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Author Topic: Indemnifying small merchants via a crowd-sourced (and refundable) fund.  (Read 622 times)
ragmondo
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January 14, 2013, 08:51:43 PM
 #1

Hey chaps,

I know I'm new here and all that, but I have a concept I'd like to run by you all - it's basically a fund which we can use to guarantee fiat cash to regular merchants. The fund will be "untouchable" by any individual - in fact I propose that it requires 3 out of 4 trustees to be able to access it - so I hope that help alleviates any concern about a "hit and run".

Although I'm initially targetting businesses that might be near a bitcoin or tech event (as they would benefit from increased foot fall), if it does take off then I'm sure it could be applicable for any small merchant.

Please read more here: http://www.indiegogo.com/bitcoin-indemnity-fund

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Please tell me what you think! Don't worry, I'm quite happy to hear bad feedback as well as good.

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January 14, 2013, 09:41:35 PM
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It sounds like you want to give away free puts, but the terms aren't very clear so maybe not.

You want to promise X rate for up to Y coins until sometime for people who have specifically requested this protection?

As with most anything you give for free you'll have more people wanting to take it from you than supply it.

A market for puts and other financial devices would be quite nice and useful.

I think for merchants who are just worried about the rate it makes the most sense to simply sell the coins right away, possibly using a service like BitPay.


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January 14, 2013, 09:49:07 PM
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I think for merchants who are just worried about the rate it makes the most sense to simply sell the coins right away, possibly using a service like BitPay.

Yes, I agree we could do everything the OP suggests for local businesses, then just use BitPay and sell the coins right away.

At the end of the day the proposition to the business is extra sales, which nobody should say no to. As an added benefit of course they get introduced to Bitcoin  Wink

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January 14, 2013, 10:02:53 PM
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It sounds like you want to give away free puts, but the terms aren't very clear so maybe not.

You want to promise X rate for up to Y coins until sometime for people who have specifically requested this protection?

As with most anything you give for free you'll have more people wanting to take it from you than supply it.

A market for puts and other financial devices would be quite nice and useful.

I think for merchants who are just worried about the rate it makes the most sense to simply sell the coins right away, possibly using a service like BitPay.



You are absolutely on the money - but what look would you get if you offered "free puts" to your local hairdresser !?

The idea is to remove a bit of the complexity and risk from the merchant - they don't want to hear that at 4.30pm there was a USDBTC run and sorry you've just lost 25% of your sales today. Or "sorry there was a double spend and this transaction didn't make the blockchain" They want (at 9am) "so we agree that 1 BTC = 15 USD and you can charge as much or as little as you want to your customers, but they are not fools so if you overcharge they'll just go to (insert competitor name here). " In fact, I would ask that they marginally discounted just to make it more of an incentive to take income in BTC (or throw in a free almost-worthless gift with the sale just to sweeten the deal).

They get additional footfall, additional sales, marketing material. We get more businesses introduced to bitcoin.

It's not for a mature bitcoin retailer and it's not as if the fund will cover WalMart. It's for the independent merchant - the ones that can make the decision to trial bitcoin.

Please. If you think it's a good idea, then tweet, facebook, blog, tell your friends or even better stick 5 bucks into the fund.

Just to re-iterate. The fund will *not* be under my control. It will be governed by contributor voted-in trustees.

 
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January 14, 2013, 10:06:37 PM
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I think for merchants who are just worried about the rate it makes the most sense to simply sell the coins right away, possibly using a service like BitPay.

Yes, I agree we could do everything the OP suggests for local businesses, then just use BitPay and sell the coins right away.

At the end of the day the proposition to the business is extra sales, which nobody should say no to. As an added benefit of course they get introduced to Bitcoin  Wink

For the last part, I would hope to "enlist" a number of local agents who would act as the advocate for bitcoin. In return for their help in getting the business into bitcoin, they would have the option of buying the bitcoin at the market rate agreed at the start of the day, or redeeming it through the fund's account.

