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You're not wrong to be confused. How anyone could transact for goods and services in such an extremely volatile currency is a mystery to me (assuming it remains

You're not wrong to be confused. How anyone could transact for goods and services in such an extremely volatile currency is a mystery to me (assuming it remains as volatile as it has been). Especially on the supply side. Let's say I'm running a coffee shop that takes orders in USD and in BTC. Let's say I want to sell a cup of coffee for $3 or 1 BTC. Or is it $3 or .0001 BTC? Or is it $3 or 1000 BTC? How do I, as a simple seller of goods and services in exchange for BTC, know how to price my items when they can be acquired via other currencies for relatively fixed prices, and huge arbitrage opportunities constantly exist?

wmf 15y ago
A suggested "solution" is to post prices in USD but perform the transaction in BTC (based on the latest exchange rate) under the hood. This shifts the problem to the buyer, who doesn't know how much will be taken out of their wallet.
- bergie 15y ago
  They had that system in Russia when the rouble was fluctuating more. All prices were posted in "comparative units", which were basically USD. You'd then pay using the day's exchange rate.
  - thebooktocome 15y ago
    And in Brazil.
weavejester 15y ago
You could price the cost in USD, and use bitcoins only as a means of transferring wealth. People would pay an amount of bitcoins calculated dynamically from the market rate, and then you'd convert the bitcoins you receive into dollars as soon as the transaction was confirmed. I suspect that we'll begin to see web services that handle this sort of conversion automatically. Give them a Dwolla account, and they'll provide you with a Bitcoin address that will automatically dump the equivalent market rate of dollars to your Dwolla account.
- sethg 15y ago
  How fast does the market move? If someone buys my coffee based on the posted USD/BTC conversion rate as of 12:00:00, and I convert those back into dollars at 12:00:01, how much variance am I likely to see between the original USD price and the USD amount that I finally collect?
  - saulrh 15y ago
    Zero, because bitcoins are processed in six-minute or ten-minute blocks.
  - weavejester 15y ago
    Any service that converted between BTC and USD would probably require at least 1 confirmation - i.e. it would take 10 minutes before the USD were sent to your account. The market value could change in that time, perhaps by 10% or more when the market is unusually volatile. However, assuming that these rises and falls average out over the long term, a web service could guarantee the quoted rate. So the user would buy the product using $20 worth of bitcoin, which would manifest itself as $20 (minus a percentage fee) in the merchant's account within 10 minutes. Any hit (or gain) due to fluctuating exchange rates would be taken by the web service sitting in the middle. Over time the fluctuations would average out - at least that would be the hope - or at least covered by the transaction charge.

wmf 15y ago

A suggested "solution" is to post prices in USD but perform the transaction in BTC (based on the latest exchange rate) under the hood. This shifts the problem to the buyer, who doesn't know how much will be taken out of their wallet.

bergie 15y ago
They had that system in Russia when the rouble was fluctuating more. All prices were posted in "comparative units", which were basically USD. You'd then pay using the day's exchange rate.
- thebooktocome 15y ago
  And in Brazil.

weavejester 15y ago

You could price the cost in USD, and use bitcoins only as a means of transferring wealth. People would pay an amount of bitcoins calculated dynamically from the market rate, and then you'd convert the bitcoins you receive into dollars as soon as the transaction was confirmed. I suspect that we'll begin to see web services that handle this sort of conversion automatically. Give them a Dwolla account, and they'll provide you with a Bitcoin address that will automatically dump the equivalent market rate of dollars to your Dwolla account.

sethg 15y ago
How fast does the market move? If someone buys my coffee based on the posted USD/BTC conversion rate as of 12:00:00, and I convert those back into dollars at 12:00:01, how much variance am I likely to see between the original USD price and the USD amount that I finally collect?
- saulrh 15y ago
  Zero, because bitcoins are processed in six-minute or ten-minute blocks.
- weavejester 15y ago
  Any service that converted between BTC and USD would probably require at least 1 confirmation - i.e. it would take 10 minutes before the USD were sent to your account. The market value could change in that time, perhaps by 10% or more when the market is unusually volatile. However, assuming that these rises and falls average out over the long term, a web service could guarantee the quoted rate. So the user would buy the product using $20 worth of bitcoin, which would manifest itself as $20 (minus a percentage fee) in the merchant's account within 10 minutes. Any hit (or gain) due to fluctuating exchange rates would be taken by the web service sitting in the middle. Over time the fluctuations would average out - at least that would be the hope - or at least covered by the transaction charge.