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Think about the amount of price fluctuation that can occur before you get a few confirmations in, especially during this last bout of speculation. I met with o

Think about the amount of price fluctuation that can occur before you get a few confirmations in, especially during this last bout of speculation. I met with one payment processor and told them that based on their rough transaction figures and the previous day's price action, I knew that they lost the equivalent of a software engineer's yearly salary because of falling prices. Wouldn't they like to hedge some of that risk off and be able to hire more people? But no, not really - most of the payment processors or businesses using Bitcoin could make more money by just sitting and holding their Bitcoin and going through the motions of running a business. The potential price increase dwarfs any normal economic activity, so they had no reason to hedge away risk.

gruez 7y ago
>Think about the amount of price fluctuation that can occur before you get a few confirmations in >[...] based on their rough transaction figures and the previous day's price action, I knew that they lost the equivalent of a software engineer's yearly salary because of falling prices. Can't this issue be solved by keeping a bunch of coins in reserve? That way you can convert to fiat immediately rather than waiting for 6 confirmations. This doesn't solve the issue of the payment processor essentially giving the buyer a free 15 minute put option[1], but I don't see how derivatives can solve this issue. [1] you pay for an invoice worth $1000. the payment processor gives you a quote for x bitcoins, valid for 15 minutes. this is essentially a 15 minute put option because if the price goes down, the higher price is locked in. But if it goes up, you can create another invoice to get a better price.