10 ms·

CheapAir accepts Bitcoin

122 points by mrb 13y ago

antr 13y ago
I'd like to know how they are hoping to hedge BTC volatility, or if they are not planning to hedge at all.
- infruset 13y ago
  Yes, that's the first thing that came to my mind as well. I guess they'll stay on the safe side as much as they can by inflating the prices in bitcoin.
- guyht 13y ago
  I assume they are using a bitpay or similar which allows merchants to instantly convert bitcoin to USD (or equiv) funds at the time of purchase. Using this system, the merchant always receives the correct fiat amount, while still benefiting from the other advantages that bitcoin brings (low fees, no chargebacks).
  - antr 13y ago
    then the other risk here is liquidity. how deep is BTC liquidity so that prices are not affected by businesses instantly exchanging to USD, EUR, etc.?
    - bdcs 13y ago
      The payment processor (eg BitPay) takes that on. Markets are still razor thin by fiat currency standards, but are 10x to 100x thicker than a year ago. For example, buying 1.5 million USD instantly would raise the price about 4% (using just one exchange, Bitstamp)
    - oscilloscope 13y ago
      There was a prolonged dip in the price in this weekend, and I was wondering if this had an effect. There've been many large Bitcoin transactions recently, especially on Bitcoin Black Friday. For instance, Amagi Metals apparently sold $900,000 worth of gold and silver for Bitcoin using Bitpay as their processor. That alone is currently a significant volume to liquidate. Enough to move the price 4-5% on some exchanges. Bitpay only takes a ~1% fee, but I assume their exchange rate is padded to absorb some of that risk. They may also sell bitcoin off the exchanges, which doesn't have a direct impact on the price.
      - kolev 13y ago
        BitPay takes 1% if you're on the free plan. Otherwise, there's just a monthly fee (well, you need to be on the $300/mo plan to get unlimited volume otherwise you're limited to $300,000/mo and $10,000/transaction)! https://bitpay.com/pricing https://bitpay.com/pricing
    - jypepin 13y ago
      according to blockchain.info (https://blockchain.info/charts/estimated-transaction-volume?timespan=180days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= https://blockchain.info/charts/estimated-transaction-volume?...) seems like about 150 000 bitcoins a day are being traded. So I assume liquidity is already good enough for almost every business.
      - kolev 13y ago
        Sometimes, a purchase or a sale of Bitcoins in the hundreds can take the market up and down by as much as 5-10% depending on the order book. I'm not sure if anybody has noticed, but Coinbase bases the price on quantity as they need to place a market order and then you depending on Bitstamp's order book state at the moment, the price difference can be huge! How are you gonna explain to consumers that they have to pay more, because they're placing a bigger order?
      - apw 13y ago
        Since most transactions are on the order of 1/1000 of a Bitcoin, it's useful to rephrase what you said as: around 150 million mBTC are being transacted (on the blockchain) per day.
  - misterbwong 13y ago
    Wow. No chargebacks? I know almost zip about BTC but this seems a bit dangerous for the consumer, though VERY merchant friendly. If BTC goes mainstream, do we expect a middleman-type escrow service to arise for everyday purchases?
    - bdcs 13y ago
      You can do clever things with BTC to make them reversible in cases where reversibility is nice. First, you can implement a centralized PayPal-type company that clears after X days to implement chargebacks. Boring, but easy to understand and effective. The clever way to do it is with M-of-N transactions, http://www.bitescrow.org/ http://www.bitescrow.org/ PS. When I order from Amazon, etc. I trust them. I get 2% back using bitcoins (from Coinbase.com (-1%) -> Gyft (+3%)). I like the 2% discount more than the credit risk of Amazon not making me happy at the end of the day : )
      - caw 13y ago
        Fidelity offers a 2% cash back on everything card. Amazon's credit card also gives you higher than 2% on Amazon purchases. Could you elaborate more why you do a double conversion to buy something rather than a straight credit card transaction?
        pfisch 13y ago
        Basically at this point it is tax avoidance. By using btc you avoid paying capital gains tax since basically everyone who holds bitcoins right now has seen their investment go up in value. Converting back to usd is not as good as spending the btc. It is kind of nice having a currency that appreciates in value over time vs slowly getting robbed by inflation or capital gains tax.
    - haakon 13y ago
      Bitcoin definitely favours the merchant/receiver in this aspect. Escrow can be used where desired, though it probably won't make sense for all everyday purchases (escrow for a cup of coffee over the counter is probably a bit overkill). The upcoming payment protocol in Bitcoin 0.9 explicitly allows the merchant to issue refunds if he wants to.
- barmstrong 13y ago
  They are using the "instant exchange" feature of Coinbase: https://coinbase.com/docs/merchant_tools/payouts https://coinbase.com/docs/merchant_tools/payouts The USD price is locked in, and they never need to hold bitcoin. It is just a cheaper payment method.
woah 13y ago
Where's Dogecoin support? This is a major oversight on CheapAir's part, IMO
LukeWalsh 13y ago
I feel like a lot of these headlines lately are extremely gimmicky given the high volatility of bitcoin prices. These companies are just straight converting BTC back to USD which in the long run does nothing positive for true widespread adoption of bitcoin as a means of exchange.
