This will happen organically as firms that keep a higher percentage of bitcoin become more profitable, those that convert 100% to fiat will lose ground.
Bitcoin is like the internet - you adapt or die.
Topic: Getting Merchants to KEEP Their Bitcoin (Read 1980 times)
Since this thread is about merchants... I have a semi-related question.
Say, that I buy a product and pay 1BTC for it on Monday and on Monday, 1 BTC = $800 exchange rate.
Two weeks go by and my product is finally delivered and it is just not what I thought it was. So, I get a Return Authorization from the retailer and ship the product back w/registration so they sign for it when they get it. On the day they sign for it, the value of 1 BTC is now up to $1000.
What SHOULD the retailer return to me? Do I get my 1 BTC back or do I get the equiv of $800 in BTC (so, .8 BTC ) back?
This is Overstock.com's policy (basically other than cancelled orders, no refund except store credit):
I personally, this the store credit only thing is a total BS move. And, they don't say how they will value the store credit. Will it be a 1 BTC value or will it be a USD value and at what conversion rate? There is no reason that the Return Authorization process can't collect an address to be used to return the BTC.
Say, that I buy a product and pay 1BTC for it on Monday and on Monday, 1 BTC = $800 exchange rate.
Two weeks go by and my product is finally delivered and it is just not what I thought it was. So, I get a Return Authorization from the retailer and ship the product back w/registration so they sign for it when they get it. On the day they sign for it, the value of 1 BTC is now up to $1000.
What SHOULD the retailer return to me? Do I get my 1 BTC back or do I get the equiv of $800 in BTC (so, .8 BTC ) back?
This is Overstock.com's policy (basically other than cancelled orders, no refund except store credit):
Quote
Cancelled Orders: Cancelled orders may qualify for a refund in Bitcoin. The refund will be issued for the full USD value of the order and processed at the Bitcoin exchange rate at the time the refund is completed. If you choose to have a refund sent to an email address that is not set up on a Coinbase account, Coinbase will create an account under that email address once the refund is sent. An email confirmation will be sent by Coinbase to set up your account and retrieve the funds. If you fail to retrieve your funds within 90 days, the funds will be returned to Overstock.com. When the refund is sent to an email address set up on an existing Coinbase account, the funds will be available to you and there is no risk of retrieval. Refunds sent directly to a Bitcoin address are also not at risk of retrieval.
Returns: Returns on orders paid by Bitcoin will be accepted for a refund as In-Store Credit to your Overstock.com account. Damaged or defective merchandise may also be returned for a replacement of the exact item. Replacement orders will ship once the return of the original item is received and processed at the Overstock.com warehouse.
Returns: Returns on orders paid by Bitcoin will be accepted for a refund as In-Store Credit to your Overstock.com account. Damaged or defective merchandise may also be returned for a replacement of the exact item. Replacement orders will ship once the return of the original item is received and processed at the Overstock.com warehouse.
I personally, this the store credit only thing is a total BS move. And, they don't say how they will value the store credit. Will it be a 1 BTC value or will it be a USD value and at what conversion rate? There is no reason that the Return Authorization process can't collect an address to be used to return the BTC.
Overstock doesn't take possession of the bitcoins at the time of sale, they are immediately converted to usd. You have to accept that overstock transacts in usd currency so that usd or the equivalent amount of usd in in-store credit will be issued.
Since this thread is about merchants... I have a semi-related question.
Say, that I buy a product and pay 1BTC for it on Monday and on Monday, 1 BTC = $800 exchange rate.
Two weeks go by and my product is finally delivered and it is just not what I thought it was. So, I get a Return Authorization from the retailer and ship the product back w/registration so they sign for it when they get it. On the day they sign for it, the value of 1 BTC is now up to $1000.
What SHOULD the retailer return to me? Do I get my 1 BTC back or do I get the equiv of $800 in BTC (so, .8 BTC ) back?
This is Overstock.com's policy (basically other than cancelled orders, no refund except store credit):
I personally, this the store credit only thing is a total BS move. And, they don't say how they will value the store credit. Will it be a 1 BTC value or will it be a USD value and at what conversion rate? There is no reason that the Return Authorization process can't collect an address to be used to return the BTC.
Say, that I buy a product and pay 1BTC for it on Monday and on Monday, 1 BTC = $800 exchange rate.
Two weeks go by and my product is finally delivered and it is just not what I thought it was. So, I get a Return Authorization from the retailer and ship the product back w/registration so they sign for it when they get it. On the day they sign for it, the value of 1 BTC is now up to $1000.
