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Now Accepting Bitcoin on Dell.com (dell.com)
400 points by mrb on July 18, 2014 | hide | past | web | favorite | 199 comments



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?


For Bitcoin to succeed as a means of payment, chains of payments need to arise. I.e. merchants not only accepting Bitcoins, but also keeping them and spending them on suppliers and paying their employees (partially) in Bitcoin. As you say, buying Bitcoins to buy something and then the merchant immediately selling them again is pointless.

That's why I'm skeptical with Bitcoin as a replacement for everyday payments. However, there is a chance of it finding significant niches online and internationally. Furthermore, it also has a value as a store of wealth, which is its main price driver (buying an hording a Bitcoin has a much bigger impact on price than buying and spending a Bitcoin with a merchant that sells it again).


We just don't understand yet what we can do with it, I think we need to see bitcoin as the raw protocol and now we have to build layers on top of it to handle security/transactions properly, what those layers are and what it looks like is yet to be decided. Any company can now be the company for bitcoin that google was to the internet if they solve the right problem.

It will be possible to do everyday payments with it, it's not that because that bitcoin is decentralised that no centralised value can exist with it. It's just so beautiful that you can interact with it any you want. Take for example mint.com that has to acquire and integrate with each and every bank separately, with bitcoin anyone can build a mint.com with the blockchain. It has the potential to change the world in ways we cannot imagine yet.

I'm even dreaming about open governments where we can actually see the governments spending... I'm a dreamer.


There are also smart contracts & distributed oracles (orisi.org)


>As you say, buying Bitcoins to buy something and then the merchant immediately selling them again is pointless.

It is not that simple, in my opinion. While the merchant may hold the bitcoins for a very short while post-purchase, the customer will probably not have automated infrastructure, and not be that efficient. The main usage of "bitcoin seconds" in the transaction while likely be the bitcoins sitting on the buyers wallet or bitcoin exchange account prior to the purchase. Now, I am just doing guesswork, but it doesn't seem that unlikely that a customer will acquire the bitcoins for the purchase a few hours, or perhaps even a few days in advance.


I.e. merchants not only accepting Bitcoins, but also keeping them and spending them on suppliers and paying their employees (partially) in Bitcoin.

I think this is illegal now in New York. The new regulation requires that companies keep profits in USD and not bitcoin.

For bitcoin to succeed, it needs to become safe. It's still incredibly easy to lose your money if it's stored in bitcoin.


Nothing is illegal yet. The regulations have been proposed, but there's still a 45-day comment period that hasn't started yet. I don't know if there are more comment/review periods after that.

Moreover, as I understood it, the proposed regulations apply pretty much entirely to those holding others' BTC, not to retailers. I didn't see anything in my (admittedly very cursory) reading to suggest a company that only takes BTC as payment for services would be disallowed from investing in, or making payments in, BTC.


> For bitcoin to succeed, it needs to become safe. It's still incredibly easy to lose your money if it's stored in bitcoin.

It's not that "bitcoin has to become safe" - it's that the users have to become security-minded. If it's even possible for that to happen in a mainstream way, it's going to be a very slow process. Like decades or generations.


Or they can just use Coinbase Vault :) https://coinbase.com/vault


If Coinbase goes out of business, you'll lose all your money. Coinbase is a startup, and >90% of startups fail. "Vault" is a marketing term designed to make people feel comfortable for no reason.

Given this major disadvantage, what benefit does Coinbase Vault offer to outweigh it?


Coinbase isn't running a fractional reserve. Barring fraud, everyone would get their BTC back even if it fails.


Prove it.


"number of blockchain transactions has been more or less constant"

No: https://blockchain.info/charts/n-transactions?timespan=all&s...


Also the number of transactions per se is not the best measure of bitcoin's importance; it is the total purchasing power being transferred that should be considered. Bitcoin is a medium of savings that allows people to transfer value easily, from any point on the globe to any other point with minimal fees. The total purchasing power being transferred has growth tremendously because BOTH the number of transactions has grown AND the purchasing power of bitcoin has increased manyfold in the last few years.

This, of course, does not even factor in all the transactions that happen off blockchain.


I think looking at transactions is a reasonable metric. In fact, even this metric may be overstating things. Tim Swanson has analyzed transactions excluding popular addresses (apparently this excludes things like SatoshiDice) to identify transactions that are positive-sum in an economic sense and then the numbers look even lower. [1]

Another factor to consider is that if you count purchasing power transferred (which I assume means dollar value times transactions) you'll end up giving a lot of weight to events like when coinbase/mtgox moved their coins from one wallet to another.

[1] http://www.ofnumbers.com/2014/06/23/separating-activity-from...


I've already had this debate with Tim in private (we're friends). Some of his analysis of transactional use is quite misleading. For instance: http://letstalkbitcoin.com/blog/post/a-marginal-economy-vers...

Here he compares bitcoin to m-pesa which is a deeply misleading comparison. The former has a floating price, the latter is a money substitute and its price is fixed against the currency which is substitutes for. This is why I've suggested to Tim that it is total purchasing power transferred that should be measured, and I think I have convinced him of that.


That doesn't look like a growth story in the last year and half.


How is going from 40k transactions (Jan 2013) to 60k+ (Jul 2014) not growth? That's +50%!


Because almost all of that growth was reached by Mar 2013 and it's been mostly flat since then(one bubble, a few small dips).


