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Author Topic: Why Businesses Accepting BTC Should Charge MORE, NOT Less  (Read 1004 times)
bitcola
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June 23, 2011, 08:59:58 PM
 #1

Accepting BTC represents a major currency risk to a vendor.

Not just that, but those hoarding, er I mean holding Cheesy , bitcoins will be prepared to pay more.

Why? Because cashing out incurs a cost in terms of commissions/spreads and also inconvenience. And most of the BTC that is being held has been mined and is pure profit. Very few holders have actually paid hard currency for theirs. Thus, they won't feel too bad spending money they have created for free.

The economy just needs businesses to hold out and start charging more. There is no reason for them to offer discounts at all. Why should they? Already, nobody is spending bitcoins anyway and businesses are not desperate to get them. So charge more for them.

The only instance when they should offer a discount is if USD or some other major currency suffers a major flight of capital.


I remember the Russian Rouble crisis not many years ago. My buddy was in Moscow as the currency crashed. Every day, he got insane offers for his USD.

Nobody is offering insane deals for BTC right now. They should be doing the opposite, they should be charging slightly more but not too much so that people will convert into USD instead. I reiterate, there is no justification for offering discounts right now.
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June 23, 2011, 09:13:22 PM
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Accepting BTC represents a major currency risk to a vendor.
Right. The volatility is still too high.
The risk premium a merchant pays for accepting Bitcoins is approximately equal to the daily volatility plus the cost of conversion to another currency. Most merchants would sweep their Bitcoins into dollars or euros once a day. 

For Bitcoins to work as a medium of exchange, the volatility has to get below 1%/day. 
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June 25, 2011, 11:47:43 AM
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The retail price most vendors charge is usually 100% or more over their costs. Giving a discount to bitcoin users is no different than giving 10% off to seniors or haves sales or coupons to generate sales.   

Business owners who were planning to buy bitcoin with some of their profits can charge less for their goods and services sold in bitcoin because they save on exchange fees and wire transfer fees they would have otherwise paid to obtain the same bitcoin.   

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