Interesting conversation with a retailer who formerly accepted Bitcoin

[juggernaut76]

I just visited NM Tea Company in Albuquerque, NM. I chose this particular tea store specifically because I found him listed as accepting Bitcoin and I want to support the Bitcoin community. However, when I inquired about it, the owner stated that he no longer accepts Bitcoin because, while the idea and principles are great, the volatility scared him. He explained that if he sold 2BTC worth of tea today, which might equal $17, it could be worth only $8 tomorrow which would cause him to have lost roughly 50% of his revenue from the sale.

I'm not versed enough the retail aspects of Bitcoin so I didn't have a rebuttal. I am interested in what this community has to say about his concerns, which can help me to engage next time.

Thanks.

[jwzguy]

The rebuttal would be that the dollar could also be worth 50% less the next day.

[FreeMoney]

The guy wants dollars, let him have dollars. Accepting bitcoins is awesome for people who want bitcoins. If for some reason customers really want to spend bitcoins and you want dollars use bit-pay or similar to avoid volatility and losing sales.

[FreeMoney]

Also the value could double as easily as halve and if he thinks otherwise he has a worse opinion of the value than average and obviosly should not accept it in his store.

[FreeMoney]

There will be 21 million ever and he doesn't want any, better that other people have them then, nice of him to get out of the way.

[CecilNiosaki]

Show him Bit-Pay. The volatility shouldn't affect him, then

[shtylman]

There will be 21 million ever and he doesn't want any, better that other people have them then, nice of him to get out of the way.

This is a terrible way to think about it. If you do not address the issues merchants are seeing then it will be very hard for Bitcoin to have the wider adoption many hope for. Exchange risk *is* a real concern and you should not shrug it off. Instead we should think about how we can work with merchants and help them understand and manage this risk or even turn it into a non risk.

If you want Bitcoins to matter beyond a tiny sphere, then you have to be ready to solve the problems others are having and not just think about yourself.

[CoinCidental]

I have tried to get people to accept it but they also think its overly complicacted, cumbersome and hard to manage and risky 
( all of which any new payment would have anyway )

the one person i know who does accept bitcoins is only accepting them as an "investment" (he knows they will be worth more in 5 -10 years than now )but not as a currency

this is another problem ,everybody cant just hoard coins hoping the value goes up  ,as addictive as it might be 

they have to be traded constantly and thats just not happening enough ,its been said before but if you had a 5 dollar note and a bitcoin in your pocket you would buy your  lunch with the 5 dollar note

the bitcoin needs spendability,outside of silkroad and tax evasion if its ever going to fulfill its potential as a  serious currency 

[Meni Rosenfeld]

I just visited NM Tea Company in Albuquerque, NM. I chose this particular tea store specifically because I found him listed as accepting Bitcoin and I want to support the Bitcoin community. However, when I inquired about it, the owner stated that he no longer accepts Bitcoin because, while the idea and principles are great, the volatility scared him. He explained that if he sold 2BTC worth of tea today, which might equal $17, it could be worth only $8 tomorrow which would cause him to have lost roughly 50% of his revenue from the sale.

I'm not versed enough the retail aspects of Bitcoin so I didn't have a rebuttal. I am interested in what this community has to say about his concerns, which can help me to engage next time.

Thanks.

1. Bit-Pay allows merchant to accept Bitcoin payments without any currency risk. If he wants $10 he gets $10 (minus a small fee).
2. Even if he doesn't want to rely on Bit-Pay, why does he have to wait until tomorrow? He can sell any received bitcoins instantly via an API. He doesn't even need to wait for the coins to clear into the exchange, he can operate with a reserve, or sell short.
3. Was he just scared about volatility, or was he ever actually harmed by it? If he kept it going I doubt he would have any significant losses due to volatility, even without doing anything to protect from it.

The guy wants dollars, let him have dollars. Accepting bitcoins is awesome for people who want bitcoins.

You're being awfully negative. Accepting bitcoins is awesome for people who want bitcoins but is also great for people who don't.