No. For noisy data like this, you need to look at averages to make sense of it. Eg. see the quarterly averages, they show a growth from 45k to 65k transaction/day: http://i.imgur.com/XJs4V74.png (or see www.quandl.com/BCHAIN/NTRAN-Bitcoin-Number-of-Transactions and select "quarterly".)

Same reason why corporate financial reports are done on a quarterly basis. Or else there would be plenty of peaks and dips from week to week.


And if you scroll back to weekly you see any quarterly growth exists in one or two peaks pushing the quarterly numbers up then rapidly falling back down.

Realistically though we're both playing with figures to show the result we expect.

I've found plenty of merchants who accept it who have seen little to no revenue from it or shrinking revenues when they original saw some. Do you know of many merchants that are seeing increasing bitcoin customers and revenue?


Who do you think is more guilty of playing with figures: the one who looks at temporary peaks and dips, or the one who looks at quarterly averages to find the overall macro trend? ;)

I once compiled datapoints showing the growth of BitPay (ie. customers spending bitcoins on real goods and services from real merchants). You will find it interesting: https://news.ycombinator.com/item?id=7974197


One who uses short term spikes to make their long term data look better? We can(and have) gone back and forth on this a bunch.

That reply is actually to me in a previous discussion. As I said before Bitpay has known to do the exact same thing(use short term spikes) and attribute it to daily volume. They did it during the last holiday season along with Coinbase then both ended up deleting all the blog posts when called out on their figures not matching up.

So until I see a long term trend from them that is >$1m/day or I see merchants coming forward and saying they are seeing increased sales I'm going to take that figure with a grain of salt.

As for the rest. Half your stats there are increased employee and office count which come from them raising money.

The other half is an increase in merchant adoption which makes sense. Everything about bitcoins in legitimate transactions is beneficial to merchants by putting all the risk and fees on the consumer side.


"One who uses short term spikes"

Exactly. And you are doing it. You look at the weekly average (short term), while I look at the quarterly average (long term). Please understand that taking the average on longer periods of time will hide/smooth out short time spikes in a way that is statistical and purely objective (unlike your subjective interpretation of short term spikes).

In fact, the peak of number of transactions you said happened around March-April 2013 was precisely due to one of these short term spikes: a bubble where BTC went from ~$15 on January 1, 2013 to ~$260 on April 10, 2013: http://bitcoincharts.com/charts/bitstampUSD#rg730zczsg2012-1... (people were all buying/selling/trading BTC like crazy).

You are inferring too much from BitPay's post deletion. For all we know their numbers in the immediate 2-3 months following Bitcoin Black Friday 2013 were down (Black Friday sales were great, hard to sustain). Maybe they felt a bit disappointed by them, so they took them down. So what? Their overall growth is indisputable: "BitPay processed $5k/day in May 2012, $18k/day in Sep 2012, $160k/day in March 2013, $300k/day average through 2013, and now $1.0M/day." It does not matter if they are doing $500k/day or $1M/day or $2M/day. Growth is here, which is why they got bit VC funding.


If you want to get an objective value shouldn't you remove the outliers from the data?

>So what?

So what is not that they took them down because sales slumped they took them down because they were using them to justify the types of numbers that you quote immediately following that.

>BitPay processed $5k/day in May 2012, $18k/day in Sep 2012, $160k/day in March 2013, $300k/day average through 2013, and now $1.0M/day.

These numbers. It's easy for them to pick and choose spikes in the data and report that.

> It does not matter if they are doing $500k/day or $1M/day or $2M/day

Then why do you keep going on about them doing $1m/day if you're not convinced yourself?

>Growth is here, which is why they got bit VC funding.

Definitely. In merchant adoption. VC funding could just as easily be a speculative bet that that merchant adoption will eventually convert to sales not that it already has. Beenz and Flooz got VC as well remember(the first one almost as much as all bitcoin vc so far).

Anyhow. We're circling around around to the same points and using the data to suit our own needs and arguing over a figure that doesn't really mean anything(number of transactions) since it can easily be inflated and because we can both use it to show our own views. At least we're not discussing my wallet accounts or coinbase accounts.

I'll ask again. Do you know many merchants who are seeing strong and consistent sales in bitcoins? What are they? Do they specialize in bitcoin related products?


The growth can be seen even if you remove outlier months (especially the bubble months Mar-May 2013.)

Even if you assume BitPay is lying by reporting peak days, it would still likely imply growth: higher peaks likely correlate with higher average volume.

When I say it does not matter whether today they are at 500k or 1M or 2M, I mean it does not matter because they were at 160k in March 2013, so any number above that demonstrates a growth.

CheapAir.com and Overstock recently said they see consistent sales: http://www.coindesk.com/cheapair-tops-1-5-million-in-total-b... Also Amagi Metals has always reported very consistent and growing Bitcoin sales. These are a few that come to mind right now.


CheapAir.com is releasing their first figures so there is no way to say if they are consistent growing or shrinking other than him saying expedia hasn't lead to shrinking sales.

Overstock has definitely not said they have seen consistent sales. Their sales have been shrinking since they started.

Jan 10 - 130K[1]

Jan 11-29 - $26K/day average [1] (600,000-130,000)/18

Next 36 days to March 4th they do $400K [2] - $11K/day average

Next 83 days to May 27th they do $600K [3] - $7200/day average

-----

[1] http://onbitcoin.com/2014/01/31/bitcoin-executives-testify-i...

