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soggy-hamster
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June 27, 2012, 11:50:47 AM
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John (John K.)
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June 27, 2012, 11:55:36 AM
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Perhaps I'm being a bit of a wally, but I'm confused.

I thought the idea of Bitcoin was to cut-out the middleman and have direct payment transfers between sender and receiver.

So why is Bit-Pay flourishing? If we use Bit-Pay the middleman is back again, taking their cut. So we're back where we started. We might as well use Paypal again???

Maybe I'm missing something here?



Until you find a chip-fab that would accept bitcoins, bit-pay and the sort would still flourish. However, bitcoins as a currency medium is definitely working here. (lower costs to transfer money as compared to traditional methods, no chargebacks etc)

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June 27, 2012, 11:57:24 AM
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Nothing wrong with having more options. Some people just want to use a e-currency for convenience, not because of ideology or politics.

 

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June 27, 2012, 12:15:43 PM
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Bit-Pay is first and foremost a payment processor that converts to and fro fiat instantly and transparently. It's optional. Also there can (and will) be competitors. Furthermore, a merchant still can accept bitcoins directly of course.

https://localbitcoins.com/?ch=80k | BTC: 1LJvmd1iLi199eY7EVKtNQRW3LqZi8ZmmB
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June 27, 2012, 12:29:09 PM
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Services like Bitpay are needed because not everyone wants to do everything from scratch. Many merchants don't have the expertise either. It's crucial that we have these services, Bitpay is excellent. It's important to remember that it's all optional. Bitcoin is easy to use for p2p money transfers by itself and merchants always have the option to set up their own Bitcoin system.

There are no restrictions except the know-how needed to implement it, because Bitcoin is an open source technology, not proprietary.

If you like to do it yourself, don't use Bitpay. If you don't like to do it yourself, use them. It's optional. Whining about it makes absolutely no sense.

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June 27, 2012, 12:33:41 PM
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If your entire supply and distribution chain operates in Bitcoin, there is no need for Bitpay. However, until that time (if it ever arrives) it provides an excellent service by solving the problem of conveniently exchanging bitcoins to fiat.

It is definitely not a middleman.

Bitcoin enthusiast and Java programmer contributing to https://multibit.org and http://bitcoin.stackexchange.com
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June 27, 2012, 01:02:51 PM
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If your entire supply and distribution chain operates in Bitcoin, there is no need for Bitpay. However, until that time (if it ever arrives) it provides an excellent service by solving the problem of conveniently exchanging bitcoins to fiat.

It is definitely not a middleman.

You need some kind of advanced retail solution. Standard bitcoin wallet solutions just don't cut it. For example, downloading the block chain is out of question for example in restaurants. You need something tailored for your business. Bit-pay is an easy drop-in solution, and it might be useful even when you don't want to change to fiat.

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June 27, 2012, 01:11:56 PM
 #8

Bit-Pay is first and foremost a payment processor that converts to and fro fiat instantly and transparently. It's optional. Also there can (and will) be competitors. Furthermore, a merchant still can accept bitcoins directly of course.

Bitpay is not an exchange. they do conversion to fiat but NOT from fiat, unless they've recently added this unannounced feature
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June 27, 2012, 01:34:27 PM
 #9

Perhaps I'm being a bit of a wally, but I'm confused.

I thought the idea of Bitcoin was to cut-out the middleman and have direct payment transfers between sender and receiver.

So why is Bit-Pay flourishing? If we use Bit-Pay the middleman is back again, taking their cut. So we're back where we started. We might as well use Paypal again???

Maybe I'm missing something here?


You may be missing something but you are not alone  Wink
Bitcoin is adding a new liberty (the liberty to conduct financial transactions without a middleman) but bitcoin is not removing any options.

The option to use a middleman for value add services like currency conversion, exchange rate hedging, dispute resolution, escrow and what not is still available to bitcoin users and merchants.
However, for most transactions, the option of using a middleman is not needed nor required.

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June 27, 2012, 05:20:38 PM
 #10

So we're back where we started. We might as well use Paypal again???

It is funny that you would use PayPal in your argument.  PayPal doesn't allow their payment network to be used to collect payment for pre-sales.

So unless BFL is ready to ship, anyone that pays with  PayPal could file a dispute and PayPal would investigate.  They'ld likely freeze all funds in BFL's PayPal account, and clawback funds from BFL's bank to cover any outstanding disputes if there weren't sufficient funds recovered in the PayPal account.  The customers who filed a dispute might likely see a return of the funds, eventually.

