
Expedia Starts Accepting Bitcoin for Hotel Bookings - peter123
http://blogs.wsj.com/moneybeat/2014/06/11/expedia-starts-accepting-bitcoin-for-hotel-bookings/
======
vijayboyapati
It's interesting to think what announcement like this have in aggregate on the
price of bitcoin. Counter-intuitively the price of bitcoin should face
downward pressure as merchant adoption of this sort increases. Expedia doesn't
hold any of the bitcoin they receive. The bitcoins are instantly converted to
dollars on a market exchange. This means that holders of bitcoin, especially
those who are sitting on large capital gains, now have a new outlet to realize
their gains.

On the other hand merchants who choose to accept bitcoin using Coinbase (or
Bitpay) and who also choose to keep some fraction of their profit in bitcoin
(thereby exposing their profits to currency volatility, which may even be a
good thing for growth of their profits) will tend to increase the market price
of bitcoin.

Overall it seems like most merchants accepting bitcoin are not holding any of
the bitcoins they accept. It would be great to see more merchants choosing to
keep some fraction, however small, in bitcoin itself.

~~~
notahacker
I suspect that, arguably more counter-intuitively, it will push the price up,
fed by increased speculation due to apparent signs of Bitcoin "going
mainstream" that will far exceed any actual Expedia transactions taking place.

I'm more intrigued by the commercial decision from Expedia's perspective.
Presumably they've done a back of the envelope calculation and decided "group
of people more likely to pick Expedia over other OTAs if they can use Bitcoin"
> "group of people that will be sufficiently confused by an additional payment
option to abandon their cart"

~~~
scoot
> I'm more intrigued by the commercial decision from Expedia's perspective.

I suspect pure marketing. A mainstream player announcing support for bitcoin
is still newsworthy. In another year, probably not so much as there will have
been a series of such announcements by then.

Even if they don't do a single bitcoin transaction, the coverage and back-
links will more than cover the cost of integration, and any resulting bit coin
transactions (that don't replace a more traditional form of payment) are
upside.

~~~
marincounty
Yea--some Harvard MBA making a name for themselves? I wish I wasn't so
cynical. I sincerely hope crypto currencies annihilate the credit card
industry. I guess any publicity is good publicity?

~~~
sillysaurus3
_Yea--some Harvard MBA making a name for themselves? I wish I wasn 't so
cynical._

It's not cynical. Accepting bitcoin as payment isn't beneficial right now.
There's no benefit for merchants, because it's instantly converted back to
traditional currency. There's no benefit for consumers, because consumers have
to buy bitcoin in order to spend bitcoin, and buying bitcoin means consumers
have to manage their own wallet or store their money in a third party service
that can fail or steal their money at any time.

The singular benefit is the publicity your business gets by accepting bitcoin.
In other words, bitcoin is trendy.

This isn't a dismissal of bitcoin. History has shown that trends are a
powerful force. If it achieves a kind of critical mass, then that will open up
other avenues for bitcoin to become useful. But in the meantime, be assured
that your gut instinct of "there doesn't seem to be any reason to accept
bitcoin except publicity" is spot on.

As an aside, I think these announcements won't affect the fundamental price of
bitcoin. They'll cause fluctuations, but not any long-term rise or fall. The
price of bitcoin is driven by speculation. It always has been, and always will
be. The fundamental price at any given time is due to speculators with large
amounts of bitcoin who place large buy orders in hopes of getting _other_
speculators to place large buy orders, then they sell. From a game theory
point of view, if a bunch of gamblers all place large buy orders, the first
gambler to sell stands to profit, and the other gamblers will lose out. You
can see the evidence of this at any time:
[http://i.imgur.com/SYHhSCv.png](http://i.imgur.com/SYHhSCv.png) ... A gambler
buys a bunch of bitcoin, which causes other gamblers to buy a bunch of
bitcoin, which lets the first gambler sell off their position and make out
handsomely.

There's no long-term speculation going on. Or, if there is, then the long-term
speculation is being done by a few dozen people with massive bitcoin holdings.
No one else's speculation is a significant price mover.

