Slashdot Mirror
Dell Starts Accepting Bitcoin
An anonymous reader writes: Mainstream retail companies have been slow to adopt Bitcoin, perhaps skeptical of its long-term value or unwilling to expend the effort required to put a payment system into place. Today, Bitcoin adoption got a momentum boost with Dell's announcement that it will accept Bitcoin as a payment method. Dell is by far the biggest company to start accepting Bitcoin. It's interesting to note that Dell, like many of the larger companies interacting with Bitcoin right now, is doing so through a third-party payment processor. On one hand, it's good — we don't necessarily want each company building their own implementation and possibly screwing it up. On the other hand, it scales back slightly the decentralized and fee-less nature of Bitcoin, which are important features to many of its supporters.
The bitcoin community is highly technical. They will probably sell a lot of systems making it available as an option. They will convert their bitcoin to cash instantly minimizing currency risk.
....It needs to go through a middleman.
Employee Wages and benefits
Suppliers
Taxes
Real Estate
Utilities
Most all of these things need cash. And even if they could be paid in bitcoin most companies wouldn't want to do that infrastructure themselves and would outsource it.
dell, as most large public companies in the U.S. , report earning in USD.. so much like a company doing business abroad in Euros or pounds, will ultimately need to convert their non-usd accounts back to USD for reporting purposes. by your argument, dell selling computers in france and generating euros would be a sham because they then call their bank to convert to USD (their reporting currency) at some point.
As things stand now, there isn't an effective method for hedging BTC exposures, and you couldn't legitimately blame them for not (at this point) wanting to take on that kind of volatility. nonetheless, them allowing payment to be made in BTC is a step in the direction of wider adoption which may have self-reinforcing knock-on effects.
p.s. yes, i know dell is no longer a public company. but in this regard (accounting and cash operations), calling them public doesn't change the calculus.
Overstock is now keeping 10% of their bitcoin sales in bitcoin:
http://newsbtc.com/2014/05/02/patrick-byrne-overstock-com-10-percent-bitcoin-income-bitcoin/
Peter predicted that you would "deliberately forget" creation 2000 years ago...
US isn't seeing any of the benefits (yet) because it's a massive power that can borrow and print money willy-nilly, and the currency is mostly under control at the moment. But not all countries are like that. There are countries where something like Bitcoin can be a viable alternative to official currency, like Argentina. Bitcoin is flawed, but it guards against certain attacks that can be performed to a currency, in a way that is sometimes useful.
On the other hand, the way Dell accepts Bitcoin doesn't bear a lot of risk; a third-party accepts Bitcoin for them and pay them in cash, and absorbs fluctuation risk in return for some fees. It relies on customers bearing the risks themselves. It isn't a big step for Bitcoin; it is only a very small step towards forming a sufficient number of nodes of a skeleton that may or may not turn into an actual ecosystem that eventually circulates Bitcoin. But isn't a terrible decision for Dell either.
Except they never, ever have a BTC.
They don't do anything after the fact with them, because they never touch one.
They touch USD, transferred to them by their payment processor - and nothing else.
I wish people would stop using the term untraceable when talking about those crypto-currencies, because the blockchain will forever hold every single transaction it has ever processed. It's the complete opposite of untraceable.
Get free satoshi (Bitcoin) and Dogecoins
I just noticed a couple days ago that newegg.com is also accepting bitcoin. Not sure how long they've been doing that, but it made me wonder how many other places where. The list in TFS was a surprise to me.
I don't think anyone can claim that bitcoin cannot have inflation. It has hyperinflation and hyperdeflation in pretty frequent intervals.
Bitcoin has an extremely predictable rate of supply inflation (the kind meant here) which follows an exponential decay curve and will be under 1%/yr. by 2020 or so. There could be some very minor supply deflation after that point due to people losing their keys, but it should never become a major factor.
The price inflation and deflation you allude to is partly due to being a very young high-risk/high-reward venture. If Bitcoin is to reach even a fraction of its potential as a currency, the price per bitcoin must end up several orders of magnitude higher than it is now to match the increased demand, or there simply wouldn't be enough to go around. On the other hand, concerted political opposition could render it useless in most of the major markets. Whether the innovators or the politicians will win in the long run is anyone's guess at this point, thus the risk.
The other part, which is likely to dominate in the long-term if Bitcoin succeeds, is a reflection of normal changes in the demand for money. Central banks usually try to dampen out demand-driven price swings by manipulating the supply of money, but they are in fact an essential part of balancing present and future demand for goods, and suppressing them leads to an economy-wide misallocation of resources.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
If anything, this demonstrates another example of how bitcoin will never catch on as an actual currency. It's a middleman at best
"Actual" currency is just the middleman to trading goods and services. So I guess dollars will never catch on either.
No. Goods and services are not only traded using currency. They may be traded using other non-currency assets as well. However trading assets has a capital gain/loss tax implication in the U.S.
A recent IRS advisory said virtual currency is to be treated as an assent not a currency. So lets say you receive some bitcoins. At some future date you spend these bitcoins. Since these bitcoins are an asset you have to account for their gain or loss in value for the days that you held them and declare a loss or gain on your taxes. In short spending bitcoins has the paperwork overhead of selling stocks, its not like spending dollars at all.
Ex. You buy one coin at $500 and another at $600. Coins are priced at $800 at the time of a future purchase. You buy something for $1,200, 1.5 coins. Using FIFO (first in first out) your basis for the outgoing 1.5 coins is $500 + $300 = $800, and the basis for the returning 0.5 coins is still $300. You experienced a gain of $400 on the 1.5 coins at the time of the sale and that $400 would seem to be taxable income. Apologies if I botched the math, hopefully the point gets across.
So if you buy a laptop from Dell and the IRS discovers you paid in bitcoins you may be expected to provide some sort of accounting for the coins used, date acquired, value on that date, etc.
if the government thinks it's a good idea to create itself an enormous amount of new money, that currency will likely fail.
Not always. Central banks created huge amount of money to save banks after the subprime crisis, and it did not hurt the currencies. Economists tells us the increase of currency will not hurt when used during a depression, because it will not fuel prices increases.
The ECB created 1 trillion euros within 2 months to save the banks, while 30 trillions euros existed. Tthis is a 1/30 increase, this is rather huge.
I agree with you about inflation, but we are very far from the point where USD or EUR are dumped for other currencies. We live the opposite excess, in fact.