The Toy-Hungry Multimillionaire Market That's Completely Underserved

A scheisseload of US Dollars

In 2010 and 2011, a lot of geeks acquired something called bitcoin. It’s a novel form of currency that breaks all the rules you know and redefines currency as we know it. In 2011, this currency was worth mid-single digits per “coin”. Today, one such coin is worth upwards of a thousand US dollars, and newly-minted millionaire geeks are hungry for toys – but almost nobody’s selling.

A lot of geeks are sitting on a ton of money, and they’ve now had the value of that money appreciate enough to spend 1% of that wealth to cross off pretty much every item on their toy wishlists all at once, and pretend it’s Christmas.

The problem?

Way too few stores are selling. You have a bunch of geek multimillionaires out there who are hungry – no, famished – for toys, and all the toy stores tell them to take a hike, because they won’t accept the bitcoin worth millions and millions today.

In a way, that’s understandable. Any deviation from an established workflow at any business – retail included – means a ton of work, and in particular, you don’t mess around with your payment workflows. And accepting a new currency into a business? That’s not just a ton of work, that’s a ton of risk, too, even in the face of an underserved multimillionaire market.

The thing is, the money is real. You can accept it much easier than you accept credit cards, and at a much lower rate, getting your usual central-bank money deposited into your bank account the next day (instead of the next week, or next month, as is the case with credit cards). Also, there are no chargebacks – the currency and its payment system is designed to not have any. Bitpay is one company processing such payments, depositing the next day, and charging 1% per transaction or USD 30 per month and 0% per transaction. What’s your current payment processor charging for access to multimillionaire markets?

Again, the money is real. It’s just an uncommon type of money, but there are middlemen who solve that problem for access to this market.

Yesterday, there was news that you can now buy a lot of geek-related stuff in the United States with bitcoin, from the electronics store TigerDirect. That’s a marked improvement just over the course of a day – each first-mover has a chance to capture the market for their niche, but this market segment is still ridiculously underserved. First, geeks don’t just exist in the United States – I’m located in Europe and I will want to buy from stores located on the inside of European Union customs walls, because I hate customs red tape and 30-percent surcharges that happen otherwise. Second, what do geeks want?

I’m looking for servers right now, just to look at myself. I’m sick and tired of the noise from my Dell PowerEdges, having put them on the balcony to get rid of the noise, and I want 128-meg or 256-meg octocore rackmount servers that don’t sound a whisper, silenced by enormous Noctua heatsinks or similar. This is off-trail stuff that still isn’t too odd to imagine somebody would want. To illustrate, I tried asking EndPCNoise.com if they accepted bitcoin for building such a server and didn’t even get a reply. That surprises me, and is illustrative of the situation at large.

Also, it goes beyond technical toys. Way so. Multimillionaire geeks with bitcoin are human beings and have just as diverse fields of interest as any other human beings – if anything, they tend to be more diverse than the average person, easily to the point of eccentricity. Again, for myself, I’ve been looking for camping and hiking gear for bitcoin – for buying inside the EU, nota bene. No joy.

There is a tremendous first-mover advantage here waiting to happen. If a market broker-portal like Ebay were to start processing payments in bitcoin, then that would be it – they would own this market, being able to serve the most odd and off-trail requests. But we’re not at that point. There are multimillionaires out there who want to buy your stuff, in the US, EU, and elsewhere, and they are asking you to accept their money.

It doesn’t matter that their bitcoin money looks unusual from euros or dollars. Somebody else can take care of that problem for you and give you access to this market, and as usual, “the firstest gets the mostest”. What are you waiting for?

Rick Falkvinge

Rick is the founder of the first Pirate Party and a low-altitude motorcycle pilot. He works as Head of Privacy at the no-log VPN provider Private Internet Access; with his other 40 hours, he's developing an enterprise grade bitcoin wallet and HR system for activism.

