Why you won’t be buying weed with Bitcoin(BTC) in 2018
A year or two ago, the thought of buying weed or seeds with Bitcoin was an exciting concept. It all sounded great in theory: anonymous digital payments that can be sent almost instantly around the world, redeemed for cash.
There were just a few problems:
1.) The price of Bitcoin spiked bullishly during late 2017. People who purchased items with Bitcoin in 2016 using Bitcoin surely feel foolish about letting that Bitcoin go when as of December 2017 it reached $20,000 USD per coin at some exchanges. Most people after going through the arduous process of identity verification just to purchase Bitcoin would rather hold their investment, as it will likely increase in value.
2.) It has come to cost a ridiculous amount of money to send Bitcoin. Miners fees are at an all-time high, a large amount of unconfirmed transactions sit in the Bitcoin network mempool (30K+ transactions, while processing only 2.81 transactions per second as of 27/12/2017 via this link) and Bitcoin’s rapidly growing network cannot scale accordingly. Additionally, each transaction in the Bitcoin network uses a gross amount of electricity — about enough power to supply the standard household unit for 9 days! (source) For these reasons, sending a small amount of Bitcoin to pay a bill is not the best solution.
3.) Most people want to use their bank card to purchase Bitcoin, as Bitcoin ATMs are not available everywhere. When you use your card to buy from an exchange, there are exchange fees that you have to pay. Read: What Bitcoin Exchanges Won’t Tell You About Their Fees These typically range from 3.75–10% of your order purchase. That’s just before you send or withdraw Bitcoin, hehe.
Let’s role-play a scenario where you would like to purchase a $100 bag of weed with Bitcoin in order to illustrate the difficulties:
>$100 USD cash in your hand.
>Deposit to bank account
>Purchase of Bitcoin on online exchange: minus 10% = You have $90 value of Bitcoin.
>Send Bitcoin to bud dealer: minus $8 miner fees = You sent $82 value of Bitcoin.
>Wait 1–2 hours for the transaction to confirm. = Dealer gets $82 dollars.
You lost about 20% of your original $100 dollars, plus you wasted all that time. That’s a bummer if you wanted a fat hundo sack of bud now. Hopefully you knew the fees involved beforehand. If you didn’t, well you just shorted your dealer.
1.) If you held onto the Bitcoin instead of spent it, you may get more than $100 dollars of value.
2.) You could have skipped all the steps above, gave the guy $100 dollars cash, and ended up with $100 dollars worth of weed. ¯\_(ツ)_/¯
Bitcoin has positioned itself to be a sort of digital gold, not to be utilized for micropayments, but rather for storing value; an investment vessel. That’s why you won’t see “buying weed with Bitcoin” becoming the fad of the century unless some things are changed about the way Bitcoin works… Lightning network maybe?
Alt-coins like Ethereum, Litecoin, IOTA and others are racing to try and fill Bitcoin’s clear drawbacks. To make P2P (peer-to-peer) transactions quicker and cheaper, and not just P2P but also machine-to-machine (M2M) transactions for the future. The IoT (Internet of Technology) future is certainly going to be built with digital currency facilitating the transfer of funds between different machine economies. Just take a look at the largest OEM supplier in the world, Robert Bosch Venture Capital GmbH (RBVC), who recently bought IOTA tokens (source) and has developed a working sensor prototype for the IOTA network.
While buying weed with Bitcoin may not be the smartest idea in 2017–2018, we shouldn’t rule out the reality of buying weed with crypto in the near future.