Bitcoin Forum

I have been somewhat fascinated with bitcoins, and while understanding the basics I feel as if everyone else is FAR more informed than me on the economy and utility of bitcoins. So bear with me if I am missing some obvious explanations here.



But anyways, I have a product I am currently selling online, why should I accept bitcoins as a method of payment? What advantages would I see, besides indulging in a personal curiosity?

The rate that bitcoins can change value is staggering, which for me is not good, because my COSTS are constant. It takes X amount USD to make the product I am selling, and until the material and labor can be bought and paid in bitcoin, the USD conversion value of bitcoin is a very real concern. If someone bought my product 2 days ago during the 30 dollar spike, I am now left holding the same bitcoins which are going for half that price now, and may no longer cover my manufacture costs when they are converted to USD. Am I missing something? Is there some way vendors can normalize the shifting value of bitcoins to ensure they are never left holding the hot potato?



Now on the other hand, I also sell virtual products for an online videogame. Virtual products cost only as much as the labor to make its "gold version", and can be duplicated and sold at no additional cost to me. In this situation, there is no cost of manufacturing the product so there is no chance that I will be left in the hole. And in this case, it could be argued that the fluctuating value would either

A) normalize over time from consumers buying my product both when the value was high and when the value was low
or
B) Be beneficial, by letting me "cash out" my companies bitcoins when the value is high and sit on them when the value is low.



From a business perpective, I suspect the current vendors that accept bitcoins do so because it is in the geek spotlight right now and gets them connected to new consumers simply because the list of vendors that actually accept bitcoins is so small. When that list grows, and the signal to noise ratio prevents vendors from getting decent exposure to the bitcoin community, why should they continue to use it?


Bitcoins future outside the e-blackmarket depends entirely on whether or not vendors want to use it, so convince me. Why should I sell my tangible products, and/or my virtual products for bitcoin? (I feel my company and what I sell should remain nameless to prevent thread derailment, but the tangible goods go for $50 - $150, and virtual goods go for $2 - $8)

You can just sell and lock in your profits as and when you need. 

If you need every cent every month to make costs / payroll, maybe not a good idea.  If you are profitable and have a buffer, then why not.  Also, you will get more exposure through the bitcoin community for your products. 

Millions of new customers who don't want to exchange their bitcoins to dollars and pay taxes, wait forever, and most of the time simply loose money. In the future it will simply be more convinient to keep your coins in your account, and only investors will be exchanging money on a weekly basis. Things will stabalize as soon as people find out what this technology really is.... Bittorrent on steroids. :D

Thank you for your well written comments and articulate questions. I will try to answer some of them. The part about price volitility is a hard one to start with. It is problematic at the moment but is expected to become less pronounced over time. One way to mitigate the problem while still participating in the BTC economy is to offer only a certain number of items per week in BTC. A way to just put a toe in the water.
As you mention for digital products this is not as much of a concern, so you could sell only certain items with bitcoin. There are also efforts to create software for vendors that convert prices in real time, etc.

Look at this:
http://www.google.com/m/finance/?gl=us&hl=en-US#search/NASDAQ%3AMSFT

It's Microsoft stock. Set the time on the graph to full and guess where BTC is on that graph.

Hope this helps.

I think we could be looking at an extended period of time of volatility. The value of bitcoins will continue to be directly tied to the availability of goods that you can purchase with them. And for there to be significant motivation to use this currency instead of our normal currency, we have to be able to buy something we wouldn't otherwise be able to buy.

Thus, Silk Road creating this huge spike in bitcoin values.

Some people have it figured out, but a lot of people still have their head in the sands on this issue: The value of the bitcoin will be directly linked to the availability of black market goods and services, until such a time that it has gained enough momentum in the mainstream for sites like amazon and newegg to accept it.

If I was a vendor, I'd probably not accept bitcoin as payment right now either...it's forces you to be a speculator, develop whole new systems and methodologies, exposes you to significant loss...all to support something that would at best free you of credit card processing fees and chargebacks.