- drcode 13y ago
  Baloney: If I buy an airline ticket with a credit card, my credit card info may get stolen- There seems to be a story about stolen credit cards in the news almost every week. With bitcoin, I can buy an airline ticket without this being possible.
  - calbear81 13y ago
    But your credit card is almost always protected from financial liability if someone steals it and you report any non-authorized charges. With bitcoin, there seems to be no recourse when the exchanges get hit. This is not to mention that you are much better protected with a credit card due to the ability to contest a merchant charge if things go sour (you didn't get the product, it was defective, etc.) not to mention other benefits of credit.
    - codeulike 13y ago
      The overall cost of all the fraud-protection that credit cards have is quite large, and ultimately gets passed on to the consumer.
      - calbear81 13y ago
        Until more places give cash/bitcoin discounts, the overall effective cost to me as an individual is the same and even less with credit card once rewards are accounted for. I would like to think that less responsible card users are financing my rewards with their interest paid while those of us who use credit cards just like cash (pay in full every month) are gaming the system a bit.
kolev 13y ago
This is ridiculous! Some said the price of BTC dropped to overreaction to bad news. Well, a street vendor in UK starts accepting Bitcoin for burgers and price jumps above $1,000 in excitement (I'm kidding, of course). Talking about overreaction! Let's see some real commerce numbers, not marketing tricks to get more news coverage. I got tired of seeing everywhere in the news that one Florida guy bought a Tesla in California! With such volatility, you need to put a huge buffer in your pricing and only idiots and criminals will spend their BTC instead of paying with fiat in such case. There was some new about Indian business accepting Bitcoin then some Indian guy converted the price and showed Bitcoin price was x3 higher! If BTC is a currency, it should move up and down by no more than 1-2% (like a real currencies do) otherwise it cannot be used in serious commerce, period. At this point, Bitcoin, unfortunately, is a speculators tool. And if you invest in Bitcoin, don't forget, you're in the hands of the Chinese investors (kings of the panic sells) and the governments. Also, there are many fake news and incorrect interpretations of news about Bitcoin. Like some putting the wrong wording in Al Gore's mouth about Bitcoin when he meant something totally different or Snoop Dogg making a joke and people taking it seriously. If Bitcoin dropped 40% due to overreaction to no-so-bad news, imagine what will happen when really bad news come out! I believe in Bitcoin, but I cannot tolerate the madness around the price. Even if you use it as a speculator, your future medical bills will not be able to cover the profit you're gonna make - with such huge swings, the stress is way too much for the profits. Just try to imagine the Winklevoss seeing BTC dropping by 40% and tens of millions of their imaginary wealth disappearing in minutes! It's better to do margin trading with Forex - you can make even more with less stress. So, speculators, please, leave the Bitcoin land and move to Litecoin or other speculator playgrounds. Don't kill Bitcoin with your greed, please!
- drcode 13y ago
  This recent volatility is mainly due to uncertainty about government responses to bitcoin: The price when up when the Congressional hearings were positive, and went down when the Chinese government announced restrictions on bitcoin use. Eventually, most governments will clarify their position on bitcoin and volatility will decrease.
  - 13y ago
colinbartlett 13y ago
I've used this to buy tickets and it was an incredibly easy process. Really, buying anything with Bitcoin is pleasurable experience... even simply to not be beholden to any bank to send money is amazing.
- markkat 13y ago
  I think it likely that this is one of those things that will slowly make the difference, and change people's minds about how financial transactions ought to be.
- makira 13y ago
  It's similar to watching only downloaded/purchased content versus watching the TV. Once you're used to having no advertisement, turning the TV on is very awkward with all the publicity. When using Bitcoin, not having to deal with all the road blocks and fees from banks is quite refreshing. Not having to ask permission to do what you want with your money is great!
- apw 13y ago
  You make a good point. It's easy for me to criticize Bitcoin from the standpoint of assuming it is the official currency of some country, or the world's only currency. However, in so doing I am unintentionally ignoring the much more relevant and likely possibility: that Bitcoin doesn't take over the world, but is simply so easy and useful for the cases you described that it "just" becomes the "Internet's currency". This softens my criticisms of how a deflationary currency carries risks, since in this scenario Bitcoin is continually being converted to and from other currencies.
pdq 13y ago
Please don't upvote a 2 week old article, and especially one with little actual content other than a "rah rah Bitcoin!" message.
- gress 13y ago
  rah rah Bitcoin!
possibilistic 13y ago
Does anyone know how these guys are processing Bitcoin? Are they using Coinbase or another processor? (Would it be feasible to roll your own transaction handling?)
- dmnd 13y ago
  They're using Coinbase: https://coinbase.com/docs/merchant_tools/examples https://coinbase.com/docs/merchant_tools/examples
SilasX 13y ago
Gee, this isn't a direct route to "extra TSA attention" or anything ...