[2] http://www.coindesk.com/overstock-million-bitcoin-sales-futu...

[3] http://www.coindesk.com/overstock-ceo-patrick-byrne-1-6m-bit...

Amagi Metals reported very strong growth up last year. Literally reporting every milestone they hit($50K, $175k, $220k, $750k) then in April of last year they just stopped. Then a year later after someone else reports selling $10m worth of stuff they suddenly appear again saying "Oh ya we passed $10m already".

Please keep coming up with them though. It would be good to see some winners. The only one I've seen so far is a bar in Florida that hosts weekly bitcoin meetups.


For Overstock you are looking at a very short time period (5 months). Similarly, Google's revenue declined over a 6-month period from $16.9B in 2013Q4 to $15.4B in 2014Q1, so by your logic Google's revenue is shrinking too(!)

In reality sales are highly cyclical: you need to look at least at the year level to measure a trend. This is why I keep pointing you to payment processors BitPay and Coinbase, as they have existed for at least 1.5 years (and they publish numbers despite being private companies). Now that the first public companies are starting to accept Bitcoin (Expedia, Dell, Dish Network, Overstock), it is going to give us more data on Bitcoin's growth as they release public financial reports.


You say Overstock says they see consistent sales and I show you that their sales have been shrinking from day 1 and your response is "Well duh there isn't enough data!". Seriously?

Besides that you're comparing 2 quarters out of many with 2 quarters that are all the data we have. If those 2 quarters were their most recent then yes we could say their revenue is shrinking.

You keep pointing me to self reporting figures randomly released in press releases by companies that have been dishonest with them in the past. You keep doing that not because it makes sense but because it supports your beliefs.

Heres one for you. 5 years in there are only ~600,000 wallets with at least $50 worth of coin. Given how many people split up their coins between multiple wallets how many actual users do you think that leaves?

Anyhow I'm done with this discussion. It is clear nothing will convince you and you'd rather drag goal posts around a field than face the fact that maybe just maybe customer adoption isn't happening in Bitcoin. Good luck with your investment I hope it makes you rich because the alternative is going to be a lot of people in serious financial troubles.


Correct, I should not have given you the Overstock example, since there is not enough data for them.

"yes we could say [Google's] revenue is shrinking"

Here lies your lack of knowledge. No analyst ever said Google's revenues were shrinking when their 2014Q1 results were announced. Instead analysts said they "grew revenues 19 percent year over year." See http://www.theverge.com/2014/4/16/5621450/google-q1-2014-ear... . This is because, as I explained, it makes no sense to compare one quarter with the previous one as this is only 6 months of data and as sales are cyclical (typically a yearly cycle). So analysts compare a quarter with the same quarter from the previous year to cover a span of 15 months (a full yearly cycle).

"how many actual users do you think that leaves"

You make a common mistake: assuming that each user has at least 1 address. In fact, a LOT of users leave their coins on exchanges who tend to consolidate coins in a small number of Bitcoin addresses. Therefore you cannot estimate the number of users from the number of addresses with a non-zero balance.


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.


"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


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?


According to that we're at the same level as we were in March of 2013 with a few dips and a bubble in the middle. Thats 17 months of more or less constant.


So, you start by assuming the answer to your own question:

"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..."

And then you say something that makes little sense... what giant fee are you talking about?? Merchants are actually offering DISCOUNTS for payments via Bitcoin.


I explained what fees I am referring to in my comment.


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)?


"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?"

That's a great question and I had wondered the same after reading the coinbase site the other day. How do they keep the balance between buyers and sellers and shield against that volatility? Further even if they do that today, this week, etc what will happen if there is an event in the future which alters the market?

Right now it seems like there is a "rising tide" which might be working in coinbase's favor. [1]

[1] This is more of a question than a statement and I'd be curious what others think along these lines.


I think it will be a big deal for Bitcoin when (if?) some of the bigger players decide to start publishing their dollar side volume (so that spectators gain some visibility into the net flow of dollars).


Coinbase quotes exchange rates that account for their risk.


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.


But slg raised interesting questions. That was the first thing I thought about as well after reading the article: will Dell (and other companies) keep the bitcoins? Rather not, the Coinbase will convert them to dollars immediately.


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


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.


> 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?


Likewise, any negative news about Bitcoin will be turned into "actually good news".


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.


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...


Having them all reinvent the wheel would be a security nightmare.

I agree, it absolutely makes sense from a business and security perspective, but at the end of the day what you end up with are a few key players who represent a centralized point of failure for spending your bitcoins on mainstream goods and services. More and more, the community is moving away from decentralization, relying instead on these centralized services to facilitate bitcoin purchases and off-chain transactions. The more companies that jump on board with bitpay and similar services, the bigger the disruption will become when one of these companies inevitably hiccups, fails, or gets hacked.


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.


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.


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.


Coinbase or Bitpay are optional facilitators, for people who want to buy or accept bitcins

Yes, they're optional for merchants, but for average consumers who want to buy the same goods and services they can buy with fiat, it becomes an unavoidable potential point of failure. If these services go down, the consumer cannot spend their coins, they rely on 3rd parties to turn bitcoins into something that businesses actually want to accept in exchange for their products.


Except that the situation with email is very much a result of a longer development. It certainly wasn't always difficult to do your own email - in fact, it once was relatively normal.