Discussion

  1. Tor Skude

    Thanks to the guys at joinsnapcard.com, you can spend your bitcoins at a lot of online stores. including eBay. They take a 2% fee though.

  2. Charbax

    Bitcoin is a scam, a so-called pyramid scheme or ponzi scheme. Bitcoins are eventually worthless. People paying $1K per bitcoin at the moment are eventually going to loose everything.

    1. Rick Falkvinge

      While you’re sitting there smug people except you will lose, a lot of people are not losing.

      Here’s a small hint: A pyramid scheme (“Ponzi scheme”) is so named because it is, you know, shaped like a pyramid, with somebody on top.

      This is a financial ecosystem, which is something completely different in every aspect.

      People who go in at $1k are still very, very early adopters and will be happy when each coin is at $1M.

      Cheers,
      Rick

      1. LennStar

        1$M would mean that 10% of money transactions are paid in Bitcoin. I think it is a bit much.
        But 1% of all transactions is quite feasable in 10 years (=100’000$/BTC)

        Anyone who wants to early adopt though could have a look (warning: advertisement!) at Gridcoin.
        It combines BOINC (humanitarian) CPU-donating research with Bitcoin. CPUMiners get GRC for running BOINC (= the 200.000 peopel running BOINC could get Gridcoins for basically free), while GPU Miners, who forge the chain, are getting more GRC depending on BOINC credits.
        Also it will include an algo to put parts of the GPU to sleep (savong energy OR beeing able to contibute to BOINC).

        Hey, Rick, run it on each of your (old) servers or computers to gat a whole lot of the GRC – while researching cancer treatment or such like 😉 You can reconfigure the old hardware for energy efficiency, does not have to run as fast as possible.

        1. Rick Falkvinge

          You’re forgetting that bitcoin is not just a transaction currency, but also a very efficient store of value. As such, it competes with the entire range of investments – art, buildings, gold, etc.

        2. Zirgs

          (=100’000$/BTC)
          —————
          Translation:
          BUY TODAY – PRICES WILL BE HIGHER TOMORROW – HURRY, HURRY, I NEED TO CASH OUT MY COINS!!!!

        3. Zirgs

          Dogecoin is even more efficient store of value.
          Faster transactions and more decentralized network.

      2. Charbax

        bitcoin is exactly a pyramid scheme. You’re saying “a lot of” and “many people” getting rich on bitcoin, that is just not true. Very few are the ones who got in early into this pyramid scheme, and all smart among them have already converted their bitcoins back to real money by now. Not selling while you are ahead is a giant mistake. Just as the dozens of stories of bitcoin users loosing all their money through bitcoin scams (so call bogus wallets), I am not going to be surprised if it turns out something about bitcoin stops working globally, perhaps something to do with its encryption or p2p networking system, and every bitcoin is worthless overnight. Also it’d be easy for an other much more reliable and worthy online currency to come along and also render most bitcoins worthless. Rick, if you’re one of those lucky ones who invested in bitcoin 2-3 years ago, I certainly hope you sell your bitcoins now and make a lot of money, so that you can help thepiratebay and whatever else needs bankrolling.

        1. TG

          You seem to be confused about what a pyramid scheme is. What Bernie Madoff ran was a pyramid scheme. He gave the illusion of getting his investors spectacular returns for their capital, but these returns were in fact paid from the capital of newer investors. Assuming a finite supply of investors, it was inevitable that some (the last to put their money in the pot) would lose their investments.

          Bitcoin, by contrast, is an asset, just like gold, silver, land, antiques or domain names. The value may go up or may go down. You might be right that Bitcoin is overvalued. It is possible that Bitcoin is in a bubble, but that does not make it a pyramid scheme. There is no inevitability that someone will lose their shirt by investing in bitcoin.

          As for something that might break Bitcoin overnight, the only thing I can think of is a quantum computer (which would be able to crack the private keys and thus access all the Bitcoins). This is something to be concerned about in the long term (especially since Snowden revealed that the NSA is doing research into quantum computing), but it is still very much a theoretical idea rather than a practical reality, and is unlikely to be a danger until a decade or two’s time. In any case, quantum computers would also break a lot of other things, including the conventional banking system.

