
Square Market Accepts Bitcoin - peter123
http://corner.squareup.com/2014/03/square-market-accepts-bitcoin.html
======
abalone
This is a strange case for bitcoin, competing with credit cards. Most
consumers would be better off paying with a card: same cost (none), more
protections (the ability to dispute bad merchants over defective goods).

It's not a bad idea for Square to add it, since some people have bitcoins
obtained through speculation, mining, cheap money transfers, and so forth. But
even so, they would be a little better served paying by card, due to the extra
consumer protections they'd enjoy.

Where bitcoin makes more sense to me is in replacing cash. But that mostly
makes sense to me in the real world where you can inspect goods and whatnot in
advance of cash payments. (There's maybe some potential for it online in the
form of micropayments, where trust and protections don't matter so much.)

But for online sellers that already accept cards, I have yet to hear why
bitcoin reflects a better choice than cards for the consumer. Anonymity maybe?
For the average consumer, not worth the tradeoff in lack of ripoff protection.

 _Sellers_ would be better off, sure, but don't forget it's a two-sided market
and consumers are heavily incentivized to use cards. Most of those "high fees"
are funneled back to the consumer's pocket in the form of benefits and
rewards. It's a form of lock-in to the CC system.

~~~
lectrick
> Most consumers would be better off paying with a card: same cost (none)

Correction here: There IS a credit card cost, but it is billed to the merchant
_and passed along to the consumer by being built into product prices_. The
fact that you think it is "none" when it is merely "hidden" speaks volumes.

~~~
omegaham
In that case, a merchant would have to offer a discount in order to make
Bitcoin worth pursuing.

~~~
schrodinger
Don't the credit card companies require that you charge the same price for
cash or credit?

~~~
aianus
I believe it's ok to offer a discount for cash as long as you don't have to
pay more than the posted price when you use credit.

~~~
InXorWeTrust
Some gas stations allow you to pay for Diesel with cash at a discount. As a
side note, Flash Foods has a card you can get that uses ACH with your debit
account (I'm probably not saying that right). You get a flat $0.05 off of gas.
They claim it's because of credit card charges (and because ACH doesn't cost
them anything).

------
theswan
How is Square/Stripe getting around the issue that most exchanges wait for 6
confirmations before a transaction is accepted? Are they ignoring the risk of
a double spend and just going ahead once a transaction has propagated to the
network for mining?

~~~
gojomo
Probably. Unless you're working in concert with major mining power, it's still
hard to engineer a successful double-spend. And by pushing their preferred
observed transaction to major pools, Square _could_ help ensure a double-spend
can't succeed, or get a near-instant indication that a competing transaction
exists. (I don't know if they're doing this.)

It also looks like most 'Square Market' purchases take more than an hour to
deliver/ship... so the payment validity will be known before a hypothetical
fraudster benefits.

~~~
theswan
Makes me wonder - would we ever get to a point where it's in
Square/Stripe/Coinbase/et. al's interests to contribute mining power to help
their own transactions along? Or is that pretty much taken care of by
transaction fees?

~~~
gojomo
I suspect they'd just strike deals with existing mining specialists, if and
when necessary, perhaps even via out-of-band (non-Bitcoin-transaction)
exchanges of considerations.

------
tlrobinson
A not-insignificant group of existing payment processors / ecommerce platforms
are now supporting Bitcoin. Shopify, Balanced (sort of), Stripe, and now
Square. Am I missing any?

~~~
steveklabnik
Hey, Steve from Balanced here. Curious as to why you say 'sort of' for us: if
it's that we're in beta, so is Stripe.

(We're hoping to get out of beta in the near-ish timeframe.)

~~~
tlrobinson
Last I saw, you accepted Bitcoins only from Coinbase accounts. Until I can
directly pay with Bitcoins from my own wallet I consider that "sort of".

~~~
steveklabnik
Ahh gotcha. Yes, we believe that's a pretty important distinction. Fair
enough!

