BitCoin business barrier to entry

[h4sc0dz]

Hi everyone,

I have been a lurker but want to get more active in the community. I am planning on developing a business that only uses Bitcoin as payment but I am concerned with a few things:

1) Are people reasonably willing to pay for services using Bitcoin or are people hoarding too much and preventing new business from getting established?

2) From a personal standpoint would you pay for monthly/yearly services using Bitcoins? Why or why not?

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[Coinabul]

Hi everyone,

I have been a lurker but want to get more active in the community. I am planning on developing a business that only uses Bitcoin as payment but I am concerned with a few things:

1) Are people reasonably willing to pay for services using Bitcoin or are people hoarding too much and preventing new business from getting established?

2) From a personal standpoint would you pay for monthly/yearly services using Bitcoins? Why or why not?

The first month or two sucks. After that, yes, there is some demand for new business.

Monthly/yearly, perhaps. Most likely for something that I want to cancel eventually.

[davout]

1) Are people reasonably willing to pay for services using Bitcoin or are people hoarding too much and preventing new business from getting established?

Just see that as an incentive to create or provide, directly or indirectly, something desirable.

2) From a personal standpoint would you pay for monthly/yearly services using Bitcoins? Why or why not?

Yes, if I really desire these services

[shamoons]

I feel that hoarding is a legit concern. With the price going up and down every day, I'd almost rather spend dollars than my precious, precious bitcoins on anything.

[Stephen Gornick]

are people hoarding too much and preventing new business from getting established?

Bitcoins are easily exchanged on the markets.  If I wish to purchase from you and you only accept bitcoins, I can convert my dollars to bitcoins and make my purchase.  The level of hoarding savings by others doesn't change that.   You just want to have a method that adjusts the price to reflect the current exchange rate, otherwise your price will reflect an amount too high if the exchange rate is rising, or you might sell for a price too low when the exchange rate is dropping.  

Thus making a purchase from you that is valued at $100 USD today costs me about $101 to complete (including the exchange fee).     Six months from now, making a purchase from you that is valued at $100 USD will still cost me about $101 then to complete -- regardless of the exchange rate then.

But as far as accepting only bitcoins, that may not be the wisest business decision.  Some businesses specifically would do this as a competitive advantage (e.g., able to better compete due to no chargebacks, or because of the privacy bitcoin offers) but generally, you don't want to shut willing and able buyers out just because they aren't yet familiar with Bitcoin.

[Morranr]

I agree with the above post; just because someone wants to hoard their BTC it doesn't mean they can't just buy however many they need to purchase what you have to offer.  As far as would I personally be willing to pay BTC weekly/monthly for something, well it depends on what it is, but I've already started using a service that I pay for in BTC in certain time increments, so yes I would!

[MDHoldings]

Bitpay takes a percentage of my money.

I like cash because there are no Fee's; we here know Bitcoin is digital cash.

I don't like the idea of giving any percentage of my business to anyone. But I do like the idea of operating cashless and broadening accepted payment is never a bad thing. Bitpay might get away with it now, but tomorrows bitcoin vendors will have 0 transactions free's.

my 2 coins   

[h4sc0dz]

But as far as accepting only bitcoins, that may not be the wisest business decision.  Some businesses specifically would do this as a competitive advantage (e.g., able to better compete due to no chargebacks, or because of the privacy bitcoin offers) but generally, you don't want to shut willing and able buyers out just because they aren't yet familiar with Bitcoin.

I understand the risk. But this is a project that I wasn't putting a whole lot of risk into and after working on it for a few weeks(in my spare time) thought that it might be a good candidate for an exclusive Bitcoin service. Mainly because it is easier to deal with accepting payments using Bitcoin than PayPal. I also was looking to just do an experiment in running a Bitcoin only service and see what type of success it could bring. I am OK with it flopping, it won't break my drive :-).

You just want to have a method that adjusts the price to reflect the current exchange rate, otherwise your price will reflect an amount too high if the exchange rate is rising, or you might sell for a price too low when the exchange rate is dropping. 

I have thought about this a little bit. My initial plan is to price the service low and only adjust it every 6 months. I have a few reasons for this:

• It keeps the price predictable. And since the service only accepts Bitcoins it may sandbox it from buyers remorse due to price fluctuations.
• There would be less push-back if I lowered the price constantly.

Thoughts on this? I admit I didn't think it through completely yet and have yet to break it down/put it through some testing.

[Stephen Gornick]

Bitcoins it may sandbox it from buyers remorse due to price fluctuations.

You don't know what the future exchange rates will be.    The customer might be quite happy they did buy when they did if the exchange rate drops.  i.e., the knife cuts both ways.

There would be less push-back if I lowered the price constantly.

If you set your price to fiat, the price isn't being "lowered" constantly, it is just pegged to the dollar and thus doesn't change.

Before bitcoins, Pecunix was a currency that some services accepted more widely.  Their prices were in goldgrams but the prices adjusted relative to the exchange rate.

It is the same thing with Bitcoin.

