[2014-12-25] The Wall Street Journal: Even Bitcoin’s Fans Prefer to Keep Cash

[pawel7777]

Quite interesting read, despite the bullshit title.

http://www.wsj.com/articles/even-bitcoins-fans-prefer-to-keep-cash-1419539916

Even Bitcoin’s Fans Prefer to Keep Cash
Volatility Deters Merchants From Holding the Virtual Currency

Reeds Jewelers encouraged customers to pay for holiday gifts with bitcoin this year, but the family-owned business isn’t hanging onto the virtual currency for long.

Like many of the growing number of merchants that accept bitcoin, the regional jewelry store immediately converts the payments into real-world dollars. The strategy is aimed at protecting Reeds from big price swings that have plagued the virtual currency for much of the year—and underscores how many business owners remain skittish about the long-term prospects for bitcoin.

“We thought about [holding on to the bitcoin] but we’re just not willing to do it,” said Mitch Caan, marketing director for the Wilmington, N.C.-based jeweler which has roughly 60 stores, mostly in the Southeast.

The price of a bitcoin has tumbled since hitting a record $1,100 in November 2013 due to nagging concerns about potential regulation, the collapse of a large bitcoin exchange in Japan and the stigma that it is often used for illicit activity. One bitcoin was worth $318.10 Thursday on the CoinDesk price index.

[1715491485]

1715491485

[1715491485]

1715491485

[1715491485]

1715491485

[kjlimo]

A fair point.  Why do retailers accept USD, but not Euros or Yen?  This is likely because most of their customers want to pay in USD.

But if they were to accept Euros or Yen, they would convert to USD likely if they are based in the US for two reasons:

1) their books are tracked in USD
2) their bills will be paid (including tax bills) in USD

So until their books are tracked in bitcoin, or their bills can be paid in bitcoin, it makes sense to avoid any risk in volatility, and they won't have the business case for keeping the bitcoins on the books.

This will be solved as bitcoin adoption grows, and we start allowing businesses to pay their bills in bitcoin. 

Bitpay, however, is a victim of their own success making transactions 0% - tough to beat that exchange fee.

It will be exciting to see how the future evolves!  Cheers to 2015!

[bitbouillion]

2) their bills will be paid (including tax bills) in USD

The only reason why there are currency monopolies. Banks created them with the help of government. Pay your taxes or go to jail.

[kjlimo]

2) their bills will be paid (including tax bills) in USD

The only reason why there are currency monopolies. Banks created them with the help of government. Pay your taxes or go to jail.

Yep, is there a country where taxes can be paid with non local currency/barter?

[hilariousandco]

Yeah, the title is a bit misleading and negative. Most businesses don't hold their coins and use a payment processor to get it converted straight to fiat, but people must remember bitcoin is not just a currency but also a payment system and that doesn't mean they have to keep the coins as you can just take advantage of the benefits of it being a cheaper option to receive fiat.

[deluxeCITY]

A fair point.  Why do retailers accept USD, but not Euros or Yen?  This is likely because most of their customers want to pay in USD.

This is correct. It is also because the US dollar is a world reserve currency that is generally the most stable.

But if they were to accept Euros or Yen, they would convert to USD likely if they are based in the US for two reasons:

1) their books are tracked in USD
2) their bills will be paid (including tax bills) in USD

Also correct.

So until their books are tracked in bitcoin, or their bills can be paid in bitcoin, it makes sense to avoid any risk in volatility, and they won't have the business case for keeping the bitcoins on the books.

It is more because their bills are paid in US dollars then the fact that their books are in dollars. There are plenty of companies that hold large amounts of foreign currency in order to pay their bills in that currency and then account for the exchange rate in their books

This will be solved as bitcoin adoption grows, and we start allowing businesses to pay their bills in bitcoin. 

Bitpay, however, is a victim of their own success making transactions 0% - tough to beat that exchange fee.

bitpay is helping companies start to accept bitcoin. As more companies start to do the same we will probably see more business to business transactions which will not need to involve companies like bitpay and coinbase

It will be exciting to see how the future evolves!  Cheers to 2015!