To ensure that the fund does not lose over time, a small percentage of sales would be payable back into the fund to cover marketing materials, minor fx swings and any "insurable event" (to be decided by the contributor community)
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January 14, 2013, 10:26:19 PM
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I think you fail to realize that bitpay already removes 100% of currency risk.  Client can request payment amount in dollars and Bitpay will display payment amount in BTC to customers.  Regardless client gets the amount requested in dollars.

It seems you reinvesting the wheel and looking for others to take the risk of doing so.  I don't see such a poorly detailed plan getting funding.

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January 14, 2013, 11:52:32 PM
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It seems you reinvesting the wheel and looking for others to take the risk of doing so.  I don't see such a poorly detailed plan getting funding.

Wow that was a bit harsh !! Bitpay seem to be very online focused. This would be for bricks-and-mortar style businesses - your local coffee shop, hairdresser, newsagent etc etc. Please correct me if I'm wrong, but that's the impression I get from most of their blurb online.
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January 15, 2013, 12:25:35 AM
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It seems you reinvesting the wheel and looking for others to take the risk of doing so.  I don't see such a poorly detailed plan getting funding.

Wow that was a bit harsh !! Bitpay seem to be very online focused. This would be for bricks-and-mortar style businesses - your local coffee shop, hairdresser, newsagent etc etc. Please correct me if I'm wrong, but that's the impression I get from most of their blurb online.

How do businesses that aren't online accept bitcoin payments in the first place?
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January 15, 2013, 01:36:01 AM
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It seems you reinvesting the wheel and looking for others to take the risk of doing so.  I don't see such a poorly detailed plan getting funding.

Wow that was a bit harsh !! Bitpay seem to be very online focused. This would be for bricks-and-mortar style businesses - your local coffee shop, hairdresser, newsagent etc etc. Please correct me if I'm wrong, but that's the impression I get from most of their blurb online.

How do businesses that aren't online accept bitcoin payments in the first place?

I'm guessing through BTC debit cards once those start actually rolling out.
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January 15, 2013, 05:55:17 PM
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It seems you reinvesting the wheel and looking for others to take the risk of doing so.  I don't see such a poorly detailed plan getting funding.

Wow that was a bit harsh !! Bitpay seem to be very online focused. This would be for bricks-and-mortar style businesses - your local coffee shop, hairdresser, newsagent etc etc. Please correct me if I'm wrong, but that's the impression I get from most of their blurb online.

How do businesses that aren't online accept bitcoin payments in the first place?

Quite simply - they just have an app on their mobile phone and just a QR code by the till. Once the customer "pays" the app will update the balance (as per normal). Now it's just a matter of hammering out the procedure as to whether they have the private key on their device, whether it's shared etc etc (probably best to discuss the options at a high level with the merchant) as there are different risks involved with each option.

As mentioned, the idea is to have a advocate "close at hand" (at least at the end of the phone and available to assist) for the start until they are comfortable.
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January 15, 2013, 05:57:42 PM
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It seems you reinvesting the wheel and looking for others to take the risk of doing so.  I don't see such a poorly detailed plan getting funding.

Wow that was a bit harsh !! Bitpay seem to be very online focused. This would be for bricks-and-mortar style businesses - your local coffee shop, hairdresser, newsagent etc etc. Please correct me if I'm wrong, but that's the impression I get from most of their blurb online.

How do businesses that aren't online accept bitcoin payments in the first place?

I'm guessing through BTC debit cards once those start actually rolling out.

This defeats the object. There is no way (currently) that a clearing house will allow you to have a credit card that gives you the best FX rate to whatever currency you are charging to. Their raison d'etre is to extract as much money from the merchant and the customer by means of processing fees and balance interest. There does exist at least one credit card you can top up with bitcoin, but the usages fees are astronomical.
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January 15, 2013, 06:07:27 PM
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It seems you reinvesting the wheel and looking for others to take the risk of doing so.  I don't see such a poorly detailed plan getting funding.

Wow that was a bit harsh !! Bitpay seem to be very online focused. This would be for bricks-and-mortar style businesses - your local coffee shop, hairdresser, newsagent etc etc. Please correct me if I'm wrong, but that's the impression I get from most of their blurb online.

