its value.

But even with this volatility, how exactly does Bitcoin have value?

Is it the energy it consumes?

An argument those who don’t think Bitcoin is a good idea often make against it is that it lacks intrinsic or inherent value. Ironically, many in this school of thought hold the view that fiat currencies like the dollar have some intrinsic value. And that it comes from the backing by the state through central banking.

An argument those who don’t think Bitcoin is a good idea often make against it is that it lacks intrinsic or inherent value.

In response, Bitcoin enthusiasts have explained that the value of a bitcoin comes from the amount of energy the Bitcoin network consumes to mine it. According to a study by Crescent Electric Supply Company, a US-based electric hardware supplier, it costs US$4,675 to mine a bitcoin in the US. In China, the cost is US$3,172, South Korea $26,170 and Venezuela$531. The variation is brought about by how much electricity costs in different countries.

This explanation of how Bitcoin gets its value has its shortcomings. First, it is hard to reconcile the different costs of mining in different countries. Secondly, it means any amount on the price of Bitcoin above the cost of mining can never be justified.  

The question of what constitutes value is one that economists have sought to answer for decades.

Renowned economist has a better theory

Carl Menger was a professor of political economy at the University of Vienna in the late 19th century and he is regarded as the founder of the Austrian School of economics. In his book Principles of Economics, he explains that what constitutes the value of an item is its utility.

He states that ‘value is…nothing inherent in goods, no property of them, but merely the importance that we first attribute to the satisfaction of our needs, that is, to our lives and well-being.’

‘Value is…nothing inherent in goods, no property of them, but merely the importance that we first attribute to the satisfaction of our needs, that is, to our lives and well-being.’

In other words, value is the usefulness of something in satisfying our needs. This way of looking at value can be a great foundation in understanding the value of Bitcoin. The value of Bitcoin comes from its usefulness as a digital ledger that is immutable, tamperproof and decentralized.

Bitcoins also have value because of its usefulness as money that is durable, portable, fungible, scarce, divisible, and recognizable. Most importantly, Bitcoin is valuable because it is a less costly, fast and reliable mode of payment across international borders.

This usefulness of Bitcoin in meeting our needs translates to the demand of its units at the marketplace and corresponding prices. If there are more people finding it useful its price will keep going up. The value is further increased by the fact that Bitcoin is a deflationary currency; there will only be 21 million bitcoins.

The Bitcoin protocol is set in such a way that about every ten minutes new bitcoins come into circulation. However, the rate halves every four years so that around the year 2140 the release of new bitcoins will stop. By then all bitcoins ever mined will total 21 million.

Bitcoin for Beginners: Purchase, Protect, Mine, and Trade

  • Bitcoin is officially considered an asset by the Internal Revenue Service but it is not considered a true currency. Bitcoin can be used as a payment method and is often referred to as digital money, virtual currency, and crypto currency. Bitcoin is also the transaction network by which you send and receive this digital asset. Acquiring bitcoin, using bitcoin to purchase items, and trading is 100% legal and you can even expect a tax bill on your capital gains. I have spent considerable time researching how to acquire bitcoin, protect my bitcoin, mine bitcoin, and trade. I am writing this article to share what I have found to be reliable and trustworthy vendors and websites engaged in bitcoin.
  • Security and documentation are important and while not exciting, it is where you should begin your bitcoin investing strategy.
    • Install a two factor authentication (Android | Apple | Windows) and turn on two factor authentication for all of the accounts that provide it. This includes email, bank, google drive, one drive, and blogs.
    • Consider a safe place that you can write down and/or print paper wallets to help protect and diversify storage of your bitcoins. (Think home safe or bank safe deposit box)
    • Many internet users do not consider the danger of accessing confidential / financial websites on public computers, work computers, public wifi, or a friends cell phone. As you enter into the high risk / high ROI opportunities of the digital asset bitcoin some rules should be considered. Make certain that you access your accounts over secured wifi and trusted wifi networks. Your personal laptop, PC, tablet, and smart phone should be the only devices used for bitcoin transactions.
  • There are many websites providing services to buy, sell, and transfer bitcoins. Global events in China and Tokyo have increased the risk that a retail customer, investor, and merchant must consider when selecting a bitcoin website. Coinbase.com, Binance.org, and Bitpay.com stand out as professional and reliable full service bitcoin websites. Retail consumers, Nonprofits, and Merchants can all benefit from the full line of services available at these websites. This is evident in my personal experience, my hosting companies merchant account, and in the extensive online research that my team continuously reviews.
    • Buy and sell bitcoin, ethereum, bnb, alts here: www.Coinbase.com
    • Accept Bitcoin Payments or Gifts here: Bitpay.com
    • Watch your bitcoin transactions here: www.Blockchain.info (All bitcoin transactions are saved to a global transaction log called the blockchain. This is public information and available if you have the ID in question)
    • Import/sweep paper or offline wallet bitcoins into an online wallet here: www.Blockchain.info
    • Contact me directly if you are within the U.S., prefer a paper wallet or hardware wallet, and want to skip the online accounts: Bitcoin @ doshost . net
  • Use BitAddress.org to create paper wallets, offline wallets, and to diversify the bitcoin wallets you have so they are not stored in one place.
  • Finally the advanced opportunity to utilize a decentralized exchange (DEX) along with the financial self custody enabled by a secure mobile wallet.

