Bitcoin

[Hoofy]

_rubinho_ said:

So the hairdresser on the high street advertises their prices in GBP as they normally would and offers payment in Bitcoin (as well as cash, debit card, credit card etc.) When a customer wants to pay with Bitcoin the hairdresser's POS terminal (or smartphone app) converts the GBP price into BTC at the current exchange rate (be that real-time or weighted daily average) and the customer transfers that amount. At that point the hairdresser has received an equivalent value to the cost of the service in Bitcoin. The only time they need to worry about huge fluctuations is if they then don't convert back to local currency quickly but leave it hanging around in BTC. If they do this, they're as likely to gain from a large upswing as they are to lose from a large downswing (but hairdressers aren't usually moonlighting currency speculators). If they have a service which allows them to convert to and from local currency quickly at efficient rates they don't have to worry and the Bitcoin aspect almost becomes transparent. I agree that it is the development of these types of service on top of the underlying protocol and currency that will allow Bitcoin to be appropriate for a wider range of businesses but it is quite a way from being there currently.

That's my understanding of your objection unless I have got the wrong end of the stick.

Ah, I don't see the problem especially if it is done on the POS terminal and especially if it immediately pays the retailer in GBP but then why does Bitcoin even need to be offered apart from for the very occasional smart-arsed customer?

We're not talking about going from bartering and trading goods to forming a portable currency - it's simply going from one currency to another with no obvious benefits to the average business owner. Everything works fine as it is. Nobody cares about what goes on in the background.

I guess you could say the same about the Euro. If a client wanted to pay me in Euros, I'd just insist on payment in GBP.

[_rubinho_]

Hoofy said:

Ah, I don't see the problem especially if it is done on the POS terminal and especially if it immediately pays the retailer in GBP but then why does Bitcoin even need to be offered apart from for the very occasional smart-arsed customer?

We're not talking about going from bartering and trading goods to forming a portable currency - it's simply going from one currency to another with no obvious benefits to the average business owner. Everything works fine as it is. Nobody cares about what goes on in the background.

I guess you could say the same about the Euro. If a client wanted to pay me in Euros, I'd just insist on payment in GBP.

There are some businesses it would suit better than others. A hairdresser might not see the benefits of accepting Bitcoin (unless they're near Old Street) in the same way as a wholly online business won't see the benefits of taking cash. There are business benefits, for example Bitcoin transactions are non-reversable by raising a dispute unlike Paypal.

It may be that in time to come, people receive Bitcoins and spend them like they do cash and with a fairly stable exchange rate to the local currency the need for constant conversion in and out is unnecessary. A parallel economy would exist with Bitcoin being used like a more flexible cash alternative with a more-or-less constant value to local currency. This is a long way off!

[Amateurish]

I just don't see any possible benefit for most businesses. It would be just like accepting payment in foreign currencies - why do it? Unless the business owner had also decided to take a punt on investing in Bitcoin, in which case there would be some very minimal savings in having payments made direct in Bitcoin.

[Hoofy]

Surely, it would be easier if EVERYONE just accepted GBP.

[jammy_basturd]

_rubinho_ said:

So the hairdresser on the high street advertises their prices in GBP as they normally would and offers payment in Bitcoin (as well as cash, debit card, credit card etc.) When a customer wants to pay with Bitcoin the hairdresser's POS terminal (or smartphone app) converts the GBP price into BTC at the current exchange rate (be that real-time or weighted daily average) and the customer transfers that amount. At that point the hairdresser has received an equivalent value to the cost of the service in Bitcoin. The only time they need to worry about huge fluctuations is if they then don't convert back to local currency quickly but leave it hanging around in BTC. If they do this, they're as likely to gain from a large upswing as they are to lose from a large downswing (but hairdressers aren't usually moonlighting currency speculators). If they have a service which allows them to convert to and from local currency quickly at efficient rates they don't have to worry and the Bitcoin aspect almost becomes transparent. I agree that it is the development of these types of service on top of the underlying protocol and currency that will allow Bitcoin to be appropriate for a wider range of businesses but it is quite a way from being there currently.

That's my understanding of your objection unless I have got the wrong end of the stick.

Wouldn't this mean that paying in Bitcoin in this type of situation would always be slightly more expensive? There are nearly always transaction fees in converting one currency to another - or do you expect that vendors will swallow these conversion fees in the same way that most swallow credit card charges?

[_rubinho_]

jammy_basturd said:

Wouldn't this mean that paying in Bitcoin in this type of situation would always be slightly more expensive? There are nearly always transaction fees in converting one currency to another - or do you expect that vendors will swallow these conversion fees in the same way that most swallow credit card charges?

I imagine there would be a spread built into the currency conversion so the transaction might be pennies more expensive and the service providers would make their money through volume and efficiency. In effect then a little like using your no-fee credit card in a foreign country but hopefully at less scandalous rates.

[_rubinho_]

Amateurish said:

I just don't see any possible benefit for most businesses. It would be just like accepting payment in foreign currencies - why do it? Unless the business owner had also decided to take a punt on investing in Bitcoin, in which case there would be some very minimal savings in having payments made direct in Bitcoin.

