Bitcoin : Trick -or- Treat?

Since it's Halloween today, let's take a short break from the thread last seen on It's for Speculating, Not Buying Stuff, and look at the following composite image. Is there anything to take away here?

Google image search on 'bitcoin halloween'

Jack-o-lanterns top row, left: I'm not sure who gets the credit as creator for this image -- it's a clever carving -- so let's take the one on a bitcoin domain. Bitcoin; Carving Out History! (31 October 2013, BitcoinNe.ws); 'Finishing up October with a treat, bitcoin remains over $200 on popular exchange Mt Gox which is a ~66% increase since the 1st.'

Costumed family pictured twice in the second row, left: Bitcoin Takes on a Scary New Look for Halloween; 'Online Halloween costume store Halloween Nation asks customers to pay with Bitcoin and Paypal instead of credit cards.'

Jack-o-lantern second row, center: BitClub Network International on Pinterest; 'BitClub Network International : A Global Wealth Building Company for the Digital Currency Market. The most innovative & lucrative way to earn digital currency. Join BitClub today!'

Jack-o-lantern group picture bottom row, center: When, Not If: Bitcoin in Israel; 'Have you seen Coinapult’s pumpkins for this year?'

That last reference mentions 'Bitcoin 2.0 technology'. I wonder what that means.

It's for Speculating, Not Buying Stuff

I finally see the light! The scales have fallen from my eyes! In Google Autocompletes 'Bitcoin Buy', I wrote

Why suggest other means of payment (credit card, debit card, paypal)?

In other words, why use one means of payment (like a credit card) to buy something (bitcoin) to buy something else (as in Buying Stuff with Bitcoin)? Why not just use the credit card to buy the 'something else'?

There's a useful site at en.bitcoin.it/wiki which keeps popping up on my searches. In a post, How To Buy Bitcoins With Your Credit Card, I learned,

Intro: While in the recent past it has been risky for sellers to offer this option, some services are now allowing you to buy bitcoins with your credit card. However, that does not mean it is entirely risk free in all markets; if you are from Asia or Africa your funds may be frozen by credit card payment processors for further inspection due to the large amounts of fraud that come from those continents.

Note: If you only want to take advantage of Bitcoin's price volatility you can trade CFDs on Bitcoin via a credit card on sites like AvaTrade or Plus500. When trading online your capital may be at risk. Trading CFDs is suitable for more experienced traders.

According to Wikipedia, CFDs are 'financial derivatives that allow traders to take advantage of prices moving (see Contract for difference). So the main interest in bitcoin isn't to buy stuff; it's to speculate in the price movement of bitcoin. This was confirmed in a CoinDesk article, How can I buy bitcoins?

Surprisingly, it's still not easy to buy bitcoins with your credit card or PayPal, depending on your jurisdiction. This is because such transactions can easily be reversed with a phone call to the card company (i.e. 'chargebacks'). Since it's hard to prove any goods changed hands in a transfer of bitcoins, exchanges avoid this payment method and so do most private sellers.

It's not that the credit card companies won't allow bitcoin transactions. For them it's just another commodity or service that a third party is buying. It's the sellers of bitcoin who won't accept credit cards. Since they can't prove that they've actually delivered something to the buyer, they risk a chargeback.

Given that I'm not interested in speculating with bitcoin -- let's not use the euphemism 'investing' -- does it still make sense to look into it? I'll think about that as I continue this blog.

Buy Bitcoin Geographically

At the end of my previous post, Google Autocompletes 'Bitcoin Buy', I noted,

That gave me plenty of ideas for further research -- Why the emphasis on geography? (australia, canada, ...)?

Starting with 'buy bitcoin online australia', first on the list was Buy and sell bitcoins in Australia, with cash and online.

LocalBitcoins.com is a marketplace for trading bitcoins locally for cash or online payments of your choice. Find local bitcoin exchangers in your country or start your own bitcoin exchange for profit.

The LocalBitcoins.com page has three sections:-

• Buy bitcoins online in Australia
• Sell bitcoins online in Australia
• Buy and Sell Bitcoins in these popular cities in Australia

In the first two sections, the various 'Buy' prices (~380 AUD) were about 20 AUD higher than the 'Sell' prices, making this the online equivalent of a currency exchange. In the third section, the first listing was for 'Trade bitcoins in Sydney NSW, Australia', where the highest prices were for 'Buy bitcoins with cash'. Since I think I know where this is going, I'll leave it there.