What SHOULD the retailer return to me? Do I get my 1 BTC back or do I get the equiv of $800 in BTC (so, .8 BTC ) back?
This is Overstock.com's policy (basically other than cancelled orders, no refund except store credit):
Quote
Cancelled Orders: Cancelled orders may qualify for a refund in Bitcoin. The refund will be issued for the full USD value of the order and processed at the Bitcoin exchange rate at the time the refund is completed. If you choose to have a refund sent to an email address that is not set up on a Coinbase account, Coinbase will create an account under that email address once the refund is sent. An email confirmation will be sent by Coinbase to set up your account and retrieve the funds. If you fail to retrieve your funds within 90 days, the funds will be returned to Overstock.com. When the refund is sent to an email address set up on an existing Coinbase account, the funds will be available to you and there is no risk of retrieval. Refunds sent directly to a Bitcoin address are also not at risk of retrieval.
Returns: Returns on orders paid by Bitcoin will be accepted for a refund as In-Store Credit to your Overstock.com account. Damaged or defective merchandise may also be returned for a replacement of the exact item. Replacement orders will ship once the return of the original item is received and processed at the Overstock.com warehouse.
Returns: Returns on orders paid by Bitcoin will be accepted for a refund as In-Store Credit to your Overstock.com account. Damaged or defective merchandise may also be returned for a replacement of the exact item. Replacement orders will ship once the return of the original item is received and processed at the Overstock.com warehouse.
I personally, this the store credit only thing is a total BS move. And, they don't say how they will value the store credit. Will it be a 1 BTC value or will it be a USD value and at what conversion rate? There is no reason that the Return Authorization process can't collect an address to be used to return the BTC.
I proposed a solution to this problem whereby a company offers a guaranteed redemption price for any bitcoin held by the merchant in exchange for a policy premium upfront that protected a specified number of bitcoins. It was promptly shot down by people who think bitpay is all that is needed for the retail market.
https://bitcointalksearch.org/topic/m.4182294
This proposal would allow merchants to hold bitcoin without risk of loss.
https://bitcointalksearch.org/topic/m.4182294
This proposal would allow merchants to hold bitcoin without risk of loss.
Companies are just starting to experiment with Bitcoin. Once they see it works, and Bitcoins have longterm value, they may decide to keep some of their profits in Bitcoin.
Thats their decision to make, and nothing we can say will influence this and I certainly dont think this topic needs much discussion.
Want Bitcoin to get more popular? Start spending it, and give some to family and friends.
Thats their decision to make, and nothing we can say will influence this and I certainly dont think this topic needs much discussion.
Want Bitcoin to get more popular? Start spending it, and give some to family and friends.
So now we have more merchants, like Overstock, accepting Bitcoin.
However, most of them use either Coinbase or Bitpay to immediately convert their Bitcoin stash to fiat.
For Bitcoin to grow, I would think that instead of just being a convenient means of transfer, it needs to become accepted as a legitimate store of value. How can we achieve that if merchants immediately trade it for fiat? Is there a way we can incentivize merchants to keep some of their reserves in Bitcoin? Right now I am sure Patrick Byrne, the ceo of Overstock, owns some bitcoin. However, Overstock doesn't. How do we develop more bitcoin--->bitcoin trade, instead of fiat--->bitcoin-->fiat?
However, most of them use either Coinbase or Bitpay to immediately convert their Bitcoin stash to fiat.
For Bitcoin to grow, I would think that instead of just being a convenient means of transfer, it needs to become accepted as a legitimate store of value. How can we achieve that if merchants immediately trade it for fiat? Is there a way we can incentivize merchants to keep some of their reserves in Bitcoin? Right now I am sure Patrick Byrne, the ceo of Overstock, owns some bitcoin. However, Overstock doesn't. How do we develop more bitcoin--->bitcoin trade, instead of fiat--->bitcoin-->fiat?
If their suppliers would accept Bitcoin, or other areas of the business i.e. logistics, then I imagine that retailers will hold onto Bitcoins, and use them to pay for products and services.
For example, I'm running a business and I accept bitcoin payment, but I never cash out the earned coins on exchanges
First I try to look at the places that I can purchase things with those coins, and since the places are limited right now, I sell some of the coins through localbitcoins.com. By doing this I will not put any coins for sell on public exchanges, and the demand on localbitcoins.com are mostly driven by curious new buyers and long term investors, no speculators due to illiquid coin supply there
First I try to look at the places that I can purchase things with those coins, and since the places are limited right now, I sell some of the coins through localbitcoins.com. By doing this I will not put any coins for sell on public exchanges, and the demand on localbitcoins.com are mostly driven by curious new buyers and long term investors, no speculators due to illiquid coin supply there
They'll keep bitcoin when they have a business reason to do so.
