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Title: Getting Merchants to KEEP Their Bitcoin Post by: daviducsb on January 18, 2014, 09:07:26 PM So now we have more merchants, like Overstock, accepting Bitcoin.
However, most of them use either Coinbase or Bitpay to immediately convert their Bitcoin stash to fiat. For Bitcoin to grow, I would think that instead of just being a convenient means of transfer, it needs to become accepted as a legitimate store of value. How can we achieve that if merchants immediately trade it for fiat? Is there a way we can incentivize merchants to keep some of their reserves in Bitcoin? Right now I am sure Patrick Byrne, the ceo of Overstock, owns some bitcoin. However, Overstock doesn't. How do we develop more bitcoin--->bitcoin trade, instead of fiat--->bitcoin-->fiat? Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: hilariousandco on January 18, 2014, 09:18:27 PM So now we have more merchants, like Overstock, accepting Bitcoin. However, most of them use either Coinbase or Bitpay to immediately convert their Bitcoin stash to fiat. For Bitcoin to grow, I would think that instead of just being a convenient means of transfer, it needs to become accepted as a legitimate store of value. How can we achieve that if merchants immediately trade it for fiat? Is there a way we can incentivize merchants to keep some of their reserves in Bitcoin? Right now I am sure Patrick Byrne, the ceo of Overstock, owns some bitcoin. However, Overstock doesn't. How do we develop more bitcoin--->bitcoin trade, instead of fiat--->bitcoin-->fiat? Maybe some will, but we need to get more other merchants and services to accept it first so it's a vicious circle really. Most retailers won't be able to take the gamble on the price fluctuations, but accepting Bitcoin is better than nothing even if they do turn it straight to fiat. If retailers could pay their employees and suppliers and bills in Bitcoin, then they might hold on to it. Some smaller businesses may keep some as an investment, but I guess that's up to them and their circumstances. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: dontek on January 18, 2014, 09:23:37 PM Get their creditors and employees to accept Bitcoin as payment for their goods/services. Other than that, why would Overstock hold onto Bitcoin if they as a company can't use it to pay their bills or employees? They won't.
Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: daviducsb on January 18, 2014, 09:27:29 PM Get their creditors and employees to accept Bitcoin as payment for their goods/services. Other than that, why would Overstock hold onto Bitcoin if they as a company can't use it to pay their bills or employees? They won't. Maybe they would if they looked at the chart and saw a more steady, less volatile rise in value? Companies do hold assets like real estate and bonds that they don't necessarily use to pay their employees, so why not hold some Bitcoin? Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: lucaspm98 on January 18, 2014, 09:35:55 PM As a merchant, I know that I am keeping all my sales in Bitcoin since I am a true believer in the cryptocurrency and don't have any investors expectations to meet, but for most business it is too much of a risk to stay invested in a highly volatile currency that can swing 20% or more in a single day. However, I do believe there will be more merchants that will at least start keep a small percentage of the Bitcoin as it becomes less mysterious.
Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: virtuexru_shibe on January 18, 2014, 09:41:08 PM Most retailers won't be able to take the gamble on the price fluctuations nail on the head imo Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Enkel on January 18, 2014, 09:42:51 PM Part of the problem for an overstock.com type retailer is that they have to settle out their books for tax purposes on a quarterly (maybe monthly?) basis. As an example, sales taxes are submitted monthly. They need to convert the BTC to stick it to a number if the value is rising, since they'd rather submit sales taxes on $100 than $150. I imagine their book keeping staff are having a great time with the sort-of rapid flux in the BTC value.
Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Littleshop on January 18, 2014, 09:50:05 PM Part of the problem for an overstock.com type retailer is that they have to settle out their books for tax purposes on a quarterly (maybe monthly?) basis. As an example, sales taxes are submitted monthly. They need to convert the BTC to stick it to a number if the value is rising, since they'd rather submit sales taxes on $100 than $150. I imagine their book keeping staff are having a great time with the sort-of rapid flux in the BTC value. Not a problem for a retailer if they work in USD (or other local currency) even if they keep Bitcoin on the backend. They pay the taxes the customer paid. If they have a gain/loss after they may have to deal with that separately. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: doof on January 18, 2014, 11:01:15 PM It'll happen, they will start to offer staff part of their wages in BTC...
Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: pening on January 18, 2014, 11:11:54 PM Bitcoin cannot move up a gear until major retailers accept the actual Bitcoin directly. Right now, Bitpay is just another payment processor facilitating a foreign currency. A cynic might say those companies using it are looking for publicity and easy money from a demographic that have a lot of spare currency they cant spend elsewhere.
Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Enkel on January 18, 2014, 11:24:30 PM Part of the problem for an overstock.com type retailer is that they have to settle out their books for tax purposes on a quarterly (maybe monthly?) basis. As an example, sales taxes are submitted monthly. They need to convert the BTC to stick it to a number if the value is rising, since they'd rather submit sales taxes on $100 than $150. I imagine their book keeping staff are having a great time with the sort-of rapid flux in the BTC value. Not a problem for a retailer if they work in USD (or other local currency) even if they keep Bitcoin on the backend. They pay the taxes the customer paid. If they have a gain/loss after they may have to deal with that separately. But, if they don't convert to USD (or a currency of some sort) fairly quickly (as in the payment processor returns USD), doesn't the transaction become a barter transaction instead of a direct sale? There isn't anything wrong with barter transactions, but it brings in new paperwork and having to substantiate the 'value' at the point of sale (There's over a $100 spread in values right now if you look at different exchange sites. -- MTGox = $903 ... Coinbase sell = $803 that's a huge difference when you're looking at tens of thousands of dollars a day.) Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: daviducsb on January 18, 2014, 11:26:59 PM It would be interesting to find out how many actual Bitcoins Bitpay and Coinbase have to keep on hand as they grow. Maybe that is an overlooked positive aspect to their growth.
For instance if Coinbase one day has to keep $1,000,000,000 worth of bitcoin on hand, that will be bitcoin out of circulation and thus increase the scarcity. Probably wishful thinking :) Would be informative though to figure out how they are set up. Just thinking out loud. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: markm on January 18, 2014, 11:29:16 PM It seems kind of short-sighted, maybe in a sense "stupid" for a huge major retailer to accept bitcoins without stockpiling a bunch of the first.
Afterall if by your action of accepting them you increase their value significantly wouldn't it make sense to capture some of that increase yourself? It seems like a positive feedback loop should arise, whereby the more they promote it and the more their customers use it convert to it adopt it and so on the more profit there would be in holding lots of it... Also the volatility can be harnessed too: place highball sell offers so you cash in when the exchange rates go high, convert incoming bitcoins into fiat faster when exchange rates go low, depending on how fast you need the fiat and how large your buffer has grown. Pretty soon you could have a nice extra earnings department just in buying low and selling high. -MarkM- Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Enkel on January 18, 2014, 11:56:55 PM It seems kind of short-sighted, maybe in a sense "stupid" for a huge major retailer to accept bitcoins without stockpiling a bunch of the first. Afterall if by your action of accepting them you increase their value significantly wouldn't it make sense to capture some of that increase yourself? It seems like a positive feedback loop should arise, whereby the more they promote it and the more their customers use it convert to it adopt it and so on the more profit there would be in holding lots of it... Also the volatility can be harnessed too: place highball sell offers so you cash in when the exchange rates go high, convert incoming bitcoins into fiat faster when exchange rates go low, depending on how fast you need the fiat and how large your buffer has grown. Pretty soon you could have a nice extra earnings department just in buying low and selling high. -MarkM- I think that they'd probably have to look at how much of this they were doing because it sounds like it is venturing into investment banking areas if they are holding TOO much BTC for the purposes of doing what might be very close to day-trading. For example, if they started just buying and selling real estate as an investment (instead of a by-product of opening retail locations), they would probably end up triggering REIT regulations. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Melbustus on January 19, 2014, 12:31:18 AM This: http://www.businesswire.com/news/home/20140113006504/en/BitPay-Announces-Bitcoin-Payroll-API
...plus a sufficiently liquid and clearly regulated futures market for bitcoin will do it. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Keyser Soze on January 19, 2014, 12:41:45 AM I cannot see most merchants holding on to the coins until the currency risk is greatly reduced (virtually non-existent) or there are other ways to mitigate those risks.
Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: johnyj on January 19, 2014, 03:22:35 AM Merchant will soon reach a consensus that if they never sell received coins but use them, they will support the exchange rate and eliminate the downside risk of exchange rates
Daily fresh coin supply is 5000-7000, means if 5000-7000 coins were used to purchase goods/services (around 4-6 million USD, ebay does 13 million per day) and never converted back to fiat money, then there will be no coins for sell on exchanges, means any amount of buy will raise the exchange rate dramatically In fact, accepting bitcoin payments works just like purchasing coins from exchanges, but won't affect the exchange rate, could be a good way to acquire large amount of coins Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: BTCisthefuture on January 19, 2014, 05:58:47 AM Maybe someday, we aren't there until volatility decreases. It's simply not practical to hold revenues in something that is do volatile as bitcoin when you have expenses and bills that need to be paid on time.