BFL does offer delivery estimates on the order form (e.g., for the BFL single - "Delivery: Units are shipped within four to six weeks from the date of purchase.", and for the Jalapeno, "October") so if they fail to deliver as per the terms then they should allow the customer the ability to obtain a refund.  But that is between the customer and BFL, not the intermediary.

Because of this, BFL can know that funds received will not be charged back and thus can commit the resources to producing product for each order sold.  They can offload the risk of future events to the customer.    What if it was some new upstart that started offering an ASIC product line, and lots of customers wanted to cancel their orders for BFL singles, for instance?

Bitcoin is simply another option available to cash-based businesses.  In many instances, Bitcoin ends up being the best option.

I thought the idea of Bitcoin was to cut-out the middleman and have direct payment transfers between sender and receiver.

Bitcoin's raison d'etre is to have the freedom to carry on your business in the manner you wish to do so.

Offloading the payment process to a third party allows BFL to concentrate on designing and building BFL's product line.

Also, the reason most of those $250K worth of payments were likely converted to USDs was because the Bitcoin economy is still nowhere near self sustainable yet.  BFL pays its component suppliers using USDs.  It likely pays staff using fiat (though a bonus in bitcoin might be one heck of an incentive to help get a target met.)

Bit-Pay allows partial conversion and will convert to other currencies.  So even with a conversion to fiat necearry, BitPay helps to cut out a step.  Instead of BFL's current flow of funds (using hypothetical numbers):

 BTC -> (70%) USD [for salaries, overhead and profit]
     -> (30%) USD [bank wire] -> [recipient's currency]


the new flow instead is

 BTC -> (35%) BTC [for profit, kept in BTC.]
     -> (35%) USD [for salaries and overhead]
     -> (30%) CNY [for payment directly to supplier]


And since the conversion to fiat is more expensive than if bitcoins were used by both sides, there will be a constant push towards avoiding the conversion, as long as those BTCs have purchasing power.

We're getting there.

The reason the mining operators were able to pay in bitcoins was specifically because they kept some of their mining proceeds, knowing that their coins would have value in the future.  By doing so, they were able to cut out two conversions to or from fiat (once -- to fiat, when they received their mining proceeds and a second time -- back from fiat into bitcoins to be able to be among the first in line for the new BFL product line.)

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June 27, 2012, 05:22:46 PM
 #11

Very well said, Stephen.

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June 27, 2012, 06:24:21 PM
 #12

Perhaps I'm being a bit of a wally, but I'm confused.

I thought the idea of Bitcoin was to cut-out the middleman and have direct payment transfers between sender and receiver.

So why is Bit-Pay flourishing? If we use Bit-Pay the middleman is back again, taking their cut. So we're back where we started. We might as well use Paypal again???

Maybe I'm missing something here?


Because Bitcoin is still small and it's price wildly fluctuate

Bit Pay allows EVERY merchant to safely and easily accept Bitcoin without even caring about what it is and it's price, they can simply receive dollars like with normal payment system and the buyer pay with Bitcoin

Sure, the day everyone will use Bitcoin and no one will need dollars the situation will be different, but now such a thing is required.
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June 27, 2012, 11:23:11 PM
 #13

Perhaps I'm being a bit of a wally, but I'm confused.

I thought the idea of Bitcoin was to cut-out the middleman and have direct payment transfers between sender and receiver.

So why is Bit-Pay flourishing? If we use Bit-Pay the middleman is back again, taking their cut. So we're back where we started. We might as well use Paypal again???

Maybe I'm missing something here?

For me, Bit-Pay is a great solution for my online store.  I do not convert to USD, I take BTC from Bit-Pay so my fee is 1%. 

Now I could do this with my own server running bitcoind.... and risk downtime and pay for the electricity and maybe a fixed IP address, or I can let them have 1% and do it all for me.  For me, bit-pay makes it cheaper. 

The bitcoin difference is that this is MY CHOICE.  With bitcoin I can manually still take that fee free transfer, with visa/mc/paypal there is no way to do it without the fee commercially.  No way to do it without very restrictive agreements and potential charge-backs.   Bit-pay provides me with automation for about the cost of electricity. 