You are mistaken. You do NOT need to submit to Coinbase KYC procedures to buy something on dell.com and pay in bitcoins! (Just like you do not need to submit to Paypal KYC procedures to pay some vendor via Paypal, because in that case the vendor is the customer of Paypal, not the buyer).


It is only natural for centralized parties to emerge. I'd rather have centralized players with a decentralized back-end versus the banking system we rely on today. With paypal there is no consumer oversight, but because of the block chain, anybody can verify that coinbase acts as it should.

And I'm not going to fault them for using every user authentication mechanism under the sun- it is the responsible way to operate.


It is only natural for centralized parties to emerge. I'd rather have centralized players with a decentralized back-end versus the banking system we rely on today.

What value does the decentralized back-end provide for your average consumer who only interacts with bitcoin through the front-end? It's true that cash-like digital transactions are still possible through bitcoin, but the utility of bitcoin as "money I can use in exchange for services" hinges on the fact that these centralized 3rd parties allow individuals at the company's discretion to spend their bitcoin.

anybody can verify that coin base acts as it should.

Tell that to those who were swindled by mt.gox and the long line of shady/incompetent bitcoin players that have screwed countless bitcoin users.


The design of Bitcoin is such that no one, not even the "average consumer" is ever unable to operate directly in the decentralised backend. All that is required is some open source free-free software, of which there are already several versions.

About your second point. I was one of the people who had coins at Gox. Hundreds of them. I still think the parent is right and you are wrong.


The design of Bitcoin is such that no one, not even the "average consumer" is ever unable to operate directly in the decentralised backend.

Yes, and that's fine if the only place you shop is silkroad, but if you want to make purchases from real companies, these centralized 3rd parties are the only option.

About your second point. I was one of the people who had coins at Gox. Hundreds of them. I still think the parent is right and you are wrong.

Well, you're entitled to that opinion, but I think the catastrophic failure of mt.gox and myriad others pretty clearly demonstrates that the blockchain is not a sufficient defense against scams and incompetence.


Critiques of Bitcoin like this baffle me. First of all, the whole point of a decentralized protocol is such that whoever follows the rules can transact accordingly. Plain and simple.

People are going to scam, they are going to swindle, they are going to get hacked. Its not Bitcoin or it's blockchain's duty to do your due diligence. It simply can't. There will always be a need for trusted entities if someone doesn't want to store the coin themselves. It's a function of vetting those players.

But I agree with you: the level of professionalism needs to be upped in Bitcoin, there is no question about that. But somehow blaming the protocol for the bad actors in the space? Come on....


But somehow blaming the protocol for the bad actors in the space? Come on....

I didn't blame the protocol for anything.

Critiques of Bitcoin like this baffle me.

It's not a critique of bitcoin, it's a critique of the increasing reliance on centralized merchant services. All these companies accepting bitcoin payments only do so by the grace of a few centralized parties that will quickly become "too big to fail" as they continue to aggregate more and more clients. I shouldn't have to rely on coinbase to provide a path to actually spend my decentralized currency.


If Bitcoin becomes big and stable, there's no reason large companies couldn't open BTC accounts at Chase or Wells Fargo and accept them directly. Amazon doesn't convert your CAD into USD immediately when you shop on Amazon.ca.

At least with Bitcoin, anyone can compete as a payment processor because there's no central authority with onerous licensing requirements like Visa/Mastercard.


>there's no reason large companies couldn't open BTC accounts at Chase or Wells Fargo and accept them directly

That strikes me as a rather extraordinary claim.


> What value does the decentralized back-end provide for your average consumer who only interacts with bitcoin through the front-end?

The primary benefit to end users is indirect. Because Bitcoin is a decentralized network, the firms which build centralized services on top of Bitcoin are doing so in a much more competitive market, because it's much more difficult for government's to restrict competition in Bitcoin services than in their own fiat currency. That competitive market is likely to lead to better and cheaper products and services than the alternative.


These companies offer a service that facilitates adoption, but Bitcoin itself does not require the use of any of them. Dell is free to implement their own solution and GUI for their customers, and maybe eventually they will.

As for KYC procedures, YES YOU DID provide a lot of information to Paypal. To open the bank account that you need to use Paypal in the first place, you were required to provide lots of personal info and ID, and sign lots of forms.

On the other hand, to create a Bitcoin wallet you could just throw some dice (or download electrum, among other options), and no one can even ask you any questions. Send coins to that wallet, and you can buy at Dell or wherever you like, with ton more privacy than with Paypal.

The fallacy you just made is basically that you represented the KYC requirements to BUY coins from SOME companies as if it were a property of the whole Bitcoin system. You can absolutely use Coinbase-Dell to SPEND your Bitcoins, and it will have the same privacy as if it were a P2P transaction, no ID required. Source: I have bought stuff from vendors who accept bitcoins via Coinbase.


YES YOU DID provide a lot of information to Paypal.

Never any of the items that I listed in my post.

To open the bank account that you need to use Paypal in the first place, you were required to provide lots of personal info and ID, and sign lots of forms.

Right, and people living in the real world still need a bank account if they want to cash out their bitcoin or spend it without a 3rd party provider cashing it out for them. It is not practical to use bitcoin in the real world without a bank account or a centralized provider's bank account by proxy.


