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Bearings and Bitcoin: Why I Love Bitcoin (but don't own any)
The reason I love Bitcoin is because I hate the banks. Every time I sell a bearing on this website, 3 to 4% goes right to the banks. By some estimates, those parasitical bastards account for 30% of the price of everything we buy.
It works like this: I may pay cash for my bearings, but the company I buy from may have a big mortgage on their factory that they price into the cost of the bearings. The bearings come from China, so I have to pay a bank to transfer dollars into Yuan for another 3% fee. Then the bearings have to be shipped to the US, and those tankers were bought on credit. So were the machines that mined the ore that became the steel that became the bearing. At every step in the process, the bankers are there, skimming their 3 to 4% and by the time the bearing, the car, the loaf of bread gets bought at its end point, 30% of the cost is banking.
Which is why I love Bitcoin. It's peer to peer and does not generally require a parasitical middle man. If I accept Bitcoin for payment, I can give a 2% discount because instead of paying 3% to the banks for processing a credit card, my cost for the transaction is a fraction of 1%.
If I can get my Chinese suppliers to accept Bitcoin and we cut out the bank, there is another 3% off the cost of the bearing. Bitcoin dis-intermediates the banks, which is why I love it and which is why it might actually be worth its current stratospherical valuation. It could save the global economy untold billions in banking fees.
Unfortunately, it isn't easy, it isn't fast and it might not be a good store of value in the long term, which is why I don't own any.
For one thing, they don't have a monopoly in the digital coin market. Competitors like Dash and Ethereum are gaining in popularity. I personally would love to take Dash, Ethereum, Bitcoin or any other form of payment that is going to reduce my costs. Looking back at the dot-com bubble, I am reminded of pets.com, lycos and a hundred other tech companies that looked to be the next big thing. There is no telling which crypto-currency is going to win the day, especially since players like Google and Amazon haven't even entered the fray yet. As a short-term speculative investment, Bitcoin might be a great play but as a long-term store of value it seems very risky.
For me, the value of crypto-currencies are that they reduce transaction costs. I will gladly accept any form of payment that can be converted into goods or cash, but I am not looking to speculate in the coin space at this time. I am looking to transfer bearings into bitcoin and bitcoin into cash, pure and simple. I would not want to hold it when the valuations flucuate so wildly (admittedly, at this time, mostly to the up side).
As for not being fast, Mastercard and Visa can handle millions of transactions a second. Currently, I think Bitcoin has a peak capacity of a mere 56,000 transactions a second, which seems too slow to displace Big Credit Card and seems enough to limit Bitcoin to niche transactions, especially tranferring money between countries. It lacks the speed if everyone wanted to use it to pay for their gas or their daily cup of coffee.
But that could certainly change and I hope it does. One could argue that the filthy banks have enslaved us all and our only hope for freedom in the future is the crypto-currencies.
I would love for someone to make Bitcoin simple and easy enough for me to use at Bearings.Parts. But for the foreseeable future, I will be continuing to give the filthy banks their pound of flesh (or 3-1/2%).