*Updated 5.15.2019

Bitcoin PSA

Public Service Announcement – Buying Bitcoin

1) What Is Bitcoin

A global payment network and a new kind of money.

2) No Really, What Is It?

Bitcoin represents a vote for a new financial system and protocol for data transfer that is decentralized, distributed, trustless, and permissionless. This is an inclusive architecture that levels the playing field globally.

3) But Traditional Technology?

Better, faster, cheaper – BlockChain Technology Amazoned traditional technology

4) How Can I Understand This?

Be a dedicated lifetime learner. This is a new tool and you will not make good decisions without proper education.

5) Should I Buy Bitcoin?

Can you explain what a fork is and when the next one is scheduled? If the answer is no, you need to learn more before buying.

6) Should I Mortgage My House? How Much To Buy?

#LunchMoney that is what you invest, on a weekly or monthly basis, nothing more. Average in over several years so you can sleep and enjoy this beautiful world!

7) Ignore At Your Own Peril.

Contribute:

https://github.com/doschott/BitcoinPSA

What’s missing in our world of digital currency?

A currency that is backed up by something substantial to help support it during the bad times, and to be the gold standard during the good times.

BIGBullion

Website:
http://bigbullion.co/content/going-be-big

Bitcointalk.org:
https://bitcointalk.org/index.php?topic=703739.0

 

Accept Bitcoin Payments on Your Corporate Website

Bitcoin eCommerce & Bitcoin POS Systems


Executive Summary from Digital Merchant Consulting

A growing number of large companies and 30,000 mid- to small-sized firms now accept Bitcoin electronic currency as an alternative to the U.S. dollar. Among these are household names including Expedia.com, Overstock.com, Kings College, Dell Computer, eBay, Dish Network, 1-800-FLOWERS, Newegg and Sir Richard Branson’s Virgin Group. Further bolstering the Bitcoin economy, the U.S. government auctioned and sold nearly 30,000 Bitcoin with a market value of about $16 million in June, 2014.

What is Bitcoin?

Bitcoin is a decentralized electronic currency produced by an international network of computers. No bank or government controls its value or its creation; it has no central bank. The current value of all Bitcoins in the market totals about $6.45 billion (July, 2014), which increases each day as new Bitcoins are created through that network.

Bitcoin Is Ideally Suited for eCommerce

Customers find it convenient and secure. They have no need to login and expose their user ID and password, nor to enter a credit card number into new and unfamiliar websites. For those who do not have bank accounts, (about one in every 12 Americans according to Forbes Magazine), [4] Bitcoin provides the opportunity to purchase online. Bitcoin currency wallets are free, secure, and users cannot be surprised with an overdraft or other fees.

Vendors find that customers using Bitcoin often spend substantially more [2] than traditional purchases made with credit and debit cards – reportedly 30 to 50 percent more in some cases. [2] Because no bank or credit card company regulates the transaction between buyer and seller, merchant transaction fees fall to zero, giving vendors an opportunity to cut the cost of sales significantly. Bitcoin provides protection against fraud and charge-backs. It makes international payments fast and simple. Finally, the expense and administration involved with Payment Card Industry (PCI) data security standards compliance are moot, for there is no “payment card” involved in the transaction.

E-commerce, the “sweet spot” for Bitcoin, is expected to continue increasing as a percentage of all commerce. The U.S. Census Bureau [1] estimates that Internet sales accounted for more than $71 billion in the first quarter of 2014, which is a 15 percent increase from the year prior. Forecasts from eMarketer [3] predict worldwide electronic sales will reach $1.2 trillion in 2014, then nearly double to 2.07 trillion by 2017.

Today, with the advent of Bitcoin ATM’s [5] and POS systems, consumers can buy from major national retailers and even food truck vendors, making Bitcoin an ever-growing method of payment.

Digital Merchant Consulting

These e-commerce trends and the growing acceptance of Bitcoin raise the question for many CFO’s at B2B and B2C companies …

How can I accept Bitcoin?

Digital Merchant Consulting, (DMC), a division of DOSHOST.NET, provides consulting and implementation services to add a robust and secure Bitcoin payment method to any existing e-commerce website.

