So if I want buy a cup of coffee for BTC, or a car, how do they calculate how many BTC I need to purchase it at that moment?
They probably use a program that calculates with the fluctuating prices of Bitcoin. Whenever you click "order," whatever the price is at that moment in time is the price you will be paying. I can't ever see Bitcoin becoming an adopted currency, just for the fact it's slow and very volatile. But I can however, see an alt coin becoming an adopted currency. The government keeps talking about making its own digital currency, but then that would just expose all the corruption that's already taking place in it. We wouldn't want to do that now would we???
As someone who has made hundreds of purchases (ranging from notebook computers, to airfare, hotel rooms, software, groceries, clothing, cell phones, other electronics, etc.) using bitcoin as payment, most retailers use a payment processor (most of the time it's Bitpay), which means the vendor is actually receiving $ and not bitcoin. Try buying a computer from NewEgg and choose bitcoin as payment, you'll be presented with a bitpay checkout process that is good for 30 minutes and as soon as bitcoin is in the mempool (transaction has been broadcasted on the bitcoin network but not confirmed on the blockchain), I would guess Bitpay has already hedged a portion of it through their machine algos trading on the big exchanges. Ironically, the purchase of fiat (purchasing $ from the bitcoin ATM, or in other words withdrawing $ from the bitcoin ATM) carries the highest "fee" in the form of a wide spread, while most bitcoin ATM's will sell bitcoin for as much as 12% surcharge, the bitcoin ATM will buy bitcoin for as little as 2% lower than official exchange rate, and even if it sounds low, is considered high when there is no noticeable exchange rate differential when purchasing from NewEgg. I suppose you could do much worse if you were dealing with physical gold, buying and selling. And on that note, I do not consider bitcoin as a good currency. I'm on the camp that it's a form of digital investment asset, which happens to offer the convenience of being able to spend (on coffee) bypassing the need to exchange to fiat. Also, was checking out Blockfi (a US regulated FinTech company) services, specifically interest bearing accounts for crypto deposits and noticed they offer loans backed by cryptos. Looked it up on YouTube and on an interview they mentioned 0 defaults on those loans, lol. I guess crypto folks don't want to lose what they value as their most important assets. You can buy a real estate or cars with bitcoin (and a few other cryptos). https://blockfi.com/home-loans/ https://blockfi.com/auto-loan/
If they want economic stimulus they many other options. They can use pension pumping or pension optimisation. http://morganisteconomics.blogspot.com/2019/03/pension-pumping.html?q=pension+pumping http://morganisteconomics.blogspot.com/2019/03/optimal-pension-saving.html?q=optimal+pension+saving They could also launch a secondary economy for supplementary income, see the R-PAID. http://morganisteconomics.blogspot.com/2018/05/an-answer-to-pay-disputes-make-sure-you.html?q=R-PAID
Old news. No impact on us. It is fairly common for C.B.s to have no specific reserve requirement. e.g., Canada, Australia, etc. The specific reserve requirement in U.S. was adopted because of the method the fed choose to target its funds rate (wholesale cost of money for banks). But there are other methods of doing this. Because of other regs, and practical reasons too, Banks have to maintain adequate reserves anyway, and at the moment they are finding themselves with more reserves than they want. Fed got rid of he specific requirement and are targeting the funds rate differently now. They wanted to drive the funds rate close to zero without going below. so they control the bottom end by just offering a little interest on reserves, no bank will loan its excess reserves to another bank below what the fed will offer, so that puts a floor under the rate which is adequate for right now. People forget that the main driver of the money supply is credit demand which I'm guessing is way down, millions out of work. Money is still in the economy but it is changing hands less rapidly because people aren't buying as much. (money velocity down) the Treasury asks Congress to compensate by spending into the economy, and that's a big help if that spending involves keeping food on the table and the lights on. This won't cause much inflation, except in specific areas that may actually be helped by the Pandemic -- you might see some inflation there.* What will surely cause inflation is if the fed doesn't drain money fast enough once business gets back on its feet and money starts moving normally. Think of two kinds of money. The net of government spending minus taxation -- that's outside money-- and the money created when new credit is issued via fractional reserve banking on the upward part of the credit cycle-- that's inside money. It is inside money that under normal economic conditions is the big driver of the money supply. The fed has relatively little to do with that. But they can keep the market happy by holding interest rates at rock bottom thus driving the dollar down. A cheap dollar gets people thinking they have more money than they do when they check their 401Ks -- cheap dollar drives up equities, ceteris paribus. They go out and buy a George Forman grill or some ninja gadget for $19.99, and the giant size box of masks. _________________________ *Dollar has been devaluing relative to other currencies, consistent with declining rates and selective price inflation, particularly in equities. Have you checked the price of lumber lately? Yikes!