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Author Topic: Important! Regarding Restaurants Accepting Bitcoin  (Read 2218 times)
Phinnaeus Gage
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February 19, 2012, 03:44:25 AM
 #1

I felt I needed to start a new thread on this very important subject. I didn't want to see it develop into a discussion on the thread I quoted the post from in case restaurant owners happen to visit this site and read that thread. I also opt to put this in Off-topic, opposed to Discussion, for the same reasoning. I hope I'm wrong with the below, but...

Ah, I just suggested grubhub in a different thread. Grubgo looks similar. Yes, this is a good idea.

Looks like they got a customer!
 - http://blockexplorer.com/address/18n4wFPmLgZSz4GQJ6Kf6M93JE8eePWMAX

Please stir me right in my thinking!!!

I clicked the link and my head went into overdrive. I thought, "WOW! I could use this." (along with other great thoughts)

Then it hit me--in like about 15 seconds. What if I were a restaurant owner. Perhaps I don't want others seeing my income. PayPal doesn't show others what I sell. My bank doesn't. My credit card provider doesn't. After a while, my competitor will be able to figure out exactly what I gross per year simply by extrapolating the data provided by blockexplorer or blockchain, like what meals and beverages sell the best, exact hour of the day I'm busy, the average check amount, etc. I've manage restaurants (Alabama), and know damn well on how great it would be to know what your immediate competition is doing.

For those thinking that this is not important or, worse, impossible, all I need to see is 10 (20 max) sales on the blockchain and a menu of Meze Grill, and I'll show you the information I can glean from that data. I'll go one step further and tell you what color Bruce's shit will be and at what hour (+/- 2 hours, but I'll get the color correct). Though humorous, I hope, I'm not trying to be funny here. Only stating facts. Imagine what a competitor could do if they were privy to 50-100 transactions spread out over a month. As a competitor, they would be looking for such businesses that accept Bitcoin, but would stay away from using it themselves. And if the Bitcoin address isn't readily available, all they would have to do is go and dine there once and pay with Bitcoin, then check blockexplorer and glean the address.

Please forgive me for playing Devil's Advocate, but felt it necessary to bring this to light. Please correct me if I'm wrong. If I'm not, then somebody needs to develop something to protect these businesses that are about to accept Bitcoin.

~Bruno~
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rjk
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February 19, 2012, 04:14:59 AM
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Any sane business owner that wishes to remain competitive would use unique addresses to receive funds. However, the only other issue is when the coins get spent - if they are sent from multiple addresses in a single transaction, that just proves that those multiple addresses are linked.

How do we fix this conundrum?

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February 19, 2012, 04:21:07 AM
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Any sane business owner that wishes to remain competitive would use unique addresses to receive funds.

You saying that they use a different address for every transactions, oppose to only using the same one, e.g., 1TacoBell1.......dVh7n? I not only envisioned them using only one address, but a vanity address to boot.

I'm pretty sure GrubGo is using only one address: http://blockexplorer.com/address/18n4wFPmLgZSz4GQJ6Kf6M93JE8eePWMAX And it would be nice if it were a vanity address: 1GrubGo1...........................

~Bruno~
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February 19, 2012, 04:24:57 AM
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Any sane business owner that wishes to remain competitive would use unique addresses to receive funds.

You saying that they use a different address for every transactions, oppose to only using the same one, e.g., 1TacoBell1.......dVh7n? I not only envisioned them using only one address, but a vanity address to boot.

I'm pretty sure GrubGo is using only one address: http://blockexplorer.com/address/18n4wFPmLgZSz4GQJ6Kf6M93JE8eePWMAX And it would be nice if it were a vanity address: 1GrubGo1...........................

~Bruno~
Your first post outlined the very reason why it might not be a good idea...

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February 19, 2012, 04:25:32 AM
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Quote
Any sane business owner that wishes to remain competitive would use unique addresses to receive funds.

You saying that they use a different address for every transactions, oppose to only using the same one, e.g., 1TacoBell1.......dVh7n? I not only envisioned them using only one address, but a vanity address to boot.