If things keep growing, that business case will present itself.
If things keep growing, that business case will present itself.
+1000
Trying to "get" merchants to keep their bitcoin is a waste of our efforts and a self-destructive cause with respect to the perceived objectives of our community. Merchants will do this if and when it makes sense to, if they haven't already, and meanwhile they will not feel obligated to update the public on their choice to keep BTC.
For merchants, not keeping BTC is one way they limit their exposure to whatever uncertainty is in Bitcoin's future. It also keeps their accounting from developing soft spots where parts of the books are maintained based on best guess as to proper accounting principles for Bitcoin, rather than generally accepted accounting principles established for fiat currency. In a nutshell, it's their prerogative to not keep BTC and their privilege to not be harassed by us in the form of petitions from us to change. Believe me, they see the potential, that's why they made the choice to get involved in accepting bitcoin today. Thank them, do business with them, but as for their choices as to what do do with their bitcoin, respect their freedom and let 'em be please!
Don't forget, what you pay a merchant is not anywhere near pure profit for them: They have to pay for new inventory to replace that which you purchased and a ton of overhead including taxes, rent, utilities, bookeepers and accountants, employees, and a slew of other expenses. At the end of it all they often only get 2 or 3% profit - and may even be losing money in this economy.
What this means is that they usually cannot hold onto bitcoins since they simply have got to pay the bills here and now.
Of course, some small mom and pop merchants may be able to hold some bitcoins they get as payment, but only because they have enough money coming in or alternative sources of income to get them through the every day expenses.
What this means is that they usually cannot hold onto bitcoins since they simply have got to pay the bills here and now.
Of course, some small mom and pop merchants may be able to hold some bitcoins they get as payment, but only because they have enough money coming in or alternative sources of income to get them through the every day expenses.
There is no plausible reason for big merchants to keep Bitcoins yet...
They won't be able to buy the products they need for the company by Bitcoin. They literally can't do anything with it but exchange them to fiat.
They won't be able to buy the products they need for the company by Bitcoin. They literally can't do anything with it but exchange them to fiat.
They'll keep bitcoin when they have a business reason to do so.
If things keep growing, that business case will present itself.
If things keep growing, that business case will present itself.
Most of these merchants have a pretty low profit margin once you deduct all costs. So unless their suppliers and/or employees start accepting Bitcoin, the merchant simply can't keep his coins since he needs most of what comes in to pay supplier/employees/etc...
Maybe someday, we aren't there until volatility decreases. It's simply not practical to hold revenues in something that is do volatile as bitcoin when you have expenses and bills that need to be paid on time.
If you're a smaller mom and pop type shop you might be more interested in keeping a portion of your revenues in bitcoin, treating it as an investment on your business. However, it's unlikely you will see large publicly traded companies do such a thing when they have to answer to their stock holders.
If you're a smaller mom and pop type shop you might be more interested in keeping a portion of your revenues in bitcoin, treating it as an investment on your business. However, it's unlikely you will see large publicly traded companies do such a thing when they have to answer to their stock holders.
Merchant will soon reach a consensus that if they never sell received coins but use them, they will support the exchange rate and eliminate the downside risk of exchange rates
Daily fresh coin supply is 5000-7000, means if 5000-7000 coins were used to purchase goods/services (around 4-6 million USD, ebay does 13 million per day) and never converted back to fiat money, then there will be no coins for sell on exchanges, means any amount of buy will raise the exchange rate dramatically
In fact, accepting bitcoin payments works just like purchasing coins from exchanges, but won't affect the exchange rate, could be a good way to acquire large amount of coins
Daily fresh coin supply is 5000-7000, means if 5000-7000 coins were used to purchase goods/services (around 4-6 million USD, ebay does 13 million per day) and never converted back to fiat money, then there will be no coins for sell on exchanges, means any amount of buy will raise the exchange rate dramatically
In fact, accepting bitcoin payments works just like purchasing coins from exchanges, but won't affect the exchange rate, could be a good way to acquire large amount of coins
I cannot see most merchants holding on to the coins until the currency risk is greatly reduced (virtually non-existent) or there are other ways to mitigate those risks.
This: http://www.businesswire.com/news/home/20140113006504/en/BitPay-Announces-Bitcoin-Payroll-API
...plus a sufficiently liquid and clearly regulated futures market for bitcoin will do it.