I'm thinking we need a good 1-2 years of high availability of black market goods and an unsuccessful challenge at shutting down bitcoin by the US government before it stands a chance of hitting mainstream.

I think developers are going ot have to start hardcoding exchange rates into their prices. I don't know how sites like bitmunchies.com do it. They must have sometype of system that auto updates depending on exchange rates.

You would be entering into a market very eager to support you based solely on the fact that you accept bitcoins for one. Your customers would have to pay less fees then traditional transfers of funds for another. Their are a heap of opinion based reasons revolving around the moral aspects considering things like helping to take a little bit of power away from the violent rulers who currently control all money.


the variance issue is very easy to tackle, simply inform your costumer that you accept bitcoins at the currently most used, by far, USD exchange - Mt. Gox. This way you are still receiving a fixed amount as far as a more stable currency is concerned.


the way I see it, it can't do anything but increase your customer base, unless of course bitcoin gets a huge negative evil eye from the public, in which case you could always just publicly dump bitcoin or change  the name of your business(depending on how much of your sales are dependent on repeat customers and reputation.) I for one, don't see bitcoin getting any more 'negative' press than torrents. I hope that was a help. I am admittedly new to all this myself.

I could be wrong here, but if you accept bitcoins as a form of payment, couldn't the Government arrest you for that?

You...alt + f4. And surrender your voter registration card.

The simple answer to why a vendor would want to accept bitcoins is that any vendor that can offer flexibility to his clients will get more business.

The second factor is that dollars are going down in value, and bitcoins are going up AND down. At some point they may just go up, but you have to take what you can get now. So vendors that amass bitcoins will generally fare better.

However, there is the important principle that "bad money drives out good". That's why people hoard silver and gold, and spend US dollars. US dollars are bad money, so that's the first thing most consumers will want to get rid of as they decline in value. When inflation sets in, US dollars are going to be flying around while other stable currencies go underground and appreciate. Vendors won't be able to get their hands on them until they are the only things that still represent value.

Not sure if you noticed, but anyone can be arrested for pretty much anything.

A bottle of pepsi in the nyc subway is an arrestable offence

www.mta.info/nyct/rules/rules.htm (http://www.mta.info/nyct/rules/rules.htm)

I don't think the govt would arrest you for accepting bitcoins, at least not only you.

They would come out and say that bitcoins are now illegal, and stop it for everyone (as if they could), rather than singling you out of the blue for arrest.

However, they could go after you specifically if they had some vendetta against you, but they would go after tax fraud, i.e., that you hadn't adequately accounted for your capital gains, or you could be audited into oblivion.

They arrested the liberty dollar guy because his coins had visual similarities to US currency. I think they said "In God we trust" or something on them. Bitcoins definately don't have this problem. But accepting an alternative currency in and of itself is not illegal. but they might be able to dig up just about anything else if that's their intention, as previously noted.

A few years back someone had a site selling Egold or something of that sort. The Feds or Secret service, one of those agencies came in and arrested him for trying to offer another currecy in the USA. This surprised me at the time because I did not know something like that was illegal. I thought about it and it made sense that the US government will not want other forms of currency and the reason is that another currency, that the USA can not control, will be a total threat to the USA.

Therefore, if I had a site selling in another currency like bitcoin, I would personally be waiting for the Feds to come crashing through my door and seizing everything. It is a matter of time before this would happen in my opinion. The USA will not play around with this.

Anyone even thinking of accepting bitcoins on a traceable site in USA is absolutely crazy.

* sigh *

hence, the Newbie Forum.

Bitcoin is not a currency, as defined in statute.  e-gold was:  their mistake.

you're correct about the threat part - although i will posit that Bitcoin is much more threatening to banks and other financial mega-institutions than it is to government.  of course, that's if one cares to make the distinction.  many don't - and a case can be made for that.

read more.  buy some Bitcoin.  play on the markets.

have fun.

Agree with what the OP have said.

I would like to accept Bitcoin as a form of payment for my brick and mortar business.
At the ongoing fluctuation of the exchange rates i am having a second thought.

