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| Room 77, in Berlin, is now Accepting Bitcoin |
Businesses like Microsoft, Dell, and Expedia say they accept bitcoin as payment. But that's not quite accurate.
Bitcoin had a rough 2014, but there was one silver lining: Over the past year, a steady trickle of large companies have begun taking bitcoin as payment. Ever since Overstock.com announced it would start accepting bitcoin roughly one year ago, a number of major brands, including Microsoft, Dell, and MONEY's own publisher, Time Inc., have done the same.
This has been a ray of light in an otherwise dismal period for bitcoin supporters, and few have missed the chance to trumpet such adoption as an indicator of bitcoin's success. One WIRED article even used the currency's recent adoption by a section of the Fortune 500 as the core piece of evidence for bitcoin's importance.
✎ Dismal? I had a blast in 2014, and generated more bitcoin related income to date. What is dismal?
"Irrespective of your opinion, the rise in popularity of cryptocurrencies cannot be ignored," the post reads. "Today, there are a number of billion dollar businesses that accept Bitcoin as a form of payment. These include Dell, Reddit, Expedia, PayPal, and most recently, Microsoft. So for the uninitiated who have not yet grasped what Bitcoin and other cryptocurrencies are, you ought to catch up."
In other words, Hey haters, look at all these huge companies that are accepting bitcoin! How can you ignore that kind of support?
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| Dell Accepting Bitcoin |
✎ Tell us how you really feel, Jake. I didn't get, the exact, perspective you did, out of what the poster said, but that's me. ¯\(°_o)/¯
Well, there's just one problem there: Almost none of the businesses mentioned above technically accept Bitcoin. Instead, they partner with a middleman—generally either Coinbase or BitPay—who takes a customer's bitcoin, immediately converts it into cash, and then deposits the cash in the company's bank account.
✎ Is that how it works? I was totally misinformed. I was under the impression, that, at the merchants discretion, it converted a requested percentage into a currency value, such as USD, then electronically transmitted that value to the bank account held by the merchant.
I had no idea it just turned it immediately into cash, and then someone runs over to your bank and deposits the cash. Do they install a cash printer at the merchant location or something? Put a runner there too?
✎ Let's review, according to Jake, an electronic transaction (bitcoin) goes to the merchant, which goes to a 3rd party, who then magically turns this into cash (a magic cash printer perhaps?), and then take the cash to the bank, and deposits it, turning it back into an electronic transaction, that is then stored in the merchants account, electronically. Sure seems like, and this could just be me, that skipping that whole entire, "cash part" thing, would be more efficient.
In other words, Dell, Expedia, Microsoft, and Time, Inc. don't actually "accept" bitcoins, Per Se. They accept U.S. dollars. It's their bitcoin processing partners who accept bitcoin. They, in turn, make money on transaction fees (in the case of Coinbase), or by selling their software and services as a subscription (in the case of BitPay).
✎ Yeah, we got it the 1st time you said it, we didn't need "other words", the original words worked, and they were pretty much the same words, "don't accept bitcoin" said twice, with different words around them, but still the same, other than the fact they were typed twice, so in that sense, they are different because now there's two sets of the same shit.
They don't actually "accept" Visa either. They don't take (different word) cash at all. I guess that's where this magic 3rd party comes in. Do they accept cash? Or do they just have the magic printer?
That's a rather charitable explanation of why companies take fiat over bitcoin when given the choice. In reality, it's probably because they simply don't trust bitcoin as a stable store of value. Since Dell began accepting bitcoin through Coinbase in July 2014, bitcoin's value has dropped by over 54 percent. If Dell had actually kept the cryptocurrency it received, its revenue from bitcoin sales would have essentially been cut in half.
✎ Had they accepted it, and held on to it, in July 2013, then by December 2013, its revenue would have been increased by 1714.29%. Even today, it would have been increased by 428.57%. We can all speculate, still doesn't make it fact, and besides, companies also spend money and liquidate assets too, whatever makes more business sense at that particular point in time. Think they would have held on to Gold? Oh wait, they don't take Gold, maybe the magic 3rd party cash printer, prints Gold too?
