
BitPay's New Plan - josu
http://blog.bitpay.com/2014/07/29/bitpay-s-new-plan-free-unlimited-forever.html
======
bitcoinnerd
2 things I am thinking:

1\. If Bitpay was making a lot of money on payment processing, would they have
gone to free forever? No!

\- The reason is payment processing does not generate much cash! Certainly
nothing that can support a 60 person team that bitpay has.

\- There is very little bitcoin payment volume and not expected to be much in
the near future. Honestly, despite how much press coverage it gets whenever a
merchant accepts bitcoin. No one is doing big volume through bitcoin.
Certainly not at a volume that is meaningful to a processor.

\- Bitpay says they processed 100m in transaction last year. That is false.
Bitcoin price was around $100 most of the year. And in December it went to
$1000/btc. And so they took $1000 and applied that to all the sales throughout
the entire year

\- They recently have a massive change in strategy when Tony Gallipi stepped
down as the CEO and Stephen Pair became the CEO (original CTO). This is
important, because since then the strategy became open source focused (very
much like Redhat for bitcoin)

2\. Bitcoin payment processing has incredibly low barrier to entry.

\- Unlike visa and mastercard which has massive barrier to entry. Vanilla
Bitcoin payment processing really just involves less than 100 lines of code.
Like

Step 1: Use BIP32 to safely and securely accept payments (Keep the private key
offline and derive addresses using the master public key on the server).

Step 2: Write a little script to run locally to hook up to a API to sell the
bitcoin. Voila, you have basically got bitpay.

Like many other internet based service, the fees eventually trends towards 0.
Unfortunately, monetization of bitcoin payments is going to look very
different than the traditional visa/mastercard/paypal model and it cannot come
from vanilla fees alone.

Because what used to be proprietary network/technologies has been mostly
replaced by the bitcoin protocol itself. And so value has to come from
somewhere else.

~~~
mrb
Your post is full of conjectures, outlandish claims, and of course no data to
back any of them... "not expected to be much volume" \- seriously? BitPay is
seeing an insane growth:
[https://news.ycombinator.com/item?id=7974197](https://news.ycombinator.com/item?id=7974197)
\- And on CNBC Stephen Pair recently said BitPay gains 500-1000 merchants
every week:
[http://www.youtube.com/watch?v=f8YSivdLKf0](http://www.youtube.com/watch?v=f8YSivdLKf0)
Claiming they lied about doing $100 million in 2013 (this rumor is apparently
being spread by a few anti-Bitcoin reddit posters...) is equally ridiculous.
BitPay is currently processing $1 million/day in sales:
[http://finance.yahoo.com/news/bitcoin-payments-pioneer-
bitpa...](http://finance.yahoo.com/news/bitcoin-payments-pioneer-bitpay-
raises-100000393.html)

BitPay has 30,000 merchants, and sells 2 plans on top of their free service:
business and enterprise. Assuming 1%-5% of their merchants are subscribed to
their business plan ($300/mo), and assuming the enterprise plan price is sold
for 5x this value (negotiable, on average) but attracts only 1/5th the number
of business plan customers (so 0.2%-1% of merchants paying $1500/mo), then it
would give BitPay between $2.2 million and $10.8 million of revenue per year.
$2.2M would not make BitPay cash-flow positive, but $10.8 would certainly do
it. In that case it is a no-brainer that they would make their basic service
free: they would entice merchants to give BitPay a shot, and BitPay would
profit from the small percentage who later decide to upgrade to a business or
enterprise plan.

------
donretag
Remember usa.net/netaddress.com?

"With USA.NET® Net@ddress®, ... have one email address for the rest of your
life for free!"

[http://web.archive.org/web/20001218082700/http://usa.net/per...](http://web.archive.org/web/20001218082700/http://usa.net/personal/)

I'm not buying into free + forever.

~~~
mastermojo
Well, free for as long as the company is around. For the next couple years: Do
you expect Google (search) to be free? Facebook? Mongodb?

Companies can build successful businesses around not charging for the core
service.

~~~
nly
Saying Google and Facebook have built successful businesses around free
services is like saying dairy farmers have built successful businesses around
offering cows free grass.