1. INSTANT SECURED PAYMENT worldwide at any hour or day with no downtime ever with no prohibitive fees or taxes attached (YOU get 100% of the price asked)
2. NO CHARGE-BACKS EVER. If a client is not satisfied or a mistake has been made, you will manually interact with the client, this creates further value for your business but also some costs.
3. REAL TIME FOREX between BTC and USD at any hour or day using for example mtgox (this could help you lock in your daily prices, as well as give you a slight margin of profit, and you can withdraw your funds to your bank later)
4. FLEXIBLE PRICING - people understand variations in the value of BTC, which will level up later in the future, and you can charge a bit more in BTC than you do in USD, people won't mind. If you feel generous you can interact with the client and offer him bonuses or discounts for the future, based on the price discrepancy he accumulated.
5. DEFLATIONARY VALUE present in all bitcoins, as the future gets nearer, their actual value will increase for new coins, and with it for ALL existing coins. This means you don't need to store your funds in an interest-gaining bank account, simply holding them in your e-wallet does the trick.

All of the above are benefits that ride on some of bitcoins short-comings (such as block generation interval delaying all transactions irregardless of size and distance, one-way only transactions, actual currency usage in any local economy, price variation and future security).

If these 5 benefits that out-weigh their corresponding down-sides brought forth by Bitcoin do not convince you, then we wish you good luck with your existing business. Please however consider that we have these Bitcoins and we want to use them.

your post is #15.  your point was responded to in post #7.

wouldn't it be a more profitable use of everyone's time for you to respond to that, rather than raising an objection that has already been dealt with?

Look, in my opinion accepting BTC exposes a business to unnecessary forex exposure which in general would be avoided.  The ONLY solution to this problem is a transparent forward/futures market which at a marginal cost will allow businesses to easily offload their exposure.  Even this is a hack and so unless the benefits (tangible benefits) outweigh this issue,  bitcoins are going to have a tricky time becoming mainstream.

< shrug >

i'm not as bullish as a lot of folks about using Bitcoin at PoS.  frankly, i don't think the blockchain confirmation process scales well for that; and i don't see the point anyway, until at least two more generations of PoS technology have gone by.

what's needed is a pay-by-wave company that's willing to exchange and hold Bitcoin long, to reduce or eliminate fees.  it'll happen.

on the other hand, taking Bitcoin directly for internet sales works now - and can be very profitable.

If you want to tank Bitcoin go ahead.  Hard coding exchange rates will be no different than the Elites deciding how much we pay for a barrel of oil regardless of how much oil is available.

I can't tell if these are uninformed lies or just hyperbolic marketing speak?
1: There is nothing instant about bitcoins, you have to wait minutes to hours to make sure the transaction went through. If you accept bitcoins instantly, then you are opening yourself to a double spending attack and getting no payment

3: These forums are full of people being hit with Mtgox transfer restrictions about it taking days or a week to exchange.

4: flexible pricing isn't good for a business. Either you are charging too much "incase" of another market slump or you are getting less than you thought you were.

5: "keeping your money in bitcoins will make them worth more and more forever!!"  Is complete speculation, and a business can not run on such a thing.

It's marketing. Now why do you call me a liar?
1. Hours? Really? Now you're lying... You could go with one confirmation for trusted clients (currently that would take 3 minutes 15 seconds on average) , because it means the network has locked that transaction into the blockchain.

If you're paranoid, then go with 6 confirmations (supposedly one hour, but more likely 40 minutes). Depending on the type of shop, the wait time is not really a big deal, and the wait time is effectively ALL the process between consumer action and account credited. You don't have to wait for credit card gateways, enter payment details, passwords, confirmations, international transfers, banking days, etc.

For websites and online services the transactions are virtually instant, once your payment is confirmed you are good to go, everything is done. For brick and mortar
Also, as far as I know, nobody reported a transaction being validated and then being unvalidated from the blockchain. I don't know how "sure" you want to be, but we are at block 130340 btw...

3. I don't see the relevance. Once you set up your accounts and workflow, you can move funds from your wallet to your exchange wallet instantly (* refer to above as to what is instant for me and not for you), while banking exchanges take the regular number of days just like in regular currency payments. The idea is to receive payments in BTC and use them in B2B and other ways, not just "hurr durr let's complicate ourselves with making people buy bitcoins, pay us in bitcoins, we sell the bitcoins and then we get the actual money". No, the whole idea of the project is to use a large proportion of incoming bitcoins for own operations and expenses. Once you have the bitcoins, you can convert them at any price you want, or not, and if you do, you can retrieve the money in your account (if necessary, otherwise mtgox is like a bank).

4. People will on average pay more than intended when using bitcoins, because the value of the bitcoin increases in time, you need to constantly lower your pricing to accomodate this, because...

5. If you read the bitcoin paper, the bitcoin mining theory threads, the actual bitcoin mining results, history charts, technical details on blockexplorer, the deflation article on wikipedia, you will understand why it's not speculation but a mechanism built into the system. Stop assuming bitcoin works like other things you are familiar with.

On the other hand, are you a vendor? Did you sell anything for bitcoin so far? Do you want to sell your products or services for bitcoins? If not, why the hell to you blab about my reply with your misconceptions?!

Its is very simple OP. People wanting to with bitcoins want to do it because of the coolness, and ideological reasons. This means that they probably wont mind a mark up high enough to cover your currency risk plus some extra

I, too, am a small business owner and have thought of the very same concerns.  

Reasons for accepting Bitcoin from my perspective include the following.

1 - helping to legitimize cryptocurrency in the eyes of the public, BECAUSE
2 - accepting cryptocurrency represents a small but meaningful revolution of the public against the banking industry.
3 - it also offers some sort of competitive pressure on the government and central banks to treat us as the public fairly.

4 - if you're a merchant who runs a high risk of having payments reversed (e.g. credit card companies that typically side with the consumer wherever possible), Bitcoin is a remedy for that.

As a side bonus, if what you have is of value to the Bitcoin community, then you'll get an extra focus on it because, in my estimation, a whole lot of people are going to be buying Bitcoins just to own a few (I did) and may not be interested in using them to buy illegal drugs.  They'll want somewhere to spend them.

If an instant conversion to dollars is necessary for operational reasons, and someone hasn't already provided that, I believe the market will recognize the need and provide it soon.

The cat is out of the bag.  The genie is out of the bottle.  However you want to put it, fiat money is toast.  Crypto currencies are the future. 

That said, timing for me as a merchant accepting bitcoin was fortuitous.  I am on my last block of inventory for my metal dice.

I started selling them in 2008 so there was not even a chance to get a bitcoin symbol on them. (why it isn't on the die is the number one question sent to me by people here.)

So I am in a position to experiment.

To get over gresham's law, a discount.

That's something I can do.

Justifying a new product catering to bitcoin would require finishing off my inventory in BTC.

When I have the BTC that came from clients, the next mission is convincing my factory to accept the BTC rather than a wire transfer.

In principle, they are okay with it.  The volatility in the exchange rate might make them flinch at crunch time.  I hope it doesn't.

I control what I can control.  I calculate risk where control is limited.  I make a decision to gamble or not when most information is unknown.

It's not my day job so I guess I can be more cavalier about how I engage in bitcoin commerce.

If it ends up higher when I need it in a different currency than it was when I sold a set of dice for it, I consider that a win.

I won't be playing with the exchange rates every day anyway.  I would suggest you find ways to avoid the exchanges as well.

I see it as an untapped market. I'm a vendor and if I accept bitcoins - it opens up my store to more people.

Wow thank you for all the responses.


So I am seriously considering accepting bitcoins for virtual goods in my companies upcoming Free2Play shooter/RPG. So assuming from a financial perspective that bitcoins are dependable, is it LEGAL to support bitcoins? (Keeping in mind that the game is not a gambling game, and the virtual products are bought and then kept by the user)

I know that bitcoins themselves are not illegal, but in the depths of US law I am concerned that there is some vague all encompassing restriction that bitcoins may fall under. Now I understand that the question itself is somewhat speculative, since we don't really know how the government will react to bitcoins when it grows out of its niche, but is there any legal concerns I should be aware of?

