Slashdot Mirror

One thing the article left out is how Zug will convert BC to SF. I would guess they want to do that immediately since they would not want to expose themselves to BC's volatility but rather ensure the expected revenues are matched by actual ones. Since it is a small trial the volatility wouldn't be enough to make much of a difference but large scale adoption of BC for payments would require them to address the volatility and conversion to SF issues.

Good question.
I would imagine they'll simply resort to a payment processor? And thus defer to them the gory details of handling the BTC-CHF conversion ?

- They use payment processors for handling credit cards anyway (Six Payment is wide speard in most physical shops in Switzerland, Datatrans is popular for on-line payments)

- There are a few payment processor that both can handle CHF *and* BTC (Random example among the bitcoin-oriented payment processors, Coinbase is available in Switzerland) (Another more classical example: Sum Up is a start-up for classical credit card payments, focussing on using Apps on smartphones/tablets a.k.a. mPOS - thus perfect for small businesses on the move like food-trucks - which is partnering in Switzerland with UBS - one of the three biggest swiss banks, that's some cred - and apparently they've started featuring bitcoin, using Bitpay behind the scene for the BTC processing)

- Nearly any shop that I know which handles BTC (random example: Humble Bundle) uses a payment processor and defers to them the handling of BTC, the shop it self only receives its local currentcy on the bank account, like with credit card processors.
The only exceptions are shops ultra specialised in bitcoin technology (e.g.: butterlfy labs, they price all their mining hardware directly in BTC)

It will be interesting to see if other cantons / cities get on the train as it leaves the station or merely get pulled along into it by Zug...

I see what you did here... :-D

That's something completely different to claiming that the Bitcoin protocol doesn't support it, which it does.

(It seems BitPay has multisig escrow-capable wallets but I don't think it's part of their PoS solution yet)

http://blog.bitpay.com/2014/09...

Most people won't deal with Bitcoin directly, and so won't need to do any speculation. Payments will be handled by people like bitpay.com. Those people will need to speculate, but they'll only need to do it for short periods (because they only need to hold enough bitcoin to cover transactions for the next N hours) and they can cover any loses from transaction fees.

I don't think the deflationary aspect (the coin generation behavior) is a problem for its use as a payment network. The total number of bitcoins is arbitrary, and the only thing that happens when you change it is that the exchange rate changes to match.

If you reduce the total number of bitcoins available for transactions (either by destroying them, or by taking some out of circulation to speculate with them), all that happens is the exchange rate goes up, as people conduct transactions with the remaining coins. Similarly, if you increase the number available (e.g. via the per-block reward), the rate goes down as people do transactions using a larger pool of coins.

At no point does that make any difference for transactions. You can still do them just fine regardless of whether there's 21M or 210M or 0.21 BTC available for them. Who cares what number is attached to your $10 BTC transaction? It's still $10.

Deflation may well be bad for an economy, but Bitcoin is for making payments, not for being an economy.

Most commerces won't bother with trading Bitcoins directly just like they don't deal with credit cards directly. Right now they use POS systems to deal with VISA and MasterCard, and they'll use a service like BitPay to accept Bitcoins.

I think the fact that the winning outcome is possible is pretty darn significant. That's enough by itself to make it not a Ponzi scheme.

As to the rest of your post... the use of absolutes in that FAQ answer was a terrible choice. It really should say "stable enough, fast enough, inexpensive enough".

bitpay.com exist and they charge a 1% transaction fee, which has to cover volatility in the exchange rate. That suggests that it's stable enough for them to do business without massive fees. Fast? Definitely not fast enough for immediate in-person transactions, especially without an internet connection available. Just use cash for those. Bitcoin doesn't have to be useful in every situation to be useful (for instance, Paypal wouldn't work well without an internet connection either, but people still use it.) If you're buying something online, the delivery time is often measured in days, so what's 20 minutes for the payment to go through?

Inexpensive... well, I can't predict miner fees, but miners will be competing for the fees, which will push them down as far as possible.

I've read that there are a large amount of Bitcoin suspected to be possessed by the really early adopters, and that will hang over Bitcoin like Damocles' sword.

What could those early adopters possibly do with all that bitcoin to stop Bitcoin from working? About the best they could do is tank the exchange rate, which would be really bad news for any day traders trying to gamble on the rate, but wouldn't actually mean anything at all for people using it for its intended use as a payment network.

If you said "real money" to mean bank notes or coins: yes, except not really. Giving some notes to somebody on another continent is an expensive business that involves flying over to them. I guess you could mail them through the post, but I don't see many people doing that.

Yeah, you're right, people don't have bitcoins and don't know what they are. That's how things should work; most people won't interact with bitcoins themselves, they'll do so via payment processors. For instance, these guys will take payments for you, and deposit dollars or euros into a bank account of your choice. On the customer side, the payment will be done by a similar provider who takes a credit card, bank transfer or whatever and makes the Bitcoin payment for you. Neither the customer or the merchant need to know anything about the protocol used to move money between their respective processors. This is similar to e.g. bank payments, where you can pay a bank account belonging to a different bank without knowing anything about the interbank protocol.

First Meta Exchange (where CEO Autumn Radtke worked) only allows bitcoin to be used for purchases of the other virtual currencies they trade. BTC purchases of IMVU Credits, Lindens, Nuvo Notes, Toricredits and Friends Hangout Tokens are actually handled through bitpay.

In other words, First Meta Exchange wasn't really a "bitcoin exchange". Of course, if the headline read "Police Say No Foul Play In Death of Torricredits Exchange CEO Autumn Radtke", few would've clicked.

The cost of doing business with BTC is unacceptably high when every person needs to do their own research

Indeed, but doing it that way isn't a requirement for Bitcoin.