~~~
my_username_is_
What's the reason for this? Is it part of Coinbase's payment integration? I
don't recall any other websites doing this (although there's the possibility
that I simply haven't used other sites that also do this)

~~~
steveklabnik
There are a couple of reasons, actually. This will be a short version of
something I'm still in the process of writing, so consider this very high
level, broad strokes. Consider "Coinbase" a stand-in for any service like it.
I also know that lots of Bitcoin enthusiasts won't agree with me, and that's
fine.

The most important one is that merchants generally want USD, not BTC. Instant
Exchange is a really important feature of Coinbase, and so even if we did
support bare addresses, they would still be generated through Coinbase anyway,
because giving our merchants USD is killer. Since Balanced isn't interested in
getting in the business of holding and selling BTC, we'd need to do that
through some sort of service, and Coinbase is the biggest and best one.

Secondly, the UX for Coinbase-only payment is vastly superior to using bare
addresses. People are generally familiar with "sign in via Facebook," and
Coinbase's OAuth works the same way. Using a Bitcoin wallet to buy something
on a site is very strange until you've done it a few times. Enthusiasts will
know what's going on, just like any early adopter will. But for most cases,
Coinbase only is waaaay better.

Coinbase <-> Coinbase transactions have another special property: they can be
off-blockchain. I don't remember offhand if they are for all purchases, but
they are for microtransactions, at least. Coinbase can (could?) not wait for
the ten minutes to confirm a transaction, since they'd just be updating
balances within Coinbase itself. They could build options in that consumers
have come to expect, like chargebacks, holds, and other things, that the
protocol would not inherently have to support.

Next, we feel that Bitcoin is best thought of as cash. Like, physical, printed
notes. Websites don't actually accept USD, for example: they accept Visa,
which is a financial instrument that happens to be denominated in USD. You
can't mail a twenty dollar bill to most SaaS products: that'd be really silly,
for a number of reasons. Using bitcoin-qt is like paying with cash, and paying
with cash works great in some ways, but is a pain in others. Chargebacks, for
example, are an incredibly important part of the advantage consumers see in
using credit cards, and nothing like that exists with 'raw' Bitcoin in any
significant capacity.

I guess that could all be summed up with "Most people don't actually use cash,
because it's pretty inconvenient. They use a financial instrument on top of
cash, because it offers a bunch of advantages for online purchases. A
successful Bitcoin will be no different."

~~~
nathancahill
Sorry Steve, I have a lot of respect for everything you're doing at Balanced,
but wow.. everything about this is wrong.

1\. "Merchants generally want USD, not BTC". Coinbase supports BTC -> USD.
It's an exchange. You don't need to use their OAuth to convert BTC to USD.

2\. "The UX is vastly superior to using a bare address". If you're using
Bitcoin, you better know how to use an address. Not sure how that would be
confusing to anyone using Bitcoin. Most sites use bare address + QR code.

3\. "You can't mail a twenty dollar bill to most SaaS products". This is what
Bitcoin solves! People are using Bitcoin to get away from the credit card
paradigm. This is a broken implementation of "accepting BTC". You don't accept
BTC, you accept Coinbase.

~~~
steveklabnik
1\. Yes, I understand Instant Exchange is separate. This is about how we
wouldn't roll our own solution, _someone_ would be powering our Bitcoin
integration.

2\. Yes, as I said, if you know what's going on, it won't be weird to you.
That said, cart abandonment is a big problem, as is keeping checkout pages as
simple as possible.

3\. Again, this is where we'll have to disagree. You say "people are using
Bitcoin to get away from the credit card paradigm", but I say "people are not
using Bitcoin because it's too far away from the credit card paradigm." If the
Bitcoin community wants to grow outside of the fringe libertarian set, they'll
need to understand people's needs more and their dreams less. I myself stayed
away from BTC for years simply because of the rhetoric. People that aren't
inherently interested in cryptocurrencies aren't going to use them unless they
solve a problem they actually have.

