While they "take" bitcoins, they do not do any business whatsoever IN bitcoins. Nothing is denominated in bitcoins, the bar never receives any bitcoins, etc. Bar prices its stuff in $, bar gets paid $. The End.
It's almost as if the bar doesn't want to reprint its menu twice a day to account for the bitcoin pricing bubble.
Heaven forbid bitcoin be used for anything. If you buy them just to sit on them, you're a dirty speculator contributing to the bubble. But if you use them to purchase something, well, there's something wrong with the way you did that as well. I'm not sure what it would take to impress some people.
My point is that this bar, run by a person who has drunk the Bitcoin Koolaid, is still unwilling to take any of the risk associated with doing business in bitcoins.
As long as you don't keep too much of a BTC balance, the risk seems minimal. I guess the trick is that with a currency that's increasing in value, it's very tempting to keep a large BTC balance.
Something I've come to realize is that there are now only two kinds of people: those that have successfully managed that simple exercise, and those that think Bitcoins are the magical future.
It's still not BC as currency, though: the prices are in USD, and then get converted for you. That's probably a good thing from the short term user's viewpoint, as BC is as volatile as a very smelly thing right now. There are all sorts of traps for a long-term user, though.
I'm not very well-versed in economics, but would setting prices to a relatively non-changing BTC value not actually be a good thing to stabilize its value, if enough people were to do that?
What is the incentive to do so? BTC is expected to rise in value over time since it's a deflationary currency. So any sane businessperson should expect to be constantly decreasing the BTC price over time. It's a feature, not a bug.
Yes, but the same effect happens (in the opposite direction) with a normal inflationary currency. Every few months or years, prices change to reflect their new value. When prices are doubling or halving once a week, that starts to get problematic (see interbellum Germany, 2000s Zimbabwe).
Almost certainly not, given that Bitcoin intentionally operates the same way cash transactions do. And BitPay specifically mentions that feature on their front page: "With Bitpay you can eliminate the risk of Fraud, Chargebacks, and Identity Theft from internet payments.".
It was my understanding that bitcoin transactions took about half an hour to clear? So how can they then say "The transaction happens instantaneously, EVR promises." Or, is this one of those things that has been fixed recently?
It's about trust. The transaction hits the network immediately. Then a miner puts it in a block as soon as right away, or as slow as... several days (if you put a transaction fee, you'll move to the frontish of the line). Once its in one block, every subsequent block is a vote for its authenticity.
So, if I accept a bitcoin right away, I open myself up to a fairly trivial double-spend attack. If I wait for one confirmation, it's harder, but still sorta maybe doable. If I wait for several (1-2hours), it's near impossible.
Compare with taking cash which may be phony, or a CC which is easily charge-backable, and the business's risk is ... close enough to the same.
Not really. The transaction arriving over the Bitcoin network, which takes around 10 seconds, is the first pass of authenticity testing - it won't work unless the account has the money and the sender has the rights to that account and the nodes forwarding the transaction haven't seen any other spends of that coin since the last block. At that point, doing a double-spend reliably is already hard enough that anyone who can do it probably has much better things to do with the ability than try to skim $20 worth of drinks at a bar.
One confirmation, that is, being included in one block, takes anywhere from a few seconds to 15 minutes, probably averaging 5-7 minutes. With that, it's already virtually impossible to double-spend without having enough mining power to take 51% of the current mining network. That's a bit more hashing power than the entire current mining network combined. That'll earn you hundreds of thousands of dollars a day just doing honest mining, and potential double-spend activity well into the tens of millions or more. Again, why bother with that to rip off a $20 bar tab? Or even a $2,000 bar tab?
The answer to this is a bit complex. But basically, if you're dealing with smaller transactions, it's OK to wait only a few seconds.
If we're talking values <$250 (an arbitrary number that I think is a "small" value for a business), you will be perfectly fine waiting only a few seconds for the transaction to go through.
However, there is a small risk of what is called a "double-spend attack". Basically, a criminal can send two Bitcoin transactions at once (one to the person they are paying and one to themselves). If they get lucky or can leverage a lot of computing power, they can make the person they are paying think they received their Bitcoins, but in the end, the attacker might be able to make the transaction in which they sent money to themselves go through first.
Thankfully, such an attack is rather hard to pull off. If an attacker sends two transactions at once, some clients can detect such an attack and display a notification within a few seconds of the transaction. It also takes some luck and computer skill. Basically, it's not a repeatable process that someone can get away with. The other way, involving lots of computing power, is very expensive to pull off and gets exponentially harder as time goes on, which is why it's not really a risk for small transactions.
