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Comment by LukeWalsh | Hacker News Reader

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.

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If Bitcoin is going to succeed, it will do so in a series of incremental improvements.

There is no way for a complex technology like this to pop up fully formed - decentralized, cryptographically secure, stable in price, with a smooth user experience and universal adoption and acceptance. You are witnessing the initial stages.

Darwinian almost. Yet most of the negativity I've seen on HN over the years is because they can't fathom that it will happen "incrementally". Bitcoin doesn't necessarily have to be the best system to survive, it just needs to be good enough and reach critical mass. It's like PHP.

> 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.

That is truly an absurd statement. Following your logic, 10 million companies using bitpay to accept bitcoin "does nothing positive for widespread adoption of bitcoin" -- compared to say.. 0 companies using bitpay?

This is actually amazing for widespread adoption; it teaches companies how they can use bitcoin as a secure, chargeback free, negligible fee payment system without being exposed to volatility of the underlying asset (which speculators are quite happy to do themselves).

It actually is not an absurd statement if you take in to account the entire quote, "…as a means of exchange." 10 million companies using bit pay is good for raising awareness of the general public, and may in fact lead to more widespread adoption. However as a means of exchange the most important characteristic is value. These companies are intentionally not using bitcoin as a measure of value, which is the next major hurdle that the currency needs to overcome.

"To be widely acceptable, a medium of exchange should have stable purchasing power (Value) and therefore it should possess the following characteristics: value common assets, constant utility, low cost of preservation, transportability, divisibility, high market value in relation to volume and weight, recognisability and resistance to counterfeiting.

http://en.wikipedia.org/wiki/Medium_of_exchange

> a medium of exchange should have stable purchasing power

What's the problem with having a medium of exchange that actually gains value over time ? (which is the case of bitcoin). By the way your USD/Euros and other fiat currencies are actually losing value over time, and not just a little. Look at what you could buy 10 years ago with 100 dollars and today. Is that "constant utility" ? Not really.

Bitcoin can act as an intermediate currency, i.e. "local currency of the internet", while both parties in a transaction are actually immediately converting to/from their own currency using their whichever exchange they like. Or maybe they're holding Bitcoin. It doesn't matter to the other party.

Existing payment systems like credit cards sort of do this, but Bitcoin does it in a more decentralized way.

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.

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.

The overall cost of all the fraud-protection that credit cards have is quite large, and ultimately gets passed on to the consumer.

Sure. But I can pay Cheapair for a return ticket $1343 with my credit card and get the fraud protection or pay the exact same price at prevailing Coinbase exchange rates (plus mining fee) and not get the fraud protection. Or, in the example I picked at random, find whitelabelled $1008 or Scandinavian $1212 returns running the same search on Kayak.

Only a shill, or someone without a credit card, could argue that paying in BTC was an advantage in this instance.

Or someone holding an appreciating currency dodging capital gains tax.

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.

As a vendor right now it makes sense to accept bitcoins and immediately convert back with bitpay or equivalent because there is no risk, lower transaction fees, and you open up your business to selling to people who want to do business with bitcoins for a variety of reasons. Some crazy reasons, some more rational reasons, but it really doesn't matter because they have money and want to spend it in btc.

Also I suspect there is a lot of "new money" in bitcoins right now made up of people who got lucky as early investors but have little or no sense of money management and tons of disposable income. This group of people make up a very desirable customer segment. I expect we will see a lot of businesses selling luxury goods rush into the bitcoin space soon(Like people selling space trips that may or may not ever exist).

Technically, you owe taxes the moment you buy something with Bitcoins that have appreciated in value:

http://www.bitcointax.info/

(That says nothing about how many people actually report that though.)

Technically you owe taxes on online purchases.

Credit cards generally have merchant rules that prohibit higher prices for credit card transactions. As alternate paying methods get more common, there will be increasing pressure on credit card companies to loosen this restriction, since right now credit cards are by far the most dominant payment method online.

There's been some movement on this front since a lot of gas stations are already charging a different cash vs. credit price. http://business.time.com/2013/01/25/a-4-surcharge-for-using-...

Well, according to that article it appears that US law mandates that sellers are able to charge different prices. So I guess those merchant rules are no longer in place.

Yeah I wouldn't argue that BTC works out better at the moment. But one of the ideas mentioned in the original bitcoin paper was about reducing the costs of having trusted central parties, and the corrolaries of that. It has the potential to be a more efficient system overall. Maybe.

Yeah, but it gets passed on to the consumer whether or not they use credit cards.

Very few places charge an extra fee for using a credit card.

Honestly, I trust my credit card company more than most merchants I do business with. I'd rather have them be able to claw back the payment if something goes wrong. I think that I'm way more likely to be screwed by the other party in the transaction than I am by the trusted third party.