    2. Ilja

      When you are making accusations you better have proof, or you’ll end up looking like a fool. It’s one thing to say that you think Bitcoin isn’t a good idea, and completely another thing to say that Bitcoin is a pyramid scheme or a Ponzi scheme. Where’s your evidence to support your claims?

      1. Charbax

        My proof is in Mt Gox and all the other online BitCoin walletgs that have already stolen hundreds of millions of dollars from the scammed populace who bought into it.

        1. @ALphaMach1ne

          I know I’m at risk of stating the damned obvious but no one else has, despite their very good explanations:
          Your reasoning for BTC being a Ponzi Scheme+/or “a bad idea ” seems to lie in it’s portability +/or inherent security, well correct me if I’m wrong but cash-money (that exciting paper) does not come with it’s own in-built security team or anything does it? And there’s certainly no centralised worldwidely accessible Accounts that tracks+ documents ownership. I believe I’m correct in saying “a few quid” has been stolen in the course of history, Scam Wallets +. Sham Exchanges seem to be BTC’s weakness, in your opinion, well that sury is a fault with the Market + Information, not the product.
          I don ‘t know of a Fiat Currency or asset class that has not been subject to abuse, theft+ misappropriation by deceipt.

    3. Anonymous

      But that does;t matter if al you do with them is accept them as payments and then cash them in (with a suitable premium for fluctuating exchange rates)

  3. LennStar

    I just see it, not only Tigerdirect now accepts Bitcon, but also NaughtyAmerica. (Porn.com already has, with 25% income in Bitcoin).
    If the Porn Industry is in it, then its a deal. And now the porn-snowball is rolling.

    1. Rick Falkvinge

      If the porn industry has adopted it, it’s the future. Remember that they had streaming video in 1995, ten years before YouTube.

      1. Anonymous

        I agree. Just look at what happened to VHS and Betamax. VHS won against Betamax because VHS was used by the porn industry.

    2. slacker

      The porn industry has some extra reason to accept bitcoin. Since it’s nearly anonymous, it’s easier to accept money from people who would rather not have porn payments on their bank statement. The more kinky stuff, the more important this becomes :-).

      Of course, the more people have bitcoin in their possession (originally for buying porn), the more non-porn businesses will start to accept it too. Network effect ‘n’stuff.

  4. Ekir

    Then you have to go to the stores that does sales for bitcoin and promote them (even as they are relatively few). Like bit electronics. I bought my phone from there. http://bitelectronics.net

  5. Darryl

    Shame you only want servers – if you wanted a lovely new Barbour jacket, we’d be happy to take your Bitcoins! http://smythscountrysports.co.uk :)

  6. jcm

    but bitcoin is still a transactional currency. you need a bank and money to buy bitcoin online, then trade with bitcoin, then a bank again to change to money to pay your bill at the bar, restaurant, etc.
    right now bitcoin is more like a credit card surrogate and, although they have different (opposite) aims, they both have the same technological needs to develop. even in the usa where credit cards (that is, as an electronic payment figure) are almost ubiquitous, you still need cash for many things (like buying a hotdog in the street).
    now, i understand that bitcoin is not here to replace ALL currency, but i believe that, while there’s an alternative (an easy, already established, managed by someone else-for profit- alternative) like credit cards, bitcoin (or litecoin, gridcoin, johngaltcoin, etc) will develop very slowly, perhaps too slow to survive on the long term.
    i really hope bitcoin sticks and grows, but how can it become an alternative when the countries that have the infraestructure to use it are also the ones where they have more options?

    1. LennStar

      There is no reason why paying a hotdog with Bitcoins should not be possible. (You can buy a beer in cafe, so why no hotdog?)
      In fact, it would be a lot easier then creditcard. The Hotdog seller just needs to place his adress on his jacket, you scan it with your smartphone, press “pay” and show the “I have paid to…” message.