I'm pretty sure GrubGo is using only one address: http://blockexplorer.com/address/18n4wFPmLgZSz4GQJ6Kf6M93JE8eePWMAX And it would be nice if it were a vanity address: 1GrubGo1...........................

~Bruno~

Just print a QR on the receipt.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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rjk
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February 19, 2012, 04:27:21 AM
 #6

Just print a QR on the receipt.
Exactly. And the vanity address could still be used - for tips! No harm having those be public right? Grin

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Phinnaeus Gage
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February 19, 2012, 04:29:33 AM
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Any sane business owner that wishes to remain competitive would use unique addresses to receive funds.

You saying that they use a different address for every transactions, oppose to only using the same one, e.g., 1TacoBell1.......dVh7n? I not only envisioned them using only one address, but a vanity address to boot.

I'm pretty sure GrubGo is using only one address: http://blockexplorer.com/address/18n4wFPmLgZSz4GQJ6Kf6M93JE8eePWMAX And it would be nice if it were a vanity address: 1GrubGo1...........................

~Bruno~

Just print a QR on the receipt.

Even if the transaction is conducted via mental telepathy, it'll still be transparent on blockexplorer.

Quote
Any sane business owner that wishes to remain competitive would use unique addresses to receive funds.

You saying that they use a different address for every transactions, oppose to only using the same one, e.g., 1TacoBell1.......dVh7n? I not only envisioned them using only one address, but a vanity address to boot.

I'm pretty sure GrubGo is using only one address: http://blockexplorer.com/address/18n4wFPmLgZSz4GQJ6Kf6M93JE8eePWMAX And it would be nice if it were a vanity address: 1GrubGo1...........................

~Bruno~
Your first post outlined the very reason why it might not be a good idea...

I knew you concurred, rjk, but was making sure I wasn't missing anything with my follow-up question.

~Bruno~
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February 19, 2012, 04:34:49 AM
 #8

How hard would it be to create and print, with the press of one button, a unique QR address for each customer tied to the restaurant's wallet? The few techno-impaired folks like myself who have no use for QR codes (especially not on my deodorant...) could be given the dirty backup address.

Don't mix your coins someone said isn't legal
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February 19, 2012, 04:36:41 AM
 #9

I'm sure Bit-Pay could do something about this, like generating a random number of addresses for merchants that are randomly rotated for every purchase.  This feature could be turned on and off at will.  

So, for example, a company may sign up with Bit-Pay and receive 20 wallet addresses linking to their Bit-Pay account.  At random, 1 out of these 20 addresses would be used for the first transaction after which another 1 out of 20 addresses would be selected randomly for the 2nd transaction.  The merchant could choose to turn the randomness feature on and off at will so that someone who thinks they can simply look at one address and multiply it's received BTC by 20 to estimate the gross earnings would be making a mistake.

Another option would be for Bit-Pay to use a Bit-Pay-owned static address that indirectly funnels the money from the customer to the merchant.  So, if a customer purchases something, the money would be sent to the Bit-Pay-owned address, and then the money would be send to the merchant.

Diagram:    Customer -----> Bit-Pay ----->  Company A, or B, or C, or D, or E, etc.

As far as going straight from a customer's wallet to a merchant's wallet, improved client options for addresses may be needed.


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February 19, 2012, 04:48:58 AM
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Even if the transaction is conducted via mental telepathy, it'll still be transparent on blockexplorer.


I meant generate a new address for each receipt.

As for expenses correlating addresses, you can make a few wallets and mix them up, or send them all to MtGox or any other trustworthy site.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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Phinnaeus Gage
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February 19, 2012, 05:07:00 AM
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Even if the transaction is conducted via mental telepathy, it'll still be transparent on blockexplorer.


I meant generate a new address for each receipt.

As for expenses correlating addresses, you can make a few wallets and mix them up, or send them all to MtGox or any other trustworthy site.

You mean like this?

