Bitcoin Money Supply and Money Creation

Many articles mention, that the limited Bitcoin money supply is a major advantage of this digital currency. The reasoning usually goes like this. Since Bitcoins can only be created through mining and there is an upper limit of 21 million, Bitcoin is supposed to be inflation proof. This article for instance says, Bitcoin “theoretically eliminates inflation”. If this was true, Bitcoins would not lose purchasing power. The Bitcoins I own today would buy me the same amount of goods and services tomorrow. Or a larger amount in the case of deflation.

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900% increase in Bitcoin merchants

Bitcoin-accepted-here-printableBitPay has announced the approval of its 10,000th merchant while at this time last year the company had just reached 1,000 merchants. That’s an increase of 900% for the leading payment processor.

While BitPay is only one option available to merchants it is the largest Bitcoin payment processor and these numbers give a glimpse into the Bitcoin economy.

BitPay’s merchants are still largely ecommerce, 90%+, but they have experienced increased growth in non-US merchants. Earlier this year 40% of BitPays merchants were located outside the US, however these latest numbers show a 10% increase to 50% of customers based outside North America.

In line with the growth in merchants, the volume of Bitcoin sales through the business has also had a dramatic increase. “The month of August was another record month for BitPay, processing over 10,000 merchant transactions worth over $6.4 million.  Year-to-date in 2013, over $34 million worth of bitcoins have been spent on goods and services through merchants using BitPay’s platform.”

The Bitcoin economy may be small, but it’s growing rapidly!

eBay flirting with Bitcoin

It seems that the online commerce giant eBay has its eyes on Bitcoin. This is of course a bit surprising as eBay is the owner of PayPal which has a lot to loose from Bitcoin’s success. However, in the past week two indications of eBays interest in Bitcoin have popped up.

First eBay added, and then removed, ‘Virtual Currency’ to its categories of items for sale.

But even more interestingly eBay appears to have produced a video about Bitcoin which they posted to their blog.  The post is titled What’s the Deal with Bitcoins anyway? And curiously is presented without a date, seems to be only accessible directly via the URL and with this disclaimer at the top, “*This video was created for informational and educational purposes.”

The video does present Bitcoin in an unbiased and educational fashion.

The post and the video asks “What do you think? Are bitcoins the real deal?” however, comments are not allowed. … What’s the deal with eBay and Bitcoin?

 

Bits and Pieces 4thSep2013

  • Bitcoin exchange TradeHill halts trading after its banking partner experiences “regulatory issues”.

After series of Bitcoin businesses being dropped  by their banking partners earlier this year, the Internet Archive Federal Credit Union (IAFCU)  came to the rescue. The New Jersey based credit union, run by the Internet Archive, has been very friendly to the Bitcoin industry and has worked with a number of businesses who have had trouble establishing relationships with banks.

One of the businesses the credit union partnered with was the US based TradeHill  exchange. Late last week Jered Kenna, Tradehill’s founder and CEO, confirmed via Reddit that the exchange had suspended trading due to “operational and regulatory issues” faced by its bank.

IAFCU posted its own statement on the matter , but was not clear on the nature of the regulatory issues.

  • As the rupee continues to struggle, Indian officials continue their attempts to curb demand for gold.

Via Reuters

India is considering a radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency.

The RBI will ask the banks to buy back jewelry, bars and coins for rupees. Lenders will have to offer better rates than pawn shops and jewelers to lure sellers.

“We will start a pilot project among some banks where we will allow them to buy back gold from individual households,” the source, an official familiar with the central bank’s plan, said. “This will start soon, we have discussed (it) with banks.”

  • From New York to Germany, check out a timeline of August events affecting the crypto-currency community here.
  • For those following the Bitcoin Foundation’s board elections Bitcoin Magazine has posted transcripts from Let’s Talk Bitcoin’s interviews with the Individual Seat Candidates

Two new seats are being added to the Board of Directors. One representing Individual Members and the other is representing Industry (business) Members. In order to be eligible to vote in this election, you must be a current member of the Bitcoin Foundation.