Also the value could double as easily as halve

Businesses strive to minimize risks. Even if his expected profit/loss from volatility is 0 it creates variance which is bad. The concern is legitimate, his decision is not.

and if he thinks otherwise he has a worse opinion of the value than average and obviosly should not accept it in his store.

A merchant's speculative position on BTC doesn't have anything to do with whether he should accept Bitcoin payments. He could accept Bitcoin because it's cheaper while going short because he thinks the price will go down, or he can take a long position because he thinks the price will go up but not accept them because it's not worth the hassle.

There will be 21 million ever and he doesn't want any, better that other people have them then, nice of him to get out of the way.

I want some of the 21 million, but I also want to be able to use them, merchants accepting bitcoins is vital and the more there are the better.

[SMTB1963]

This is a terrible way to think about it. If you do not address the issues merchants are seeing then it will be very hard for Bitcoin to have the wider adoption many hope for. Exchange risk *is* a real concern and you should not shrug it off. Instead we should think about how we can work with merchants and help them understand and manage this risk or even turn it into a non risk.

If you want Bitcoins to matter beyond a tiny sphere, then you have to be ready to solve the problems others are having and not just think about yourself.

Thank you for combating the groupthink that seems so prevalent on these forums.  It's nice to know there's at least a few who aren't in denial about the problems posed by exchange risk for merchants looking to accept BTC payments.

The good folks at Bit-Pay certainly recognize the problem, and recognize that there's money to be made in providing a solution.  I hope Bit-Pay (and others like them) get some traction in the marketplace...otherwise I fear BTC will continue to go nowhere fast.

[drrussellshane]

I have tried to get people to accept it but they also think its overly complicacted, cumbersome and hard to manage and risky 
( all of which any new payment would have anyway )

the one person i know who does accept bitcoins is only accepting them as an "investment" (he knows they will be worth more in 5 -10 years than now )but not as a currency

this is another problem ,everybody cant just hoard coins hoping the value goes up  ,as addictive as it might be 

they have to be traded constantly and thats just not happening enough ,its been said before but if you had a 5 dollar note and a bitcoin in your pocket you would buy your  lunch with the 5 dollar note

the bitcoin needs spendability,outside of silkroad and tax evasion if its ever going to fulfill its potential as a  serious currency 

it's called "Gresham's Law"...
https://en.wikipedia.org/wiki/Gresham%27s_law

Gresham's law is an economic principle that states: "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."[1] It is commonly stated as: "Bad money drives out good", but is more accurately stated: "Bad money drives out good if their exchange rate is set by law."

This law applies specifically when there are two forms of commodity money in circulation which are required by legal-tender laws to be accepted as having similar face values for economic transactions. The artificially overvalued money tends to drive an artificially undervalued money out of circulation[2] and is a consequence of price control.

[jwzguy]

they have to be traded constantly and thats just not happening enough ,its been said before but if you had a 5 dollar note and a bitcoin in your pocket you would buy your  lunch with the 5 dollar note

No, I'd be thrilled to buy it with bitcoin and if I was dying to keep my investment 100% in bitcoins, I'd go home and buy more.

The "hoarding problem" is not really a problem as long as the exchanges are as easy to use as Bitfloor.

[CoinCidental]

they have to be traded constantly and thats just not happening enough ,its been said before but if you had a 5 dollar note and a bitcoin in your pocket you would buy your  lunch with the 5 dollar note

No, I'd be thrilled to buy it with bitcoin and if I was dying to keep my investment 100% in bitcoins, I'd go home and buy more.

The "hoarding problem" is not really a problem as long as the exchanges are as easy to use as Bitfloor.

the current  exchanges are anything but "easy to use "

intersango is fcked (cant get money in or out)  ,gox has got too much rules and regulations and delays   and i dont personally trust small exchanges with big transactions
so i would prefer  person to person trading ,face to face if necessary

[jwzguy]

they have to be traded constantly and thats just not happening enough ,its been said before but if you had a 5 dollar note and a bitcoin in your pocket you would buy your  lunch with the 5 dollar note

No, I'd be thrilled to buy it with bitcoin and if I was dying to keep my investment 100% in bitcoins, I'd go home and buy more.