It's true that the market responds to announcements, but it's not true that
the market price is driven by announcements. They just serve as a trigger for
gamblers to initiate gambles. Hence, I don't think the fundamental price will
shift very much; what shifts the price is when large players enter or exit the
market, which happens much more rarely than announcements do.

~~~
wwwtyro
> Accepting bitcoin as payment isn't beneficial right now. There's no benefit
> for merchants, because it's instantly converted back to traditional
> currency.

I see two advantages: 1) They get their name in the news (and in consumers
minds), and 2) they get the bitcoin spenders that they may not have otherwise
(an admittedly small bump at the moment, but a bump nonetheless and at
virtually no cost).

~~~
sillysaurus3
_2) they get the bitcoin spenders that they may not have otherwise (an
admittedly small bump at the moment, but a bump nonetheless and at virtually
no cost)._

I'd love to see evidence of bitcoin spenders. So far, they haven't been:
[http://blog.samaltman.com/bitcoin-price-
pressure](http://blog.samaltman.com/bitcoin-price-pressure)

 _I hear from merchants who start taking bitcoin that after an initial spike
they see almost no volume._

The above quote fits with my experience as well, though my sample size was a
single merchant. I noticed they were accepting bitcoin, so I sent a
congratulatory email and got a response along the lines of, "Surprisingly, no
one at all has bought my product using bitcoin! Maybe that will change in the
future..."

------
avd74
When I first read this I thought, why would they start with hotels? may be
because the big profit they make out of reservations?

Then I remembered what an accountant friend once said to me: "Hotels are big
portals between the black and white worlds".

So you may have black money in bitcoins (and a Hotel which is your "legal
business"), and want to "wash" it? now you can do it through Expedia (they
having a bite in the process, hence their motivation).

~~~
malandrew
Makes sense, but I'd love to here more on this. What features of hotels makes
them particularly good portals between the black and white worlds.

~~~
volker48
Hard to prove how many people actually stayed in the hotel would be my guess.
Other businesses like restaurants have inventory so you can't as easily make
it look like you made a great deal more money than you actually did.

~~~
seizethecheese
This idea is really seductive. Wouldn't it be kind of hard/traceable to fake
bookings though? It seems like strip clubs or some sort of service company
would be better.

------
doctoboggan
The common thread in many of these announcements seems to be coinbase.

~~~
jwcooper
Does coinbase sit on the Bitcoins, or turn around quickly and convert to USD
somehow (where?)?

Holding thousands of bitcoins as a startup seems like it would introduce a lot
of volatility, even if the long-term prospects of bitcoin are good (still need
to pay the employees).

~~~
broolstoryco
Coinbase has an account on bitstamp where they hedge their net position. In
times of high demand for btc, it sometimes happens that they run out of fiat
on bitstamp and cannot process orders instantly.

~~~
brador
What happens if bitstamp follows mtgox?

~~~
mrb
Probably nothing. At worst Coinbase would only lose the fraction of their
USD/BTC holdings that they have stored in Bitstamp, but they would continue
business as usual.

Coinbase could abandon Bitstamp if they wanted to, since they have their own
customers selling and buying coins (therefore providing a supply of coins, and
a way to liquidate them). And Coinbase also trade coins on multiple other
exchanges (according to their claims). This makes their overall Bitcoin
trading activity decentralized with no single point of failure.

------
rmason
Well it seems that Expedia did a great thing by allowing you to use Bitcoin to
pay for hotel bookings. So that means I don’t need to use my credit card any
longer when I check into the hotel?

Not exactly:

[http://www.reddit.com/r/Bitcoin/comments/27vc4x/expedia_star...](http://www.reddit.com/r/Bitcoin/comments/27vc4x/expedia_starts_accepting_bitcoin_for_hotel/)

If you read down in the comments you see hotel workers saying they will still
apply a 2X block on the daily rate of the room to your credit card, even if
you've paid for the room with Bitcoin. A block that can take up to two weeks
to be released.

Obviously the standard hotel procedures will need to be revised but until then
Bitcoin buyer beware ;<(.

Rick

~~~
jpatokal
Think of it this way: you're paying by Bitcoin, but you're guaranteeing that
you won't drink the minibar dry or trash the room with a credit card. This
won't change until there's a well-established Bitcoin credit facility.

------
kleer001
This seems good. But at the heart of it I fear it defeats the whole point of
Bitcoin the payment system. Why? I thought the whole point of Bitcoin was to
create a decentralized payment system. And here is Coinbase (or Bitpay)
becoming centralized payment systems...

~~~
jordigh
Yeah, I hear you. I am hoping they are just crutches to bootstrap bitcoin
adoption. If bitcoins become popular, perhaps we can lose the crutches. Or
perhaps we'll have tons of competing escrow businesses.

What is it with humans' tendency to centralise anyways? Here is democracy...
now here's an all-powerful president and congressional oligarchy. Here is the
industrial revolution to facilitate transportation of goods all around the
countryside... now here are the giant megalopolises in which most of us now
live. Here is the internet... now here's Gmail, the single location to email,
and Facebook, the single location to put all of your personal data. Here are
DVCSes... now here is github, a place to centralise all of our DVCS work.

Maybe there's just something fundamentally ingrained in human psychology that
makes us converge like this.

~~~
yen223
> What is it with humans' tendency to centralise anyways?

I think it's less about human psychology and more about managing efficiency.

A well-run centralized system will always be more efficient than a well-run
decentralized system, by virtue of having less overhead. Whether it's overhead
from arranging logistics to one large city, instead of a hundred small cities,
or overhead from interacting with one large federal government, instead of 50
small state governments.

~~~
baddox
> A well-run centralized system will always be more efficient than a well-run
> decentralized system, by virtue of having less overhead.

That's a circular definition, unless you have some objective way to measure
how "well-run" a system is other than just measuring its efficiency.

------
kolev
Expedia accepts Coinbase, not Bitcoin. This is no different than accepting
PayPal. Did you pay with PayPal balance, credit card, or bank account - it
doesn't matter. You implement PayPal APIs and you receive dollars from PayPal.
The rest is just speculation, but seems that price is dropping as "acceptance"
like this can only lead to selling pressure if it ever gains any traction, of
course. I'm really surprised all these merchants implementing Bitcoin for the
PR, but confusing their checkout routine. The path to checkout should be as
short as possible with as little decisions to be made along the way. Any
distraction can lead to abandonment. Is the cheap PR all worth it? I
personally doubt. It's obvious that the general public is not interested in
Bitcoin and is, in fact, getting bored. I keep polling non-techie friends, the
common theme is "Bitcoin is a scam". Even most tech people aren't much
interested except the small share who invest in stocks, i.e. the speculator by
nature.

~~~
bequanna
> It's obvious that the general public is not interested in Bitcoin and is, in
> fact, getting bored.

Do you have any proof to backup this statement?

Bitcoin related growth abound. The number of My Wallet Users has doubled in
the past 6 months.

[http://blockchain.info/charts/my-wallet-n-
users](http://blockchain.info/charts/my-wallet-n-users)

~~~
kolev
Also, I'm sure there are speculators running scripts to generate new wallets
and pump the bubble further.

~~~
bequanna
>Also, I'm sure there are speculators running scripts to generate new wallets
and pump the bubble further.

That sounds like pretty strong, objective evidence. /s

There are Bitcoin bulls and bears. Nothing wrong with being either. But, if
you're going to make claims, at least have facts to back them up.

~~~
kolev
I can't prove it as I'm not the NSA. We're not in court anyway - heuristics
here is totally acceptable.

What I proposed was solid - after all the Bitcoin theft recently, many learned
to use hot/cold wallets, not split holdings in several wallets, etc.

------
stevehawk
Has there been much talk about how stores using Bitcoin reduces the anonymity
of Bitcoin by tying IDs in the transaction of acquiring that coin to the
person that ultimately uses it?

I'm sure the uber nerds were already aware of this but has it been brought up
enough that the general community thinks this through? One booking on Expedia
and you've revealed any possible Silk Road or other curious transaction you've
ever made, right?

~~~
jordigh
How does this work, exactly? I use a unique address each time I receive
bitcoins. Then I sometimes move money between more unique addresses in
plausible-looking ways. I always use Tor for talking to the bitcoin network.

How easy is it to de-anonymise me?

~~~
jmhain
See the two heuristics in this paper for creating clusters of bitcoin users
[0].

The first (and rather obvious) one is to cluster all inputs of a transaction,
so if you use A and B, and later use B and C, we now know the same user owns
A, B, and C and only need to tie your identity to one of them.

The prior one is rather weak, and could be avoided by consistent usage of
unique change addresses. Thus, the second heuristic works to reveal which
output is the change address. There are various ways of performing this
prediction, some more deterministic than others. A pretty conservative and
reliable one, described in [0], assumes an output is a change address if it
(1) is the first appearance of the address, (2) the tx is not a coin
generation, (3) there is no self-change address, and (4) #1 is only true for
this address.

There is an open-source implementation of these ideas called BitIodine [1,2]
(albeit with slightly different criteria for change-address identification,
including an off-by-one error in bitcoin core that caused the first output to
always be the change address in a 2-output transaction until it was fixed in
early 2013). Punch in one of your addresses and see what it comes up with.
However, I may have found a bug that reduces input-clustering, so if it
doesn't find your addresses don't get too excited.

Also, don't forget about the recent technique for de-anonymizing coin mixing
transactions [3].

[0]
[http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf](http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf)
[1]
[https://github.com/mikispag/bitiodine](https://github.com/mikispag/bitiodine)
[2] [https://bitiodine.net/](https://bitiodine.net/) [3]
[http://www.coindesk.com/blockchains-sharedcoin-users-can-
ide...](http://www.coindesk.com/blockchains-sharedcoin-users-can-identified-
says-security-expert/)

------
pistle
The common thread is coinbase creating a low-friction opportunity for
merchants to accept another form of payment, but to be paid in - most likely -
USD as far as they are concerned.

This does nothing to disperse bitcoin into many little places. In other words,
accepting bitcoin by online merchants everywhere doesn't make many people want
to go trade fiat for a volatile currency with all the inconveniences inherent.
You need a frictionless means and stimulus for many swathes of people and
organizations to accept and _hold_ BC instead of wanting fiat conversions
immediately.

"We take Discover/American Express etc." only really got so far to help with
consumer adoption of those networks. This keeps coming around to a currency
without a country is a PITA.

What are return policies around goods bought with BC? Do you get BC back or
fiat? Do you get spot prices at time of return request, etc?

------
malloreon
Does Expedia hold any bitcoin reserves? Do they interact with bitcoin at all?

Nope. They let someone else do it and just accept real money.

~~~
codyb
That's okay though. As bitcoin proliferates large businesses will eventually
start cutting out the middle man.

But currently, with the drastic swings, it's not a sound economic move
(especially publicly owned) to actually have holdings in bitcoin. It requires
infrastructure for cash exchanges too. Is Expedia going to pay its dividends
with its bitcoin reserves?

Not yet!

------
jordigh
Is this as big as it seems to me? This seems huge. Is it huge? I can't tell.
Should I be excited? I am.

Now if only I could make it easier for people to pay me in bitcoins for small
freelance work...

~~~
XorNot
Can you accept Coinbase payments?

That's the thing here: Coinbase is just another payment processor. Most
businesses are used to having to accept "some extra payment processor".

Since you get to do some sort of announcement, which more most companies means
you get to be in the news in a semi-positive way, why not? It's risk free for
them - or at least only as risky as their ability to sue Coinbase for missed
payments.

~~~
jordigh
> Can you accept Coinbase payments?

I don't need help for accepting bitcoins. I trust bitcoins themselves, I
consider them a real currency, not something that has to be immediately
exchanged for centralised currency. So I'm fine just accepting them without an
intermediary. My hope is that as bitcoins get more popular, businesses like
Coinbase will seem less important.

Instead, I need help getting bitcoins from all the people out there who have
no idea how to get bitcoins.

~~~
taylorwc
I would contend that though you are at the tail end of the curve that _doesn
't_ need an intermediary, many of your customers are likely to need/desire an
intermediary to facilitate for the people you mention, with no idea how to get
bitcoins.

Regardless of whether you, I, or HN hates Coinbase or loves Coinbase, they
provide a layer of accessibility to an otherwise intimidating ecosystem.

