BITCOIN

Frequentlyhere

No replies to my question I see. 

I did try googling it, but was of course immediately swamped by thousands of SEO paid puff pieces breathlessly exclaiming that "yes, you CAN!" with strangely zero mention of whether you're also going to be paying lots of fees to do so.

I gave up on finding UK material, and did find this from the US from last year.

"Currently on bitinfocharts.com, the average transaction fee is $15. Two weeks ago, it was around $30."

"Using a popular service, I was able to buy a $5 gift card to use on Amazon by connecting my crypto wallet. The process was slightly time-consuming and the transaction page did not break out the service fee.

Future of money.

But, god the amount of bilge, and so sad to see it from some reputable sources. This nerdwallet article for example has a guide for retailers accepting bitcoin. I thought it might be well balanced but then came across these gems:

Pros to accepting bitcoin: "If you choose to hold Bitcoin, the payments you accept could potentially become more valuable over time." Hmm.

Convenience of credit card compared to BTC "Transactions are quick and how-to is well known, but underlying processes can be hairier."

Yes indeed, every time I use contactless I'm always thinking "well, this is superficially fast and convenient, but just think of those underlying processes!"

Adyinvestment

I don't use one because I don't want to spend my Crypto, but a common way is a Visa/MasterCard based card linked to an exchange.

You would use it in the same way as a debit card linked to your account, and it accepted everywhere your bank card is, the retailer does not know the card is using Bitcoin.

Most cards are free with no/little fees, and some give crypto cashback.

Think of it as using a uk debit card abroad, the price of the cup of coffee in Euro's/GBP/whatever is converted at the current bitcoin to that currency price without any exchange fees.

P1Fanatic

Adyinvestment said:

I don't use one because I don't want to spend my Crypto, but a common way is a Visa/MasterCard based card linked to an exchange.

You would use it in the same way as a debit card linked to your account, and it accepted everywhere your bank card is, the retailer does not know the card is using Bitcoin.

Most cards are free with no/little fees, and some give crypto cashback.

Think of it as using a uk debit card abroad, the price of the cup of coffee in Euro's/GBP/whatever is converted at the current bitcoin to that currency price without any exchange fees.

Thanks for the reply but I am still confused. Buying a coffee for £2.99 I know exactly what its going to cost me on my credit card. If I use a Crypto card my first coffee could be one price and the 2nd coffee could cost me more of less as the rate of crypto fluctuates so much. I get the comparison to foreign card purchases as even with a regular credit card its hard to know the exact exchange rate at the time of purchase but its not likely to deviate much. Mastercard publish their rates and banks who don't charge for foreign purchases are usually in line with those rates. Whilst some Crypto cards offer no fees, I would be surprised if they are not building a charge into their exchange rate.

I still don't understand how its all recorded either. For arguments sake I own one bitcoin. How do I enable a crypto card to use it e.g. do I have to buy credit on the card by selling part of my Bitcoin? Or do I associate my crypto card account with my bitcoin and the exchange takes off X value at the current GBP rate?

Adyinvestment

I don't know how all the cards work, but I have a friend who uses one all the time (he paid for my fish and chips some time ago in this thread). As far as I understand it if he buys a coffee for £2.99 then the exchange converts/sells the equivalent £2.99 of his Bitcoin holding at whatever the GBP/Bitcoin exchange rate is at that time, there are no exchange fees for this.

As Bitcoin is volatile the amount of Bitcoin used is likely to vary a little minute to minute. I guess the exchange is making its profit from the buy/sell spread, similar to selling an individual stock which will be at a lower sell price than the buy price.

HCIMbtw

Couple of questions raised here.

Why would retailers use BTC over standard GBP payment? better payment fee's is the most obvious reason for me. I'm not sure on the detail of visa/mastercard/amex rates for companies being paid, but there is big opportunity to disrupt here for crypto in general (not necessarily BTC). 

Speed of bitcoin payment? when transferring money between wallets you typically get a pretty quick, within 30s response of a pending transfer, but the actual transfer happens on the network in about 10 minutes or so. This obviously wouldn't be good for normal shopping, which is why things like the lightning network have been developed, to provide an effectively instant settlement process for Bitcoin. 

