bitcoin

Fixing the Linear Leak: The Real Reason the Bitcoin Price is Dropping

Why is the price of Bitcoin so off the high?

Bitcoin is moving across the internet as fast as ever with more and more online merchants accepting it yet nearly all of it is being converted to fiat. This Bitcoin is flooding the exchanges and this is what is driving the price down.

This entire situation can be compared to a living system that is losing pressure. Blood doesn’t flow from the heart to the arm and stay there. If it does there will be a swell which will only be relieved by drainage and thus a loss of pressure. This is what we are seeing now via the selling off at the exchanges of merchant bitcoins.

For a system to be alive the blood must flow in a circle, a linear flow will always result in leakage. How long it lasts depends on how fast we can Close the Circle. More than that concept here. To summarize closing the circle is when an industry or community can survive by trading mostly in a single currency.

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Mark Cuban has gone on record saying that “Bitcoin won’t make it as a long term currency”.  He also noted that “no one” that he knows in traditional sales who accepts it as payment keeps it as Bitcoin: “They all translate it to dollars.” And, if they convert the digital money to traditional fiat money, in his mind, it’s not a currency. What Cuban is talking about is the Linear Leak. He knows where it will lead. The Solution is closing the circle.

 

To the Moon

Online merchants have a chance to close the circle but it is far less of a chance than a local community does. Take Dell for example. To close the circle they would have to get their suppliers such as Samsung and Hitachi to trade with them in Bitcoin and Samsung and Hitachi would have to get their suppliers  who provide them with raw materials to trade with them in Bitcoin. The raw mineral suppliers could then purchase new computers from Dell with Bitcoin, thus closing the circle. As unlikely as Samsung and Hitachi taking bit coins are the chances of getting old world heavy industry to accept bitcoin is far less.

Far better to focus on local communities. a local cafe that accepts bitcoin and the distributor and bakery that supply them with coffee and banked goods are far better candidates for trading in Bitcoin. When the farm that supplies their coffee beans and flour also accepts bitcoin and begins trading with them in bitcoin and possibly buys a cup of coffee from the cafe in bitcoin, then the circle is officially closed. The chances of this farmer accepting Bitcoin and holding Bitcoin is far far greater than a big heavy industry such as natural ores etc..

If we can close the circle in local communities first we will naturally see them connect via the internet. When these local merchants realize they don’t have to convert those bit coins to dollars and they can just purchase everything they need from their local communities and the internet the transformation will begin. Those second tier internet suppliers not accepting Bicoin will then have pressure to accept Bitcoin not only from their internet customers but also from the retail customers who are now holding bitcoin. The third their heavy industries shall soon follow. When this does happen it will be like a tidal wave and the price of Bitcoin will skyrocket as the selling pressure is removed from the exchanges.

The key to kick this off is to focus on the retail market as it has the best potential to close the circle.

Get ready for $100,000 Bitcoin.

Paxful

Paxful is a marketplace where people can buy and sell bitcoins directly with each other. You can get bitcoins instantly and pay with debit, credit, cash, Paypal and any currency.

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  • An often overlooked benefit of bitcoin is its scarcity and its growing ability to act as a long term store of value. I therefore believe bitcoin’s greatest utility is as this store of value. I encourage merchants to accept bitcoin as a means of acquiring them at a discount (at their cost of goods) and then adding them to their long-term savings.