~~~
yen223
> I would contend that though you are at the tail end of the curve that
> doesn't need an intermediary

If you want to do away with intermediaries, what Bitcoin needs is a large
ecosystem, such that my BTC never needs to be converted to USD to be useful -
I want to be able to be paid in BTC, then to be able to exchange that same BTC
for food. The food vendor in turn needs to be able to exchange that BTC for,
say, a car.

For that to happen, Bitcoin needs a critical mass of adopters. Unfortunately,
the Bitcoin feature of capping the number of total BTCs in circulation means
that the number of BTC users will always be limited.

~~~
Karunamon
_the number of BTC users will always be limited_

Mmh.. mathematically true, but practically? First consider that block awards
will continue being generated until roughly the year 2100 and probably up to
another half decade on top of that.

Empires have crumbled in less time..

Secondly, remember that 1BTC is divisible down to 8 decimal places. There's no
reason that .00000001BTC (aka 1 Satoshi) couldn't become the base unit of
transaction.

If this were to happen (say with a client update), that would mean, once the
block awards cease generating in a hundred years or so, and all 24,000,000 BTC
are mined, that would mean there's (24M * 10^8) 24 _quintillion_ individual
units of currency in the world.

~~~
psykovsky
There will never be even 21 million of BTC. Pretty close to 21M, but it won't
get there. Also, 99,99% of block rewards will be distributed before 2040. The
next 60 years till 2100 blocks will only reward a few satoshis each, except
for transaction fees.

~~~
Karunamon
_There will never be even 21 million of BTC._

Why not? As I understand the algorithm, the decay rate of block awards is
pretty much a constant, understood thing.

------
mrfusion
Side note, I'm noticing a lot of merchants accepting bitcoin asking for more
information than they should need.

For example I tried to buy an ebook recently and it required my home address.

For Credit cards I believe that's required to verify the billing info, but
there's no reason bitcoin purchases should need it for non-shippable products.
And it cancels out a lot of the benefits of using bitcoins (fast purchase,
anonymous from marketers)

~~~
TomGullen
We sell digital services (ebooks count), and require the customers address (or
part of) to determine the VAT status of the sale.

Even though buying an e-book for Bitcoin seems like you shouldn't need any
personally identifiable information, quite often merchants do need to collect
it.

~~~
higherpurpose
So collect the country or state, not the home address.

~~~
jimktrains2
You do know that in the US counties (and possibly cities, I need to double
check cities) can leverage sales tax as well. However, it should only really
be an issue of where you have nexus.

It's probably just how their system handle's orders (you need home address for
CC for AVS, so it's probably just required everywhere in their code.

~~~
toast0
In the US, cities can levy sales taxes as well. Also, the city field in your
address does not accurately indicate your municipal boundaries; it's more of
an identifier of which post office serves you and which municipal boundaries
it falls within.

------
justme123
These is very good news overall, taking into account that we are now in the
first-stage-of-adoption of bitcoins, where the most important is to spread the
info about bitcoins and increase its usage.

In a later stage, when bitcoins are more diseminated and people feels bitcoin
more "domestic", then there will be a interest for "personal-wallets" and
"business-wallets", which may be hardware-wallets, or multisig-insured-online-
services...

TLDR; this is a good-first step toward bitcoin adoption, further later will be
another step towards personal-wallets.

------
coryking
How does this deal with damage deposits? Why would I pay with bitcoin when
many rewards cards pay out extra when you use them for travel-related use?

Honestly, the cynic in me says the use case for spending bitcoin is a quick
way for speculators to "cash out" in a way that makes it easier to hide
earnings from the tax-man.

~~~
rational-future
Honestly, the cynic in you may say everyone buying a kitchen knife plans to
cut a child throat, but that won't decrease the usefulness of kitchen knifes.

Damage deposits - not something Expedia does with credit cards or PayPal,
hotels have to ask their clients for a credit card at check in.

Rewards - it's just a matter of time for Bitcoin rewards schemes to appear.

------
taariqlewis
Speculative bitcoiners will not spend their hard-earned BTC on travel goods
and services.

They will HODL and continue to buy their air and hotel with fiat cash which
will be cheaper, faster, and easier.

------
abc123xyz
This is only in US, I went to expedia, no bitcoin option, well that was a let
down.

------
vundervul
Too bad, I liked expedia. Now I have to use travelocity.