True, unless it becomes a very easy to use day-to-day payment method you might be right. The benefits of accepting Bitcoin or using a payment system with Bitcoin as the underlying mechanism for a business selling to multiple regions could be huge.

[FredClogs]

We already have a monetary system that no one really understands under the control of shady and corrupt institutions which have a habit of disappearing, that is volatile and unpredictable unless you're well connected, why would we need another? (unless you're buying shady stuff from criminals on silk road obviously)

[shigs]

Amateurish said:

I just don't see any possible benefit for most businesses. It would be just like accepting payment in foreign currencies - why do it? Unless the business owner had also decided to take a punt on investing in Bitcoin, in which case there would be some very minimal savings in having payments made direct in Bitcoin.

Theirs no downside as you technically don't have to hold your received payment in bitcoins. You can price your goods as you naturally would, it can be instantly converted and the required fiat currency will be sent straight to your bank account just like any other merchant service. Providers such as bitpay can offer this service and charge only 1%.

Overstock.com is now processing $1m per month in bitcoin payments. And dell has just recently begun accepting bitcoin. Yes I agree it is a small pool of a very "particular" type of customer at the moment, but there's no downside risk to accepting bitcoin (if you convert 100% to fiat) and your business can be geared to accept bitcoins in as little as 10mins.

[Amateurish]

shigs said:

Theirs no downside as you technically don't have to hold your received payment in bitcoins. You can price your goods as you naturally would, it can be instantly converted and the required fiat currency will be sent straight to your bank account just like any other merchant service. Providers such as bitpay can offer this service and charge only 1%.

Overstock.com is now processing $1m per month in bitcoin payments. And dell has just recently begun accepting bitcoin. Yes I agree it is a small pool of a very "particular" type of customer at the moment, but there's no downside risk to accepting bitcoin (if you convert 100% to fiat) and your business can be geared to accept bitcoins in as little as 10mins.

OK I get that argument, but then how is it any different to accepting payments in any other currency. Should I offer my UK customers the chance to pay in Euro or Dollars? I accept that I could, but what is the benefit?

And if bitcoin crashes (again) then presumably bitpay will go under, and I will lose my month's turnover. Presuming they are not FSA regulated.

[jammy_basturd]

FredClogs said:

We already have a monetary system that no one really understands under the control of shady and corrupt institutions which have a habit of disappearing, that is volatile and unpredictable unless you're well connected, why would we need another? (unless you're buying shady stuff from criminals on silk road obviously)

But Bitcoin is not under the control of anyone - the whole point of digital currencies like Bitcoin is that they are distributed.

Having said that, I don't believe Bitcoin will be truly accepted until -

• It achieves some stability.
• It becomes as easy as integrating Paypal into a website
• Someone starts offering POS systems that can process Bitcoin that are as easy as using any other POS system.

[shigs]

Bullett said:

So it offers me no benefit as a Uk business? I can transact in £ $ Eu or many other currencies. I don't see why I would choose something else.

Also how would these people with no banking access actually acquire bitcoins?

Hey Bullett,

Depends on what your UK business is?

For example, The internet has allowed for businesses to have global reach, if you're a content / online service provider you can conduct your business with little friction and deliver your goods efficiently & instantly. However there's no currency which is native to the internet so moving money around is cumbersome, expensive and full of friction due to the need of centralised actors.

So, your ready to deliver your side of the trade instantly but your subject to 3rd party risk as merchant providers typically take T + 3-7 days for settlement and international bank transfers take equally as long, not to mention expensive.

With a decentralised peer to peer currency and payment system these hurdles are overcome, as your global customers can now pay you directly in bitcoin instantly for almost zero fee as easy as sending you an email.

People with no traditional banking facilities can offers products / services in exchange for bitcoin.

Hope this helps a little.

Also, I would just like to point out that bitcoin is not perfect, liquidity is a major drawback right now especially from a medium of exchange standpoint but the underlining technology and potential upside to its application far out weighs the negatives of being the new kid on the block right now. All IMO of course.

Edited by shigs on Wednesday 26th November 15:53

[burwoodman]

shigs said:

Bullett said:

Why would you choose to use bitcoin over real money?

See that's the point.... You've hit the nail on the head! for the first time ever we actually have a choice!

Bitcoin can allow for transactions that "real" currency just simply can't facilitate.

We live in a world where 2billion people have access to the internet but only 1 billion of which have what we would call "modern" banking facilities. Bitcoin has much less importance for developed nations where financial equality and neutrality is not a key concern of ours. Bitcoins real potential is literally catering for the 6 billion people on this planet who have ZERO access to financial markets / banking (2.5billion of which are adults).

What complete nonsense. bitcoin is less secure. Not portable and black market. It's a magic beans concept that will never fake off because, for one the major governments gave already crushed it

[northwest monkey]

shigs said:

However there's no currency which is native to the internet so moving money around is cumbersome, expensive and full of friction due to the need of centralised actors.