...plus a sufficiently liquid and clearly regulated futures market for bitcoin will do it.
It seems kind of short-sighted, maybe in a sense "stupid" for a huge major retailer to accept bitcoins without stockpiling a bunch of the first.
Afterall if by your action of accepting them you increase their value significantly wouldn't it make sense to capture some of that increase yourself?
It seems like a positive feedback loop should arise, whereby the more they promote it and the more their customers use it convert to it adopt it and so on the more profit there would be in holding lots of it...
Also the volatility can be harnessed too: place highball sell offers so you cash in when the exchange rates go high, convert incoming bitcoins into fiat faster when exchange rates go low, depending on how fast you need the fiat and how large your buffer has grown.
Pretty soon you could have a nice extra earnings department just in buying low and selling high.
-MarkM-
Afterall if by your action of accepting them you increase their value significantly wouldn't it make sense to capture some of that increase yourself?
It seems like a positive feedback loop should arise, whereby the more they promote it and the more their customers use it convert to it adopt it and so on the more profit there would be in holding lots of it...
Also the volatility can be harnessed too: place highball sell offers so you cash in when the exchange rates go high, convert incoming bitcoins into fiat faster when exchange rates go low, depending on how fast you need the fiat and how large your buffer has grown.
Pretty soon you could have a nice extra earnings department just in buying low and selling high.
-MarkM-
I think that they'd probably have to look at how much of this they were doing because it sounds like it is venturing into investment banking areas if they are holding TOO much BTC for the purposes of doing what might be very close to day-trading. For example, if they started just buying and selling real estate as an investment (instead of a by-product of opening retail locations), they would probably end up triggering REIT regulations.
It seems kind of short-sighted, maybe in a sense "stupid" for a huge major retailer to accept bitcoins without stockpiling a bunch of the first.
Afterall if by your action of accepting them you increase their value significantly wouldn't it make sense to capture some of that increase yourself?
It seems like a positive feedback loop should arise, whereby the more they promote it and the more their customers use it convert to it adopt it and so on the more profit there would be in holding lots of it...
Also the volatility can be harnessed too: place highball sell offers so you cash in when the exchange rates go high, convert incoming bitcoins into fiat faster when exchange rates go low, depending on how fast you need the fiat and how large your buffer has grown.
Pretty soon you could have a nice extra earnings department just in buying low and selling high.
-MarkM-
Afterall if by your action of accepting them you increase their value significantly wouldn't it make sense to capture some of that increase yourself?
It seems like a positive feedback loop should arise, whereby the more they promote it and the more their customers use it convert to it adopt it and so on the more profit there would be in holding lots of it...
Also the volatility can be harnessed too: place highball sell offers so you cash in when the exchange rates go high, convert incoming bitcoins into fiat faster when exchange rates go low, depending on how fast you need the fiat and how large your buffer has grown.
Pretty soon you could have a nice extra earnings department just in buying low and selling high.
-MarkM-
It would be interesting to find out how many actual Bitcoins Bitpay and Coinbase have to keep on hand as they grow. Maybe that is an overlooked positive aspect to their growth.
For instance if Coinbase one day has to keep $1,000,000,000 worth of bitcoin on hand, that will be bitcoin out of circulation and thus increase the scarcity. Probably wishful thinking
Would be informative though to figure out how they are set up. Just thinking out loud.
For instance if Coinbase one day has to keep $1,000,000,000 worth of bitcoin on hand, that will be bitcoin out of circulation and thus increase the scarcity. Probably wishful thinking
Would be informative though to figure out how they are set up. Just thinking out loud. Part of the problem for an overstock.com type retailer is that they have to settle out their books for tax purposes on a quarterly (maybe monthly?) basis. As an example, sales taxes are submitted monthly. They need to convert the BTC to stick it to a number if the value is rising, since they'd rather submit sales taxes on $100 than $150. I imagine their book keeping staff are having a great time with the sort-of rapid flux in the BTC value.
Not a problem for a retailer if they work in USD (or other local currency) even if they keep Bitcoin on the backend. They pay the taxes the customer paid. If they have a gain/loss after they may have to deal with that separately. But, if they don't convert to USD (or a currency of some sort) fairly quickly (as in the payment processor returns USD), doesn't the transaction become a barter transaction instead of a direct sale? There isn't anything wrong with barter transactions, but it brings in new paperwork and having to substantiate the 'value' at the point of sale (There's over a $100 spread in values right now if you look at different exchange sites. -- MTGox = $903 ... Coinbase sell = $803 that's a huge difference when you're looking at tens of thousands of dollars a day.)
Jump to: