
Now Accepting Bitcoin on Dell.com - mrb
http://en.community.dell.com/dell-blogs/direct2dell/b/direct2dell/archive/2014/07/18/we-re-now-accepting-bitcoin-on-dell-com.aspx
======
wsxcde
We know that number of blockchain transactions has been more or less constant
for a while and in the range of several tens of thousands per day. This means
either merchants aren't seeing too many bitcoin sales OR a lot of these sales
are happening offchain through coinbase/bitpay.

In the latter scenario, coinbase just looks like a giant transaction fee with
nothing changing except an entry in their database. Are they generating enough
value to justify these fees? Note coinbase/bitpay makes money when (1) they
sell you (the customer) bitcoin (2) the buy/sell spread when you buy btc (3)
merchant fees and (4) buy/sell spread again when the purchase occurs.

A big selling point for bitcoin was that you'd avoid credit card processing
fees. Has someone done the math on whether this is turning out to actually be
cheaper than credit cards after all fees are considered?

And even if they turn out to be marginally cheaper, is it justified from the
consumer's point of view given you don't even get the consumer protections
that you get for free with a credit card?

~~~
mrb
_" number of blockchain transactions has been more or less constant"_

No:
[https://blockchain.info/charts/n-transactions?timespan=all&s...](https://blockchain.info/charts/n-transactions?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=)

~~~
wsxcde
From Jan'13 to now, which is when most of this merchant adoption has occurred,
I can see an increase from around 40,000 transactions to about 60,000
transactions, which is rather modest and one can easily cherry pick points
which show that the number of transactions has actually declined.

ed: And like I said in my other comment to vijay, it's not even clear that
much of this represents positive-sum economic activity.

~~~
mrb
_" 40,000 transactions to about 60,000 transactions"_

Exactly. You called this +50% growth "more or less constant", which is why I
corrected you.

As to judging how much of this +50% growth is due to increased economic
activity, it is impossible to prove due to the anonymous nature of Bitcoin.
However indicators like the growth of Bitcoin payment processors (BitPay and
Coinbase) very clearly show there is extreme growth. Eg. look at this data
about BitPay:
[https://news.ycombinator.com/item?id=7974197](https://news.ycombinator.com/item?id=7974197)

~~~
wsxcde
The Bitpay numbers are very impressive.

I do think that 50% growth in a year, especially when it is not that clear-cut
that it really is 50%, isn't that impressive by itself. Perhaps there's a lot
more growth in off-chain activity.

I remember reading an estimate that Bitcoin has < 500,000 users which seemed
quite small to me given the hype surrounding it. So I'd be interested in
seeing if there is growth in the number of wallets holding bitcoin. If bitcoin
is taking off, we should be seeing that number explode, right?

------
slg
What I find interesting about all these new merchants accepting Bitcoin is
what happens to the Bitcoin they receive. It is a safe bet that all of these
Bitcoin are converted to USD immediately as part of the payment processing by
someone like Coinbase. The question is, can Coinbase sell these coins as
quickly as they receive them? If not, what kind of exposure do they have to
the violatility of the price of Bitcoin? Is that exposure high enough that
these companies could be brought down by a drop in Bitcoin pricing and would
that lead to a collapse of the Bitcoin economy (i.e. are any of these too big
to fail)?

~~~
rockyleal
Impressive. You managed to turn the most positive news for Bitcoin into a post
about the "collapse of the Bitcoin economy", through a very flimsily
constrcted series of assumptions. There should be like a new version of
Godwin's law wherein all positive Bitcoin news will lead to its collapse in
three steps.

~~~
larrys
Why don't you try and counter or answer what he is saying instead of attacking
him for saying it.

~~~
rockyleal
Because it smells like a manipulative post. The goal (it seems) is not to
discuss the topic, but to deformm the opinion of the readers and the general
mood of the thread.

If you want an answer, it is easy: companies like coinbase or bitpay know very
well what they are doing, and participate in the market in ways that minimise
the exposure risk. OP does not deserve to be top post in a site that is
supposed to have quality debate like HN.

~~~
krzrak
> If you want an answer, it is easy: companies like coinbase or bitpay know
> very well what they are doing, and participate in the market in ways that
> minimise the exposure risk.

So the question is: how they do it?

------
vectorpush
Notice how all these big "wins" for bitcoin come in the form of services
facilitated by a centralized 3rd party. Coinbase, Bitpay, et al are becoming
the de facto gatekeepers of bitcoin in business, it's not hard to imagine a
future where these companies are the only practical option for real people
interacting with the bitcoin economy. We're building a centralized
infrastructure around the supposed decentralized currency of the future and
these companies have extremely cumbersome KYC procedures; paypal never
required me to scan a passport, take a selfie or submit to social graph
analysis in order to use their services.

edit:

As some have pointed out, KYC is for _buying_ bitcoin, not for making
purchases with bitcoin, this is a fair point, but I think it's still
noteworthy to recognize that _most people_ will endure that KYC process to
acquire bitcoins since the alternative is something like localbitcoins (scam
prone and considerable effort for a newbie). Additionally, it's still true
that for most people, the practical utility of bitcoin is a function of the
services that these 3rd party companies are willing/able to provide, if some
of these big players went bankrupt, suffered from long term DDOS, encounter
legal problems or have their coins stolen by hackers, suddenly your average
consumer has lost practical use of their bitcoins.

~~~
ryandvm
What you're seeing is merchants relying on the expertise of 3rd party payment
processors. This is a good thing. Having them all reinvent the wheel would be
a security nightmare. You'd be hearing about enormous Bitcoin heists daily.

At the end of the day, these are still Bitcoin transactions and if Coinbase et
al started engaging in onerous practices you could very easily switch to
another Bitcoin processor without much friction.

Now if you start seeing things like Coinbase only accepting payment from other
Coinbase users...

~~~
bdcs
It seems there are obvious parallels between Bitcoin:Coinbase :: SMTP:GMail

XMPP:GChat

~OAuth:Facebook

These analogies are only so accurate, but the centralized service seems to try
to lock-in users whereas decentralization forces the opposite way.

~~~
rockyleal
It is way easier to "be your own bank", using free software like electrum or
the reference Bitcoin client, than trying to "be you own email" by setting up
your own email service and whatnot.

Coinbase or Bitpay are optional facilitators, for people who want to buy or
accept bitcins. That is not centralisation, that is just providing a service.
Lots of people use Coinbase to buy their coins and then withdraw them to their
offline-decentralised cold wallts created in electrum.

~~~
sanswork
Is it? If I want to be my own bank I also have to coordinate to sell all
income coins on a market rapidly to avoid fluctuations in price. That's a full
time job in itself.

Also the risk of failure for a mistake in being my own email service is that
some of the mail I send lands in a spam folder. The risk of failure in being
my own bank is that I lose all my money.

------
tabrischen
Earlier this week, Shopify integrated with Coinbase to provide 100,000+ online
stores with bitcoin checkout. It's really exciting to see bitcoin adoption
rising among merchants of different sizes.

~~~
aroch
I feel like merchant adoption is being done for the sake of "looking cool" not
because they really care or their users really want it. Actual adoption of
bitcoin by consumers has remained relatively flat

~~~
jcliff
flat based on what?

~~~
aroch
The number of bitcoin transactions/day hasn't really changed, at all, despite
all these vendors adopting it.

[http://blockchain.info/charts/n-transactions](http://blockchain.info/charts/n-transactions)

~~~
mrb
You fail at reading a graph (in your defense, the data is noisy). But smooth
it by looking at the quarterly averages and it is clear there was a +40%
growth from 45k to 65k transaction/day over the last year:
[http://i.imgur.com/XJs4V74.png](http://i.imgur.com/XJs4V74.png) (or see
www.quandl.com/BCHAIN/NTRAN-Bitcoin-Number-of-Transactions and select
"quarterly".)

~~~
aroch
No, I didn't fail at reading anything. The increase is both within the noise
of the data and insignificant. 20K transactions is nothing, hell given the
number of BTC that are "washed" through pools, one person could easily account
for 5K of those transactions.

~~~
mrb
+40% is significant (insignificance would be <5%).

If it really was noise,
[http://i.imgur.com/XJs4V74.png](http://i.imgur.com/XJs4V74.png) wouldn't show
a relatively smooth exponential-looking curve.

~~~
aroch
Are you really arguing that a pitiful increase of 20K over a year, in a system
where every single change in any holdings causes a transaction to occur, is
significant for this system? I shudder to think of the reality distortion
field you live in.

For sake of argument, let's say that coinbase keeps 100 small, hot wallets
around. Every time coinbase rearranges funds in their wallets, they could
create between 1 and infinity transactions. If, on average, they rearrange
funds daily in such a way that 25 transactions occurs, they would account for
50% of your increase alone.

Given that _all_ exchanges and processors routinely shuffle funds around, and
every move is recorded as a transaction, you need exchanges (in total) to make
55 more transactions/day to make up your superduper exponential growth.

20K increase in transactions in bitcoin is no increase in transactions.

~~~
mrb
Your math is way off. It is 20k transaction PER DAY. 5.9 MILLION transactions
were processed in 2014Q2, up from 4.1 MILLION in 2013Q2. That is an increase
of 1.8 MILLION!

------
mrb
Surely many will ask "Why would I pay Dell in bitcoins?". Well Dell wants to
promote the currency so much they will be giving a discount:

 _" we’ll be offering a special Alienware promotion wherein customers can save
10% off a new Alienware system purchase (up to $150 limit) when checking out
with bitcoin"_

~~~
67726e
> Well Dell wants to promote the currency

Maybe. But that's probably just wishful thinking. Someone in marketing
probably came up with this as a way to get some free publicity from all the
raving bitcoin lunatics and get some sales. Offering 10% off of their
Alienware systems, which are pretty well know as overpriced crap, is probably
a fraction of their markup.

~~~
johnyzee
Why wouldn't they want to promote the currency? Bitcoin is win-win for the
merchants, with no fees and no chargebacks.

~~~
67726e
And that is a double-edged sword for the consumer. What if I purchase
something and the vendor screws up and refuses to fix it? What if the vendor
scams me? Having a credit card gives me the chargeback process to resolve a
dispute. Using Dunning-Krugerrands... sorry, bitcoin, gives me no real
recourse other than to piss and moan on Twitter.

I get using Bitcoin to purchase when it's questionable or you otherwise want
something to be anonymous, although with a physical good it is much harder to
be anonymous, but why in the hell would I care if someone knows I bought an
Alienware laptop or a pack of socks on Overstock? And that is assuming they
someone got ahold of my transaction records anyway.

~~~
baddox
> What if I purchase something and the vendor screws up and refuses to fix it?

You tell your friends or post on the Internet that they did so, and more
importantly, you don't purchase things from vendors that don't have a good
reputation.

What do you do if a restaurant gives you horrible service? You don't sue them,
because litigation is much more expensive than it's worth to you. Restaurants
don't tend to provide good service out of respect for the law or fear of
litigation, but rather out of the desire for continued business from
customers.

~~~
67726e
Or better yet, I just issue a chargeback and get my damned money back.

The restaurant is just a terrible retort. I'm physically in a location to
receive a service. This has nothing to do with paying for a product and not
receiving it.

Of course if I'm receiving bad service in a restaurant I will speak with the
manager. If he refuses to speak or help I will demand a check and pay without
tipping. Simple as that.

~~~
baddox
> Or better yet, I just issue a chargeback and get my damned money back.

Doesn't work with cash, and might not work depending on how the credit card
company's arbitration works.

> The restaurant is just a terrible retort. I'm physically in a location to
> receive a service. This has nothing to do with paying for a product and not
> receiving it.

Your physical presence is irrelevant to the analogy. The point is that acting
legitimately is in the interest of both the company and the customer.

> Of course if I'm receiving bad service in a restaurant I will speak with the
> manager. If he refuses to speak or help I will demand a check and pay
> without tipping. Simple as that.

Then you're out the cost of your meal. The restaurant gets your 20 bucks, and
didn't have to provide good service, which is clearly profitable for them in
this isolated case. So why don't all restaurants do that?

~~~
67726e
No, it's just fucking wrong. My point is that Bitcoin leaves the consumer
defenseless. Eating at a restaurant Has nothing to do with that. I could in
fact refuse to pay.

~~~
baddox
My point is that in most everyday transactions, the consumer's defense is not
the legal system of the country he or she lives in (because it's too expensive
to litigate most everyday transactions), but rather market mechanics like
reputation and competition.

------
Zikes
Whatever happened to that crisis where a single party got control of 51% of
total network mining power giving them essentially 100% control over the
blockchain? [1]

[1]
[https://news.ycombinator.com/item?id=7890215](https://news.ycombinator.com/item?id=7890215)

~~~
sp332
They've voluntarily decided to limit themselves to 40%.
[https://arstechnica.com/business/2014/07/bitcoin-pool-
ghash-...](https://arstechnica.com/business/2014/07/bitcoin-pool-ghash-io-
commits-to-40-hashrate-limit-after-its-51-breach/)

