Wednesday, April 06, 2011

Thirty-five dollar wires

We'll be in France for a couple of weeks next month, and paying for the house we're renting has involved three trips to the bank and will cost $35 (plus whatever costs are hidden in the exchange rate).

Granted, a couple of those trips to the bank wouldn't have been necessary if we'd gotten everything exactly right the first time. But still... I found myself thinking "paying for this using bitcoins would be SO much easier and less expensive."

Maybe paying for vacation rentals in other countries will be one of the "killer applications" for bitcoin; I bet vacation property owners are the kind of small entrepreneur that might like to cut out the credit card or bank middle-men.

3 comments:

Max said...

Gsvin,

I think the best starting place for bitcoin to gain traction would be a marketplace where buyers are often also sellers, and sellers often act as buyers.

For example, MMORPG gold is probably one of the more successful examples of a digital currency. One reason for this I believe is that sellers don't have a need to cash out to dollars since they will eventually use their gold for a purchase.

Contrast this with a market where buyers are almost always buyers and sellers are almost always sellers. Incentives are very low for anyone to hold the currency. This erodes most of the advantage bitcoin has over dollars, low transaction costs.

You are correct that any market where high transaction costs occur make bitcoin more attractive to settle payments. Wire fees are too high to last forever in the internet age.

Gavin Andresen said...

I think you're right-- and I know that owners of vacation houses are often world-travelers. I know of Bed&Breakfast owners in the US who regularly swap houses, for example, which is (essentially) being both buyer and seller using barter. If they got bitcoins from customers that they could then use to rent a nice house somewhere else in the world....

Max said...

Yes, in that case bitcoin would offer a big efficiency improvement over the barter system since traded houses might not be of the same value.

A quick search of google revealed several vacation home swapping sites. Maybe you could try to get one of them to use bitcoin to produce more efficient home swapping outcomes than straight bartering does. A home swapper could offer his home twice in a row, three way swaps become easier, etc...

There are probably more examples of exchanges like this. I'll have to think about it some more.