Yes.  The most likely classification under US tax laws that Bitcoin would fit into is a "stored value" digital asset.  So as a business openly engaging in Bitcoin trading for goods and services, there is the possibility that the law could interpret part of your company as a money services business, and thus subject to such laws. 

You should accept bitcoins... But if you just accept Paypal it would also be fine.

I should have Analytics traffic numbers in a week to offer other prospective merchants.

I feel that without a separate forum for vendor/merchant (non-exchange) issues accepting Bitcoin at this point is unwise. The software is not there, there will be significant overhead in technical support for clients who screw up their transactions- and no dedicated venue for collectively solving these problems. If you don't like it some random Mod may kill your thread- hard way to run a business.

When the Bitcoin community decides they want vendors and puts the same effort in there as they do into mining and exchange, there will be a flood of capital and new software. But most people are here to mine and trade and that is what the forum caters to.

Just my two cents as a vendor.

The elite quote was very well said. Good man.

What is your comment on the deflationary nature of bitcoin and the appreciation of the bitcoin you hold (if you still kept most of the bitcoin income).

The fact that every business will start accepting bitcoin will soon mean B2B naturally starts working with bitcoin.

Do you or your partners find the instant payment, non-taxation and the low fees attractive when using bitcoins?

Bitcoin is probably not legally different than from any in game currency, just accepted wider by design.  Still, just because the US Treasury Department isn't concerned about the tiny market that Mindmark oversees doesn't mean that those same regs don't apply to them.  The yprobably do, regardless of whether or not the USTD has ever intervened into that market.

OPs question is what i'm asking myself for a couple of days now and i've found no reasonable explanation yet, besides "BC is teh future!". :)

Exchange rate is fluctuating extremely and is too easily influenced by lots of factors right now, which makes it a pure gamble to accept bitcoins for goods that you've payed real money for, imho.

Bitcoin exchange rate needs to be somewhat stable, before i'd personaly would accept them as a payment option. You never know what they will be worth the next hour/day.
Playing around with the money on the exchanges is something for banksters, not merchants. At the end, as a merchant, you've payed real money for the goods you sell and you have real bills to pay.

What am i missing? :)

Kind of what I am wondering as well.  I'm new too this but it seems like this whole thing is nothing but speculation.

The price has been volitile as of late do to the massive influx of new users, like yourself, who only recently discovered Bitcoin.  Only some of those new users are going to be concerned about buying a few bitcoin now, but enough that with a market as thin as Bitcoin is at present, that's enough to move it quite a bit.  There are vendors who accept Bitcoin, however, by using a price update script that takes the 24 hour weighted average price from bitcoinwatch.com and changing their prices automaticly one or more times per day.  Those who are concerned about the voltility of bitcoins can then sell those same coins on MtGox automaticly at that same price almost immediately by using their MtGox business account to produce their bitcoin addresses.  Most vendors have started out in Bitcoin by selling all or part of their received bitcoin immediately in this fashion, but most move to the point of accumulation of Bitcoins.

In life, you will find it helpful to base your absolutes and final conclusions on solid facts rather than half-remembered stories.   

Thanks for your explanation. If you are able to adjust prices regulary and (quickly) convert them to real cash automagically, this should work. I didn't think about that (and i should have *blush*).

I have to say at this time it's hard for any vendor to accept BTCs without risks.
The only benefit I can see is if you start early you get a bigger portion of the BTC market once it takes off.

As a vendor, I accept Bit Coin for a number of reasons. 

1) My primary good is intangible (writing services, chiefly academic essays) and thus it represents only my own labor and the labor of my employees. My costs are relatively stable, and I'm fairly certain that short a complete collapse of BitCoin, I will be able to meet at least my basic costs through my BitCoin margins.  Thus, it is only my profit that is affected by swings in the currency value, and I am willing to risk the devaluation of my currency based on my ideological support for BitCoin.