122 points by mrb 13y ago

antr 13y ago

I'd like to know how they are hoping to hedge BTC volatility, or if they are not planning to hedge at all.

infruset 13y ago
Yes, that's the first thing that came to my mind as well. I guess they'll stay on the safe side as much as they can by inflating the prices in bitcoin.
guyht 13y ago
I assume they are using a bitpay or similar which allows merchants to instantly convert bitcoin to USD (or equiv) funds at the time of purchase. Using this system, the merchant always receives the correct fiat amount, while still benefiting from the other advantages that bitcoin brings (low fees, no chargebacks).
- antr 13y ago
  then the other risk here is liquidity. how deep is BTC liquidity so that prices are not affected by businesses instantly exchanging to USD, EUR, etc.?
  - bdcs 13y ago
    The payment processor (eg BitPay) takes that on. Markets are still razor thin by fiat currency standards, but are 10x to 100x thicker than a year ago. For example, buying 1.5 million USD instantly would raise the price about 4% (using just one exchange, Bitstamp)
  - oscilloscope 13y ago
    There was a prolonged dip in the price in this weekend, and I was wondering if this had an effect. There've been many large Bitcoin transactions recently, especially on Bitcoin Black Friday. For instance, Amagi Metals apparently sold $900,000 worth of gold and silver for Bitcoin using Bitpay as their processor. That alone is currently a significant volume to liquidate. Enough to move the price 4-5% on some exchanges. Bitpay only takes a ~1% fee, but I assume their exchange rate is padded to absorb some of that risk. They may also sell bitcoin off the exchanges, which doesn't have a direct impact on the price.
    - kolev 13y ago
      BitPay takes 1% if you're on the free plan. Otherwise, there's just a monthly fee (well, you need to be on the $300/mo plan to get unlimited volume otherwise you're limited to $300,000/mo and $10,000/transaction)! https://bitpay.com/pricing https://bitpay.com/pricing
  - jypepin 13y ago
    according to blockchain.info (https://blockchain.info/charts/estimated-transaction-volume?timespan=180days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= https://blockchain.info/charts/estimated-transaction-volume?...) seems like about 150 000 bitcoins a day are being traded. So I assume liquidity is already good enough for almost every business.
    - kolev 13y ago
      Sometimes, a purchase or a sale of Bitcoins in the hundreds can take the market up and down by as much as 5-10% depending on the order book. I'm not sure if anybody has noticed, but Coinbase bases the price on quantity as they need to place a market order and then you depending on Bitstamp's order book state at the moment, the price difference can be huge! How are you gonna explain to consumers that they have to pay more, because they're placing a bigger order?
    - apw 13y ago
      Since most transactions are on the order of 1/1000 of a Bitcoin, it's useful to rephrase what you said as: around 150 million mBTC are being transacted (on the blockchain) per day.
- misterbwong 13y ago
  Wow. No chargebacks? I know almost zip about BTC but this seems a bit dangerous for the consumer, though VERY merchant friendly. If BTC goes mainstream, do we expect a middleman-type escrow service to arise for everyday purchases?
  - bdcs 13y ago