But it is your business, you are free to set pricing in whatever manor you wish.

[h4sc0dz]

I understand your position. How frequently should I adjust the price to match the exchange? I would think the beginning of the day would be the best.

[Stephen Gornick]

I understand your position. How frequently should I adjust the price to match the exchange? I would think the beginning of the day would be the best.

It pretty much will depend on the profit margin that gives you some leeway.  I just read that Joe's Datacenter in KC accepts Bitcoin, and they use the weighted average over the previous 24 hours (a value that can be obtained from the BitcoinCharts API).   So the exchange rate is determined at the time the customer invoice is prepared.  

A low margin service would be forced to set prices based on the last price on a large exchange (but also take into account "slippage" for larger transactions.)

A higher margin service could get away with once a day adjustments based on previous day's average, or something like that. Sometimes it will be in the merchant's favor, other times in the customer's favor -- but generally will even out, roughly.

[adamstgBit]

what is your service?

[🏰 TradeFortress 🏰]

I think the major problem in btc in RL businesses would be the 10 min confirm cost.

[Stephen Gornick]

I think the major problem in btc in RL businesses would be the 10 min confirm cost.

Can you name a scenario in which this is a problem?

So far the extensive list of businesses where this is a problem is:

 - coin vending machines
 - merchants without a continuous data connection
 - ATMs
 - currency exchanges
 - larger purchase amounts (over $100)

Seriously, that's about it.

When properly configured (no incoming connections, outgoing connection explicitly made to well connected nodes), the risk of getting a successful double spend are trivially low. 

If one out of thirty attempts of a race attack is successful (which is much higher than what likely would happen), that means that twenty-nine weren't successful and thus normal sales occurred twenty-nine times.  If the attacker will lose money there is no incentive. 

The merchant that accepts on 0/unconfirmed has no defense against a Finney attack but the attacker of that holding a block must act within seconds -- each second a block is held costs the miner more than $1.  An attacker holding up from broadcasting a solved block for one minute costs the attacker $60 (on average).

But for 95% of brick and mortar merchant scenarios, accepting bitcoins on 0/unconfirmed is "safe enough" to use.  There will be intermediaries who will take this risk for the merchant in exchange for a fee, so the merchant knows the exact cost.

[Kazimir]

1) Are people reasonably willing to pay for services using Bitcoin or are people hoarding too much and preventing new business from getting established?

Yes, I am most definitely willing to spend bitcoins.

2) From a personal standpoint would you pay for monthly/yearly services using Bitcoins? Why or why not?

Yes, but only if the fee is adapted to the actual Bitcoin rate (unless I'm making most of my own income directly in Bitcoin as well).

For example I get paid x euro's per month, and currently 1 BTC is about € 9.50. Next year I'm probably still getting paid approximately x euro's per month, but the BTC rate might easily be over €20 or €30. So then I'd rather not pay the same amount of bitcoins as the service would effectively have become much more expensive for me

[Foxpup]

Bitpay takes a percentage of my money.

I like cash because there are no Fee's; we here know Bitcoin is digital cash.

I don't like the idea of giving any percentage of my business to anyone. But I do like the idea of operating cashless and broadening accepted payment is never a bad thing. Bitpay might get away with it now, but tomorrows bitcoin vendors will have 0 transactions free's.

my 2 coins   

Actually, you can ditch BitPay right now and stop paying their fees simply by setting up the Bitcoin software on your server yourself, securing the server yourself, integrate it with your website yourself, and doing all that other complicated stuff all by yourself. Since doing all this yourself is not very easy, and not even advisable if you have no experience in these areas, you pay other companies to do it for you. You probably pay for water too, even though you could, if you wanted to, install a rainwater tank to collect your own water and pump it and filter it yourself for free*. It all comes down to convenience vs. cost. BitPay makes handling bitcoin payments far more convenient than managing it all yourself, so it's only fair that they receive a fee for their services. It is most unlikely that anyone will offer similar services for free, since there are real costs to providing these services.

*Except in Colorado, where the rain is government property and preventing it from going down the drain is considered stealing. Technically, you can be arrested for staring at the sky with your mouth open on a rainy day.

[laSeek]

*Except in Colorado, where the rain is government property and preventing it from going down the drain is considered stealing. Technically, you can be arrested for staring at the sky with your mouth open on a rainy day.

LOL - please tell me you're kidding?

[Foxpup]

*Except in Colorado, where the rain is government property and preventing it from going down the drain is considered stealing. Technically, you can be arrested for staring at the sky with your mouth open on a rainy day.

LOL - please tell me you're kidding?

I kid you not. If you want to collect rainwater for any purpose in Colorado, you have to pay an exorbitant fee for a special permit (which can be refused for any reason and is subject to arbitrary restrictions) in order to essentially buy your rain from the government.

[Richy_T]

I understand your position. How frequently should I adjust the price to match the exchange? I would think the beginning of the day would be the best.

Don't think of it as Bitcoin appreciating, think of it as the dollar depreciating