Like many bitcoin users, Alberto, the miner who makes $1,200 daily, imports food from the U.S. through Amazon's Prime Pantry service. This would be impossible with bolivars because almost no one outside of Venezuela accepts them as payment, and the growing scarcity of U.S. currency has made purchasing foreign goods with dollars increasingly difficult. Though the Seattle-based retail giant doesn't accept bitcoins itself, plenty of intermediary companies do. Alberto purchases Amazon gift cards through the cryptocurrency-friendly website eGifter, using software to mask the location of his computer, and then routes his orders through a Miami-based courier service.

http://reason.com/archives/2016/11/28/the-secret-dangerous-w...

http://www.econtalk.org/archives/2017/02/jim_epstein_on.html

And yes, I do pay taxes on my Bitcoin payments. It's somewhat annoying to keep track of everything, but my accountant mostly takes care of it for me. I probably end up losing ~2% to overhead (very little of which is due to Bitcoin itself), which is unfortunate but comparable to even the cheapest traditional services.

The darknet markets certainly bring some demand, but it's high-velocity. You don't need to hold BTC, only transact in it.

The remittance market does seem to be there, but it's still in its infancy. Maybe only a small fraction from this.

Similarly, actual e-commerce is quite limited. Bitcoin offers few advantages over PayPal and credit cards for the large majority of consumers. There's only a subset of international transactions and other fringe situations where it makes sense.

I think the other significant market, after the speculators, are those that are ideologically motivated to hold Bitcoin.

Except that if you're doing something illegal you pretty much do need to hold onto it unless you have a way of laundering it to a national currency.

There might even be enough of a legitimate bitcoin economy you could mostly do it, assuming you weren't a really big time criminal. Those guys have ways to launder the profits anyway.

No data supports this. For some reason articles occasionally still make this claim, but no sources support this.

In fact I am aware of a study that reports the opposite: that Bitcoin commerce is no longer driven by "sin" activities but instead by legitimate enterprises: https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=2808762

I used to use Xoom but every six months when I'd go to do a transfer they'd need more security verification and it got tiresome. Although that was a few years ago, maybe it is better now.

http://web.archive.org/web/19990508170650/http://www.xoom.co...

The amount of new bitcoins that are being made available is just 12.5 every 10 minutes, this is a mere 1,800 BTC a day, or around USD 2 million. If the main use for bitcoin is store of value or long investments, the available "old" bitcoins are not going to be that many. In my opinion this is the main driver of the price.

More noteworthy is the assumption people have that BTC (or any other early-adopter-deflationary-investment-coin) is able to serve as a currency ecosystem when it's inherently deflationary, thus discouraging the usage of it for anything but speculative hording (which assumes there is a demand by something other than hoarders..) - or rapid short term use, which has proven ineffective and untimely for micropayments [1].

http://www.coindesk.com/lightning-duplex-scalable-bitcoin-mi...

It's also good to remember that the tech world is built on all sorts of 'objectively obsolete' technologies.

If there's a shift, it can quickly turn into a flood, since much of the value of bitcoin is based on speculation, rather than more robust demand from use as a payment vehicle.

Hardware, and electricity investment is not static for miner upkeep. A fun feature of most cryptocoins is the ever increasing demand for hashing power, forcing miners to constantly consider the value of their real costs versus the real value of the protocol they apply their equipment to.

So by design, the network effect of cryptocoin miners will flock to whatever the current best design is on any given day.

Furthermore, for all intents and purposes, the technology behind bitcoin is already obsolete. So if the obsolescence hasn't affected it yet, there is no reason to believe that further obsolescence would hurt it.

  there won't be a need to move your funds anywhere else.

Bitcoin is inherently deflationary as coin creation slows to 0.

>Volatility

Volatility is due to uncertainty and speculation. If Bitcoin survives and is used significantly for transactions volatility will decrease (it already has but not enough).

  Bitcoin is inherently deflationary as coin creation slows to 0.

I'm not convinced that the deflationary spiral argument applies to what I view as a settlement layer, but it's definitely concerning to Bitcoin's future. I will agree that as long as bitcoin is seen as more of a commodity than a transaction layer, it will have a questionable future.

There is a huge barrier to switch. Bitcoin has common mindshare. Why would someone want to use an asset with far less mindshare?

The history of altcoins over the past 6 years supports these points.

Especially in black market type transactions this is hugely beneficial.

That said, a lot of the infrastructure is only on the Bitcoin front still - only a few exchanges offer other cryptocurrencies.

The people of Venezuela or Kenya would say the same thing about their local currency.

As far as I can tell there is simply nothing else to do with BTC as of now ... sure you can use it in some shops and you can buy plane tickets from Air Baltic with BTC - but those purchases are always actually more expensive to cover for the volatility of the BTC value and of interest only for users who think its fun to actually use BTC in the real world.

Probably it will either establish as an illegal clandestine super-national currency or it will be hijacked by banks for whatever weird theoretical purpose.