How do businesses that aren't online accept bitcoin payments in the first place?

Quite simply - they just have an app on their mobile phone and just a QR code by the till. Once the customer "pays" the app will update the balance (as per normal). Now it's just a matter of hammering out the procedure as to whether they have the private key on their device, whether it's shared etc etc (probably best to discuss the options at a high level with the merchant) as there are different risks involved with each option.

As mentioned, the idea is to have a advocate "close at hand" (at least at the end of the phone and available to assist) for the start until they are comfortable.

Think the point is that BitPay already does all this via apps on mobile devices.  Merchant takes payment in BTC and gets paid in fiat minus a small fee immediately.

Any fund existing to perform the same function will either:

a)  Charge a small fee (or make a profit on exchanging - which works out exactly same for merchant)
or
b)  Make a loss

You're tring to create similar functionaility to Bitpay - just with MORE complexity for merchants.  They don't need advisors on the phone, worrying about where private keys are etc.  They just need to get the price they want when they sell something that's priced in fiat and accept BTC as payment.  If you intend to compete with Bitpay then that's great - but realise that you ARE competing with them and start off by working out where you can offer a better service than them.
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January 15, 2013, 06:10:31 PM
 #13

The fund will be "untouchable" by any individual - in fact I propose that it requires 3 out of 4 trustees to be able to access it - so I hope that help alleviates any concern about a "hit and run".



Not seeing how you've stopped this.

If your indiegogo campaign gets funded the money gos to you.  THAT's when any hit and run would occur - not after you'd appointed trustees.  Very hard for me to see how you didn't notice this possibility - or is there some restriction I can't see which would stop the funds being sent to you?
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January 15, 2013, 06:24:12 PM
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The fund will be "untouchable" by any individual - in fact I propose that it requires 3 out of 4 trustees to be able to access it - so I hope that help alleviates any concern about a "hit and run".



Not seeing how you've stopped this.

If your indiegogo campaign gets funded the money gos to you.  THAT's when any hit and run would occur - not after you'd appointed trustees.  Very hard for me to see how you didn't notice this possibility - or is there some restriction I can't see which would stop the funds being sent to you?

Well.. I would be happy to hand over the "keys" to the indiegogo account to a trusted or escrowed individual. If it makes you feel happier, we can agree that if funding reaches a certain percentage, that's when the contributors so far can nominate (and then vote) for that person.

I think it's possible to allocate other members to the indiegogo account such that they can still update the progress and pages without being able to get hold of the cash - so I would demote myself to a "project member" whilst the trusted party would take the place of account holder.
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January 15, 2013, 07:51:24 PM
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It seems you reinvesting the wheel and looking for others to take the risk of doing so.  I don't see such a poorly detailed plan getting funding.

Wow that was a bit harsh !! Bitpay seem to be very online focused. This would be for bricks-and-mortar style businesses - your local coffee shop, hairdresser, newsagent etc etc. Please correct me if I'm wrong, but that's the impression I get from most of their blurb online.

No, this would seem to be a bit harsh.

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January 15, 2013, 08:59:08 PM
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The fund will be "untouchable" by any individual - in fact I propose that it requires 3 out of 4 trustees to be able to access it - so I hope that help alleviates any concern about a "hit and run".



Not seeing how you've stopped this.

If your indiegogo campaign gets funded the money gos to you.  THAT's when any hit and run would occur - not after you'd appointed trustees.  Very hard for me to see how you didn't notice this possibility - or is there some restriction I can't see which would stop the funds being sent to you?

Well.. I would be happy to hand over the "keys" to the indiegogo account to a trusted or escrowed individual. If it makes you feel happier, we can agree that if funding reaches a certain percentage, that's when the contributors so far can nominate (and then vote) for that person.

I think it's possible to allocate other members to the indiegogo account such that they can still update the progress and pages without being able to get hold of the cash - so I would demote myself to a "project member" whilst the trusted party would take the place of account holder.