2) Anonymity.  Can't stress how important this is to both myself and my clients.

3) Exposure: The kinds of people who use BitCoin are just the kind of technologically savy individuals who (from my market research) are more likely to be enrolled part or full time in academic programs, greatly weighted towards distance education.

So, with intangible goods this is a great way to exchange services, but what about tangible goods? Shipping and handling is not cheap for many items. I don't believe there to be any shipping companies that accept bitcoins. So, if I were to make something like furniture I would need to charge a calculated amount to cover shipping, convert it to dollars, and then pay for the shipping cost? Or are people simply charging a flat rate for BTC purchased items and then sitting on the income hoping it will increase in value to eventually cash out and cover shipping expenses.

I make a lot of beer bottle cap related furniture, which is usually quite costly to ship.

Yes, you can.  But that is not what he is actually saying here.  The vendor can go to MTGox and open a business account, and then his ecommerce store provides the bitcoin address that leads the funds directly into MtGox.  It's not necessary for the sender to have a MtGox account, although that would work at least as well.


To completely eliminate it, yes.

No, it would not.  Why would that be necessary?  An anonymous user can withdraw fiat currency from MtGox daily up to a $1000 per day limit, while a verified user (such as a business account would be) has no such limits as far as I am aware of.

Vendors should not pay attention to Bitcoin prices.  Go and ask the local vendor on the street corner if the pay attention to EUR/USD, EUR/JPY, or XAU/USD.  The answer will be no.  Vendors should mind that bitcoins are deflationary and will always be scarcer than gold and set the price accordingly. Do not check bitcoincharts every day.

Those complaining volatility, apparentely you never traded forex, if you do check the charts for years ago.  Check also the charts for commodities.

Legality? Unless you live in North Korea, you can safely assume bitcoins will continue to be legal.

What the street corner vendor does is irrelevant, he does not need to convert his money from one currency to another at the end of the work day. His costs are in USD, his revenue is in USD and his profits are in USD.

If I accept bitcoins, my costs are in USD, my revenue is in BTC, and my profits are in USD. The conversion rate matters to me.

You sold an item in your shop during the weekend. Your desired price was 80$, but you added a 20% buffer to account for the market variation, and converted the 100 USD price to 4 BTC, because that's how much a bitcoin was worth saturday morning. So now you have 4 BTC, which since saturday morning were valued at anything between 40$ and 96$. You decide when the convert the bitcoin and lock in the dollar value. You can do this at any time at the current price, or simply place an order for 25$ for your 4 BTC and wait. Considering the huge variation in value, you didn't actually lose anything, and still receive expected income.

What if your sold when the BTC was valued at a lower price and converted at a higher price?
What if you wait for the price to come at around your desired level?
What if you traded with someone else using those bitcoins and maintained parity?

Surely I understand that you need to pay for your costs in USD, but bitcoin is not just a clutch to tip your toe into a small market. If you put a little effort and explore more, you get stable results. Market variation can play against you or in your favor. Why do you have to stick out only the downsides but quietly ignore the upsides?

The long term trend of Bitcoin is up, it's day to day fluctuations that are an issue. I consider Bitcoin purchases Net 60 receivables. In that timeline, if you have a standing sell order it is possible to exchange nearly all the Bitcoins for 5% over what the seven day averaged quote was on the day the purchase occurred- covering any loss the delay in funds might have caused. This approach does require having a reasonable amount of operating capital or credit with your suppliers however.

If the buyer is using his personal client, then yes, there will be a delay.  However, if the buyer is using an online wallet service, such as from within MtGox itself or Mybitcoin.com, then transfer can be instant.  It depends on just how much MtGox and Mybitcoin trust one another.

Private currencies in the USA are not illegal... Trying to use them to do crazy illegal things still is, check out wikipedia http://en.wikipedia.org/wiki/Private_currency#United_States (ok I hate using it as a reference but its a good place for people to start if they want to understand the true legalities here).

