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Why would a major, established business like Amazon want to deal with Bitcoin? Transaction times of 10 minutes? Questions about how to pay their taxes (yes, b

Why would a major, established business like Amazon want to deal with Bitcoin? Transaction times of 10 minutes? Questions about how to pay their taxes (yes, believe it or not, a business as enormous as Amazon is not going to fail to pay taxes) and what taxes should be paid on BTC transactions are probably enough to keep them away. Amazon issues lines of credit to their customers, and only a fool would issue a line of credit in a currency that has built-in deflation. I think it is more likely that Congress will dismantle the military industrial complex.

Coinabul1 14y ago
When a little startup already has better pricing than a well established billion dollar company, that's something to take note of. Most Bitcoin Processors give confirmation fairly quickly. The customer doesn't have to wait 10 minutes. Taxes shouldn't be too big of an issue. They just get reported like accepting any other foreign currency. As for line of credit... you should check out Ripple.com
- betterunix 14y ago
  "When a little startup already has better pricing than a well established billion dollar company, that's something to take note of." By selling at a loss. We are not talking about a startup that outprices Amazon by actually doing something technically superior to cut costs, we are talking about a startup that is trying to use a loss leader strategy. Nothing to see here, it's a well known tactic. "Most Bitcoin Processors give confirmation fairly quickly. The customer doesn't have to wait 10 minutes." Last I checked, it was 10-30 minutes. More importantly, isn't using a payment processor defeating the whole point here? What advantage does Amazon get from using a BTC payment processor over Visa? Were we trying to avoid convincing Visa to become a Bitcoin processor? "Taxes shouldn't be too big of an issue. They just get reported like accepting any other foreign currency." Bitcoin is not a foreign currency. In all likelihood, Amazon would have to report taxes on BTC transactions as if they were barter transactions, which basically means reporting the dollar value of the goods being sold. That means that either Amazon has to adjust the prices of goods on a day-by-day basis to account for Bitcoin prices, or take the risk that they will wind up losing money as Bitcoin fluctuates (and without a futures market on Bitcoin, there are few ways to mitigate that risk, except the immediately convert the BTC they receive back into dollars -- so again, why bother with the extra complication?). As for lines of credit, the point is this: issuing a loan in a deflationary currency is a massively bad idea. Deflation makes loans harder to repay over time, and at an accelerating rate. Amazon would have to keep adjusting their interest rate on BTC lines of credit to stave off the possibility of a disaster, which would only make the credit more difficult to utilize. This is widely understood by economists, and it is among the more important reasons that governments work hard to prevent their currencies from deflating.
nwh 14y ago
Generally you can accept transactions with zero confirmations without a huge issue. For someone like Amazon the small loss you might make from a couple of double-spends is outweighed by the almost instantaneous transaction. In an ideal circumstance, you'd average five minutes for a confirmation anyway. Blocks are usually generated every 10 minutes or so.
- betterunix 14y ago
  I think you are underestimating the number of double-spend attacks that a business like Amazon would face if they never waited for confirmation. Amazon has plenty of problems with fraud right now; this would just be another way for people to commit fraud. It is not just the losses, either; Amazon could reverse transactions once the double spending is detecting, but they have to worry about their reputation. The last thing they need is to be known as the website for people trying to cheat. Also, "ideal circumstances" do not happen in the real world. IF you want to convince Amazon to adopt Bitcoin, you need to impress them with typical and realistic circumstances.
  - ewillbefull 14y ago
    Amazon could always just wait for confirmations if the order is large enough. Double-spends cost a lot to pull off. So if you're doing a large transaction, you're going to want it "settled" in the blockchain for about an hour.
    - betterunix 14y ago
      I think the result of that would be relegating Bitcoin to small orders. Even then, Amazon would probably still face non-trivial problems with double-spending schemes where someone tries to engage in large numbers of very small transactions as part of some larger fraud. The problem here is that neither you nor I can envision every possible way to exploit Amazon failing to confirm transactions of any size.
  - nwh 14y ago
    Given that double spends are reasonably expensive, you could just use zero confirmations for anything under 25BTC and the standard six confirmations for the rest. If you double spent a transaction under 25BTC, you would have been better off just mining a block yourself. I'm sure anyone spending more than $750 on amazon is probably happy enough waiting for two or more confirmations.
AnIrishDuck 14y ago
I don't necessarily disagree with you but: > only a fool would issue a line of credit in a currency that has built-in deflation. Is backwards. Deflation is bad for borrowers, not creditors. This should be self evident; in periods of deflation, one unit of currency can buy more tomorrow than it can today. As a borrower, you are paying a second interest rate. Further, deflation and inflation are only damaging when they occur unpredictably. Predictable amounts of either can easily be built into the interest rate of the transaction.
- betterunix 14y ago
  Deflation is bad for creditors for the same reason it is bad for debtors. By making it harder to repay a loan, deflation raises the risk of default i.e. it makes issuing a loan riskier. Out-of-control deflation can lead to disasters where large numbers of loans go into default, ultimately bankrupting creditors. "deflation and inflation are only damaging when they occur unpredictably. Predictable amounts of either can easily be built into the interest rate of the transaction." The problem here is that as the economy expands, the rate of deflation increases if no new currency can be added to the system (as is the case with Bitcoin). As the economy contracts, issuing a loan is risky due to the economic contraction. Expansions and contractions of an economy are basically unpredictable; there are a few vague patterns here and there, but in general predicting economic booms and busts is difficult (if you could do it, you would be very rich very fast). Issuing a loan in a deflationary currency is asking for trouble.
  - AnIrishDuck 14y ago
    Good points. I wasn't thinking of the macroeconomic implications of deflation. You're absolutely right; there's a spectre of unpredictability that I fear will preclude any "real" institutional use of the Bitcoin system. I honestly wish that Nakamoto had consulted an economist before creating Bitcoin. A system with a modest rate of built-in inflation makes far more sense than Bitcoin's deflationary issue scheme.
    - ealloc 14y ago
newnewnew 14y ago
Bitcoin is not replacing credit card companies. It is replacing the electronic transfer of cash between banks which currently takes several days. A credit card company built upon bitcoin could offer instant transactions with a vastly superior underlying architecture.
csense 14y ago
> Amazon issues lines of credit to their customers Really? I've always paid with credit card. > Questions about how to pay their taxes A "business as enormous as Amazon" probably has a horde of accountants to answer those questions. > what taxes should be paid on BTC transactions The same as on any other transactions in non-USD currency perhaps?
dustcoin 14y ago
>Transaction times of 10 minutes? Transaction times would be irrelevant for Amazon as they could tell customers their order is placed with zero confirmations (a few seconds), and then check for more confirmations before shipping. There is already a delay of hours or even days between when a customer orders and when they pay because credit cards are charged when the order ships. >and what taxes should be paid on BTC transactions I would guess the same taxes paid on other non-USD transactions. Amazon already deals with many non-USD currencies. >Amazon issues lines of credit to their customers I don't think this applies to most orders/customers. Amazon could choose not to offer lines of credit in BTC.