It's really easy to buy BTC in cash on LocalBitcoins in any major city and maintain pretty good anonymity. Also cheaper than the conventional alternative for anonymous online payments, Visa gift cards.


The difference is that the BTC transaction system can operate independently of the incumbent transaction system.


I don't know about you but paypal asked me to send a picture of my id along with a recent picture of me. They froze my account until I did so.


> it's not hard to imagine a future where these companies are the only practical option for real people interacting with the bitcoin economy

It actually is hard for me to imagine that. I don't see why having centralized payment processors (which are essentially just online wallets, fiat exchanges, and SaaS providers) makes it less practical to interact with the Bitcoin economy in other ways.


Bitcoin appeared on 2009 and we already have a few payment intermediaries.

VISA was created in 1958, and nowadays there are basically only 3 companies processing credit/debit card payments: VISA, Mastercard and Amex.

The threat is obviously there, but it's still too early to make any judgements. In my opinion, the entry barriers for new payment processing companies is very small, and we will see a huge competition.


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.


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


As a merchant, this is essentially the main reason we started taking Bitcoin.

But it's also because we need a payment method that our customers cannot reverse is important to us. Bigger international customers will do a wire, but there's a lot of smaller guys and Bitcoin is a bit easier than Western Union sometimes.

But for Overstock and Dell? It's pure marketing.


It's not only one-sided. Huge brand like Dell and Newegg lend massive streetcred to bitcoin as a legitimate method of payment and goes a long way towards changing perception about the ease of bitcoin transactions, which would drive up user adoption over time.

User may not want it now because they're not familiar with the technology behind it or perceive it as being an uncommon and difficult/unsafe method to use.

But once they see bitcoin as an available payment option on all their favorite retail sites, they would be interested to at least learn more about it.


I don't understand. How would integrating Bitcoin make a company "look cool" if no one is interested in companies integrating Bitcoin?


I always assumed that companies like Coinbase offered very favourable terms for building in Bitcoin support in the interest of driving forward public awareness of the currency. Obviously if Bitcoin becomes a major thing, then Coinbase is very well positioned.


Maybe if you turn this chart sideways it will look flat, otherwise... up, up and away!

http://blockchain.info/charts/my-wallet-n-users


Number of transactions would probably be a better metric

http://blockchain.info/charts/n-transactions


"WARNING: Forgotten passwords are UNRECOVERABLE and will results in LOSS of ALL of your bitcoins!"

I hate when my banker says this to me about online banking.


Then use Coinbase, which says "you'll have to trust us with your coin, and hope we don't get hacked".


Honestly, I prefer it to "WARNING: Your password must be 6-8 characters and contain no numbers or symbols"


Thats the number of accounts on a website. Anyone can create as many accounts as they want and they don't limit that chart to accounts with bitcoin. It's a pointless metric that is easily faked. Given the number of wallets with bitcoin in them worth >$50 isn't really growing I'd say its pretty likely a lot of those are fake/unused accounts.


flat based on what?


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

http://blockchain.info/charts/n-transactions


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 (or see www.quandl.com/BCHAIN/NTRAN-Bitcoin-Number-of-Transactions and select "quarterly".)


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.


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

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


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.


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!


Not sure if that's what the parent reply means, but while there's no baseline to compare growth in consumer usage of bitcoin, you can compare it to the growth in business acceptance of bitcoin.


Number of wallets with more than pennies in them, interviews with merchants who accept it, number of transactions per day.


[citation required]


Shopify already provided BitPay checkout and has for many months, so those 100,000+ online stores already had access to a bitcoin checkout option.

Source: I operate a shopify bitcoin store


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"


> 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.


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


Like I say every time this comes up: lack of chargebacks is a mixed blessing. It puts risk on buyers, which shows up as lower demand for the product, with part of the economic incidence falling on the merchant.

To the extent that it's a benefit, I would prefer it be phrased as the ability to opt out of chargback insurance, the cost of which can be shared by merchant and buyer, if it's not worth the cost.


>It puts risk on buyers, which shows up as lower demand for the product

Because the bitcoin crowd has shown it's self time and time again to be perfectly rational agents.


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.


> 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.


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.


> 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?


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.


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.


I've yet to be so scammed by a company I purchased products from since they inherently have MUCH more to lose by being dishonest. Obviously that's anecdotal but I'm still 100% convinced the chances of being scammed by a reputable merchant is absolutely miniscule.

Looking at the other side of the equation- I've had TONS of customers attempt to cheat me in one way or another. Buyers have very little to lose and are much more likely to be irrational/outright thieves than someone who took the time to build up a business.

As a buyer I'll happily take a discount equal to the cost of CC transaction fees over the "buyer protections" any day of the week.


I've also never been scammed. It's worth noting that I have initially had bad experiences with merchants, e.g. incorrect shipments, severely delayed shipments, etc. But the merchants have, so far, always gone to reasonable efforts to make things right.


As someone else said, all those protections causes merchants to just refuse transactions to people in various countries and contexts. It creates a payment alternative for those people to buy things because merchants don't have to expose themselves to the fraud risk.


There's no fees because you can't tell a merchant they are are going have to pay fees for handling the funny money. Do you think Dell is over the barrel with fees? It's one thing if you just got your first cheap card scanner as a merchant or use stripe. It's another thing if you bring volume.

Coinbase is out there begging to be allowed to put the "Bitcoin accepted here!" sticker on any window they can so that they can put consumers in exactly the same, or worse, spot they are in now should BC become more than funny money.

For moving money in shadows, there's Bitcoin. For everything else, there's MasterCard.


Coinbase doesn't charge a fee?


Right. As with Overstock, this is marketing ploy to a target demographic.


My company started accepting bitcoin a few months back. We use BitPay.com to offload risk (they instantly convert a BTC payment into your preferred currency and cash you out at the going rate).

We haven't made any sales with BTC yet... (as my VP reminds me weekly ;-), but none-the-less, the company views it as a great alternative to what normally would constitute a "high risk" shipment (usually to countries were high credit card fraud rates or other scams originate from... if we get our money now, and there is no risk of chargeback, etc, then we will ship the order).

So, it's not really a "marketing ploy" as you put it, but rather a good vehicle to accept orders the company may have normally rejected due to too much risk.


So, uh, what's the company? I got me some Bitcoins here. (Partially serious; chances are you don't sell what I need, but if you did, I'd rather support a Bitcoin accepting company.)


Doubtful you would be interested in our products, although you never know! -- we're in the jewelry and crafting business.

http://www.jewelrysupply.com/

http://www.jewelrysupply.com/ordering_info.html


Have patiencce. Bitcoin is a very new technology and mass adoption will definitively take time, but precisely because of that you will see significant rewards by being an early adopter.


I wish I could find the link but I read an interesting story about the history of successful new payment types. Dwolla (not), mPesa, PayPal, Venmo, btc. The successful ones all had an early sustained uptick. btc looked more like Dwolla which had not. So it appears that the patience argument, which in general makes sense, may not apply here.


The CEO of Overstock, Patrick Byrne, is an outspoken libertarian. It is just as likely that a political move as it is a 'marketing ploy'.


I can't understand the point of your argument. You're saying that Dell chose to integrate Bitcoin because it will be noticed by Bitcoin users, who will then purchase Dell products with bitcoins. What is wrong with this motivation, and what other possible motivation would there be to integrate any payment method?


Major companies accepting bitcoin have gotten a fair bit of free press even if they haven't converted to sales in bitcoin.

So they aren't doing it to get bitcoin users they are doing it so that they get free publicity from the news media and bitcoin users going around talking about them all the time.

For example I've heard about Overstock more in the past year than I have in the past decade and they are constantly in the news. Despite the fact that bitcoin sales figures are low and have been in decline since day one for them.


> So they aren't doing it to get bitcoin users they are doing it so that they get free publicity from the news media and bitcoin users going around talking about them all the time.

That's almost certainly part of the story. But the only reason they get free publicity that they believe will benefit them is that some people are genuinely fans of Bitcoin, enough so that the negative effects of potential customers who hate Bitcoin will be outweighed by the positive effects of potential customers who love Bitcoin.


Any publicity that isn't negative will benefit them even if it is a neutral story for most people it still gets their name in front of the news watching public.

>enough so that the negative effects of potential customers who hate Bitcoin will be outweighed by the positive effects of potential customers who love Bitcoin.

I don't think people who hate bitcoin will avoid a store because they accept it. I mean I'm pretty vocally outspoken about bitcoin in that I don't think it offers anything for consumers and I don't think it will ultimately succeed but its not like I'm going to avoid Newegg from now on. :)

So ultimately by accepting bitcoin even if you don't get a single bitcoin customer you probably get spoken about in the news a bit which will maybe add more general customers. Thats more of a belief in free publicity then bitcoin though.


I still don't understand the argument. They're implementing a new payment method because they believe that doing so will lead to more business.


The argument isn't if it will get them more business it's if anyone will use bitcoin.

They will get business from the advertising not the payment method.


Overstock acceptance is absolutely not a marketing ploy. The CEO of overstock gave a talk at a Bitcoin conference. He is very passionate about certain areas of philosophy, and Bitcoin tickles his philosophical fancy.


Here's a video of it. I really enjoyed listening to the talk.

https://www.youtube.com/watch?v=bkf04kQw1YU


"tickles his philosophical fancy" : i like this sentence


I think it's probable that someone in marketing created this campaign ... and they're careful to call it a "pilot" in the announcement (so they can pretty easily back out). On the other hand, if Bitcoin sales are adding to their gross income, why would they get rid of the program? If it's cannibalizing other sales channels, it may not be worth the extra effort.


> Someone in marketing probably came up with this as a way to get some free publicity

Bitcoin comes with essentially none of the consumer protections associated with credit card payments[0]. All of those consumer protections represent liabilities to merchants.

Similarly, merchants usually bear the costs associated with disputes and/or fraud (depending on how they're resolved, and this depends on the company). Bitcoin offers a great way to process these transactions without any of these risks for the merchants (oftentimes at the cost of shifting those risks onto the customer).

So, it's not marketing so much as some higher-up realizing that they can now offload some of their liabilities onto their customers. At this point, why wouldn't they?

[0] There are other consumer protections that are independent of payment method, but I'm referring to those specifically.


And 10% of those will probably burn out their Alienware systems trying to mine bitcoins in them anyway.


> Well Dell wants to promote the currency

Dell wants to promote Dell.

And the Alienware promotion? Alienware is used primarily for video gaming. There's quite an overlap between the demographics that play video games and own bitcoin ("geeks").

This is Marketing 101.