The Liberty Dollar was taken down because they were committing fraud and their coinage was to similar to the US coins (so the Secret Service tacked on counterfeiting)

Now regarding taxes.. Don't listen to anyone here.. If I were considering taking bitcoins as payment I would be caching them out each night and treating them like normal reciepts you pay taxes on.. If I chose to hold them I would have to talk to an accountant but I would imagine you would pay taxes on the value they were "persumed" to have when you sold your goods.. And then when you sold your bitcoins you would have to treat that as capital gains (or loses)... The only model that works in my head would be that of executing options which is what I am basing the above model on.. but Please Please Please Please Please contact a CPA and make sure you won't get bitten by the goverment for playing willy-nilly with your bitcoin income.

Personally I have an LLC that I run my BTCs through, I have expenses (my mining rigs and electricity and about 20% of my bandwidth) after that I pay tax on the rest of my income.

Fastest way to get the goverment mad at bitcoins would be to try to use them to avoid paying taxes.. Hell Silkroad.com already got BTC some uncomfortable press from at least one member of congress.. Of course his arguments would hold true with good old hard cash, so is a non starter.. But I hate having to have that discussion with people when I describe what bitcoins are and why they should check them out.

~Hands
(here is the ubiquitous "donate" wallet ID 13d46unynPiuspsND1fC3kuPeb8szgWv4T)

As a vendor, I accept them as payment. You can exchange them for other currencies. It is no problem at all.

Right now, the market is unstable enough, that either some sort of options trading system is needed, or the vendor has to be willing to wait a while to actually get the money out.
The patience approach is 100% programmable with Mt Gox APIs right now.

You could easily set up a program to charge the customer the average rate over the last few days, and then as soon as the bitcoins are received, sell the bitcoins on Mt Gox at the price you charged that customer plus 1-2%. Given the volatility of the market, that offer will be accepted eventually. It is very unlikely that bitcoin is going to suffer a long upswing followed by a dramatic dropoff with no recovery, since it is deflationary currency.

You could even charge more, if bitcoins have been especially unstable recently.

The only way a vendor can get a fair price is to have dynamic bitcoin prices based on the market in real time. Charge a 5-10% premium (bitcoins can drop $1+ in seconds with big selloffs) and it might work

Why not take another form of payment people are willing to pay?

that's a good idea.

what if they are willing to pay in Bitcoin?  does that count?

why limit your market as a seller?  y'know, there are people who want to pay with Bitcoin first - they go quite far out of their way to find a vendor who will accept it.

I want to sell some of my songs, photos, and sounds I took recorded for bitcoins...
... But I am not sure how to go about that...
- Casey

What, are you saying that vendors sell their products and services at 0% profit and don't ask for a penny more than what they need? Or they don't add insurance percentages, or forex percentages when dealing with external currencies, or card processing services that vary in the 2-5% range? Color me impressed.

Good question. If you find the answer you are in business. You could even surpass the masters like... Apple. 20% too big for you, go to another country and buy anything imported from your country? Don't sell, don't buy, use a smaller figure. Why are you thinking it's impossible to be flexible?

Don't trade in bitcoins if you don't have the time to manage/understand bitcoins. Seriously, NOT THAT HARD. I don't trade in Turkish lira, because I don't have time to learn and manage my Turkish bank accounts. It's that easy.

Yes, cashing in as quickly as possible even if working against yourself is good advice. You're a cheapo!

Because when I have BTC would like to buy in your store.

#1 You'll increase sales
#2 Bitcoins tend to appreciate over time, so it's likely that by the time you cash out your Bitcoins you'll have made a profit just by holding onto them for a while.

I went the other way for bitcoin.  Because of the theoretical appreciation, buyers using BTC get a discount -a big one.

That's because, even at the discount, that money doesn't go to Ebay or Paypal.  It makes the customers happy and encourages bitcoin commerce.

Maybe they should use local currency for local trades? And a global currency for global trades? That would be like the purpose of bitcoin, to allow global instant forex free transactions. Locally there are not many uses. But we are talking about the situations where bitcoin applies.

