Please see update at the end of this post…
Recently there was a news item that Newport Beach Lamborghini sold a Tesla Model S Performance car, whose payment was made 100% using bitcoins.
Whilst this is great news for Bitcoin advocates, it might not be the best of news for Newport Beach Lamborghini. The price for 1 BTC on (3rd/4th December) was about US$ 1,150. Days later the price dropped and depending on which day we look at the price was hovering between US$ 800-900 per 1 BTC.
Whilst Newport Beach Lamborghini may be able to absorb the loss in value when converting from Bitcoin to US Dollars, other merchants may not have that holding power. Newport Lamborghini however, can safely say, the publicity they got out of this adequately covers their loss (assuming they are not holding on to Bitcoins and started the conversion process).
What if the reversed happened, and Bitcoin shot up to US$ 2,000 per BTC shortly after the trade. Could the owner ask for some coins to be refunded?
Grey area if you ask me.
This is exactly what is keeping merchants at bay from accepting Bitcoins. The up/down swings in price is a hurdle. Granted everyone wants Bitcoin to succeed, the reality is everyone wants Bitcoin to succeed as a currency on which they can get in now and after a few weeks / months, it will x10 or x100 in price so they can make a profit. Bitcoin was not intended for that. It was meant as a currency to trade, globally, anonymously, in real-time, without control, without borders, without any authority, without inflation.
Bitcoin is meant for trading between Buyers & Sellers – globally. Not for speculators (but that is something that cannot be avoided at this time).
The ugly side of Bitcoin for now, remains the wild price swings. Until these speculative up/down prices do not stabilize, quite a large swath of merchants would be hesitant in accepting Bitcoins for their product/services.
The irony is that the swings will keep on happening until and unless merchants and buyers step into the arena, increasing bitcoins liquidity in the products/services trade forrest, outside the Bitcoin exchanges ecosystem. Companies like BitPay are at the forefront of such mass adoption of Bitcoins, but we need more. A whole lot more.
So if you’ve been thinking of accepting Bitcoins as a merchant, get on board today. Waiting will not help. Go ahead, take the plunge and experience the benefits of an online digital crypto currency.
I posted a tweet about this blog entry and got the following reply from Bitpay.
So I stand corrected. The volatility is zero for the dealer because Bitpay will actually convert the Bitcoin sale into US Dollar at the transaction time (until and unless you opt for keeping Bitcoins, in which case volatility applies). This is clearly mentioned on Bitpay’s website regarding Direct Deposit of Bitcoins.