~~~
hendzen
Regarding raw addresses, I would encourage you to look into the payment
protocol (BIP70). Once that is widespread (it is already implemented in some
wallets), the average BTC user will never have to worry about raw addresses,
without the downside of having to route everything through coinbase. As a
plus, the UX is IMO, better than that of typing in a CC number.

------
johncoogan
Does anyone have an opinion on why the price of Bitcoin doesn't seem to move
on news like this? It seems significant in my opinion and I would think that
wider acceptance would lead to a higher price, but that hasn't been the case
over the past few weeks / announcements.

~~~
Lerc
It seems to be following a repeating pattern.

* Bitcoin builds infrastructure.

* People notice bitcoin isn't going away

* Media says Bitcoin will make everyone Gazillionairres

* Bitcoin skyrockets until infrastructure comes under strain.

* Something involved with bitcoin breaks

* Media(not neccisarrily the same media) says Bitcoin is all over, and everybody will lose their bitoin, their home, and their dog.

* Price drops.

* Bitcoin builds infrastructure.

* People notice bitcoin isn't going away

We seem be going into the build infrastructure phase. That's where genuine
value actually gets added, and doesn't actually stop at the other times, It's
just when the craziness is going on it's hard to see from the noise.

~~~
ycombasks
> * Bitcoin skyrockets until infrastructure comes under strain.

Source? Unless you consider the failure of Mt. Gox an "infrastructure"
problem, then this is not the case.

~~~
acchow
It's hard to see how that wasn't an "infrastructure" problem. Mt Gox was the
largest BTC exchange - an integral bridge from old world to BTC world.

------
rdl
Sort of starting to feel like all the crappy Bitcoin-specific businesses are
about to get replaced by their "normal" equivalents who will just suddenly
start taking Bitcoin. Much less disruption than new privacy/security/anonymity
focused companies who were early Bitcoin adopters replacing old institutions,
but much more likely to actually work.

Kind of the equivalent of NYT becoming a major website for news, rather than
something organic to the Internet becoming the main news site of record.

~~~
tych0
I don't really think this is a problem, though. The point of bitcoin is not to
distrupt businesses, it is to disrupt traditional currencies. That traditional
businesses are accepting it is a sign of good, not bad.

~~~
rdl
I agree that it's a sign of maturity and success for Bitcoin itself; it's just
not a great sign for people who invested in Bitcoin-specific businesses.

A great position right now would probably be "products and services to help
service providers integrate bitcoin into their core products". Simple merchant
integration is one thing, but more in-depth integrations would be interesting.

------
blhack
Looks like this is only for square market stuff right now.

Any clues on when this will get pushed out to mobile clients? Because that
will be absolutely huge.

[https://squareup.com/market](https://squareup.com/market)

------
DigitalSea
It'll be interesting to see if this announcement actually helps increase the
price of Bitcoin which has taken a few hits over the last few months due to
countless exchanges being hacked and collapsing (one of those being Mt Gox),
to the IRS's announcement proclaiming Bitcoin is property not currency and
other bumps in the road.

Initial indications seem to suggest this far the announcement has done little
to raise the price of Bitcoin. Time will tell and I personally think this is a
great step in the right direction, eventually even Paypal will allow you to
accept Bitcoin, it is only a matter of time.

------
jusben1369
When Bitcoin's are converted to a fiat currency that's now a taxable event
correct? That's when the gain or loss is "realized" So if you pay in Bitcoin
and the platform/processor immediately converts it into $US to pay the
merchant does that create a taxable event for the seller? I suspect people
would like to pay in Bitcoin to a merchant who accepts and keeps it in Bitcoin
so that a gain is not realized and no taxable event occurs. But really am
curious/scratching head/not sure.

