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Author Topic: Discounted Auctions as a way to publicise Bitcoin ?  (Read 886 times)
mintymark
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July 15, 2011, 08:07:33 PM
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I started an aution recently on that Oh so well known auction site. I said quite clearly that I would accept bit coins at the current britcoin rate at the time the person pays. And then I thought, why not offer an incentive, say 5% discount for anyone who pays in bitcoin? I placed the auction, and we will see what happens.

Did I need to be so conservative, and who does this policy actually help? Lets say (hypothetically, I am not going to change this auction whatever we decide here) I said not 5% discount by 95% discount on the current bitcoin price?  Do I loose out ? Well Lets say the item goes for £100, and the official exchange rate is £10 per bitcoin. So the bitcoin price would normally be 10 £/BTC.  But people bidding KNOW that they can bid at the discounted rate, and if they bid as much as £2000 then I will say that the exchange rate is £200 per bitcoin, so that the price in bitcoins would be still be 10, assuming that the bidders trust me and fully understand the situation.

So who exactly looses out here?
    If a bitcoin buyer buys it, he will still pay me pretty much the market price, assuming he bids agains other bitcoin buyers.
    If a non bit coin buyer buys it he obviously will just pay me £100 using paypal or whatever.
    If there is a bitcoin buyer and just one non bitcoin buyer, then I seriously loose out, the bitcoin buyer bids £101 pounds, the normal buyer
    considers its not worth that so stops and the bitcoin buyer buys it for .505 BTC. I lost out by 95%. Ooops.
    If there are a number of each, basically you end up cutting the non bitcoin buyers out of the end of the auction. But if they want
    to bid users can become bitcoin bidders quite easily. The wonder of this is that they do secretly..

So maybe 95% discount would be excessive, but a 5% discount sounds like a really good idea and might actually encorage non-bitcoin buyers to bid as well. Or in reality have I just lost 5% of the value of my item? Would 10% work better, it is after all probably unlikely the winner will pay in bitcoin...

What would be the right and best discount to offer from a self-interest perspective? Or from a bitcoin perspective? as clearly this also incentives people to use bitcoin as well as publicising it.

Is this a good plan, (It really seems like it)  or did I miss something here ?

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July 15, 2011, 08:25:13 PM
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The discount is money out of your pocket, so to pick the right number, you must decide how much it is worth to you to introduce someone to Bitcoin.

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mintymark
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July 15, 2011, 08:33:48 PM
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Is it? If all my bidders were using bitcoins and had understood what was going on, surely they would just bid higher? Now if that is true or not does rather depend on what I am selling doen't it? Point is even if most of them were using BTC, then it seems to me that it isnt out of my pocket ?

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July 15, 2011, 08:34:49 PM
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If most of your bidders already intended to use BTC, then there would be no need to offer a discount! Smiley

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July 15, 2011, 08:37:13 PM
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This is like having all the bidders place 2 bids, one on Bitcoins and another on GBP and the winner decide which one to finally pay. You can get a more straightforward analysis with this in mind Smiley.

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July 15, 2011, 09:03:43 PM
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I've been listing my auctions as accepting Bitcoin. But I think I'll also start offering a small discount for using Bitcoin, if for no other reasons:

  • No possibility of charge-backs.  I could even ship to Nigeria and not have to worry about the transaction being reversed against my will.
  • Save the ~3-4% that Paypal would charge me on each transaction.

Perhaps I'll even require Bitcoin for international buyers.   I've noticed many sellers simply refuse to ship internationally, or to specific countries with bad reputations for fraud/lost mail.  This is one area where Bitcoin has potential to find an early niche use.

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July 15, 2011, 09:32:13 PM
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I think we will find that Bitcoin will take off precisely because vendors will be able to offer slightly lower prices when paid in Bitcoin. They will not do this because they "like Bitcoins" but rather because they don't have to pay 2-3% CC fees, and don't have the risk of chargebacks.

This incentive is the strongest impetus for widespread Bitcoin adoption.
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