    You can do clever things with BTC to make them reversible in cases where reversibility is nice. First, you can implement a centralized PayPal-type company that clears after X days to implement chargebacks. Boring, but easy to understand and effective. The clever way to do it is with M-of-N transactions, http://www.bitescrow.org/ http://www.bitescrow.org/ PS. When I order from Amazon, etc. I trust them. I get 2% back using bitcoins (from Coinbase.com (-1%) -> Gyft (+3%)). I like the 2% discount more than the credit risk of Amazon not making me happy at the end of the day : )
    - caw 13y ago
      Fidelity offers a 2% cash back on everything card. Amazon's credit card also gives you higher than 2% on Amazon purchases. Could you elaborate more why you do a double conversion to buy something rather than a straight credit card transaction?
      - pfisch 13y ago
        Basically at this point it is tax avoidance. By using btc you avoid paying capital gains tax since basically everyone who holds bitcoins right now has seen their investment go up in value. Converting back to usd is not as good as spending the btc. It is kind of nice having a currency that appreciates in value over time vs slowly getting robbed by inflation or capital gains tax.
  - haakon 13y ago
    Bitcoin definitely favours the merchant/receiver in this aspect. Escrow can be used where desired, though it probably won't make sense for all everyday purchases (escrow for a cup of coffee over the counter is probably a bit overkill). The upcoming payment protocol in Bitcoin 0.9 explicitly allows the merchant to issue refunds if he wants to.
barmstrong 13y ago
They are using the "instant exchange" feature of Coinbase: https://coinbase.com/docs/merchant_tools/payouts https://coinbase.com/docs/merchant_tools/payouts The USD price is locked in, and they never need to hold bitcoin. It is just a cheaper payment method.

woah 13y ago

Where's Dogecoin support? This is a major oversight on CheapAir's part, IMO

LukeWalsh 13y ago

I feel like a lot of these headlines lately are extremely gimmicky given the high volatility of bitcoin prices. These companies are just straight converting BTC back to USD which in the long run does nothing positive for true widespread adoption of bitcoin as a means of exchange.

drcode 13y ago
Baloney: If I buy an airline ticket with a credit card, my credit card info may get stolen- There seems to be a story about stolen credit cards in the news almost every week. With bitcoin, I can buy an airline ticket without this being possible.
- calbear81 13y ago
  But your credit card is almost always protected from financial liability if someone steals it and you report any non-authorized charges. With bitcoin, there seems to be no recourse when the exchanges get hit. This is not to mention that you are much better protected with a credit card due to the ability to contest a merchant charge if things go sour (you didn't get the product, it was defective, etc.) not to mention other benefits of credit.
  - codeulike 13y ago
    The overall cost of all the fraud-protection that credit cards have is quite large, and ultimately gets passed on to the consumer.
    - calbear81 13y ago
      Until more places give cash/bitcoin discounts, the overall effective cost to me as an individual is the same and even less with credit card once rewards are accounted for. I would like to think that less responsible card users are financing my rewards with their interest paid while those of us who use credit cards just like cash (pay in full every month) are gaming the system a bit.