The problem is that what you've described is the sort of thing that should be in place BEFORE you start claiming you can't do a hit and run.

The project in general looks more like a dream than a plan.  Where's the prototype of one of these hardware devices (and appropriate software/firmware) showing how a merchant can seamlessly accept BTC and receive fiat?  Where's any breakdown of how the expenses will be spent?

The problem isn't so much that you're reinventing the wheel as that you're trying to reinvent the wheel - but a square one.  Small merchants DON'T want to agree exchange-rates in the morning and have to consult with anyone if they want to sell more than X BTC worth of goods.  They just want to get paid the price listed on the tag of their item.  And that's already available.  It's not hard (conceptually) to do what Bitpay does - accept BTC, convert using something called and exchange, then send the received funds (less fees) to the merchant in their currency of choice.  The hard part, as with most business ideas, is actually doing it.  You've come up with a worse method (I repeat: merchants DON'T want to agree exchange-rates or have limits on how much they're allowed to sell) and no real plan of how to do it - but seem surprised noone is throwing money at you.
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January 15, 2013, 09:41:25 PM
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The fund will be "untouchable" by any individual - in fact I propose that it requires 3 out of 4 trustees to be able to access it - so I hope that help alleviates any concern about a "hit and run".



Not seeing how you've stopped this.

If your indiegogo campaign gets funded the money gos to you.  THAT's when any hit and run would occur - not after you'd appointed trustees.  Very hard for me to see how you didn't notice this possibility - or is there some restriction I can't see which would stop the funds being sent to you?

Well.. I would be happy to hand over the "keys" to the indiegogo account to a trusted or escrowed individual. If it makes you feel happier, we can agree that if funding reaches a certain percentage, that's when the contributors so far can nominate (and then vote) for that person.

I think it's possible to allocate other members to the indiegogo account such that they can still update the progress and pages without being able to get hold of the cash - so I would demote myself to a "project member" whilst the trusted party would take the place of account holder.

The problem is that what you've described is the sort of thing that should be in place BEFORE you start claiming you can't do a hit and run.

The project in general looks more like a dream than a plan.  Where's the prototype of one of these hardware devices (and appropriate software/firmware) showing how a merchant can seamlessly accept BTC and receive fiat?  Where's any breakdown of how the expenses will be spent?

The problem isn't so much that you're reinventing the wheel as that you're trying to reinvent the wheel - but a square one.  Small merchants DON'T want to agree exchange-rates in the morning and have to consult with anyone if they want to sell more than X BTC worth of goods.  They just want to get paid the price listed on the tag of their item.  And that's already available.  It's not hard (conceptually) to do what Bitpay does - accept BTC, convert using something called and exchange, then send the received funds (less fees) to the merchant in their currency of choice.  The hard part, as with most business ideas, is actually doing it.  You've come up with a worse method (I repeat: merchants DON'T want to agree exchange-rates or have limits on how much they're allowed to sell) and no real plan of how to do it - but seem surprised noone is throwing money at you.

I have actually very concrete ideas about what sort of hardware to provide - but what I don't want to do is fall into the trap of "I think we should use x" just so people can then say "ooh no I don't like x I like y". If you notice, I am deliberately light on technical detail - not due to the fact that I haven't got an outlined planned but just due to the fact that I don't want to go in a direction that the majority of contributors don't agree with (or a least a vocal minority). If I say "the expense to the merchant is 0.5%", someone will say "oh that will never break even". If I say 2%, someone else will say "that's far too much". If I say "let's provide them with budget android devices", someone will say "OMG no-one is going to trust 5000 BTC on one of those". If I say "let's supply merchants with brand new ipads", someone else will say "but they'll just 'lose' them".

Ok - here's a challenge for you. Instead of rubbishing what I am trying to do (and include personal statements about "I'm surprised no-one is throwing money at me" - based on what did I say again ?) - how about you list a series of questions which I will answer, and if you think there is a better answer, then after a constructive discussion, we'll adopt your answer. How does that sound ? But if your reply is just "don't do it - it'll never work" then my retort to you is "People who say it cannot be done should not interrupt those who are doing it.”. I'm more than happy to answer - or try to answer - any questions you have. But please stop saying "it's not going to work stop trying".