There is already at least one service that takes all of the research out of it from the seller's perspective. Customers pay into a Bitcoin address; all the seller needs to do does is sign up, integrate it into their checkout system and they get money in their bank account at the end of every day.

All we need now is a similar service for the customer end. The obvious way to do it would be a service that takes a credit card payment and turns it into a Bitcoin payment, although there would also be room for services that take bank payments or whatever's useful. (Perhaps somebody has done this already, but I don't know of an example off-hand.)

Both of these services take the responsibility of research off of the payer and payee. They also bundle up all of the risk associated with the exchange rate and turn it into fixed fees. (This is where they make their money: insuring against risk, making sure, as with all insurance, that they statistically get paid a profit overall.)

And now perhaps you're thinking "wait... what's the point of Bitcoin if I'm just going to use a credit card with it anyway"? Well, it's like the point of e-mail when we have Facebook Mail. Or the point of the Internet when we have CompuServe Information Service.

https://bitpay.com/

Deflation is bad because SMART people stop buying things that will be cheaper tomorrow

The data shows this is not the case. https://blockchain.info/charts/n-transactions http://blog.bitpay.com/2013/12/bitpay-drives-explosive-growth-in.html

Payment exchangers like bitpay who facilitate merchant processing show the highest amount of purchasing activity of actual goods during periods where bitcoin is rapidly rising in value. This contradicts claims made from economists who support inflationary models who predict that deflation will encourage hoarding and thus drive down spending. While individuals using deflationary currency may be more likely to save and spend their money on items that they really need(One would think these are good behaviors, right?), they still feel the wealth effect of their new found savings and therefore are more likely to spend and be generous during times where bitcoin is rapidly appreciating with planned deflation.

Perhaps Smart people actually occasionally need to buy things when they need them?

Like almost all online merchants who accept Bitcoin, they set their price in euros or dollars and the price in BTC is calculated at the moment of sale. Mobile Vikings uses BitPay as a payment processor who offers this service, another one is Coinbase.

There is a solution for people in your position, they will take a cut though.
https://bitpay.com/

I looked at bitpay.com same problem as Mt. Gox...

But yes, I agree that theoretically I could set up a BTC wallet, take BTC orders online then process each of them at the end of the day into my $$$ account via Bitpay

first, you only "solved" one part of the Mt Gox problem...Bitpay still isnt a brick/mortar place I can demand redress for an error.

but to continue...since Bitpay "takes a cut" of each transaction, **i'm actually paying for my customer to use Bitcoin**

Please understand what I just said...the system now makes the vendor pay for the customer's convenience...

That's why if I ever **do** take BTC I'm making my own flat BTC fee or giving the customer a surcharge...which would incite anarchy...which is why i'm not taking BTC at all for now.

why should I have to take a cut in profits so my customer can use BTC???

Well, currently there is about ~1.4Billion USD in value in the bitcoin network.. Well, maybe quite a bit less but even having more than $100M should say something about the usage..

Bitcoin's are as much for illegal things as normal cash is, the only difference is that it's not government-controlled..
Some things that it would be perfect for:

- Micro-transactions for buying services on the internet.
- Simple way to transfer money all over the world.
- Generic way to buy things instead of VISA/Mastercard etc. No or very small transaction-fees. This also makes the retailers free of subscriptions to the banks for the card-terminals.
- Check https://bitpay.com/ for one currently available service. But they require a transaction-fee, but also converts bitcoins back to your local currency at the time of the sale.

The thing is right now that it has not grown big that's why there have been quite of flux on the exchange, and liquidity is just also something that reflects on how big it is..... But saying that it's only or mostly for illegal things then you are completely wrong..

And i don't know myself if bitcoin is the way to go.. But the concept of it is very promising.

For the same reason I wouldn't take Euros, Pounds or any other currency and then immediately convert it to USD (my local currency), it's extra work and trouble for me to do.

Well if you are accepting credit cards you are already doing this. No credit card transaction is free, and it's not the customer that is paying for the transaction fees (other than through inflated prices for the goods).

Presumably the process would be automated so that conversion rates, and conversion to USD would be automatic. There shouldn't be any extra work beyond initial development time. Also if you are dealing with people from other countries that do use other currencies every transaction in BTC would cost you considerably less to get their money. Take PayPal as an example: https://www.paypal.com/cgi-bin/marketingweb?cmd=_display-xborder-fees-outside&countries= Even domestic transactions cost 2.9% + $0.30 from PayPal https://www.paypal.com/us/webapps/mpp/merchant-fees

So that's costing YOU 3+% + $0.30 for every transaction to someone outside of the US let alone what your customers credit cards are charging them to convert to USD. Compare that to BitPay's 1% flat rate. https://bitpay.com/pricing BitPay also appears to have immediate USD payouts as part of their service as well.

So in the end by accepting BTC you will save yourself, and your customer money, while opening yourself up to more customers that will be looking for services available in BTC form. Unless all of your customers can pay in person, with cash you will only make more money accepting BTC.

People just don't commonly price things in two different currencies and want to deal with exchange rates all day long.

I live within an hour of the Canadian border, and almost all of the gas stations/businesses around here accept Canadian currency. They certainly don't price everything in the store with two prices, they simply post whatever the store is currently charging for a conversion rate somewhere and expect the customer to figure out the prices for themselves until they get to the checkout. The best part is the store can charge whatever conversion rate they want. If the bank/market is at 102% go ahead and charge them at 95% and pocket the difference. The customer can either go and convert it themselves or eat the difference for the convenience.

0.99% transaction fees (bitpay)

https://bitpay.com/pricing