~~~
alistairjcbrown
That's a great analogy!

------
josu
From reddit[0]:

> _Hey, everyone! This is BitPay. We know you have a lot of questions so we
> 'll be doing an AMA at 12:00PM EST (today) on r/Bitcoin_

[0]
[http://www.reddit.com/r/Bitcoin/comments/2c510m/bitpays_new_...](http://www.reddit.com/r/Bitcoin/comments/2c510m/bitpays_new_plan_free_unlimited_forever/cjbzfdz)

~~~
josu
The actual AMA:

[http://www.reddit.com/r/Bitcoin/comments/2c5f1l/bitpay_here_...](http://www.reddit.com/r/Bitcoin/comments/2c5f1l/bitpay_here_excited_to_announce_zero_processing/)

~~~
opendais
Thanks!

------
rhino369
I'm sure they are just hiding the fees in the exchange rate. Which could be
much more than 1% or whatever they were charging.

~~~
pmorici
A user on Reddit checked out the exchange rate spread between them and
Coinbase and found was about $1. That is about 0.17% at the current prices. An
incredible deal by any measure.

~~~
rhino369
Almost too incredible. They must dump the coins on the market right away to
less volatility risk.

Did they check the exchange rate for buying on Coinbase or selling. Coinbase
might be playing with the exchange rate too.

~~~
wcummings
>They must dump the coins on the market right away to less volatility risk.

If they had any reasonable volume wouldn't it make more sense to stagger their
selling? On a long enough timeline it'd probably even out, especially if they
did something more clever than "sell X% every Y minutes"

------
crxgames
This is fantastic news. I just setup my online store to support Bitpay last
night! Can't wait to see how this turns out. Even if they end up charging a
percentage, paypal/stripe are almost 3% so anything less than that is great.

------
pbreit
Rant: blogs lacking links to the company's web site (towards the top) are
annoying.

------
twodayslate
They are planning on making their money thru their Business and Enterprise
plans

[https://bitpay.com/pricing](https://bitpay.com/pricing)

~~~
bitcoinnerd
I don't buy it.

How much money are they going to make from those plans? A grand here and there
from the big clients and a hundred bucks from the small clients?

Their annual run rate is at least 6-7 million dollars a year if not more.

I think this is just part of a greater shift in strategy in focusing on
becoming the redhat for bitcoin. And thus opening up all their payment
processing tech for free.

Pure speculations, but I will not be surprised if they eventually open source
their core payment processing as well.

------
StavrosK
Can someone explain what this is, exactly? Is it a fee-free way for people to
accept Bitcoin on their site/shop?

~~~
natrius
It's a fee free way to effectively accept Bitcoin as debit cards. The local
currency value of the transaction is deposited in the merchants bank account.
The merchant never needs to care about exchange rate fluctuations.

There's really no reason for a merchant not to accept Bitcoin at this point.

~~~
StavrosK
Ah, thanks, so it's like Coinbase's Bitcoin thing, except with no fees. Very
nice.

I don't much understand why people worry about the "free forever" part,
though. Surely, if they become too expensive, you can just switch?

~~~
wmf
I don't know if people are actually worrying or just bragging about how
cynical they are. The whole "don't pretend you wouldn't sell out" thing is a
HN cliche at this point.

------
wesley
Very nice, does anyone know if they'll ever accept anything other than
bitcoin? Altcoins like NXT etc?

~~~
wyager
Why would they bother? The transaction rate (in USD/time) is microscopic in
altcoins.

~~~
mapleoin
> The transaction rate (in USD/time) is microscopic in altcoins.

I believe the word you're looking for is liquidity.

~~~
wyager
I'm no economist, but isn't it possible to have an illiquid market despite
high volume?

------
ericcholis
Anybody have reading for a merchant evaluating Bitcoin as another payment
option?

~~~
walden42
Read up some articles from Coinbase or Bitpay. You can also contant Bitpay
with any questions you may have and I'm sure they'll be able to help you. Also
feel free to ask me anything, as well, and I'll try to help you out.

------
kakashi19
the part scares me the most - "Free Forever"

~~~
Istof
maybe that means that they plan to sellout

