Bitcoin price is plunging? No worries. When your granny will be able to buy a burger with a one-click app, it will come up again

Why is the Bitcoin Price Going Down? The answer is simple: we are starting to use Bitcoin to do things, buy goods and services, as opposed to holding Bitcoin for speculation.

If everyone wants to buy and nobody wants to sell, the price rallies. If more people want to sell, the price goes down. This basic principle of economy applies to everything, including Bitcoin. The truth is that so far, the Bitcoin economy has been mostly based on speculation.

But there are emerging more and more ways to let consumers spend their Bitcoin in the real world. The most recent example is Australian company CoinJar unveiling the country’s first Bitcoin debit card, which seems especially user-friendly and integrated with the existing Australian payment infrastructure. More people will start using Bitcoin to buy groceries and other goods. Their bitcoins will be converted to Australian dollars on-the-fly (because the merchants must receive Australian dollars). This is a sell order that drives the value of Bitcoin down. In the US, consumers can shop at Sears, Home Depot, Whole Foods, and many other retailers, with the awesome Gyft cards system, using a convenient one-click app.

Other similar initiatives are emerging, but most of them convert bitcoins to US dollars for the retailer, which drives the value of Bitcoin down.

A guy who wrote this article is also paid in Bitcoin. Since he also needs to put food on the table, he will use Bitstamp and exchange the bitcoins for local currency in my bank account. More and more people are paid in Bitcoin, and the majority do just that, which drives the value of Bitcoin down.

A positive sign

If this analysis is correct, we are starting to observe a structural downward trend, and this trend is positive, since it shows that the Bitcoin economy is becoming real, with less speculation and more use as a currency for day-to-day living. That's the first phase of the real Bitcoin economy.

That might seem quite irritating for those who possess thousands of bitcoins. But don’t worry, the value of your bitcoins will go up again.

When will it happen? When more consumers, instead of converting their Bitcoin to cash to buy groceries, will buy their groceries directly in Bitcoin.

This will be the next phase of the real Bitcoin economy.

This won’t happen in a couple of days, though. The majority of the merchants that accept Bitcoin sell electronic goods and services online, but regular guys don’t dream of electric sheep and don’t eat bits. The good news is that more and more brick-and-mortar sellers accept Bitcoin, in big cities with a critical mass of Bitcoin users.

Those who live in New York could pay most of the stuff they need in Bitcoin, without going through a cash exchange. But, even in New York, only technically savvy consumers can do that.

When McDonalds will accept Bitcoin directly, and your grandmother will be able to buy a burger with a coupon or a simple one-click app, the value of your Bitcoins will go up again. So, the best you can do is to think of creative ways to bring about the next phase of the real Bitcoin economy.