kolev 13y ago

This is ridiculous! Some said the price of BTC dropped to overreaction to bad news. Well, a street vendor in UK starts accepting Bitcoin for burgers and price jumps above $1,000 in excitement (I'm kidding, of course). Talking about overreaction! Let's see some real commerce numbers, not marketing tricks to get more news coverage. I got tired of seeing everywhere in the news that one Florida guy bought a Tesla in California! With such volatility, you need to put a huge buffer in your pricing and only idiots and criminals will spend their BTC instead of paying with fiat in such case. There was some new about Indian business accepting Bitcoin then some Indian guy converted the price and showed Bitcoin price was x3 higher! If BTC is a currency, it should move up and down by no more than 1-2% (like a real currencies do) otherwise it cannot be used in serious commerce, period. At this point, Bitcoin, unfortunately, is a speculators tool. And if you invest in Bitcoin, don't forget, you're in the hands of the Chinese investors (kings of the panic sells) and the governments. Also, there are many fake news and incorrect interpretations of news about Bitcoin. Like some putting the wrong wording in Al Gore's mouth about Bitcoin when he meant something totally different or Snoop Dogg making a joke and people taking it seriously. If Bitcoin dropped 40% due to overreaction to no-so-bad news, imagine what will happen when really bad news come out! I believe in Bitcoin, but I cannot tolerate the madness around the price. Even if you use it as a speculator, your future medical bills will not be able to cover the profit you're gonna make - with such huge swings, the stress is way too much for the profits. Just try to imagine the Winklevoss seeing BTC dropping by 40% and tens of millions of their imaginary wealth disappearing in minutes! It's better to do margin trading with Forex - you can make even more with less stress. So, speculators, please, leave the Bitcoin land and move to Litecoin or other speculator playgrounds. Don't kill Bitcoin with your greed, please!

drcode 13y ago
This recent volatility is mainly due to uncertainty about government responses to bitcoin: The price when up when the Congressional hearings were positive, and went down when the Chinese government announced restrictions on bitcoin use. Eventually, most governments will clarify their position on bitcoin and volatility will decrease.
- 13y ago

colinbartlett 13y ago

I've used this to buy tickets and it was an incredibly easy process. Really, buying anything with Bitcoin is pleasurable experience... even simply to not be beholden to any bank to send money is amazing.

markkat 13y ago
I think it likely that this is one of those things that will slowly make the difference, and change people's minds about how financial transactions ought to be.
makira 13y ago
It's similar to watching only downloaded/purchased content versus watching the TV. Once you're used to having no advertisement, turning the TV on is very awkward with all the publicity. When using Bitcoin, not having to deal with all the road blocks and fees from banks is quite refreshing. Not having to ask permission to do what you want with your money is great!
apw 13y ago
You make a good point. It's easy for me to criticize Bitcoin from the standpoint of assuming it is the official currency of some country, or the world's only currency. However, in so doing I am unintentionally ignoring the much more relevant and likely possibility: that Bitcoin doesn't take over the world, but is simply so easy and useful for the cases you described that it "just" becomes the "Internet's currency". This softens my criticisms of how a deflationary currency carries risks, since in this scenario Bitcoin is continually being converted to and from other currencies.

pdq 13y ago

Please don't upvote a 2 week old article, and especially one with little actual content other than a "rah rah Bitcoin!" message.

gress 13y ago
rah rah Bitcoin!

possibilistic 13y ago

Does anyone know how these guys are processing Bitcoin? Are they using Coinbase or another processor? (Would it be feasible to roll your own transaction handling?)

dmnd 13y ago
They're using Coinbase: https://coinbase.com/docs/merchant_tools/examples https://coinbase.com/docs/merchant_tools/examples

SilasX 13y ago

Gee, this isn't a direct route to "extra TSA attention" or anything ...