Coinabul1 14y ago

When a little startup already has better pricing than a well established billion dollar company, that's something to take note of. Most Bitcoin Processors give confirmation fairly quickly. The customer doesn't have to wait 10 minutes. Taxes shouldn't be too big of an issue. They just get reported like accepting any other foreign currency. As for line of credit... you should check out Ripple.com

betterunix 14y ago
"When a little startup already has better pricing than a well established billion dollar company, that's something to take note of." By selling at a loss. We are not talking about a startup that outprices Amazon by actually doing something technically superior to cut costs, we are talking about a startup that is trying to use a loss leader strategy. Nothing to see here, it's a well known tactic. "Most Bitcoin Processors give confirmation fairly quickly. The customer doesn't have to wait 10 minutes." Last I checked, it was 10-30 minutes. More importantly, isn't using a payment processor defeating the whole point here? What advantage does Amazon get from using a BTC payment processor over Visa? Were we trying to avoid convincing Visa to become a Bitcoin processor? "Taxes shouldn't be too big of an issue. They just get reported like accepting any other foreign currency." Bitcoin is not a foreign currency. In all likelihood, Amazon would have to report taxes on BTC transactions as if they were barter transactions, which basically means reporting the dollar value of the goods being sold. That means that either Amazon has to adjust the prices of goods on a day-by-day basis to account for Bitcoin prices, or take the risk that they will wind up losing money as Bitcoin fluctuates (and without a futures market on Bitcoin, there are few ways to mitigate that risk, except the immediately convert the BTC they receive back into dollars -- so again, why bother with the extra complication?). As for lines of credit, the point is this: issuing a loan in a deflationary currency is a massively bad idea. Deflation makes loans harder to repay over time, and at an accelerating rate. Amazon would have to keep adjusting their interest rate on BTC lines of credit to stave off the possibility of a disaster, which would only make the credit more difficult to utilize. This is widely understood by economists, and it is among the more important reasons that governments work hard to prevent their currencies from deflating.

