Bitcoin

[_rubinho_]

Bitcoin, the contraversial peer-to-peer cryptocurrency is a growing idea slowly moving from the geeks arena and into the mainstream. Business owners; how much interest do you think there would be in a course for non-nerds covering the basics of what it is, how it works and how you could use it in your business? The focus would be on how to take customer payments, secure your bitcoin wallet and how to convert back to real currency.

I think there may be a market for providing training and services surrounding Bitcoin to non-tech businesses. Any thoughts?

[_rubinho_]

shigs said:

Hey Rubinho,

Not a bad idea, I believe there's already some online courses explaining the technicalities and benefits to businesses, but it's certainly a growth area especially here in the UK.

I've been 100% focussed on Bitcoin professionally since the start of the year. I'd be happy to assist in any way I can

Michael

Michael, thanks for your help. It's an idea I'm mulling over so I will definitely contact you if I take it further. Online courses are one thing but there's value I think in visiting a customer's site, throwing things up on a whiteboard and taking a Q&A face to face. The barrier to understanding is quite high and just reading online, no matter how well written, will turn many people off.

[_rubinho_]

gregf40 said:

It's not going to take off IMO.

I would avoid it at all costs.

That's an interesting viewpoint and one I think is shared with many people. I'd like to hear your opinions on why if you'd like to expand. In it's current form I think you're right but if the right services are built on top to hide the technicalities (just like in the conventional banking system) then maybe not.

[_rubinho_]

Some interesting opinions here and good discussion.

It is new technology and only the most keen early adopters are using it for real goods transactions. Harking back to the foundings of real currency I am certain there were many who said it wouldn't catch on because there was nothing wrong with trading goods and services directly. Nowadays we're getting increasingly cashless individually with the actual banking system itself being entirely electronic. Bitcoin (and similar) are now enabling wholly electronic transactions without a central clearing bank. There are reasons this is empowering in both the first- and third-worlds.

Exchanging fiat money for Bitcoin is a major downside to its adoption currently. I have personally lost money when the Tradehill and MtGox exchanges collapsed. Presently the exchanges are relatively small and disconnected. This makes them vulnerable to bankruptcy and open to manipulation. National regulations can make it complicated and expensive to deposit and withdraw money too. Services such as Coinbase are making it easier by being user friendly, based in a stable country and connected to major banks. Unfortunately the UK lags the USA with the UK based service Blockchain, who have recently secured $30million in venture funding, unable to get a UK business bank account and accept GBP deposits.

Addressing volatility and its affect on pricing, there's no real difference to providing goods and services in another currency. Your pricing needs to take into consideration the exchange rate to BTC from the local currency and calculate prices based on that. Due to the volatility you may need to sample the exchange rate more frequently and update accordingly. If you can update prices in near real-time and offer product in EUR or USD there's no reason why you can't offer in Bitcoin either. BluePurpleRed's options site idea is very interesting.

As for why would you want to take Bitcoin over other forms of payment. I don't think it's an issue of one or another. It is an alternative and one you may like to offer customers for their convenience. You may also be able to access a wider market without providing hundreds of foreign currency options by allowing Bitcoin payments instead for some regions.

[_rubinho_]

Hoofy said:

_rubinho_ said:

Addressing volatility and its affect on pricing, there's no real difference to providing goods and services in another currency. Your pricing needs to take into consideration the exchange rate to BTC from the local currency and calculate prices based on that. Due to the volatility you may need to sample the exchange rate more frequently and update accordingly. If you can update prices in near real-time and offer product in EUR or USD there's no reason why you can't offer in Bitcoin either. BluePurpleRed's options site idea is very interesting.

Problem is that for most businesses who don't trade internationally, you don't have to worry about currency fluctuations. The hairdresser on the high street isn't really going to be affected on a daily basis (the cost of hair spray may go up by 10p over a 3 month period - not something they need to worry about, really) but they don't need to worry about the rate going from 1 unit to 700 units in value in a 2 month period (or whatever happened to Bitcoin).

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.

[_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!

[_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.

[_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