So basically, there is a small risk of losing money if you only wait a few seconds, but almost no risk if you wait a few minutes. If my math is right, it takes, on average, 5 minutes for a block to confirm from any random point in time (if my math is right, which I'm not at all confident it is). So if I was doing a thousands-of-dollars transaction, I would wait for one block (5 minutes average? Someone check my math here), but if I was doing tens of thousands of dollars, I would wait for 3 blocks (closer to half an hour).
I'm very sure both the replies to you here are incorrect. These are not 0 confirmation transactions but are instead going through a company called Bitpay.
I went out on a Monday night to EVR, met Charlie through a mutual friend. I had no idea that he was involved with Bitcoin at the time, nor that he was planning on accepting it at EVR. Really down to earth guy, plus the free drinks didn't hurt my opinion of him. :)
> Servers bring over a tablet with a BitPay app that lets merchants accept Bitcoins as a form of payment. The app converts the dollar value of the bill into Bitcoins and gives customers a bar code...Customers would use their smart phones to scan the bar code that will deduct the amount from their Bitcoin accounts. BitPay will credit that $15 to the bar.
This is kind of counter the spirit of direct P2P of bitcoin. I'd expect the transaction to happen directly between the customer wallet and the wallet of the bar. Why is the intermediary / conversion needed at the time of the transaction?
It's not much different than any other currency in this regard. You can trade USD cash for goods directly in person, which is easy and works fine, but you can also choose to use any of various financial services built on top of USD, like credit cards.
Bitcoin is still superior to USD cash in many ways, however, because the "direct P2P" transactions are virtually immune to fraud (e.g. counterfeiting) and can be done online. Of course, the financial services for bitcoin are relatively new, which means there aren't any particularly experienced and trustworthy options. It takes time and a long transaction history because the average person will trust a financial service provider—remember that credit card companies used extensive advertising campaigns in their efforts to get people to think of them as normal everyday USD transactions.
Right, but there is a slight difference. Credit cards work as virtual money and enable credit as an extra service attached to them. Direct bitcoin transactions are more similar to debit cards (rather than cash) in a sense that they enable virtual money and you pay from what you have (except that you don't need any service to back that up, unlike the debit cards which require banks to enable them). I.e. ideally in the bar example, one wouldn't need to use any financial services, but would still be able to pay with virtual money a la just using a card, of course for that the circulation of bitcoins needs to be more active, so bar could actually use them, instead of opting for instantaneous conversion.
The bar doesn't want to price its drinks in bitcoin, and it doesn't want to hold bitcoin either. The BitPay intermediary is needed to display the bar's USD price as a bitcoin price to the customer, and to convert the customers bitcoin payment into a USD receipt for the bar.
Pricing doesn't need to be in bitcoin, the rate can be obtained at the time of purchase, but the purchase still can happen wallet to wallet. If the bar doesn't want to hold bitcoins - that's a different story of course.
Sure, it doesn't need to hold them forever, but they can manage them in their own pace, instead of instantaneously converting them to $. This is just a sign that bitcoins are still very volatile and don't have wide usage (otherwise the bar wouldn't rush to convert them instantaneously through an intermediary, but instead would find how to use them for their needs as bitcoins, converting them to $ only when needed to pay the salaries and etc.). It's still great that they even offer an option to pay in bitcoins.
"Manage them in their own pace" entails accepting exchange rate risk, at least until their inputs are priced in bitcoin. Their core business is mixing drinks, not currency speculation, so it makes perfect sense that they don't want to hold bitcoin.
From the bar's point of view this is really no different to a Canadian coming in to the bar and buying a drink with their Canadian credit card - in that case, the customer is debited a $CAD amount by their bank (plus a currency conversion fee) and the bar receives $USD in their account.
> "Manage them in their own pace" entails accepting exchange rate risk, at least until their inputs are priced in bitcoin.
That's exactly my point. Dollars are viewed (and are) way more stable and less risky at present. For real bitcoin economy to expand though, this needs to change, so more and more bitcoins are used for direct transactions, rather than for such instantaneous conversion.
As long as you pay tax its fine, anyway for the bar they are accepting USD. Bitpay accepts the transaction and pays USD to the bar, Bitpay worries about the BTC they collected.
>"When we opened a few months ago, I said that we needed to be the first New York bar to accept Bitcoins," said Charlie Shrem
So it's more like "Long-time Bitcoin promoter finally able to accept Bitcoins".