What about 'buy bitcoin online belgium', where I happen to reside? The equivalent page is Buy and sell bitcoins in Belgium. I don't have any cash that I need to convert to bitcoin, but I'll keep it in mind. Also interesting is Dutch Bitcoin Exchange Bitplaats Expands to Belgium (January 2014).

Belgian users can now trade digital currency from Bitplaats using the country's dominant online payments platform, Bancontact/Mister Cash.

Bancontact++ is the country's primary system for paying with bank cards, aka debit cards. This brings me to the next question from the 'Google Autocompletes' post:-

Why suggest other means of payment (credit card, debit card, paypal)?

I'll tackle this in my next post.

Google Autocompletes 'Bitcoin Buy'

After my attempt at Buying a Chess Set with Bitcoin flopped, I wondered,

Maybe I'm going about this the wrong way. Rather than try to buy a specific item -- this isn't about Amazon or eBay, after all -- I should look at the types of goods and services where bitcoin is preferred.

Here I fell back on the old 'Google Autocompletes' trick. I fed Google the keywords 'bitcoin purchase' and Google immediately suggested adding the words

online, uk, paypal, canada, india, usa, ...

On the keywords 'bitcoin buy' Google suggested adding

online, and sell, with credit card, price, instantly, debit card, paypal, gold, stuff, usa, ...

Since 'online' started both lists, I added that to both phrases, e.g. 'bitcoin purchase online', and sent it to Google. Here I received a list of pages for buying bitcoin. Since that wasn't what I was looking for, I extended the search by adding a single letter at a time, e.g. 'a', then recorded the suggestions that Google made for that letter. On adding 'a', it suggested

australia, alcohol, anything

On adding 'b',

books

On adding 'c',

credit card, canada

And so on. Now that gave me plenty of ideas for further research -- Why the emphasis on geography? (australia, canada, ...)? Why suggest other means of payment (credit card, debit card, paypal)? -- but I ran out of time to pursue them. I'll come back to the subject on my next post.

Buying a Chess Set with Bitcoin

I ended my previous post, Buying Stuff with Bitcoin, with a specific idea for this current post.

How about using bitcoin to buy a chess set? I didn't notice any possibilities while I was researching this post, but I didn't put any effort into it either. I'll look at that for my next post.

The first results on a search for 'bitcoin chess set' turned up many of the same pages I found in 'Buying Stuff'. The first real chess set was Bitcoin Gifts | Traditional Mandarin Design Chess Set (bitcoinbazaar.co.uk), which is more of a decorative item than a set I would use to play.

How about a Staunton style set? Here the first few results were from HouseOfStaunton.com and Amazon.com with the note 'Missing: bitcoin', i.e. let's first show this guy Staunton sets, because that's probably what he really wants. After those were a couple of metal sets from Peerhub.com with the note 'Payment accepted: PayPal / Bitcoin'. That's more like what I had in mind, but I prefer a wood set. Here I found nothing.

How about 'bitcoin chess board'? Here I also found nothing in the first few pages of results, which were mainly articles on bitcoin using a chess metaphor. The first result suggested an image search, which gave me the idea to redo 'bitcoin chess set', this time on images. The result is shown below.

Four of the six items in the first line, including the first two on the left, were again from bitcoinbazaar.co.uk, so I took the hint. The site's About Us page says,

Here at BitcoinBazaar we have some of the coolest gifts that Bitcoin can buy.

We like the fact that Bitcoin provides the easy transfer of value on an unprecedented scale. [...]

We like the fact that the Bitcoin network is secure. [...]

We like that the use of Bitcoin offers users increased anonymity to that of the traditional banking sector – the network verifies the payment and not the identity. [...]

Our primary aim as a company is to help promote the use of Bitcoin around the world and help it to gain traction as an accepted currency. [...]

Got it, thanks. It's as much about the political statement as it is about the medium of payment. I'll keep that in mind for a future post, but first I want to finish my search for a chess set.

Maybe I'm going about this the wrong way. Rather than try to buy a specific item -- this isn't about Amazon or eBay, after all -- I should look at the types of goods and services where bitcoin is preferred. I'll pursue that in another post.