Source: http://starburst.hackerfriendly.com/?p=1530

Quote
He held up an enormous laminated QR code the size of an entire sheet of paper, which I scanned on my phone yielding

bitcoin:1MTbKpYWnzqmsLvCjdTtwrvuX81g3HCgC

http://blockchain.info/address/1MTbKpYWnzqmsLvCjdTtwrvuX81g3HCgC

Color guess: Burnt orange at approximately 7:35 PM EST.
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February 19, 2012, 05:17:20 AM
 #12

No.  Not like that.  That is 1 address for all transactions.

I'm talking about 1 address per transaction.  Nobody else will ever see your address besides you and your server/cashier.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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Phinnaeus Gage
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February 19, 2012, 05:25:12 AM
 #13

No.  Not like that.  That is 1 address for all transactions.

I'm talking about 1 address per transaction.  Nobody else will ever see your address besides you and your server/cashier.

So, if I'm a rogue competitor, and I come into your restaurant and pay with Bitcoin, I would not be able to reverse engineer blockexpoler or blockchain to see your other transactions. Is that what you're saying? And is this fact? Is this easy to implement for the restaurant owners?
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February 19, 2012, 05:34:27 AM
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No.  Not like that.  That is 1 address for all transactions.

I'm talking about 1 address per transaction.  Nobody else will ever see your address besides you and your server/cashier.

So, if I'm a rogue competitor, and I come into your restaurant and pay with Bitcoin, I would not be able to reverse engineer blockexpoler or blockchain to see your other transactions. Is that what you're saying? And is this fact? Is this easy to implement for the restaurant owners?


Right, if I use a new address each time and forward all my funds straight to MtGox each time I receive, the funds will be mixed together with all the other MtGox deposits and can't be linked.

They will need integration with their existing payment systems.  Alternatively, servers could generate an address and display the QR on their smartphone.  There is work to be done here, but a system could be built to guarantee one address can only give you info for a single transaction.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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Phinnaeus Gage
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February 19, 2012, 05:43:28 AM
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No.  Not like that.  That is 1 address for all transactions.

I'm talking about 1 address per transaction.  Nobody else will ever see your address besides you and your server/cashier.

So, if I'm a rogue competitor, and I come into your restaurant and pay with Bitcoin, I would not be able to reverse engineer blockexpoler or blockchain to see your other transactions. Is that what you're saying? And is this fact? Is this easy to implement for the restaurant owners?


Right, if I use a new address each time and forward all my funds straight to MtGox each time I receive, the funds will be mixed together with all the other MtGox deposits and can't be linked.

They will need integration with their existing payment systems.  Alternatively, servers could generate an address and display the QR on their smartphone.  There is work to be done here, but a system could be built to guarantee one address can only give you info for a single transaction.

Great! Therefore, you see that this is an important aspect that needs to be addressed for reasons I've outlined? And chances are, it's a relatively easy fix?
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February 19, 2012, 12:45:42 PM
 #16

No.  Not like that.  That is 1 address for all transactions.

I'm talking about 1 address per transaction.  Nobody else will ever see your address besides you and your server/cashier.

So, if I'm a rogue competitor, and I come into your restaurant and pay with Bitcoin, I would not be able to reverse engineer blockexpoler or blockchain to see your other transactions. Is that what you're saying? And is this fact? Is this easy to implement for the restaurant owners?


Right, if I use a new address each time and forward all my funds straight to MtGox each time I receive, the funds will be mixed together with all the other MtGox deposits and can't be linked.

They will need integration with their existing payment systems.  Alternatively, servers could generate an address and display the QR on their smartphone.  There is work to be done here, but a system could be built to guarantee one address can only give you info for a single transaction.
Note: This would only work if the deposits went straight to a MtGox or some kind of mixing service. If it went to the restaurant's wallet, you could correlate the outputs with the inputs.

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February 19, 2012, 12:46:10 PM
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No.  Not like that.  That is 1 address for all transactions.