Plenty of places (in the U.S. at least) charge a credit card fee, or require a minimum transaction. Also, as the grandparent mentioned, the cost of processing credit cards gets inevitably passed on to the customer. There was an article a while back about a local business owner who had fought the necessity to process credit cards for years (http://www.oregonlive.com/portland/index.ssf/2013/07/northwe...). Businesses that don't process credit cards presumably don't have that cost to pass on, but could still accept bitcoin as a non-cash method of payment.

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.

Gyft.com gives 3% cashback if you pay in bitcoin at a variety of retailers.

"Cars are better than horses because then we don't have shit all over the streets"

"Yeah, but the shit isn't really so bad, you can often step around it, and we have a tax to pay people to clean it up. Therefore horses are just as good as cars."

I have no idea how your reply relates in any way to what you replied to, but in defense of credit cards, if my credit card is stolen I'm not liable for any charges and if the airline screws me over I can dispute the charge with my credit card company and get my money back. Paying with Bitcoins is like paying with cash - if someone steals the cash, it's gone, and the airline screws me over, I can't get my money back.

This is only true if you use the simplest Bitcoin transaction.

However, Bitcoin supports programmable m-of-n transactions, which enable highly nuanced levels of risk hedging.

I suspect that it is only a matter of time before Silicon Valley (and elsewhere) innovators realize this and start providing smooth "select your desired level of risk" services.

How does the seller hedge against currency risk? Given that BTC is very volatile and that it can be difficult to get USD or whatever currencies the carriers are accepting for tickets the reseller ( Cheapair in this case ) has to be able to ensure that they are getting tickets for an amount in BTC greater than the cost of the ticket in the target purchase at the time they ( Cheapair ) purchase the ticket from the airline. If they guess wrong and they charge you 2 BTC for a ticket to Malaysia, but the ticket would cost 2.6 BTC by the time they confirm the transaction with you and start buying the ticket from the carrier... they'll probably just refund your BTC and tell you to try again. If on the other hand your tickets would actually cost 1.8 BTC by the time they talk to the carrier; you paid too much.

Also nobody is going to sell you an anonymous airline ticket so, the benefit of using Bitcoin in this case is very dubious.

This is exactly the kind of fluctuations futures markets were built to cover for providers (airlines, farmers, global businesses, you name it). Unsure if there is a reliable BTC futures market in existence, but I gather it would extremely active and profitable for the market makers.

The spreads would be quite high at the moment, but the risk is high too and volumes are low.

Also, if you're already signed in to Coinbase you don't have to pull out a card and copy your CC info into a form. It's basically a 2-click checkout. I bought a $1,000 plane ticket using this last week in less time than it takes to order food from most sites online.

There are many tools that will save your credit card information and fill out payment forms automatically. I'm not so sure this is a great benefit of Bitcoin.

How does their refund process work should you need to cancel the trip? Do you get the nominal or real value of bitcoin back, or do you get the cash equivalent back?

I haven't bought an airline ticket in a decade that has been refundable for cash of any kind. Most airlines will take some massive fee and then give you a credit toward a future flight, if anything at all.

Alright, but the credit is typically equal to the dollar amount spent. How will they handle it for BTC? Will the credit be equal to the original BTC amount or the value in dollars?

That is, suppose you buy a 0.5 BTC (say at the time that's 500 USD) ticket. You need to change things, cancel for some reason. Do you get the credit as 0.5 BTC or as the USD value of the ticket at time of purchase (500 USD) or as the BTC equivalent of converting from USD at the time of the credit (which may or may not equal the original 0.5 BTC).

EDIT: Went to their site. Apparently refunds (in general, not BTC or USD specific text) are not typically available. When circumstances affect your plans you have to call to find out your options. Anyone have experience with their refund/credit options to comment?

I think this practice is a short-term solution. Every new company that starts accepting Bitcoin does help spread adoption. Eventually, it will mature and the price will stabilize, but this part is going to have to happen before we can get there.

I don't entirely agree. I see your point, but let's not make perfection the enemy of progress. The more vendors that take bitcoin, regardless of what they do with it after they receive it, the more viable the currency is. "Real People" want a currency they can spend. So the more vendors that accept bitcoin the more long term widespread adoption bitcoin will have. Which is what you want right?

If Bitcoin as a payment system (including exchange fees to give government fiat to the bank) has lower overall per-transaction fees than VISA, it's a win for adoption for this business.

I don't think so, it's Bitcoin's remittance potential starting to be realised. Converting BTC to local currency straight away is probably more profitable than just taking currency via traditional channels, there's a lot of fees and middle men involved in that process. Bitcoin helps reduce them.

Maybe the pain of exchange fees will start to push businesses to hold Bitcoin instead at some point?

Exactly! BTC has to become mean for exchange of some serious commodity, like rare metals, before being considered true money. Anyone heard of tech contracts between large companies valued in BTC?

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