This means that if you call up Domino's and ask them "How much does a large pizza with extra cheese cost?", and they quote you a price in USD or JPY or not-a-toy, you can reliably expect that quote to last long enough to pay for the pizza. (There is a related concern, as a pizza providing entrepreneur, that your currency should be stable enough that sales of Monday's pizzas can reliably purchase Tuesday's tomatoes without losing half their value overnight, but it actually does Bitcoin way too much credit to say that that is the main reason you can't reliably make a bitcoin-accepting pizzeria.)
FYI this is a concern that companies using USD also face. (For example Apple will quote a USD price for a laptop that they will build using Yuan... even though the exchange rate between USD and Yuan is always changing).
In fact, your USD pizza parlor example is actually more complicated than you make it sound -- tomato prices, wheat prices, etc all fluctuate based on supply and demand.
I think this is a place where web entrepreneurs get confused because their high margins and large suppliers do such a good job isolating them from the problem: if web profit margins were 10% over the cost of hardware, and if you were running your own servers, you'd be exposed to the fluctuation of energy and bandwidth prices... you'd have the same problem predicting how much it would cost to serve a web request. (I imagine Google actually faces problems like these because of their scale).
So it's not like these problems don't happen when you use USD... it's that your margins are so high, and your providers are so good, that you've forgotten the problem existed in the first place. #firstworldproblems
For those curious how these sorts of problems are handled by non-web companies, the answer is derivatives. Apple will hedge their USD -> Yuan conversions as necessary with currency options, Dominos uses wheat futures, the farmers supplying wheat to dominos are using oil futures, and the oil company will have currency hedges for the 50+ countries they operate in. By buying and selling risk, companies are able to give you the feeling that prices are stable. Even though prices aren't stable.
If you'd like to do something like this for your bitcoin site, you should check out https://icbit.se (a bitcoin derivatives exchange)
I'm kind of disappointed with your attitude towards bitcoin since I otherwise highly respect your writings and opinions. A software entrepreneur should see the things that bitcoin can potentially enable. Just that it is now just used by black markets and some tech freaks, doesn't mean that this will be the case forever.
I never got this argument. Currently the money you pay with in the shop is the only one associated with funding wars, gangs, human trafficking, etc.
One thing that leaves a nasty taste in my mouth is that Bitcoin encourages people to use services that would otherwise be referred to as money launderers, all in order to try and guarantee their anonymity.
Please elaborate on what you're saying. I don't see that Bitcoin encourages anybody to do anything -- Bitcoin just is.
It's not clear to me what services would otherwise be referred to as money launderers, or how they are promoting anonymity. Paypal? Mt.Gox?
Is it money laundering when you buy Dominos gift cards, or phone cards? Pre-paid mobile phones that you can recharge using cash at any gas station? Web hosting from GoDaddy?
https://en.bitcoin.it/wiki/Anonymity
The link you passed seems to start with the misconception that Bitcoin is actually anonymous -- that users of Bitcoin might come because they think it makes them more anonymous.
I was also interested to read http://en.wikipedia.org/wiki/Structuring
Did you know it's called "smurfing" when you read and understand the law, and make your deposits in such a way that they will fly under the radar?
Money laundering just seems like such a nebulous crime to me. Maybe it's because I've never imagined having enough money to bring the scrutiny of federal agencies down on me. I'm still paying so much interest every year in federal student loans, at the end of the year they actually pay me just to have a job and keep it.
EDIT: I misinterpreted what you said. Yes, I do think it's freaky now that you put it that way. However it's not the act of making transactions over $10,000 that's illegal, it just brings increased scrutiny on you. IANAL though, and I don't know how they can determine that your transactions shouldn't be "just under the limit" that they decided arbitrarily was the amount that they should watch for.
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That's not what I thought was freaky. It's that it's actually called 'smurfing.'
You can't disagree that money laundering is a nebulous term! My understanding is that if you're not doing anything illegal in the first place, then it's not illegal, or money laundering, to attempt to remain anonymous and make your transactions anonymous, however, if you are attempting to make your money less traceable because you want to cover up your illegal activities (say tax evasion), then it's an extra charge for the district attorney to get you with.
Have you ever heard of being charged with conspiracy after the fact, when you've already been exonerated of the charge that you supposedly conspired to commit? It happens.
I don't understand why you think this is a point to be made. Yes, the ingredients/labor cost of a pizza from Domino's is USD-relative and the value of this new currency is volatile.