I'm talking about 1 address per transaction.  Nobody else will ever see your address besides you and your server/cashier.

So, if I'm a rogue competitor, and I come into your restaurant and pay with Bitcoin, I would not be able to reverse engineer blockexpoler or blockchain to see your other transactions. Is that what you're saying? And is this fact? Is this easy to implement for the restaurant owners?


Right, if I use a new address each time and forward all my funds straight to MtGox each time I receive, the funds will be mixed together with all the other MtGox deposits and can't be linked.

They will need integration with their existing payment systems.  Alternatively, servers could generate an address and display the QR on their smartphone.  There is work to be done here, but a system could be built to guarantee one address can only give you info for a single transaction.

Great! Therefore, you see that this is an important aspect that needs to be addressed for reasons I've outlined? And chances are, it's a relatively easy fix?


I'm no programmer, but every time I (personally) want to accept bitcoins from a new source, I make a new address and labelled it for that transaction.

I imagine that a programmer with a minor effort could automate that process to give a unique address to each customer.

Bruno, you'll want to keep in mind that publicly aware transactions is part of the theory of bitcoin.  I don't think it's that big of a deal, because there are ways to limit the amount of information available.  

It doesn't seem like GrubGo is using bit-pay.com, so they will need to do this on their own.

I encourage a programmer to reach out to them, but I doubt GrubGo will be worried about it until they start getting 20+ orders via bitcoin.

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February 19, 2012, 01:16:55 PM
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Phinnaeus Gage:

For a developer it's straightforward to develop a solution that generates a new receiving bitcoin address for every transaction. This new address could either be generated on the spot, or it could be taken from a pool of pregenerated addresses. It's true what you say that if a business uses the same address all the time, it would be just like the public having access to their bank account (ie. seeing all their transactions).

There are numerous ways this could be solved, but first one would have to consider how important it would be to hide this information from public view. Perhaps some restaurant owners wouldn't object to anyone knowing how much bitcoin transactions they did, perhaps it's 2% of their overall sales anyway, so there would be no reason to be overly sensitive about the privacy.

In the event that a business simply doesn't want anyone else to see all their transactions, they would need to have a unique address for every payment received. That might seem like a daunting taks, but unless you're amazon.com, it's pretty manageable. For a restaurant this could mean that when it's time to pay the bill, the cashier simply selects bitcon as the payment method, then the customer is presented with a QR-code to scan and make the payment that way, or there could be a very short and easy url-shortener the customer could just type in to get the whole bitcoin address, like 'https://tb.co/3r7'.

It would also be possible for the restaurant to present the menu, and even make a order system the customer could access available over wifi once the customer enters the restaurant, then payment addresses could be generated based on mac-addresses or ip adresse, depending on whether it's a local network only, or connected to the internet. It would even be possible for a customer to have a btc address permanently assigned to him at that restaturant, so he later could look through his bills to have an overview (but it should be optional), as the standard should be a new bitcoin address for each transaction done.

The restaurant would need to have a well programmed system that made encrypted backups of the store's wallet to multiple remote locations after each purchase, so that in the event of failure of the system, the bitcoins the customers paid would not be lost. I would imagine that most restaurants simply would not have the technical knowledge or expertise to make this themselves, so it would probably have to be outsourced to companies that specialized in merchant solutions for bitcoin.

For everything to work flawlessly, there would need to be good design, redundancy and simplicity of use. For instance a restaurant could offer a app for bitcoin and iphone that could be installed on the phone, from which the visitor could order his meal and pay bitcoins. This way the restaurant could also verify that the funds where received before the customer left, as it would most likely be a few confirmations in that time. Usually eating at a restaurant takes around an hour or more.

It would also solve the problem of a customer running from his bill, as he would always pay up front. If he paid too much, or had a complaint and needed a refund, then the restaurant could just reinstate him the coins. I haven't looked into all the possible merchant systems that exists, but if something like what I described here doesn't exist (doubt it), it's bound to be implemented by someone soon.