You don't understand what people are saying here. Noone is saying anything about profit margins, they are saying that people arent going to want to pay 20% more than they would pay with government currency when its just as easy to use the currency they already have in their hands.

So the choice is to pay $5USD for something, or pay $7USD to buy bitcoins, then lose a few dollars on transaction fees and exchange fees and "seller inflation" because he has no idea how stable the currency is and then get the same product.

Main reasons for accepting bitcoin are lower prices for payment processing and irreversible transactions. Downside is converting them to USD/EUR/etc. which is sometimes (bottom-line!) more expensive than you would think. Ideally, you would have both your payables and receivables in bitcoins - but we're not there yet  ;)

You are talking about a specific scenario: everyone let's trade in bitcoins because it's the new hipster thing to do!

While the situation is as follows: Hey, I have some bitcoins anyway and need to spend them, what do you have?

I'm not advocating for everyone to effectively trade in dollars but using bitcoins, I think we can all go B2B and trade the bitcoins among ourselves. If all vendors accept bitcoins, and some vendors are clients to other vendors, how silly would it be to convert all bitcoins into dollars, then dollars into bitcoin as a client, then buy stuff, then the vendor converts the bitcoin into dollars.

Also, transaction parity aside, which can work for you or against you in half the situations respectively, the process of paying for a 100$ item is as follows:
- convert some dollars to bitcoin on mtgox through dwolla for example (supposedly 101$, you give 0.25$ to dwolla-mtgox transfers and 0.6% to mtgox (so just below 1$)
- you pay the merchant 5 bitcoins (example) for his item listed in bitcoins
- the merchant has 5 bitcoins, converts them to dollars (0.6%) and withdraws them (another 0.25$), effectively losing a 2% tax on the whole value/benefit transaction.

This might look ugly on a local shop (where you can use dollars), but consider the implications of international trades, where you pay a receiving fee if you use paypal, an obligatory forex fee (2% or more) and the client's paypal fee, and your withdrawal fee. Or in the case of CC processing, you pay a 2-5% fee on received payments.

Also, let's not forget:
- you can maintain a specific sum of liquid funds in BTC and USD and only exchange when needed
- you can declare the item sold for a lower profit margin and pocket the rest because you don't declare taxes on the BTC transactions
- you can wait 1-2-3 days and place exchange orders at beneficial rates (the btc can vary up to 5% a day, you can add a small bonus like this, not that hard to do)
- other vendors want your bitcoins

Why must you insist that all trades can be made in a "local" currency? Anyway, I heard there was a site called SilkRoad. Good luck trading "local currency" with that.

If some vendor adds 20% on their product in times of price distress, I don't mind. Some other people have posted they don't mind either. Let's let the vendors decide on this.

Bomba you aren't going to convince any legitimate businesses to adopt bitcoin because of their ability to trade on black markets, or commit tax fraud.

You might run a test product that is fully based on BTC and does not require converting BTC to other currencies for running expenses.

Regardless of changes in the BTC-to-USD conversion rates, each one of your BTC will always be at the value of 1 BTC, plus steadily increasing as compared to other currencies.

At later stages you can slowly switch to cooperate with businesses also accepting BTC for their services.

Good luck!

Yeah I know, the people that trade on black markets and commit tax fraud around these places will continue to do it in fiat currencies, you're right...

It's a good thing the developers are working to get bitcoin regulated by the US government, right?

It was briefly mentioned that the way to counteract volatility is to use the average exchange rate over the last few days. I would go even further and take the 30 day average.

But above all, I would say, be fair to your customers. You don't need to rip them off just because they want to use a different currency. Indeed, bitcoin might well be something that you could offer a "discount" for using. Because of the deflationary nature of bitcoins, you'll make up the "lose" if you keep hold of them.

If you are worried, just don't sell everything for bitcoins, or only sell a certain amount of each product each month for bitcoin. That'll let you work it out, and if it's all good, then switch to bitcoins for everything.