The "hoarding problem" is not really a problem as long as the exchanges are as easy to use as Bitfloor.

the current  exchanges are anything but "easy to use "

intersango is fcked (cant get money in or out)  ,gox has got too much rules and regulations and delays   and i dont personally trust small exchanges with big transactions
so i would prefer  person to person trading ,face to face if necessary

I didn't say anything about intersango or Gox. Let's try again.
The "hoarding problem" is not really a problem as long as the exchanges are as easy to use as Bitfloor.
Bitfloor is EXTREMELY easy to use.
Person to person is fine, once there are enough people using it. But online exchanges are necessary to get to that stage.

[SMTB1963]

Some point to help next time:

1) For the least amount of risk he could use a service like BitPay and never risk losing anything.  If the tea is $17.  He prices it at $17 BitPay gives he the amount of BTC required, you pay in BTC, he gets $17.  No risk, no extra work.

2) If he didn't want to use Bitpay he could simply sell on an exchange.  While he is exposed to some currency risk the 50% tomorrow scenario is kinda silly.   He could sell within the hour and be exposed to a much smaller % of volatility.

3) The amount of Bitcoin sales he is likely to get in the begining is small.  If 1% of his business is bitcoin that would be pretty good.  So being exposed to a 3% currency risk on 1% of sales is a rounding error on the amount of risk his business (any business) is exposed to from everything else (fraud, theft, catastrophic loss, etc).  Thus he can start "simple" because initially he is not likely to have huge exposure to Bitcoin.  As his Bitcoin volume grows (likely measured on a timeline in years not days) he can move to more sophisticated methods.

4) If he does start getting a significant volume of Bitcoin sales he could keep a reserve on the exchanges (say 100 BTC).  While that 100 BTC is at risk all sales can now be hedged.  You pay he 2 BTC he instantly sells 2 BTC at the market price.  Currency risk is 0% and processing costs are <0.5%.  He then deposits your funds on the exchange to refill the reserve.

Oh and edit the wiki to remove him.  No sense in giving him free advertising as a bitcoin business if he doesn't accept bitcoins.

While those points are by and large valid, nos. 2/3/4 essentially require a company to add a forex function to their operations.  For the vast majority of small businesses, there's simply no rationale to do so.  Even if they have the expertise, these guys just don't have the time.  IMO, the only reasonable option for NM Tea Co. - and indeed 99% of all small businesses - is Bit-Pay.  And not to nit-pick, but with Bit-Pay he would get $16.54 for his tea, not $17...correct?

David Edwards President, NM Tea Co. Inc. was once active on these forums.  Given his last activity here was April 2011, I doubt he's even aware of Bit-Pay.  In any case, it appears to me that he put some effort into getting bitcoin to work for his business.

I've sent an e-mail to the address in his profile asking him to share his thoughts/experiences on bitcoin...perhaps he'll respond.

 

[nmteaco]

My name is David Edwards and I am the owner of New Mexico Tea Company. I was asked by SMTB1963 to respond to some of the discussion.

I just visited NM Tea Company in Albuquerque, NM.

Thank you for coming in, I hope you are enjoying your tea!

The rebuttal would be that the dollar could also be worth 50% less the next day.

Yes, but it wont! And if it does, I have a lot worse issues to deal with then buying more tea... like finding a bunker to hide in!

Scared implies an emotional not logical response.  Most likely he never lost a single cent using Bitcoin he is simply uninformed.  He likely starting thinking wait I could lose 50% and what if I get 10,000 orders that I lose 50%?  I would be bankrupted.  The reality is he doesn't have 10,000 bitcoin orders and he isn't going to lose 50%.  He certainly isn't going to lose 50% on every single order.

Oh and edit the wiki to remove him.  No sense in giving him free advertising as a bitcoin business if he doesn't accept bitcoins.

I am looking at it logically, and last year the potential gain did not out weight the risk. I saw within a few months bit coin go from $2 to $8 to $16 to $60 (!) and then back down to $8. I had people who wanted to buy tea when it was at $60, if I had done that then I would have lost a significant amount. I also did not want to keep flip flopping and accept them, then not accept them, then accept them again, so I decided to stop all together.