Even Overstock.com CEO Patrick Byrne, one of bitcoin's most outspoken supporters, doesn't think bitcoin is worth embracing in full. His company, which also uses Coinbase, keeps 90% of bitcoin transaction revenue in dollars. Considering the magnitude of Bitcoin's price drop, Overstock has likely still paid a heavy price for Byrn's enthusiasm.
✎ Doubt it, see the aforementioned "spend" mention, and Overstock.com also recently offered to pay employees with Bitcoin[2], so I have reservations about concluding Overstock just put their pile of XBT in a dark corner somewhere and just left it there. Not many companies do that with anything, not even cash..
All of this is not to say more companies taking bitcoin—even through a middleman—is a bad thing for the currency. At the very least, it gives bitcoin holders something (legal) to spend their money on, and increases bitcoin's utility, which, in the long run, could make it a more viable medium of exchange. Cryptocurrency fans should be naming their first born children after Coinbase and BitPay executives since there would probably still be no major businesses accepting bitcoin at all without these companies offering full conversion services.
✎ Unlike all of those organizations that just take American Express directly, with no middleman, processor, or bank or anything. I guess Amex handed out those magic cash printers too?
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| Bitcoin Accepted |
But make no mistake, just because Dell and the like are letting their customers pay in bitcoin doesn't mean they believe in the currency. It's just that intermediary services have made it possible to accept bitcoin without really accepting it. If anything, that shows corporations still don't trust bitcoin with the one thing a currency needs to do: hold its worth. That's the metric we should be using to measure bitcoin's success, not by counting the number of merchants with a Coinbase link on their checkout page.
✎ The only mistake made here, was reading the original article in the first place, because I can't get that time back, it's wasted, gone like the Mt Gox bitcoins.
So now that this (article) is over with. My earlier comments regarding the magic cash machine was obvious sarcasm, but this is not. Visa, MasterCard, American Express, Diner's Club, Bank Debit Cards, Apple Pay, PayPal, Skrill, Google Wallet, Square, Discover, Venmo, and just about every other payment transaction facilitation on planet earth works in the exact same way as the author's critical explanation of how Dell, Microsoft, and the like, are accepting Bitcoins, or not accepting them, as he put it.
Dell doesn't really accept Visa cards, and Overstock.com doesn't really take American Express Gift Cards, what they take is a transaction, with a value, which is exactly what a Bitcoin is. A transaction with a value.
Furthermore, these transactions, are converted into an electronic deposit into an electronic account owned by an organization until the point this value is then turned into another transaction and sent to a new destination via an electronic wire, ACH, paper check, card debit, etc..., and then the cycle repeats, unless somewhere, along the line, the transaction is converted into cash. Which may never happen in this day and time, and generally only by an individual. The truth is, a corporation may never convert it to actual cash. In fact, it's pretty rare.
Think about how much actual cash you carry around these days?
None of these companies are doing anything differently than they were doing before, except that now they will not have charge back risks, fraud, and the high transaction fees associated with other electronic payment forms when accepting Bitcoin transactions, or 3rd party-magic-cash-printing-machine-name-1st-born-after-company-might-print-gold-too-has-link-company partner not really accepting them. (which sure makes me wonder if this author named his kid Amex).
The truth of the matter is that "big companies" are indeed accepting Bitcoin transactions, just like they accept Visa, Checks, PayPal, or Diner's Club (I have never actually seen one of these, but I hear they exist), which is simply an electronic transaction with a value, that, when converted, can be deposited as the currency that their bank account accepts.
Currency, of many kinds, shapes, forms, makes, and models, is already electronically transacted, with, all over the world, and has been, for quite some time now, people just got sick of how expensive, centralized, regulated, and monopolized, it had become, and decided to unite, globally, and do more than just bitch about it.
The result... was a Bitcoin.
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