Topic: Are there ANY risks for a business to accept BTC with BitPay? (Read 1612 times)
Thanks for your response!
You have counterparty risk with BitPay. Your funds are as safe as they are. Personally I believe the risk is very low, BitPay is well run, has deep backing, and shows no signs of financial problems. I only state this because you said "ANY" risk.
Hedging is pretty easy if your goal is to limit the scope of a potential loss (not try to hedge out any possibility of a loss) it is pretty easy. Say BitPay on average does <1,000 BTC in business per hour. They simply hold an unhedged reserve of 1,000 BTC which is already on the exchange and ready to trade. Now exchange rates will fluctuate and as such the value of those unhedged coins will affect BitPay's balance sheet but they can now do 1,000 BTC per hour (8.8 million BTC per year in transactions) with only the same 1000 BTC at risk.
So you pay for an order for 2 BTC. As soon as the unconfirmed 2 BTC hits there wallet they sell 2 BTC on one or more exchanges from their reserve of 1,000 BTC (leaving 998 BTC available for more orders before your 2BTC confirms). Once your 2 BTC payment has 1 confirm they send it to the exchange and after it posts (6 confirms later) it is sold. In an hour they have the 1,000 BTC back on the exchange again. This is what we did on FC4B for over a year and it works well. Essentially a rolling reserve which is always at risk but that allows significantly more volume while the amount at risk stays capped.
As for articles as you pointed out sensationalism is the point. Sensational articles means more readers and that means more ad revenue. Always keep in mind those in the "news" business are really in the ad business. They don't get paid based on accuracy, quality, or completeness. They get paid based on ad revenue.
Hedging is pretty easy if your goal is to limit the scope of a potential loss (not try to hedge out any possibility of a loss) it is pretty easy. Say BitPay on average does <1,000 BTC in business per hour. They simply hold an unhedged reserve of 1,000 BTC which is already on the exchange and ready to trade. Now exchange rates will fluctuate and as such the value of those unhedged coins will affect BitPay's balance sheet but they can now do 1,000 BTC per hour (8.8 million BTC per year in transactions) with only the same 1000 BTC at risk.
So you pay for an order for 2 BTC. As soon as the unconfirmed 2 BTC hits there wallet they sell 2 BTC on one or more exchanges from their reserve of 1,000 BTC (leaving 998 BTC available for more orders before your 2BTC confirms). Once your 2 BTC payment has 1 confirm they send it to the exchange and after it posts (6 confirms later) it is sold. In an hour they have the 1,000 BTC back on the exchange again. This is what we did on FC4B for over a year and it works well. Essentially a rolling reserve which is always at risk but that allows significantly more volume while the amount at risk stays capped.
As for articles as you pointed out sensationalism is the point. Sensational articles means more readers and that means more ad revenue. Always keep in mind those in the "news" business are really in the ad business. They don't get paid based on accuracy, quality, or completeness. They get paid based on ad revenue.
I've been surprised at several articles I've read in the past week that sensationalize the risks of accepting Bitcoin as a business. Seems to me that accepting Bitcoin with a payment processor, such as BitPay, is safe from all the risks typically associated with owning and transacting in Bitcoin. But none of the articles I've read mentioned Bitcoin payment processors mitigate the risks they point out (one article mentioned BitPay, but still failed to mention how it would help overcome the risks).
Since I'm still a relative newbie, do any of you think there are significant risks for businesses accepting Bitcoin payments with BitPay? The only risk I can think of is that BitPay folds or something, before you receive your payment (which seems highly unlikely, but I guess the possibility exists).
I'd love to hear your answers. Oh, I'm sticking to BitPay on this question, since they seem to be the biggest and most reputable in this space. I'm intending to blog about the topic, with more accurate/complete information than the articles I've read recently.
Since I'm still a relative newbie, do any of you think there are significant risks for businesses accepting Bitcoin payments with BitPay? The only risk I can think of is that BitPay folds or something, before you receive your payment (which seems highly unlikely, but I guess the possibility exists).
I'd love to hear your answers. Oh, I'm sticking to BitPay on this question, since they seem to be the biggest and most reputable in this space. I'm intending to blog about the topic, with more accurate/complete information than the articles I've read recently.
Jump to: