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Does anyone with knowledge of e-retail industry and BTC acceptance know how do business deal with the wild fluctuations in the BTC price?

giancarlostoro 9y ago
Look at posts by Steam on the matter, and in the comments on that article some mention that it is based on the price at the second the transaction occurs.
- paulmd 9y ago
  Steam, as with most institutions that "accept" Bitcoin, never actually handles Bitcoin themselves. They use a financial services provider who accepts Bitcoin and gives them USD and takes a cut of the transaction for themselves. Dealing with that short-term volatility is one of the things that fee pays for. Is it ridiculous that the price can fluctuate enough in 60 minutes to significantly affect a transaction? Obviously.
kuroguro 9y ago
I would imagine they exchange them to fiat as soon as received.
- dimillian 9y ago
  That where it got trickier. IMO, if a big brand start to accept BTC, like Walmart or such, my strategy would be to hire 1 or 2 traders to deal exclusively with the BTC/FIAT wallet of the company. The goal being to make the BTC/FIAT ratio interest grows. I think accepting cryptocurrencies will create a lot of job in trading/finance for companies totally unrelated to the business.
pjc50 9y ago
The easy answer appears to be "stop accepting bitcoin". Such as Steam, Microsoft and now https://news.bitcoin.com/miami-bitcoin-conference-stops-accepting-bitcoin-due-to-fees-and-congestion/ https://news.bitcoin.com/miami-bitcoin-conference-stops-acce...
- mkirklions 9y ago
  People are freaking out about this. There are 1000 other cryptos that can move money. Bitcoin is the only reliable way to hedge money against massive government inflation that we have seen after an African Coup or hyperinflation.
  - pjc50 9y ago
    You can't say it's a viable hedge given its extreme volatility. Africa and South America maybe, but if you're expecting dollar hyperinflation you have a very strange set of assumptions about the world.
    - Dumbdo 9y ago
      Even if one would assume that there's a dollar hyperinflation, Bitcoin as a alternative is certainly the worst alternative as it is much more volatile than any real world currency.
krisives 9y ago
Look at something like CoinPayments.net they will let you accept any coin and if you link to a service that does exchange/banking it can auto-liquidate your coins for you.
StavrosK 9y ago
The processor handles that by "freezing" the price for ~15 minutes and hoping it averages out. Of course, that assumes that the transaction will take less than fifteen minutes to confirm, which... good luck.
- Tepix 9y ago
  Depending on how much time you have you could use this for speculation purposes. If bitcoin goes up, you cancel your purchase. If bitcoin goes down you go ahead with your purchase at the outdated rate.
  - StavrosK 9y ago
    Sure, but then what do you do with the thing you bought?
    - greenleafjacob 9y ago
      What if it’s a cash equivalent like Amazon gift cards?
- Cthulhu_ 9y ago
  This is where an exchange like Coinbase could provide a payment service, paying directly but doing the actual BTC transfer under wate.r
  - blunte 9y ago
    This is what Bitpay does. You, the merchant, can accept bitcoin (and other currencies) using Bitpay's payment system. Bitpay immediately credits your account with USD. No risk of long-term (more than a few seconds) price moves in BTCUSD. The downside is that Bitpay, like every other authorized cryptocurrency "bank", is crippled by KYC/AML regulations and cannot process all the applications they receive for new customers.
- xorcist 9y ago
  Why would you need to wait for it to confirm? Make sure to have access to liquidity so you can set the trade the second it is likely the transaction will confirm at some point. That's how the big payment processors do it. You need liquidity to process payments on a non trivial scale, but that's par for the game for banks, credit cards companies, paypal, and everyone else in this space. Waiting for a confirmation will do you no good anyway. No exchange accepts any less than six, which would have you take the exchange risk for over an hour. That's not a very good business case.
vthallam 9y ago
Retail Industry has stopped accepting Bitcoin(latest example: Microsoft). Most of them who do now do mostly for PR or a thought that they support the industry. On the other hand, Litecoin, RaiBlocks and Ripple could be used for payments and many companies seems to have started.
- EA 9y ago
  Microsoft has resumed taking Bitcoin payments: http://fortune.com/2018/01/10/microsoft-bitcoin-temporary-halt/ http://fortune.com/2018/01/10/microsoft-bitcoin-temporary-ha...
friedButter 9y ago
Someone should open a company which provides tokens in exchange for depositing BTC with them. People can trade these tokens which are notional representations of the BTC holdings in an instantaneous manner. Then when someone actually wants the BTC, they redeem the tokens with the company and the BTC is transferred to their wallet... alternatively the company itself could act as an exchange and always send currency instead of tokens to the person receiving a payment. Since all the small transactions are happening via these tokens, the cost of Bitcoin transactions would be a much smaller issue..
- che_shirecat 9y ago
  what would be the point of this? why not just use mainstream payment methods and then when someone actually wants BTC, purchase it from an exchange for fiat? The whole point of cryptocurrency is that its decentralized, creating a derivative on top of it (for payments??) issued by a centralized company subject to counterparty risk kinda ruins the purported advantages of Bitcoin don't you think?
  - mkirklions 9y ago
    I think Ethereum might be the closest thing we have to that today. However, still things require an additional layer to get it to work in the physical world. Lets not forget that this technology only became 'accepted' by the mainstream in 2017. Before that, it was nerds volunteering to program various infrastructure. Also, between accounting, finance, and taxes, implementing cryptocurrency for any fortune 500 company will add additional layers of complexity.
  - friedButter 9y ago
    As long as this system is run online,it would be free of regulations,so the govt would not be able to impose it's will on your assets...
    - che_shirecat 9y ago
      Until this only-online "exchange" is "hacked" and suddenly you can't claim any BTC with their tokens anymore. Did you read the "counter-party risk" part of my comment?
solatic 9y ago
One possible way of dealing with high transaction fees is to deposit more money into an account with a retailer, and then use money in that account to fund purchases over time. For example, transaction costs are too high to reasonably pay for a single cup of coffee. But if you know you buy a cup of coffee on a roughly daily basis, you could put down $1,000 worth of Bitcoin, get an anonymous gift card for that amount of money, and then use that over time to pay for individual coffees. But that really raises two questions: why do you feel the need to use a semi-anonymous, public-ledger currency to pay for coffee at a shop where your status as a regular makes you recognizable, and why is it worth foregoing interest plus the risk of not using the entire gift card for the privilege?
- stanleydrew 9y ago
  Also note that when you buy the $1000 gift card you are converting back to USD, so you're not really buying with BTC anymore anyway.
zjaffee 9y ago
Payment processors traditionally would convert to USD right away, where the % they charged for the processing included the risk they held for having to hold the coins for the time it took to convert. I know back when there was the "bitcoin boulevard" in Cleveland, this was around 1% which was cheaper than processing credit cards for the businesses and is what got them onboard to accept BTC.

giancarlostoro 9y ago

Look at posts by Steam on the matter, and in the comments on that article some mention that it is based on the price at the second the transaction occurs.

paulmd 9y ago
Steam, as with most institutions that "accept" Bitcoin, never actually handles Bitcoin themselves. They use a financial services provider who accepts Bitcoin and gives them USD and takes a cut of the transaction for themselves. Dealing with that short-term volatility is one of the things that fee pays for. Is it ridiculous that the price can fluctuate enough in 60 minutes to significantly affect a transaction? Obviously.

kuroguro 9y ago

I would imagine they exchange them to fiat as soon as received.

dimillian 9y ago
That where it got trickier. IMO, if a big brand start to accept BTC, like Walmart or such, my strategy would be to hire 1 or 2 traders to deal exclusively with the BTC/FIAT wallet of the company. The goal being to make the BTC/FIAT ratio interest grows. I think accepting cryptocurrencies will create a lot of job in trading/finance for companies totally unrelated to the business.

pjc50 9y ago

The easy answer appears to be "stop accepting bitcoin". Such as Steam, Microsoft and now https://news.bitcoin.com/miami-bitcoin-conference-stops-accepting-bitcoin-due-to-fees-and-congestion/ https://news.bitcoin.com/miami-bitcoin-conference-stops-acce...

mkirklions 9y ago
People are freaking out about this. There are 1000 other cryptos that can move money. Bitcoin is the only reliable way to hedge money against massive government inflation that we have seen after an African Coup or hyperinflation.
- pjc50 9y ago
  You can't say it's a viable hedge given its extreme volatility. Africa and South America maybe, but if you're expecting dollar hyperinflation you have a very strange set of assumptions about the world.
  - Dumbdo 9y ago
    Even if one would assume that there's a dollar hyperinflation, Bitcoin as a alternative is certainly the worst alternative as it is much more volatile than any real world currency.

krisives 9y ago

Look at something like CoinPayments.net they will let you accept any coin and if you link to a service that does exchange/banking it can auto-liquidate your coins for you.

StavrosK 9y ago

The processor handles that by "freezing" the price for ~15 minutes and hoping it averages out. Of course, that assumes that the transaction will take less than fifteen minutes to confirm, which... good luck.