If you're a smaller mom and pop type shop you might be more interested in keeping a portion of your revenues in bitcoin, treating it as an investment on your business. However, it's unlikely you will see large publicly traded companies do such a thing when they have to answer to their stock holders. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Rannasha on January 19, 2014, 06:26:16 AM Most of these merchants have a pretty low profit margin once you deduct all costs. So unless their suppliers and/or employees start accepting Bitcoin, the merchant simply can't keep his coins since he needs most of what comes in to pay supplier/employees/etc...
Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: kjlimo on January 19, 2014, 01:25:20 PM They'll keep bitcoin when they have a business reason to do so.
If things keep growing, that business case will present itself. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Bitcoi2n2n on January 19, 2014, 05:54:37 PM There is no plausible reason for big merchants to keep Bitcoins yet...
They won't be able to buy the products they need for the company by Bitcoin. They literally can't do anything with it but exchange them to fiat. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Johnny Bitcoinseed on January 19, 2014, 06:15:37 PM Don't forget, what you pay a merchant is not anywhere near pure profit for them: They have to pay for new inventory to replace that which you purchased and a ton of overhead including taxes, rent, utilities, bookeepers and accountants, employees, and a slew of other expenses. At the end of it all they often only get 2 or 3% profit - and may even be losing money in this economy.
What this means is that they usually cannot hold onto bitcoins since they simply have got to pay the bills here and now. Of course, some small mom and pop merchants may be able to hold some bitcoins they get as payment, but only because they have enough money coming in or alternative sources of income to get them through the every day expenses. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: casascius on January 19, 2014, 06:23:02 PM They'll keep bitcoin when they have a business reason to do so. If things keep growing, that business case will present itself. +1000 Trying to "get" merchants to keep their bitcoin is a waste of our efforts and a self-destructive cause with respect to the perceived objectives of our community. Merchants will do this if and when it makes sense to, if they haven't already, and meanwhile they will not feel obligated to update the public on their choice to keep BTC. For merchants, not keeping BTC is one way they limit their exposure to whatever uncertainty is in Bitcoin's future. It also keeps their accounting from developing soft spots where parts of the books are maintained based on best guess as to proper accounting principles for Bitcoin, rather than generally accepted accounting principles established for fiat currency. In a nutshell, it's their prerogative to not keep BTC and their privilege to not be harassed by us in the form of petitions from us to change. Believe me, they see the potential, that's why they made the choice to get involved in accepting bitcoin today. Thank them, do business with them, but as for their choices as to what do do with their bitcoin, respect their freedom and let 'em be please! Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: johnyj on January 19, 2014, 08:03:33 PM For example, I'm running a business and I accept bitcoin payment, but I never cash out the earned coins on exchanges
First I try to look at the places that I can purchase things with those coins, and since the places are limited right now, I sell some of the coins through localbitcoins.com. By doing this I will not put any coins for sell on public exchanges, and the demand on localbitcoins.com are mostly driven by curious new buyers and long term investors, no speculators due to illiquid coin supply there Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Cryptopher on January 19, 2014, 08:11:13 PM So now we have more merchants, like Overstock, accepting Bitcoin. However, most of them use either Coinbase or Bitpay to immediately convert their Bitcoin stash to fiat. For Bitcoin to grow, I would think that instead of just being a convenient means of transfer, it needs to become accepted as a legitimate store of value. How can we achieve that if merchants immediately trade it for fiat? Is there a way we can incentivize merchants to keep some of their reserves in Bitcoin? Right now I am sure Patrick Byrne, the ceo of Overstock, owns some bitcoin. However, Overstock doesn't. How do we develop more bitcoin--->bitcoin trade, instead of fiat--->bitcoin-->fiat? If their suppliers would accept Bitcoin, or other areas of the business i.e. logistics, then I imagine that retailers will hold onto Bitcoins, and use them to pay for products and services. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: cdog on January 19, 2014, 09:06:11 PM Companies are just starting to experiment with Bitcoin. Once they see it works, and Bitcoins have longterm value, they may decide to keep some of their profits in Bitcoin.