nwh 14y ago

Generally you can accept transactions with zero confirmations without a huge issue. For someone like Amazon the small loss you might make from a couple of double-spends is outweighed by the almost instantaneous transaction. In an ideal circumstance, you'd average five minutes for a confirmation anyway. Blocks are usually generated every 10 minutes or so.

betterunix 14y ago
I think you are underestimating the number of double-spend attacks that a business like Amazon would face if they never waited for confirmation. Amazon has plenty of problems with fraud right now; this would just be another way for people to commit fraud. It is not just the losses, either; Amazon could reverse transactions once the double spending is detecting, but they have to worry about their reputation. The last thing they need is to be known as the website for people trying to cheat. Also, "ideal circumstances" do not happen in the real world. IF you want to convince Amazon to adopt Bitcoin, you need to impress them with typical and realistic circumstances.
- ewillbefull 14y ago
  Amazon could always just wait for confirmations if the order is large enough. Double-spends cost a lot to pull off. So if you're doing a large transaction, you're going to want it "settled" in the blockchain for about an hour.
  - betterunix 14y ago
    I think the result of that would be relegating Bitcoin to small orders. Even then, Amazon would probably still face non-trivial problems with double-spending schemes where someone tries to engage in large numbers of very small transactions as part of some larger fraud. The problem here is that neither you nor I can envision every possible way to exploit Amazon failing to confirm transactions of any size.
- nwh 14y ago
  Given that double spends are reasonably expensive, you could just use zero confirmations for anything under 25BTC and the standard six confirmations for the rest. If you double spent a transaction under 25BTC, you would have been better off just mining a block yourself. I'm sure anyone spending more than $750 on amazon is probably happy enough waiting for two or more confirmations.

AnIrishDuck 14y ago

I don't necessarily disagree with you but: > only a fool would issue a line of credit in a currency that has built-in deflation. Is backwards. Deflation is bad for borrowers, not creditors. This should be self evident; in periods of deflation, one unit of currency can buy more tomorrow than it can today. As a borrower, you are paying a second interest rate. Further, deflation and inflation are only damaging when they occur unpredictably. Predictable amounts of either can easily be built into the interest rate of the transaction.

betterunix 14y ago
Deflation is bad for creditors for the same reason it is bad for debtors. By making it harder to repay a loan, deflation raises the risk of default i.e. it makes issuing a loan riskier. Out-of-control deflation can lead to disasters where large numbers of loans go into default, ultimately bankrupting creditors. "deflation and inflation are only damaging when they occur unpredictably. Predictable amounts of either can easily be built into the interest rate of the transaction." The problem here is that as the economy expands, the rate of deflation increases if no new currency can be added to the system (as is the case with Bitcoin). As the economy contracts, issuing a loan is risky due to the economic contraction. Expansions and contractions of an economy are basically unpredictable; there are a few vague patterns here and there, but in general predicting economic booms and busts is difficult (if you could do it, you would be very rich very fast). Issuing a loan in a deflationary currency is asking for trouble.
- AnIrishDuck 14y ago
  Good points. I wasn't thinking of the macroeconomic implications of deflation. You're absolutely right; there's a spectre of unpredictability that I fear will preclude any "real" institutional use of the Bitcoin system. I honestly wish that Nakamoto had consulted an economist before creating Bitcoin. A system with a modest rate of built-in inflation makes far more sense than Bitcoin's deflationary issue scheme.
  - ealloc 14y ago

newnewnew 14y ago

Bitcoin is not replacing credit card companies. It is replacing the electronic transfer of cash between banks which currently takes several days. A credit card company built upon bitcoin could offer instant transactions with a vastly superior underlying architecture.

csense 14y ago

> Amazon issues lines of credit to their customers Really? I've always paid with credit card. > Questions about how to pay their taxes A "business as enormous as Amazon" probably has a horde of accountants to answer those questions. > what taxes should be paid on BTC transactions The same as on any other transactions in non-USD currency perhaps?

dustcoin 14y ago

>Transaction times of 10 minutes? Transaction times would be irrelevant for Amazon as they could tell customers their order is placed with zero confirmations (a few seconds), and then check for more confirmations before shipping. There is already a delay of hours or even days between when a customer orders and when they pay because credit cards are charged when the order ships. >and what taxes should be paid on BTC transactions I would guess the same taxes paid on other non-USD transactions. Amazon already deals with many non-USD currencies. >Amazon issues lines of credit to their customers I don't think this applies to most orders/customers. Amazon could choose not to offer lines of credit in BTC.