Tepix 9y ago
Depending on how much time you have you could use this for speculation purposes. If bitcoin goes up, you cancel your purchase. If bitcoin goes down you go ahead with your purchase at the outdated rate.
- StavrosK 9y ago
  Sure, but then what do you do with the thing you bought?
  - greenleafjacob 9y ago
    What if it’s a cash equivalent like Amazon gift cards?
Cthulhu_ 9y ago
This is where an exchange like Coinbase could provide a payment service, paying directly but doing the actual BTC transfer under wate.r
- blunte 9y ago
  This is what Bitpay does. You, the merchant, can accept bitcoin (and other currencies) using Bitpay's payment system. Bitpay immediately credits your account with USD. No risk of long-term (more than a few seconds) price moves in BTCUSD. The downside is that Bitpay, like every other authorized cryptocurrency "bank", is crippled by KYC/AML regulations and cannot process all the applications they receive for new customers.
xorcist 9y ago
Why would you need to wait for it to confirm? Make sure to have access to liquidity so you can set the trade the second it is likely the transaction will confirm at some point. That's how the big payment processors do it. You need liquidity to process payments on a non trivial scale, but that's par for the game for banks, credit cards companies, paypal, and everyone else in this space. Waiting for a confirmation will do you no good anyway. No exchange accepts any less than six, which would have you take the exchange risk for over an hour. That's not a very good business case.

vthallam 9y ago

Retail Industry has stopped accepting Bitcoin(latest example: Microsoft). Most of them who do now do mostly for PR or a thought that they support the industry. On the other hand, Litecoin, RaiBlocks and Ripple could be used for payments and many companies seems to have started.

EA 9y ago
Microsoft has resumed taking Bitcoin payments: http://fortune.com/2018/01/10/microsoft-bitcoin-temporary-halt/ http://fortune.com/2018/01/10/microsoft-bitcoin-temporary-ha...

friedButter 9y ago

Someone should open a company which provides tokens in exchange for depositing BTC with them. People can trade these tokens which are notional representations of the BTC holdings in an instantaneous manner. Then when someone actually wants the BTC, they redeem the tokens with the company and the BTC is transferred to their wallet... alternatively the company itself could act as an exchange and always send currency instead of tokens to the person receiving a payment. Since all the small transactions are happening via these tokens, the cost of Bitcoin transactions would be a much smaller issue..

che_shirecat 9y ago
what would be the point of this? why not just use mainstream payment methods and then when someone actually wants BTC, purchase it from an exchange for fiat? The whole point of cryptocurrency is that its decentralized, creating a derivative on top of it (for payments??) issued by a centralized company subject to counterparty risk kinda ruins the purported advantages of Bitcoin don't you think?
- mkirklions 9y ago
  I think Ethereum might be the closest thing we have to that today. However, still things require an additional layer to get it to work in the physical world. Lets not forget that this technology only became 'accepted' by the mainstream in 2017. Before that, it was nerds volunteering to program various infrastructure. Also, between accounting, finance, and taxes, implementing cryptocurrency for any fortune 500 company will add additional layers of complexity.
- friedButter 9y ago
  As long as this system is run online,it would be free of regulations,so the govt would not be able to impose it's will on your assets...
  - che_shirecat 9y ago
    Until this only-online "exchange" is "hacked" and suddenly you can't claim any BTC with their tokens anymore. Did you read the "counter-party risk" part of my comment?

solatic 9y ago

One possible way of dealing with high transaction fees is to deposit more money into an account with a retailer, and then use money in that account to fund purchases over time. For example, transaction costs are too high to reasonably pay for a single cup of coffee. But if you know you buy a cup of coffee on a roughly daily basis, you could put down $1,000 worth of Bitcoin, get an anonymous gift card for that amount of money, and then use that over time to pay for individual coffees. But that really raises two questions: why do you feel the need to use a semi-anonymous, public-ledger currency to pay for coffee at a shop where your status as a regular makes you recognizable, and why is it worth foregoing interest plus the risk of not using the entire gift card for the privilege?

stanleydrew 9y ago
Also note that when you buy the $1000 gift card you are converting back to USD, so you're not really buying with BTC anymore anyway.

zjaffee 9y ago

Payment processors traditionally would convert to USD right away, where the % they charged for the processing included the risk they held for having to hold the coins for the time it took to convert. I know back when there was the "bitcoin boulevard" in Cleveland, this was around 1% which was cheaper than processing credit cards for the businesses and is what got them onboard to accept BTC.