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January 15, 2013, 09:48:24 PM
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Nevertheless, I am quite glad this has evoked some responses and some questions as I'll be able to start putting some Q&A on the indiegogo page now.
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January 15, 2013, 11:01:08 PM
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I have actually very concrete ideas about what sort of hardware to provide - but what I don't want to do is fall into the trap of "I think we should use x" just so people can then say "ooh no I don't like x I like y". If you notice, I am deliberately light on technical detail - not due to the fact that I haven't got an outlined planned but just due to the fact that I don't want to go in a direction that the majority of contributors don't agree with (or a least a vocal minority). If I say "the expense to the merchant is 0.5%", someone will say "oh that will never break even". If I say 2%, someone else will say "that's far too much". If I say "let's provide them with budget android devices", someone will say "OMG no-one is going to trust 5000 BTC on one of those". If I say "let's supply merchants with brand new ipads", someone else will say "but they'll just 'lose' them".

Ok - here's a challenge for you. Instead of rubbishing what I am trying to do (and include personal statements about "I'm surprised no-one is throwing money at me" - based on what did I say again ?) - how about you list a series of questions which I will answer, and if you think there is a better answer, then after a constructive discussion, we'll adopt your answer. How does that sound ? But if your reply is just "don't do it - it'll never work" then my retort to you is "People who say it cannot be done should not interrupt those who are doing it.”. I'm more than happy to answer - or try to answer - any questions you have. But please stop saying "it's not going to work stop trying".

You seem to have a misapprehension over where the onus lies.

I (and others like me) aren't the ones seeking reasons to invest in your project.  You're the one trying to raise funds - so the onus is on YOU to convince others that your idea will work.

The fundamental questions you need to answer in my opinion are:

1.  What is it you'll be offering that Bitpay doesn't?  Bitpay allows merchants to accept BTC payments and receive fiat equal to the price they want (less a fee).  They don't need BTC wallets at all.  They don't need to know or care what the exchange-rate is.
2.  What can you show to demonstrate that you've done the ground-work and have the competence (either as an individual or within your team) to deliver on your project?

Where I have ffurther concerns is that I don't believe the funds you're asking for are sufficient to do what you plan to do.  Are you planning to do it all yourself without any pay for your work?  Staff travelling around to merchants and demonstrating the hardware/software costs money.  As does staff cold-calling (or whatever you plan to do) to identify merchants to demonstrate your product to in the first place.  I seriously believe the funds you're asking for are an order of magnitude below what you'd need to make any sort of decent attempt to deliver - but as there's no attempt at any sort of cost projections in your fund-raising request I obviously can't point to the specific things you haven't covered.

If you want funds then you need to convince people that you can deliver, that the funds you're asking for are sufficient to deliver and that IF you deliver there's a market for the product.  I'm not seeing any of that - the need you appear to have identified is one that's already got a solution.

I should note in passing that you appear to be in the UK - so potentially you DO have a market there that (as far as I know) BitPay aren't in any way focussing on.  But have you done ANY market research showing that there's actually demand if you deliver?

Contrary to what you seem to think, I don't have any interest in dissuading you from continuing - it makes zero difference to me.  I'm just pointing out the reasons why, as it stands, your proposal is of no interest to me.  If other people are PMing you en masse and donating by the bucket-load then clearly I'm wrong.  If they aren't then maybe the reasons I'm expressing are actually similar to those of plenty of other people.

YOU need to convince US that you have a good idea - we don't need to convince you of anything.
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January 16, 2013, 08:01:57 AM
 #20

It almost sounds like you are talking about the futures market for BTC.
For start, it's a really good idea is to make sure you understand basic financial terminology and know what different instruments are used for  - WHY and WHEN.
Also try to understand the involved risks etc. 
It is pointless to invent another square wheel Smiley

While reading what I wrote, use the most friendliest and relaxing voice in your head.
BTW, Things in BTC bubble universes are getting ugly....
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