    2. slacker

      The same could be said about credit cards a few decades ago. With time, things changed. Once the bitcoin-accepting market grows, you’ll be able to fulfill increasingly more of your needs without dropping to another currency.

      And while straight gov’t-issued fiat cash will still have its’ place, I would like to point out that the barrier of entry to accepting bitcoins is much, much lower than with credit card payments. You need literally just an internet-connected app-enabled device (e.g. a smartphone), and off you go! Compare that with the trouble needed to get a card terminal and a contract with a payment processor… Tiny businesses like hot-dog stands are much more likely to start accepting bitcoins than credit cards :-).

  7. Zirgs

    There is no need to buy hotdogs with bitcoin, because I have euros that do not increase in value.
    In fact there is no reason to buy ANYTHING with bitcoin if it keeps increasing in value.
    Bitcoins are seriously overvalued.
    There is no finite supply – there are tons of currencies like it – and anyone can start a new one.
    There is no logical reason why 1 bitcoin costs 1000$, but 1 dogecoin only 0.013 eur and not the other way around.
    Dogecoin is in fact a better currency, because transactions can be confirmed quicker and it is possible to mine it using ordinary graphics cards – dogecoin network is a lot more decentralized.

    1. David

      Why is an ounce of gold $1270 whilst an ounce of silver is only a small fraction of that?

      1. Zirgs

        Dogecoin just proves that cryptocurrencies can be printed out of thin air.

        1. LennStar

          There was never a need of a proof for that.
          EVERYONE can make a Cryptocon. I think Bitcoin developers especially said that.

          The reason it is worth something is a) intrinsic – like the Gridcoin I have mentioned, because it is proof you have done something humanitarian, or in case of bitcoin that you were on this amazing new thing – and b) invested something – bitcoin means in hardware and energy. And of course, what is the reason for all Fiatmoney to work: believe. Believe that you can exchange it for something else in the future.

          b) is the same as a lot of the old money systems like shells, tea, whatever.

      2. B. Anon

        Not to harp at the point, because there’s some validity to it, but for pure volume alone is one thing. I believe the last number I read was close to 175,000 tonnes of gold have been mined, as far as is known in history. In comparison, the current mining of silver amounts to over 20,000 tonnes per year and has been continually increasing since the 1940s.

        Just sayin’. I wont textwall about other various properties and applications.

        1. slacker

          Properties are irrelevant. It’s only supply and demand that matters for formation of prices.

          Of course, demand for a good (*any* good) is related to its’ applications. “Store of value” being the primary application for silver and gold.

  8. TGD

    Even if bitcoin value drops to zero related to fiat currencies, wouldn’ t the largest p2p network ever created by man worth anything…? Euros are loosing value everyday although invisible to most. 200, 100 and now 50 eur notes are near impossible to withdraw from atms, has anyone noticed? Coupons, tickets, vouchers, discounts on plastic cards, restaurant eurotickets, i have them more than REAL euros, has anyome noticed it? Why is bitcoin so bad in this context i have described? Next time at any type of store, ask if they STILL accept euros…you’ll be surprised upon the reactions…people now something’s wrong with the current euro system, but unlike me…they are ashamed of questioning the standards. Try it for yrself a laugh at the end will be guaranteed.

    1. Zirgs

      Low inflation is nothing bad and euros lose value by design.
      Just like most other fiat and some cryptocurrencies.
      Euros in your credit card are exactly the same as euro banknotes in your wallet.

      Money is a medium of exchange and NOT an investment – that’s what biotcoin designers got wrong..
      If you want profit or long term store of value – go and invest in something – real estate, land, company, natural resources, whatever.