Edited by shigs on Wednesday 26th November 15:53

You're right. There should be some way of someone in say Brazil being able to see my goods on the internet, buy them and pay with their local currency then it end up in my account in my currency. If someone invented this way of doing business, they could call it something like "Paypal".

No way would I entertain taking payment in Bitcoin - too volatile and too many crooks involved.

[jammy_basturd]

northwest monkey said:

You're right. There should be some way of someone in say Brazil being able to see my goods on the internet, buy them and pay with their local currency then it end up in my account in my currency. If someone invented this way of doing business, they could call it something like "Paypal".

No way would I entertain taking payment in Bitcoin - too volatile and too many crooks involved.

Hmmmmm.

[andy_s]

They are a pain to get hold of, a pain to understand, and risky to have escrowed at a marketplace. Add in the laundry service and having your wallet on a flashdrive and it's a right old pain.

The market is open for someone to be the google/apple of bitcoin, if ever something ever needed an urgent UI upgrade its bitcoins.

Even with a much streamlined approach I can't see the advantage for the average Joe though; sure it has idealistic potential - but what it gains in freedom it loses with high risk (at the moment).

I've used it a few times, you have to jump through hoops but it works fine. I just can't see its everyday use.

[dfen5]

I had a read up on it out of interest. Think the only thing I read that summed it up, which I now can't find, described how bitcoin is in effect a pyramid scheme.

A real note has the "Promise to pay the bearer.." in relation to its value in gold (obviously historically).

bitcoin has no such promise, it's worthless at the end of the day. Those that get in early, as in ages ago, will make a few quid I'm sure. £700+ for one bitcoin that's now £270? No thanks..

[_rubinho_]

dfen5 said:

I had a read up on it out of interest. Think the only thing I read that summed it up, which I now can't find, described how bitcoin is in effect a pyramid scheme.

A real note has the "Promise to pay the bearer.." in relation to its value in gold (obviously historically).

bitcoin has no such promise, it's worthless at the end of the day. Those that get in early, as in ages ago, will make a few quid I'm sure. £700+ for one bitcoin that's now £270? No thanks..

It's not actually worthless. Bitcoin miners i.e. computers running the mining algorithm to generate a bitcoin, consume energy and convert it into a unique (albeit virtual) object thus inferring it with some inherent value. As the price of bitcoin goes up the difficulty of the algortithm gets harder thus taking more computing power and therefore energy to produce. It's equivalent to digging some gold out of the ground and minting it into a coin; the scarcer the gold gets the more expensive the coin is to produce thus it's inferred with greater value. There's also a finite number of bitcoins that can ever be produced. There's no central machine (or individual) deciding on how many bitcoin there are and the nature of the network and cryptographic algorithms ensures this shouldn't happen. People can't just magic them out of thin air even though they are a virtual mathmatical construct.

Bitcoin doesn't grow on trees

[98elise]

_rubinho_ said:

dfen5 said:

I had a read up on it out of interest. Think the only thing I read that summed it up, which I now can't find, described how bitcoin is in effect a pyramid scheme.

A real note has the "Promise to pay the bearer.." in relation to its value in gold (obviously historically).

bitcoin has no such promise, it's worthless at the end of the day. Those that get in early, as in ages ago, will make a few quid I'm sure. £700+ for one bitcoin that's now £270? No thanks..

It's not actually worthless. Bitcoin miners i.e. computers running the mining algorithm to generate a bitcoin, consume energy and convert it into a unique (albeit virtual) object thus inferring it with some inherent value. As the price of bitcoin goes up the difficulty of the algortithm gets harder thus taking more computing power and therefore energy to produce. It's equivalent to digging some gold out of the ground and minting it into a coin; the scarcer the gold gets the more expensive the coin is to produce thus it's inferred with greater value. There's also a finite number of bitcoins that can ever be produced. There's no central machine (or individual) deciding on how many bitcoin there are and the nature of the network and cryptographic algorithms ensures this shouldn't happen. People can't just magic them out of thin air even though they are a virtual mathmatical construct.

Bitcoin doesn't grow on trees

They don't have an inherent value just because you consumed energy. No Fiat currency has an inherent value. Its only value is that people will accept it in exchange for goods and services, knowing they can also use it to further procure goods and services.

[FredClogs]

I just listened to a pod cast with Andreas Antonopoulos (a bit coin evangelist) and he puts forward a decent case for their adoption, especially with concern to being able to make micro payments online, if that was adopted widely and rid us of annoying advertising and marketing then I'd be happy to pay.

But I am concerned that he was reticent to accept any possibility that the whole "limited availability" thing is open to corruption, the plan is that every 4 years "or so" bitcoins being made will half until 2040(something) at which point they'll cease to be produced and be at their maximum of 20 odd million, it's all a bit airy fairy and I just can't see how it won't be corrupted under pressure. It's also true that if demand was really strong then the smallest available current unit of bit coin 10^-8 could still be subdivided, it would surely lead to massive deflationary pressure?