~~~
natrius
I believe the taxable event is exchanging Bitcoin for something that isn't
Bitcoin. Even if the merchant holds on to the Bitcoin, a gain has been
realized.

~~~
jusben1369
Got it. So that makes sense. If I pay someone in 100 shares of Google vs $US
for a service I no longer own the shares but have transferred them to someone
else and would be on the hook for the gain or the loss.

~~~
7Figures2Commas
This is perhaps the most useful way of looking at Bitcoin today. Now that the
tax treatment of Bitcoin has been established, using Bitcoin as currency makes
about as much sense as using stock as currency. In other words, it doesn't.

~~~
natrius
Can I transfer stock to you with three taps on my phone? Bitcoin makes far
more sense than stock as currency, especially if higher sustained demand
reduces fluctuations in value, which isn't typical for stocks.

~~~
7Figures2Commas
Based on your comment, I would guess that you have never had to file a long
Schedule D. Accurately tracking your short and long term capital gains and
losses is not always as straightforward as it might seem, especially when you
have lots of transactions. Additionally, there are often associated matters
(such as carryovers) that you wouldn't want to address without the assistance
of a qualified professional. Unless you're an investor/trader who is familiar
with these issues and has enough money at play to make it worth your while,
the hassle, costs and liability that could arise should you make a mistake are
going to quickly eliminate the utility of using Bitcoin over USD.

Additionally, you need to look at this from the perspective of a merchant. The
average merchant has expenses denominated in US dollars and accepts payment in
US dollars. There is no FX risk. Bitcoin changes that. Do you honestly believe
that the average merchant is equipped to manage FX risk, or has any appetite
for FX exposure in the first place?

Please note that volatility is a red herring. Volatility has no bearing on the
costs associated with tracking capital gains and losses (you need to
accurately track your transactions regardless), and while the level of
volatility will certainly impact _how_ you manage FX risk, low volatility
doesn't mean that there is no risk to address.

~~~
natrius
Merchants don't need to expose themselves to FX risk to accept Bitcoin. Square
does that for you, as do Coinbase, Bitpay, and similar companies.

I don't think the tax issues will be prohibitively complicated for consumers.
Whichever exchange someone uses to buy Bitcoin and whatever app they use the
spend it can easily generate the necessary paperwork. The companies have
hundreds of millions of dollars on the line that require Bitcoin to be easy to
use. They're going to do it.

~~~
7Figures2Commas
> Merchants don't need to expose themselves to FX risk to accept Bitcoin.
> Square does that for you, as do Coinbase, Bitpay, and similar companies.

Allowing your payment provider to handle currency conversion for you does not
mean that you have eliminated FX risk. You have simply outsourced it, and you
(and in many cases your buyer) almost always pay for this.

> I don't think the tax issues will be prohibitively complicated for
> consumers. Whichever exchange someone uses to buy Bitcoin and whatever app
> they use the spend it can easily generate the necessary paperwork.

I suspect you've never had to file a tax return with a significant number of
transactions involving capital gains and losses. There are often associated
matters, such as carryovers, that the average person will need the services of
a tax professional to address.

As for the notion that somebody is going to do the paperwork for you: the
nature of Bitcoin makes the generation of the paperwork you refer to
incredibly difficult.

Currently, when dealing with securities like stock, brokers must provide you
with a 1099-B which reports information about the transaction, including the
cost basis and sale proceeds. If you transfer securities between brokers, the
broker transferring your securities is required to report the cost basis data
to the receiving broker.

To the best of my knowledge, Bitcoin is not a covered security for which
institutions must provide a 1099-B, so no third party is obligated to provide
you with accurate records. More importantly, it may be impossible for third
parties to do this for you. For instance, consider this hypothetical yet
almost certainly common transaction scenario:

1\. I buy 1 BTC using Provider A.

2\. I transfer .5 BTC from my account at Provider A to a local wallet housed
on my computer.

3\. I later transfer that .5 BTC to Provider B.

4\. Using Provider B, I send the .5 BTC to a merchant.