~~~
jdong
And that 40% is still enough for lots of attacks.

~~~
michaeltoth
Not really.

For an attack to be possible, the attacker needs to generate an alternate
blockchain faster than the honest blockchain. This problem can be thought of
as a binomial distribution where the "success" is the honest blockchain mining
a block and extending its lead by a block and the "failure" is the attacking
chain being extended by one, reducing the gap by 1 block.

p = probability of honest blockchain extension by 1 block q = 1 - p =
probability the attacker extends by 1 block

If p <= q, the probability of the attacker catching up at some point in time
is 1. This is what makes a 51% attack possible.

If p > q, the probability of the attacker catching up is (q/p)^z where z is
the number of blocks behind at the beginning of the attack.

There is a reasonable possibility for small values of z (small number of
blocks behind), that 40% control would allow for the creation of an alternate
blockchain longer than the honest chain, but this is mitigated by the fact
that transactions require confirmations, which extends the number of blocks
and makes the likelihood of an attack very unlikely.

~~~
sp332
51% attack is not the only kind of attack. A "selfish mining" attack can break
the system too. [http://hackingdistributed.com/2013/11/04/bitcoin-is-
broken/](http://hackingdistributed.com/2013/11/04/bitcoin-is-broken/) Here's
the paper [http://arxiv.org/abs/1311.0243](http://arxiv.org/abs/1311.0243)

~~~
michaeltoth
Thanks for the articles. I recall reading about this last year when the paper
was published, but I had since forgotten about this form of attack. This is
definitely interesting.

------
parfe
Acceptance of bitcoin continues to increase, but has a store seen sustained
usage? I recall a chart from a few weeks ago after newegg(?) began accepting
bitcoins an initial glut of bitcoin transactions quickly dwindled to
background noise. It seems once the novelty wears away people find it easier
to just pay directly in USD.

~~~
johmas
We added a btc option at Tuft & Needle last November and up until about Feb
was about 5% of our sales. btc purchases have been steadily dropping and are
now around .01%

~~~
aianus
Do you offer a discount for people paying in BTC? If not, why not?

------
yefim
A huge win for Coinbase. Congratulations Brian and the rest of the team!

------
Keyframe
I have a question. If business sells something directly for bitcoin (not via
3rd party which accepts bitcoin and proceeds cash), how do they do VAT?

~~~
wmf
If a business sells something directly for USD, how do they do VAT? (Assuming
that the company is not in the US since the US doesn't have VAT.)

~~~
Keyframe
You're right. Question is rather how does one issue a receipt if you're
exchanging bitcoins for goods. You can't, since it's not a legal tender. So
how do they do it if they're not using 3rd party which proceeds them with
cash?

------
malloreon
Title should be "Dell now accepts USD and doesn't care where it comes from!"

------
lucb1e
What's interesting is that they are limiting this borderless currency to US-
only. But it doesn't take much to start accepting from other countries after
they get through the legal complications, it probably won't take too long :)

~~~
MichaelGG
Dell isn't actually doing anything with the Bitcoin, they're getting USD
payments via Coinbase. And Coinbase appears to be US only and maybe US bank
only? Their site says:

"Right now the only supported payout option is USD to a bank account. However,
options for other countries are planned."

Which is a bit ambiguous but I think it may be only US bank accounts (or
accounts accessible within the US system)?

~~~
lucb1e
Very good point, thanks for the reply. One remark though:

> "Dell isn't actually doing anything with Bitcoin"

Perhaps not directly, but they don't go and accept any odd currency that comes
along. It shows that Bitcoin is an interesting option to look at.

~~~
sanswork
Dell will accept any currency at all as long as Visa, Mastercard, Amex, etc
will convert it to USD first.

~~~
lucb1e
Tell that to e-gold

------
wallzz
Is it just Dell.com or all the Dell's ?( dell.fr , dell.de ...)

------
chesterbr
Can I buy a server and only pay after I mine its price in bitcoins with it?
:-)

(pretty please with sugar, don't take this joke seriously)

------
martinSlovakia
Hi all, please for anybody's sake, can you explain me why the world is
accepting something that we know is unsecured properly? Sometimes money just
disappear etc..

~~~
josu
Is there any properly secured money? Each type of money has its flaws and its
advantages. For one, bitcoin is traceable to a certain degree, whreas a paper
bill is not.

> _Sometimes money just disappear_

Are you talking about fiat money or bitcoin?

~~~
martinSlovakia
bitcoin

~~~
josu
Sorry, it was rethorical. I wanted to point out that fiat money disappears all
the time. I lose money all the time; it falls out of my pocket, I forget where
I put it... However I have never lost any amount of bitcoin.