So in summary, to have bitcoins accepted at a restaurant, the owner of the restaurant should be aware/educated of every aspect of using bitcoin, and a good merchant solution should be used, that will make it almost as easy or just as easy as using cash to make the payment.

One good argument is that if the restaurant now is accepting debit or credit card, a certain percentage of their earnings will go to the credit card companies and banks. Typicall fees of 3% or less. A negative aspect with bitcoin though is that there often is big fluctuations in it's worth relative to fiat money, so if the restaurant can't accept the price swings, they would need to convert to fiat money immediately, probably on an exchange, and this would mean they would need to pay a trading fee, which could be anything from 0.7% to 0.25%. Then they would also need to get the fiat money out of the exchange to their bank account, unless they paid their staff wages in BTC. Perhaps in the future, this will happen, and the steps for needing to exchange the bitcoins to fiat money will not exist.

But currently, there's so much technicalities that the head of the average restaurant owner would spin around it's own axis trying to comprehend it all, so in short what would be needed to have bitcoin as a popular option at restaurants would be to have companies that does all the integration, and can guarantee for the earnings of the restaurant.

So with a good solution, and good sales tactics, I'm sure a lot of restaurant and other brick and mortar businesses could be talked into accepting bitcoins, but there would need to be some incentive for them to do it. I'm sure the 'no fee'-alternative would be a good selling point, but only if there are good solutions that can be readily adopted.

Also there's another good argument, I'm sure today a lot of restaurants lose revenues over customers that pay with cards they don't own (ie. stolen cards). With bitcoins, once the payment is done, it's done, and there's no chargebacks, ever. This is because of the nature of the irreversibility of bitcoin transactions.

We also have another selling point. It's the coolness of this cryptocurrency. I would think it would be 'posh' and 'cool' to use the smart phone to make the payment, and using a QR-code would by many be considered as high tech and interesting. So for a lot of free advertising, the first restaurant in a town could claim to be the first one in that town to accept bitcoin, and thus I'm sure a lot of people would go there because they became curious, and news papers would write about it, which would mean free PR for the restaurant.

As for the negative points, I already mentioned a some of them, mainly the volatility, and the technical barrier and the simple fact that most people simply have no clue what bitcoin is. For the time being, I'm sure that this would be more of an experiment for most restaurants, than something they would get most of their income from. But in big cities, bitcoin enthusiasts would certainly go to places where they could spend their bitcoins.

I hope this gave some insight, and I'd be happy to answer more about the technical side of things.

It sure is interesting that more and more brick and mortar shops is accepting bitcoin.
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February 19, 2012, 01:25:31 PM
 #19

Also, isn't this already common practice?

Granted, new businesses who want to test out the demand tend to use a single address but AFAIK almost all automated solutions use one address per payment simply because you can't track individual payments otherwise. Correlation may or may not be a problem depending on how you utilize your bitcoins.

In an ordinary circumstance, they would be spent through diverse channels and collecting enough information to reach a useful sum of earnings is pretty difficult. Even if what you only do with them is to send to a single exchange, you can use different receiving addresses for each bulk transfer.
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February 19, 2012, 01:47:40 PM
 #20

Also, isn't this already common practice?

It is the recommended practice.

I've seen restaurant's that print a QR-code and laminate it and set it up on the cashier as well, that means they have perhaps only a single receiving btc address, or perhaps a new address for each day. As for receiving payments, if the customer does it in front of the staff, and he's saying he pays immediately, and it shows up on their screen immediately (although as 0/unconfirmed), there's no need for different receiving addresses to identify the payment of this particular customer. A payment can also be identified on it's TxID, but as that's public information anyone could claim it, but the shop could print the TxID as a reference number on a printed receipt for instance.

Note: A TxID is the reference you get when you make a bitcoin transaction. It's not visible in all clients, but it's looks something like 8703f0076c65ff7e2295445a0d526a34b90e461a1b09cf665f0fd7bb7821dc2c and it uniqely identifies a particular transaction, which can later be looked up, for instance on block explorer.
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