DMC, through its partnership with Bitpay, delivers a robust and proven solution known as an API – an application programming interface. The API seamlessly connects the services of Bitpay to your web site so with each Bitcoin transaction you receive the full value of the sale: If you charge one dollar, you receive one dollar with instant conversion to U.S. currency, with bank deposits made daily and with no transaction fees.

DMC’s solution includes …

  • A payment gateway with seven ready-made libraries that scale to accommodate both domestic and international sales.
  • More than 20 plug-ins that integrate with a wide range of shopping carts and e-commerce systems.
  • Full functionality for mobile users working from smartphones and tablets.
  • A merchant’s ability to accept Bitcoin in 150 different currencies, and to receive settlements in nine currencies via direct bank deposit, vastly simplifying international sales.
  • Conversion from Bitcoin to U.S. dollars occurs instantly after each purchase to avoid the risk of exchange rate fluctuation.
  • Cash from sales is transferred to your bank account daily and appears in the account after two business days. Settlements are made with as little as $20.00 in sales each day.
  • Quickbooks integration allows exporting sales data from Bitpay directly into Quickbooks for subscribers to the Business and Enterprise level plans.
  • For retail brick and mortar establishments a POS application accepts Bitcoin for any retail point-of-sale system that can access the Internet.
  • For mobile sales reps and field service personnel, the application accepts Bitcoin payments through smartphones and tablets running Apple IOS or Android operating systems.
  • Options are available to retain some or all sales revenue in Bitcoin.

Plan Options

In addition to three levels of service summarized below, DMC offers a free starter plan for companies wishing to test the system. The starter plan levies a one percent transaction fee on each sale. However the full-service plans outlined below charge no transaction fees. Your monthly cost is fixed and understandable, while you benefit by accepting Bitcoin as an alternative form of payment.

Professional Business Enterprise
$30 / month $300 / month Contact DMC
Free, instant conversion to dollars Free, instant conversion to dollars Free, instant conversion to dollars
Daily bank deposit Daily bank deposit Daily bank deposit
Retail POS application Retail POS application Retail POS application
22 eCommerce integrations 22 eCommerce integrations 22 eCommerce integrations
Email support Phone & email support Priority phone & email support
Up to $10,000 daily sales Up to $100,000 daily sales Unlimited daily sales
Quickbook sales integration Quickbook sales integration
Dedicated account manager
VPN access
Enterprise engineering & integration services available

Learn More

Digital Merchant Consulting has deep knowledge of eCommerce and the Bitcoin economy. Further, with years of technology experience through its parent, DOSHOST.NET, the company has substantial resources to help in most any kind of technology venture. Now, through the relationship with Bitpay, DMC is uniquely positioned to assist you in adding Bitcoin payment capabilities to your eCommerce site. We’ll provide in-depth consulting, advice and implementation services required to bring you “live” so you can begin taking advantage of this growing trend in electronic commerce. For more information, please visit www.DigitalMerchantConsulting.org, or contact us directly.

Business: 701-203-2002

Email: info@DOSHOST.NET

Author: Allen R

#Crowdfunding for First Two-Way Digital Currency Kiosk in #NorthDakota

Crowdfunding link for the two-way digital currency kiosk (Bitcoin ATM | BTM)
https://BitLendingClub.com/loan/browse/lid/1859

https://DOSHOST.net is a technology consulting company in Grand Forks, North Dakota. DOSHOST.net provides technology consulting for small and large organizations including nonprofits. The State of North Dakota is a leader in supporting innovative high tech organizations. The CEO of DOSHOST.net has approval to move forward with a BTM within the State of North Dakota. The BTM will follow all federal AML/KYC requirements. The location of the BTM is still in negotiations.

This first of its kind BitLendingClub.com merchant integrated bitcoin loan will fund the purchase of one BTM from CoinOutlet.io. The loan is at 80% funding as of July 20th and there has been strong support from North Dakotans. Detailed explanation of the merchant integrated loan can be found here: http://blog.bitlendingclub.com

 

Updated: Quick Links to Buy & Sell Bitcoin | Retail Customers, Nonprofits, and Merchants

Updated: Quick Links to Buy Bitcoin & Sell Bitcoin | Retail Customers, Merchants, Nonprofits

  • Install a two factor security phone app (Android Apple | Windows) and consider turning on two factor authentication for your Gmail, Outlook, Apple email. Bitpay & Coinbase require two factor enhanced security.
  • Retail Customers ~ Buy/Sell/Safely Store bitcoins here:  www.Coinbase.com
  • Nonprofits & Merchants ~ Review who uses merchant accounts and why they use merchant accounts with Bitpay.com here: Bitpay Information Link

Additional and more detailed info for bitcoin beginners: Link

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