A partnership with Coinbase is seen as low enough risk (they're backed by A16Z!), that conventional merchants are prepared to use them as a payment processor; first, probably, in exchange for publicity, and later, because they will be at a competitive disadvantage if they don't.


But most people have to pay extra to acquire Bitcoins in the first place. And 10% is a promotion not a persistent discount. Why would I pay Dell in bitcoins in the long term given that Coinbase doesn't have any obvious cost advantage over other payment processors?


You say "why would I spend bitcoins if I don't have any?" That's the problem of bootstrapping an economy. But I would like to point out that the history of Bitcoin demonstrates it is not such a big problem. Indeed more and more merchants are accepting it, more and more users are setting up wallets, more and more people are giving bitcoins to friends and family, etc.

So given this adoption, at some point you will probably receive some bitcoins. Perhaps a friend will give you bitcoins as a birthday gift, or a coworker will insist to pay you back his sandwich in Bitcoin. Then you will say to yourself "hey, why not spend it on that ergonomic Dell keyboard"?

And you will have played a role in bootstrapping the Bitcoin economy.


I don't think it is plausible that a significant number of people will receive a material portion of their income from Bitcoin. Your examples of ways in which I can receive BTC are trivial in amount and frequency.


If you don't use bitcoin, there's absolutely no reason. Same reason for paypal et al. There are a group of people who prefer to use bitcoin as their payment method, and this is for them.


People who already have bitcoins can now spend them to get an Alienware. I know I would if I didn't lose mine.


If it means that I can get $150 off a new Alienware machine I would go and create a wallet right now to buy some bitcoins.


> But most people have to pay extra to acquire Bitcoins in the first place.

What do you mean by "pay extra"? The functional exchange rate of that currency to bitcoins is the total cost of exchanging fiat currency for bitcoins.


Trading costs are an expense and you pay Coinbase more than the market spread (they need to make money). If you use a credit card to buy BTC you pay those fees directly or indirectly.


> Well Dell wants to promote the currency so much they will be giving a discount

What could be going on here is, Dell is speculating on BTC. So a 10% discount today in exchange for products they still make profit on, will result in potentially multitude of additional profit later. (The discount encourages people to give Dell their BTC, so Dell can sit on them and speculate... it's what a lot of the BTC payment processors are doing presumably).


Dell sells computers and peripherals. They aren't really in the business of alternative currency speculation.

I doubt Dell management (at any level) would green-light gambling with company revenue.

> it's what a lot of the BTC payment processors are doing presumably

Maybe some, but certainly not most.


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


They've voluntarily decided to limit themselves to 40%. https://arstechnica.com/business/2014/07/bitcoin-pool-ghash-...


I'm still a little surprised this was necessary. Miner income depends on the price of Bitcoin. Therefore, miners have a self-interest to protect the integrity of the network. It isn't like there are no alternatives to Ghash.io. It looks they collectively voted that this wouldn't be a big deal, or it would get sorted out by other mechanics (like this), and they were right. It hasn't seemed to significantly effect the price of Bitcoin.


Ghash.io makes money from hosted mining, and takes no mining fees from the pool. So some miners in the pool might go elsewhere (and pay mining fees) for those reasons, but it looks like lots of people are just hoping that someone else will leave.


The economic question is whether Ghash.io will make more money by staying legitimate or by attacking the network. They might be able to get a nice one-time payout with an attack (although even that's debatable), but I suspect that it would be more profitable to provide the legitimate service.

It's the same reason why most bars don't take your drink order and money and then refuse to give you the drink. Obviously, in isolation it would be more profitable to take the money then refuse to give the drink. It's illegal, but you're unlikely to sue because of the cost of litigation. The reason the bar gives you the drink isn't that they want to sacrifice their profits just to make you happy, and it's not that they fear litigation. The reason is that it's more profitable in the big picture for them to give you the drink, because people don't tend to visit bars if they hear that the bartenders take money and don't give drinks in return.


I didn't realize that about Ghash. Are there other zero-fee pools? Why wouldn't Ghash raise their rates? Their pool shrinks and they make more money. What's the advantage of the current setup?


it looks like lots of people are just hoping that someone else will leave.

Yup. Hello, tragedy of the commons. Albeit in a slightly different form from normal.


In this case, it's more like the Bystander Effect[1], which is related to the tragedy of the commons. Both can be the result of what's called the "Diffusion of Responsibility" [2]. Specifically, the game model this is following is the Volunteer's Dilemma [3].

[1] http://en.wikipedia.org/wiki/Bystander_effect [2] http://en.wikipedia.org/wiki/Diffusion_of_responsibility [3] http://en.wikipedia.org/wiki/Volunteer's_dilemma


So now you just have to trust that they don't have 11% more unused CPU power sitting around waiting to suddenly take over the network at any moment.


They don't own the computer power. It comes from the miners who join the pool.

The 51% attack problem is something that needs to be solved for bitcoin. But it isn't as bad as you think it is.

I used to think that someone who took over the network could spend my bitcoins even without my private keys. But that is not true. The actual attacks possible with 51% are significantly more minor than stealing bitcoins.


With 51% a miner could orphan everyone elses mined blocks could they not? Essentially giving them 100% of the rewards.

Thats pretty huge.


All the miners would leave that pool if they did that. I would.


Really? If the pool only has 51% of the mining power but gets 100% of the block rewards, pool members would get coins at double the normal rate. I don't see a lot of people leaving in that event.


And what would happen to the value of bitcoin?


That was and is always the case. Each individual Bitcoin miner can only be certain that they themselves are not colluding with other miners, but for all they know, every single other Bitcoin miner in the world could be colluding against them. Luckily, there is very little incentive to take over the network.


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


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.


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/ Here's the paper http://arxiv.org/abs/1311.0243


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.


While the factual you said we're true, they aren't anywhere near as useful as just linking to a calculator— http://people.xiph.org/~greg/attack_success.html

I don't agree with your conclusions though— at 40% a determined attacker reorgs 6 confirmations with a 50% success rate. Many users don't wait even six.

Consider, even with 20%— thats analogous to having five parties 'signing' blocks— a result which is less decentralized than a fair amount of traditional financial systems. (The comparison is better than it would be with other pools because ghash primarily physically controls their own infrastructure).

Even though this is all quite concerning, Bitcoin is very dynamic— the current state isn't something that will last, one way or another.


Yep, obviously the incentive system of bitcoin is deeply flawed.

It's interesting to see that the market price is completely decoupled from such problems coming into public attention...

I'm holding on to my stash for now, but unless the network is hard-forked to solve this issue (and other major ones on the way), I don't see a real future for bitcoin anymore.

The price could still hit $20k, but the coin would be tightly controlled by then if mining remains centralized.


> Yep, obviously the incentive system of bitcoin is deeply flawed.

Then how do you explain that apparent lack (or at least, very low rate) of such attacks? It seems to me that what we observe is evidence against your description of the incentives.


They did occur, but yes, at a very low rate. The rate will increase once the people with guns realize the benefit of such attacks. This is not the case now, but it will be the case if the price continues to rise.

Imagine that 2 court orders (one to GHash, one to the next largest pool) are enough to reverse a transaction, or to "freeze funds" by not allowing TXs from a certain key.

If the incentive system encouraged independent mining, this would not be possible.


> It's interesting to see that the market price is completely decoupled from such problems coming into public attention...

It's seems "decoupled" because investors know that there is a fairly high chance that the problems will be fixed when it becomes apparent that it's posing a serious threat. Ultimately what Bitcoin is is a social consensus, and that social consensus has rapidly changed before in the face of exploits and will probably do so again. Secondly, at a technical level solving the flawed incentives can be done in a backwards compatible soft-fork upgrade - a hard-fork where everyone upgrades at once is not required, which makes agreeing to and deploying such a change significantly easier.


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.


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%


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


Alternate theory: Bitcoin owners are disproportionately likely to be speculators who have no interest in ever spending Bitcoins except maybe once as a novelty.


I have owned for a long time. This is not a good time to spend, that is all. The price seems to be artificially depressed right now, especially considering all the big companies starting to accept it. In a few months I will use them way more.


I pay my monthly VPN subscription with BTC, and will continue to do so. That's not a store and certainly a niche, mind.


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


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?


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.)


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?


What does bitcoin have to do with this question? Hint: nothing.


It has to do everything with it. If company sells something directly to a customer and is under VAT obligation and it takes bitcoins in exchange for goods.. how is VAT then distributed to tax collecting entity? I guess that's why 3rd party bitcoin processors are popular because business is getting cash, not bitcoins. I presume if they were collecting bitcoins directly, then it would be no different than dealing with non-convertible foreign currency, which is not a legal tender, and it would be impossible to deal with.


how is VAT then distributed to tax collecting entity?

The same way it is with any other payment system, by having the vendor pay the tax collecting authority. Again, the payment system is totally irrelevant here.

Seeing your clarification in the other response:

As for the issue of the exchange rate and convertibility on taxes, I can only speak from the local law here, but the defining section of VAT regulations says that if the sale "contract" specifies the exchange rate between the used currency and EUR, that is the rate to be used for the calculation of VAT due. If you wouldn't mention the current Bitcoin/EUR rate on the invoice, you move into undefined territory.


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


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 :)


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)?


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.


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


Tell that to e-gold


The Dell merchant account on Coinbase has to be US-based but there's no reason they can't accept BTC from anyone world-wide.


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


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)


[flagged]


HN stories cannot be downvoted.


"Modded", not voted.


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..


What do you mean by "just disappear"? People lose it, but because they lose the keys or passwords. It's not like the protocol causes it to poof away out of nowhere. It's entirely user error, and not terribly hard errors to avoid at that.


I meant bitcoins stolen by hackers - in digital world where is practically no anonymity..

..and what about that idea, where you buy HW with graphics card and you can earn bitcoins? It sounds so simple and unbelievable imho. That's why I am curious.


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?


bitcoin


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.


Bitcoins won't disappear unless you lose control of the private key, or if you do something foolish like use a 'brain wallet' with poor entropy or pretend that an unregulated exchange is a bank and give them all of your money.


Just look for it on Google - http://goo.gl/zKuX4S

I am too skeptic about this whole new IT/Finance bubble. If I am wrong please correct me.


Nothing in that Google results page contradicts what I have said.

In cases where bitcoins have been stolen it is because the person failed to secure their wallet, used an insecure wallet (such as brain coins), or foolishly entrusted their wallet to an untrustworthy third party (such as MtGox).


Can you provide me with any proof? I am still not convinced why should I trust bitcoin.. but my karma is going down here.. pretty strange huh :-)




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