Why should I, a vendor, accept bitcoins?

[InASpiral]

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)

[1713941514]

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[Ruxum]

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. 

[FlipPro]

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.

[RodeoX]

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.

[smackdaddy]

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.

[FlipPro]

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.

[yeponlyone]

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?

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 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?

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.

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)

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.

[Edward50]

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

[tehcodez]

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.

[gmk80]

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.

[yeponlyone]

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

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

[gmk80]

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

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.

[Edward50]

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.

[Jaime Frontero]

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.

[gotBitcoin]

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.

[BombaUcigasa]

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.

[Jaime Frontero]

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.

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?

[bluefire]

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.

[Jaime Frontero]

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.

[TheGer]

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 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.