So, i'm trying to offer the 3D printing service described here:https://bitcointalk.org/index.php?topic=148902.0
One of my new clients has asked an interesting point, which i'm not sure how to resolve in the long term. I was looking for advice, and also thought that this might benefit from a larger discussion as it's the kind of problem that any service might encounter over time.
After talking with a client, he asked us this question” If for some reason the price of bitcoin jumps even more wildly I'll keep the payment to the equivalent asking price of $XYZ. Since you don't have hedged escrow does this sound fair?”
Our payment plan of “we trust you and you trust us” leaves us open to being left holding some fraction of our fees unaccounted for if a client never follows through with their final payment. That in and of itself is not a big deal, but I guess this question gives me pause because of this: This service is an experiment, a test of the bitcoin economy's health and the dynamic nature of the community. It's a stone soup thing in that sense: the development and expansion of this service are predicated on the market demand for it.
You can now buy pizza for BTC. Whomever is operating that service is doing something really neat: Manifesting a physical good for BTC. (Even better is getting donations to charity for BTC ala: www.reddit.com/r/Bitcoin/comments/19oiht/rbitcoin_lets_share_with_those_in_need_for_every/) Being able to feed yourself with something is coming pretty close to 'being money' to me. Being able to pay rent, power bills, and shipping costs are still a ways off. I worry that they will continue to be a slow deal as long as the main sources of physical goods available are VHS tapes on Bitmit (no offense intended).
Food is a funny thing like that: it's worth more than gold or bitcoin if you don't have it. The 10,000 BTC pizza will live on in infamy. It was paid for, eaten, presumably enjoyed, and now the story is all that's left. Whatever BTC is costing now is what determines our offers, but we're not acting like investors - we're trying to live in a fantasy world where we could can use the BTC we earn to sustain the service we provide. There's nothing close to a hope of making this a full time job. If the community responds to overwhelm us, we will respond in kind - we think that's a long way off at this point, but are happy that you're considering having us work for you.
The price fluctuations and recent highs you mention are hard to get around without making someone feel disappointed. In some sense, there's no way we can get around the fact that what you pay in BTC for a 3D printed object one day, might potentially buy many such things down the line. At least you have a conversation/art piece from it, rather than a grease stain on a pizza box.
Our first customer seemed pretty happy to make the transaction independently of the market price for BTC. I guess if you're having any qualms about purchasing from us, then maybe you've invested more into your BTC than you're willing to part with for a custom print job. We want to make sure that you're happy, and that you will want to pay us the rest of what we've asked for our work. If you feel like we didn't live up to the job, I guess that's where the ball is in your court.
Others offered these suggestions: “Well, you can denominate your "half" either in USD or in Bitcoin.The real question is how to deal with escrow in a transfer currency (like Bitcoin) which fluctuates relative to the currency value you choose to denominate in (such as USD). The answer is to have the buyer submit the prescribed amount of Bitcoins to Escrow, plus a markup (50% or 100% markup should cover week and month long transactions safely) and then direct the escrow agent to release the appropriate funds to seller equaling the agreed amount of USD at time of transaction completion, and remit the "change" back to buyer.
When accepting payment plan from buyer, best strategy is to tender payments in bitcoin denominated in payment stages prescribed in USD. You agree on $100 USD total in $50 now, $50 later fashion, then buyer sends 1.25 BTC @ $40usd/btc = $50usd for first stage and then follows up with 1 BTC @ $50usd/btc = $50usd for second stage. :3"
"Price your goods in USD and then convert to show prices in BTC. When they pay, convert immediately to USD to avoid any price shift risk."
All of this makes operating in BTC as part of a long term strategy somewhat problematic, as you seem to have no idea what your assets are worth at any given time. Additionally, this introduces some disparity amongst buyer and seller if there is any confusion about the exchange rate used to pay the service. How does the seller know that he’s been paid in full? When he gets anything at all close to what he thinks he should get from the buyer, in this case. What happened to using BTC as the means of transaction without the need for 3rd parties and their associated fees? Is this even possible or am I insane?
Because of this, any future orders will likely start with an estimate of the current market value of our labor in USD. We will allow our customer to bid in BTC until a price is agreed upon, after which time the price is locked - in BTC. We will endeavour to honor our part of the agreement, and trust that our customers will fulfil their own part.
If you’re unsatisfied with what you get, it may just be your very own ‘10,000 BTC pizza’. Think of it as an heirloom print, whose artistic value will only appreciate with time, especially if you can tell people what it’s REALLY worth in the future. We hope you won’t hold that against us, just as we don’t think anyone should hold a grudge regarding the guy who sold a pizza for 10,000 BTC.
We’d love to hear comments on this issue/policy, especially from others who might have more experience in trading physical goods than we do.