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June 28, 2012, 02:53:01 AM
 #14

My theory is bitcoin will go through two stages:

1) People use bitcoin to transfer sums to tertiary currencies via exchange services
    Such  as:
   
Code:
(user 1)==$USD==> < Exchange > ==BTC==> (user 2) ==BTC==> < Exchange > ==EUR==> (user 2)
2) People will use bitcoin to transfer sums between exchanges, services and users, with no intermediate conversion. (This is the desired eventual outcome, of course.)

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June 28, 2012, 03:15:31 AM
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When m-of-n transactions are implemented and combined with open transactions, Wall Street will become obsolete.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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June 28, 2012, 04:45:27 AM
 #16

The reason the mining operators were able to pay in bitcoins was specifically because they kept some of their mining proceeds, knowing that their coins would have value in the future.  By doing so, they were able to cut out two conversions to or from fiat (once -- to fiat, when they received their mining proceeds and a second time -- back from fiat into bitcoins to be able to be among the first in line for the new BFL product line.)
Ironically, some miners were commenting that they had to buy back some of the bitcoins they'd only recently sold to place their BFL orders. Wink

(gasteve on IRC) Does your website accept cash? https://bitpay.com
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June 28, 2012, 04:06:25 PM
 #17

Perhaps I'm being a bit of a wally, but I'm confused.

I thought the idea of Bitcoin was to cut-out the middleman and have direct payment transfers between sender and receiver.

So why is Bit-Pay flourishing? If we use Bit-Pay the middleman is back again, taking their cut. So we're back where we started. We might as well use Paypal again???

Maybe I'm missing something here?

With many others in this thread, I agree that Bitpay and other diversifications of payment options add to the value of the bitcoin economy and make it more attractive to customers and merchants, while the bitcoin economy has not blended in with the offline world entirely.

BUT:

Aren't bitpay and any other "man in the middle solutions" only second best? Isn`t bitcoin about taking power out of corporate hands and giving it back to the idividuals by offreing a protocol so elaborate in its design, that all those barricades and parasites our modern economy has accumulated can easily be avoided and shaken off altogether?

If we have not yet written the code, openscource and for everyone to use, to facilitate those services bitpay and others are needed for at the moment, we should better get down to business and start thinking about ways to achieve that!
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June 28, 2012, 05:19:10 PM
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While I agree with the poster's sentiment, I actually think that companies like Bit-Pay provide a useful service.  It's not a service that I would probably ever use, but I can totally see why some would.  In the real world, when running a business, the most important thing is to minimize risk and to have someone to blame if things go wrong.  Even for the smallest business, with only one or two investors, it can make sense to outsource payment processing to Bit-Pay.  Rather than have to go to your investors and say "I took a risk in accepting Bitcoin and ended up losing out because the exchange rate fluctuated" or whatever, it is much easier to say "I outsourced that to some other company for a flat 2% fee," even if things do still end up going wrong.  It's dumb, but that's just the way it is.

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June 28, 2012, 05:32:45 PM
 #19

As you all know our service is entirely optional.

If a business wants to spend the time to learn, install, secure, and automate the bitcoind for their online store, by all means go ahead.  But most business owners I talk to want to focus on growing their sales, not futzing around with some beta software to save 1%.

Conversion from bitcoin to fiat is also optional. I would say about half of our merchants just choose to keep the bitcoins straight up.

If a business wants to convert to fiat, we do everything from start to finish without them needing to lift a finger.  The next day money shows up in their bank account.  Most business owners I talk to don't want to sit around on a computer futzing with some online currency exchange in a foreign country, then moving money to an intermediary, then moving money to their bank account.  They want to spend time growing their business.



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June 28, 2012, 06:46:19 PM
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As you all know our service is entirely optional.

If a business wants to spend the time to learn, install, secure, and automate the bitcoind for their online store, by all means go ahead.  But most business owners I talk to want to focus on growing their sales, not futzing around with some beta software to save 1%.

Conversion from bitcoin to fiat is also optional. I would say about half of our merchants just choose to keep the bitcoins straight up.

If a business wants to convert to fiat, we do everything from start to finish without them needing to lift a finger.  The next day money shows up in their bank account.  Most business owners I talk to don't want to sit around on a computer futzing with some online currency exchange in a foreign country, then moving money to an intermediary, then moving money to their bank account.  They want to spend time growing their business.
+1

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