      1. TGD

        I didn’t said euros was an investment…can u tell how many there are in circulation? Not credit, PAPER in circulation..can u tell the difference if BCE injects 2 or 3 billion on top? Imho fiat money has already dissapear, only exists BECAUSE of your notion of it, no one can recall life WITHOUT IT (alive i mean..lol) but the reality is, as u said, fiat is only for exchange, no backing from the start (debt creates money) and no backing at the end (fewer and fewer paper). Go and do the test for yrself. Ask some shop vendor upon payment if they still accept notes, last one i got was like: ohhh..i really dont care u can pay me with monopoly notes if u like to!!

  9. […] The Toy-Hungry Multimillionaire Market That’s Completely Underserved […]

  10. […] or anywhere near it. Each I interpret based on what they appear to be up to. Today there is an article on cryptocurrency. I’m not going to be making a lot of investment decisions based on this, but it does provide […]

  11. Zirgs

    Did you know that you can’t get money out of mtgox?

  12. jose

    First of all, sorry for my English.

    Congratulations Rick, as another guy said previously, you could use some of your millions to back the Pirate movement, that always has lacked of that financial support.

    I think cryptocurrencies are here to stay, but Bitcoin, although has the advantage of being the big first (so it hits twice) and of his good name (like Pirates), and getting advantage of common inculture among journalistsy, still has very strong drawbacks to become the crytocurrency that will eventually extend enough.

    The first problem is that now it is overvaluated, as Rick stated last November, if I remember well, when it was exchanged at around 70$.

    People that buy at 1000$ could be early adopters if there was a market for it (this post states that there is almost no market) and if a year ago it costed 900$ for example. If there is no market, and the price rises so rapidly, its all about especulation.

    The second reason is that people are not going to accept a currency that has not been fairly distributed if there are better alternatives. For example, I heard about the bitcoin years ago, but I didn’t have the infraestructure that I could have had in case of working as an IT administrator in a public institution like an University or school (imagine a classroom of PC’s mining in the bitcoin early times, even without having to pay for the electricity costs)

    Do you think I am going to contribute to that injustice?

    The cryptocurrency that will extend is one that mixes the good points of bitcoin with the ones of the basic income. For example, a cryptocurrency that is already mined but now owned but anyone but the “central bank”, and that any people that registers for it will get a basic income of it (each day, week or month.)

    A cryptocurrency like the bitcoin that mimics the limitations and injustices of real world (there is petrol in my country, I get rich. I have money to buy a mine and the machinary, I get rich) is not going to triumph in the long term, if there is another alternative more fair, and that alternative it will appear soon or later.

    A cryptocurrency that will identify each user with third party systems (such as electronic ID’s) and that will give a basic income to each one. That will triumph. And people will gain money by securing transactions, but not by mining.

    1. jose

      Well, the article of Rick talking about the overvaluation was of September (with an exchange value of around 140$)

      https://falkvinge.net/2013/09/13/bitcoins-vast-overvaluation-seems-to-be-caused-by-usually-illegal-price-fixing/

  13. Antimon555

    I think Bitcoin will die soon. For you who read Swedish, you can read about it on my blog.
    http://integritetsnytt.wordpress.com/2013/12/10/bitcoin-framtiden-falskt/

    Others can try Google Translate or similar to can reading bloggposten on Engelska language :-)

  14. Googla

    Quite embarrassing that Falkvinge is trying to con companies that they will make massive amounts of money by accepting bit coins. Most companies that are accepting bit coin today sells for very small sums.
    And there is a big risk of fraud in so many ways when one starts accepting bit coins. Quite a few bitconartists have been buying stuff with stolen bit coins and by selling things (that don’t exist) in classified ads and asking the buyer to pay the money to a bitcoinexchange who the sends it to the scammers

  15. Birdie Cashmere

    Hello Bitcoin millionaires,

    As the wife of a bitcoin geek I know how hard it is to impress the females you know about bitcoin.

    What does impress us is quality and style. Cashmere is the pinnacle of fabrics loved by women because it is so soft, light and warm. I sell my beautiful Birdie Cashmere capes, ponchos and wraps for bitcoin.

    Send me an email if your are interested.
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