Maybe the system has calmed down now... I have not looked at it in about a year. So you can say... "well just sell all your bit coins for $60 when you take them for $60"... but I have other aspects of this business to run as well. I cant be monitoring bitcoin all day!

the current  exchanges are anything but "easy to use "

intersango is fcked (cant get money in or out)  ,gox has got too much rules and regulations and delays   and i dont personally trust small exchanges with big transactions
so i would prefer  person to person trading ,face to face if necessary

I used Mtgox and my bit coin last year, both got hacked right after I sold all my coins.

Also the value could double as easily as halve and if he thinks otherwise he has a worse opinion of the value than average and obviosly should not accept it in his store.

I am not running a speculative business, nor do I really have much interest in the nitty gritty of finance. I do like the idea of bitcoin as a marketing tool, which is why I experimented with it last year. At the time I made the determination that the extra rigamarole, and possibility of loosing money (Remember I have to buy the product your buying. I only have a certain margin to work with before im paying you to buy it!) was not worth the extra business that it was bringing in.

However, technology has moved on... I did not know about bit-pay, so maybe its time to take another look at it.

Thank you everyone for your input and thoughts on this.

[SMTB1963]

My name is David Edwards and I am the owner of New Mexico Tea Company. I was asked by SMTB1963 to respond to some of the discussion.

Thank you sir!  (man i love the internetz)

I am not running a speculative business, nor do I really have much interest in the nitty gritty of finance. I do like the idea of bitcoin as a marketing tool, which is why I experimented with it last year. At the time I made the determination that the extra rigamarole, and possibility of loosing money (Remember I have to buy the product your buying. I only have a certain margin to work with before im paying you to buy it!) was not worth the extra business that it was bringing in.

I think that sums it up pretty damn succinctly.

However, technology has moved on... I did not know about bit-pay, so maybe its time to take another look at it.

I guess we'll hold off on banishing New Mexico Tea Company from the wiki LOL!

Thanks again for your perspective...if you end up experimenting with Bit-Pay, let us know how it goes.   

[jwzguy]

The rebuttal would be that the dollar could also be worth 50% less the next day.

Yes, but it wont! And if it does, I have a lot worse issues to deal with then buying more tea... like finding a bunker to hide in!

You don't know that. The US's currency has certainly crashed before. I agree it's unlikely that it would happen in one day. If you've looked at the price history for bitcoin, it's also unlikely bitcoin will drop by 50% in one day.

If you don't want to invest anything into bitcoin, and just want to use it to increase your customer base, that's still great. We are happy to have you and support you. You can cash out every day yourself with an exchange like Bitfloor, which has free ACH transfers. Or you can pay someone else like Paysius (1.5%) or Bit-Pay( 3%) a fee to cash out instantly for you.

One thing I don't understand is the statement that it's too much hassle for the amount of customers that it was brinigng. If it's bringing in very few customers, surely it's very little hassle. Also very little risk. Even if you were risking leaving some of your assets in Bitcoin, with the very small amount of Bitcoin business you're getting, vs the fanatical support Bitcoin customers give (at least the ones I know), it seems like you have very little to lose.

But obviously that's up to you to decide, whether I understand your reasoning or not. I hope you keep Bitcoin in the loop. If I lived nearby or was even traveling nearby, I would make a point to stop at your store or anywhere that's accepting Bitcoin right now, and I don't even drink tea!

Best wishes.

[wachtwoord]

Not really an argument in this discussion but just as a FYI: The highest price for Bitcoin has been $32, and that's where the bubble burst

[Vandroiy]

Volatility is expensive to the ones causing it. It's a setup problem that will solve itself over time, and has nothing to do with Bitcoin itself.

Bitcoin volatility has been decreasing. It may go up again if we experience exponential growth, but we all know this can't go forever, so as long as the system stays healthy, it will always settle with time.

Just tell him to come back later, when it's more stable. Smarter would be to already use it for small sums now, to prepare for the case that things get serious.