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Author Topic: Why should I, a vendor, accept bitcoins?  (Read 4472 times)
contentkaiser
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June 13, 2011, 07:51:03 PM
 #41

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.
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joec0p
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June 13, 2011, 09:20:28 PM
 #42

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.

Airport security wouldn't let me through with my Origami Dagger, but I got by with the paper to make Origami Hand Grenades!
MoonShadow
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June 14, 2011, 12:21:37 AM
 #43


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.

Can one do this?  Can I go to Mt. Gox and transfer BTC to OP's account if I want to buy OP's products/services? 


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.

Quote

 If so, doesn't OP then have to immediately sell BTC on the exchange to eliminate his risk? 


To completely eliminate it, yes.


"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
MoonShadow
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June 14, 2011, 04:22:50 AM
 #44

  Of course, this would require the vendor to maintain a suitable balance at Mt. Gox...or is there something else I'm not getting?


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.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
Stardust
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June 14, 2011, 08:16:25 AM
 #45

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.
InASpiral
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June 14, 2011, 11:46:22 AM
 #46

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. 


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.
BombaUcigasa
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June 14, 2011, 01:49:51 PM
 #47

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. 


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?
Jessy Kang
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June 14, 2011, 02:06:16 PM
 #48

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.

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.
MoonShadow
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June 14, 2011, 02:39:51 PM
 #49

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.

If a customer makes a purchase with BTC, doesn't the network have to validate the transaction before the vendor can actually sell the BTC he's received?  And doesn't this validation currently take anywhere from a few minutes to an hour?  As a vendor, I need to issue a sell order on the exchange immediately upon any sale of my goods to minimize/eliminate my exchange rate risk, right? 

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.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
Hands
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June 14, 2011, 05:12:21 PM
 #50

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.







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
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zurzon
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June 15, 2011, 12:29:51 AM
 #51

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

BITCOIN SECRETS
exchadmin
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June 15, 2011, 01:46:43 AM
 #52

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.
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June 15, 2011, 01:53:42 AM
 #53

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
deadon
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June 15, 2011, 03:00:26 AM
 #54

Why not take another form of payment people are willing to pay?
Jaime Frontero
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June 15, 2011, 03:51:02 AM
 #55

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.
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June 15, 2011, 07:11:36 AM
 #56

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
BombaUcigasa
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June 15, 2011, 08:48:59 AM
 #57

Am I reading this right?  Are you suggesting that a business should charge it's customers a 20% price premium for using bitcoins?  Why would any customer agree to that?
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?

That's a lot of "what ifs", all of which imply taking time away from actually running a business in order to spend it in the BTC currency markets.  Small businesses in particular lack the time/inclination/expertise to get involved in BTC trading on the exchanges (just to start accepting what is in effect a foreign currency that lacks any hedging instruments).
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.

That is some VERY good advice.    Smiley
Yes, cashing in as quickly as possible even if working against yourself is good advice. You're a cheapo!
arminvan
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June 15, 2011, 08:57:10 AM
 #58

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

1Jv49jZgio6H8PrahHVUpQxCXjx4bXwWSt
teamdren
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June 15, 2011, 09:25:32 AM
 #59

#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.

Follow me on twitter for bits about bitcoin, and EVERYTHING else I'm interested in, @teamdren
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June 15, 2011, 12:37:36 PM
 #60

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.

Like what I posted?

Buy my Metal FX Currency Dice Set
http://tradersedgedice.com

Buyers using bitcoin get a deep discount.  Free worldwide shipping.

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