Thats their decision to make, and nothing we can say will influence this and I certainly dont think this topic needs much discussion. Want Bitcoin to get more popular? Start spending it, and give some to family and friends. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Duane Vick on January 19, 2014, 09:38:29 PM I proposed a solution to this problem whereby a company offers a guaranteed redemption price for any bitcoin held by the merchant in exchange for a policy premium upfront that protected a specified number of bitcoins. It was promptly shot down by people who think bitpay is all that is needed for the retail market.
https://bitcointalk.org/index.php?topic=388620.msg4182294#msg4182294 This proposal would allow merchants to hold bitcoin without risk of loss. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Enkel on January 19, 2014, 10:03:28 PM Since this thread is about merchants... I have a semi-related question.
Say, that I buy a product and pay 1BTC for it on Monday and on Monday, 1 BTC = $800 exchange rate. Two weeks go by and my product is finally delivered and it is just not what I thought it was. So, I get a Return Authorization from the retailer and ship the product back w/registration so they sign for it when they get it. On the day they sign for it, the value of 1 BTC is now up to $1000. What SHOULD the retailer return to me? Do I get my 1 BTC back or do I get the equiv of $800 in BTC (so, .8 BTC ) back? This is Overstock.com's policy (basically other than cancelled orders, no refund except store credit): Quote Cancelled Orders: Cancelled orders may qualify for a refund in Bitcoin. The refund will be issued for the full USD value of the order and processed at the Bitcoin exchange rate at the time the refund is completed. If you choose to have a refund sent to an email address that is not set up on a Coinbase account, Coinbase will create an account under that email address once the refund is sent. An email confirmation will be sent by Coinbase to set up your account and retrieve the funds. If you fail to retrieve your funds within 90 days, the funds will be returned to Overstock.com. When the refund is sent to an email address set up on an existing Coinbase account, the funds will be available to you and there is no risk of retrieval. Refunds sent directly to a Bitcoin address are also not at risk of retrieval. Returns: Returns on orders paid by Bitcoin will be accepted for a refund as In-Store Credit to your Overstock.com account. Damaged or defective merchandise may also be returned for a replacement of the exact item. Replacement orders will ship once the return of the original item is received and processed at the Overstock.com warehouse. I personally, this the store credit only thing is a total BS move. And, they don't say how they will value the store credit. Will it be a 1 BTC value or will it be a USD value and at what conversion rate? There is no reason that the Return Authorization process can't collect an address to be used to return the BTC. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: Duane Vick on January 20, 2014, 12:19:48 AM Since this thread is about merchants... I have a semi-related question. Say, that I buy a product and pay 1BTC for it on Monday and on Monday, 1 BTC = $800 exchange rate. Two weeks go by and my product is finally delivered and it is just not what I thought it was. So, I get a Return Authorization from the retailer and ship the product back w/registration so they sign for it when they get it. On the day they sign for it, the value of 1 BTC is now up to $1000. What SHOULD the retailer return to me? Do I get my 1 BTC back or do I get the equiv of $800 in BTC (so, .8 BTC ) back? This is Overstock.com's policy (basically other than cancelled orders, no refund except store credit): Quote Cancelled Orders: Cancelled orders may qualify for a refund in Bitcoin. The refund will be issued for the full USD value of the order and processed at the Bitcoin exchange rate at the time the refund is completed. If you choose to have a refund sent to an email address that is not set up on a Coinbase account, Coinbase will create an account under that email address once the refund is sent. An email confirmation will be sent by Coinbase to set up your account and retrieve the funds. If you fail to retrieve your funds within 90 days, the funds will be returned to Overstock.com. When the refund is sent to an email address set up on an existing Coinbase account, the funds will be available to you and there is no risk of retrieval. Refunds sent directly to a Bitcoin address are also not at risk of retrieval. Returns: Returns on orders paid by Bitcoin will be accepted for a refund as In-Store Credit to your Overstock.com account. Damaged or defective merchandise may also be returned for a replacement of the exact item. Replacement orders will ship once the return of the original item is received and processed at the Overstock.com warehouse. I personally, this the store credit only thing is a total BS move. And, they don't say how they will value the store credit. Will it be a 1 BTC value or will it be a USD value and at what conversion rate? There is no reason that the Return Authorization process can't collect an address to be used to return the BTC. Overstock doesn't take possession of the bitcoins at the time of sale, they are immediately converted to usd. You have to accept that overstock transacts in usd currency so that usd or the equivalent amount of usd in in-store credit will be issued. Title: Re: Getting Merchants to KEEP Their Bitcoin Post by: cryptoanarchist on January 20, 2014, 12:24:14 AM This will happen organically as firms that keep a higher percentage of bitcoin become more profitable, those that convert 100% to fiat will lose ground.
Bitcoin is like the internet - you adapt or die. |