In Step 2, Provider A will be faced with the challenge of determining whether
my transfer of .5 BTC represented a sale for tax purposes. It should not, as I
was transferring the BTC to myself. But how does Provider A know who I
transferred the BTC to?

In Step 3, Provider B has no way of obtaining my cost basis and in Step 4, it
is faced with the challenge of determining whether or not the transfer of .5
BTC represented a sale for tax purposes. How does it know that I wasn't
transferring the .5 BTC to myself?

Now imagine this across _n_ wallets, including desktop wallets, and with lots
of fractions of BTC. You're going to be investing a lot of USD in
bookkeeping/accounting.

Bottom line: I can't for the life of me imagine why anybody who actually
understands the implications of this would ever use Bitcoin as a currency
going forward. As far as I'm concerned, it makes absolutely no sense except as
a vehicle for investment or speculation.

~~~
hibikir
Having to treat it as a stock or a commodity makes it a bad currency, but it
was already a bad currency due to volatility. Using a currency that has major
deflation is just as silly as using one that has major inflation.

A currency's utility is directly linked at how many people use it as a unit of
account, and it's really hard to become people's real unit of account when
your value changes a lot, and is unpredictable. Just look at Argentina during
the crisis: Even when taxes in the country were paid in pesos, people really
used the US dollar as their unit of account.

------
aledujke
I know this is offtopic... but I recently emailed the squareup's support over
an issue that got me really mad at their development team (or whoever is
reponsible). I was trying to buy some elementary OS stickers as I've been
using it for over a year now and I'm extremely happy with it. Turns out you
cant order anything from squareup if you are accessing outside of US. What
made me write to their support is that there is no notification about it when
you try to buy a product. It just shows you "add product to list" button but
hides "buy" or add to cart button and does not display any info on why the
buttons are missing. I mean... if you implemented a solution that detect non
us ips and made an effort to hide the buy button... at the very least put some
notification in there. Sometimes I really cant understand stuff like this >.>

My first post here is a rant... dang it.

------
battani
Good to see. Businesses that offer marketplace services should have no
objection to integrating bitcoin as a payment option. It does not deteriorate
the merchant or consumer experience (regardless of whether or not they use or
hold bitcoin), so they have nothing to lose, and all to gain.

For Square, it's just an extra payment method that they're hoping will help
their merchants (and them) tap into the very small percentage of evangelistic
early adopters who have made large gains and are now willing to spend some of
their coins.

Square is most probably _not_ a supporter of the vision of bitcoin taking over
e-commerce payments. Most of their business stems from partnerships with large
credit card companies. This is a pure (and smart) marketing play.

~~~
marcell
No need to speculate on their motives, Jack Dorsey explains them here:
[http://www.youtube.com/watch?v=0zJe4PUVx3c](http://www.youtube.com/watch?v=0zJe4PUVx3c)

------
goeric
Curious if they are going to take a lower transaction fee on Bitcoin payments
as opposed to credit card purchases. They really should.

~~~
blhack
Why? They are incurring a potentially-substantial risk in facilitating the
transaction for you, as well as providing the infrastructure for you.

That's why CC fees exist, and that's why people providing bitcoin-related
services should be able to charge fees too.

~~~
foobarqux
Because otherwise people will just stick to credit cards?

------
markhall
It's great to see the adoption of bitcoin payments by major players like
Square and Stripe! Super exciting

~~~
SilasX
Next milestone: for me to stop confusing the two...

------
fyresite
Companies like Square and Stripe making it easy to pay with Bitcoin will have
a huge affect on whether the general population accepts the cryptocurrency.

------
finnn
So has the Square app been banned from the Apple App Store yet?

EDIT: I guess if its just the square market, which is just a website (I
think).

------
kimonos
I find it cool!

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zabcik
Umm... April fools?

~~~
socmoth
Is not an april fools joke. Was a hackday project that turned cool.

------
huslage
This has to be an April Fool's joke.