Other crypto assets (e.g. Ethereum) have challenges operating as payment layers as well, for example with ethereum the more people who use it, the more congested the network is, the more it costs to transfer and use the network, so what started out cheap platform to transact on was ending up close to $100 per transaction?!. Ethereum is trying to solve some of these issues with the development of its own network, but you might have heard people talk about layers 2's or L2's and these are networks built to provide different/improved functionality to layer 1 network, e.g. make transactions cheaper, faster, provide improved security etc. 

Section62

HCIMbtw said:

Why would retailers use BTC over standard GBP payment? better payment fee's is the most obvious reason for me. I'm not sure on the detail of visa/mastercard/amex rates for companies being paid, but there is big opportunity to disrupt here for crypto in general (not necessarily BTC). 

How can you assess it as a 'big opportunity' if you don't know the detail of real-world card charges?

The amount charged by the card companies/banks is trivial in comparison to the potential variation in value of bitcoin through the course of the day.

A few months ago the theme of this thread was Bitcoin is a store of value, not a method of paying for your coffee.  Now the discussion seems to have swung back to paying for coffees.  Has something happened to prompt that change of direction?

Malthusian

Section62 said:

A few months ago the theme of this thread was Bitcoin is a store of value, not a method of paying for your coffee.  Now the discussion seems to have swung back to paying for coffees.  Has something happened to prompt that change of direction?

It dumped 60% so swapping it for a coffee seems like less of a loss. If it was rocketing in value then it would be crazy to exchange BTC for coffee and miss out on future gains, rather than offloading some worthless fiat onto the barista. You'd be the guy who paid 10,000 BTC for a couple of pizzas all over again. 
This is of course the exact opposite of how successful long term investment works, but it's easy to say "you shouldn't sell at the bottom of the market, even if you need caffeine" when you're an MSE-reading long term investor. Most people think that it makes more sense to sell low and buy high, that's why we have crashes and bubbles.

DannyCarey

Section62 said:

HCIMbtw said:

Why would retailers use BTC over standard GBP payment? better payment fee's is the most obvious reason for me. I'm not sure on the detail of visa/mastercard/amex rates for companies being paid, but there is big opportunity to disrupt here for crypto in general (not necessarily BTC). 

How can you assess it as a 'big opportunity' if you don't know the detail of real-world card charges?

The amount charged by the card companies/banks is trivial in comparison to the potential variation in value of bitcoin through the course of the day.

A few months ago the theme of this thread was Bitcoin is a store of value, not a method of paying for your coffee.  Now the discussion seems to have swung back to paying for coffees.  Has something happened to prompt that change of direction?

Visa and Mastercard is at least 2.5% isn't it? Payments on lighting at something like "1 sat" i.e. fractions of a penny. Presumably if doing it through a 3rd party provider like Strike, then they will have a competitive fee, like 0.5 - 1%. In the end it neither matters if the shop owner takes Bitcoin or fiat currency, what matters to them is paying less of a merchant fee every time someone comes into their shop. 

It doesn't matter what people here attempt to define Bitcoin as.. you could say it is money that can be spent on milk, or held for the long term with a 13 year history of going up in value dramatically. Whether that continues to be as aggressive remains to be seen...

HCIMbtw

Section62 said:

HCIMbtw said:

Why would retailers use BTC over standard GBP payment? better payment fee's is the most obvious reason for me. I'm not sure on the detail of visa/mastercard/amex rates for companies being paid, but there is big opportunity to disrupt here for crypto in general (not necessarily BTC). 

How can you assess it as a 'big opportunity' if you don't know the detail of real-world card charges?

The amount charged by the card companies/banks is trivial in comparison to the potential variation in value of bitcoin through the course of the day.

A few months ago the theme of this thread was Bitcoin is a store of value, not a method of paying for your coffee.  Now the discussion seems to have swung back to paying for coffees.  Has something happened to prompt that change of direction?

They vary based on the contract for company I think and the format of card, they are either a % of transaction value either 1-3% or minimum transaction value, hence why you get shops applying 50p charge per card 

lots of articles about people moaning that visa have them over a barrel, paying thousands a year and for a small business that can be material... you even have the biggest companies in the world weighing into this as an issue - https://www.theguardian.com/technology/2022/feb/17/amazon-visa-resolve-credit-card-dispute-global-deal-payments - I don't need the 'detail' to know that it's an opportunity 

Visa market cap $500bn, to help one person pay another when software can do it for $0.. 

Also note my comments aren't bitcoin related, just generally about crypto opportunity, it is disruptive to traditional finance.. so you can conflate points around bitcoin and coffee, but your missing the point 

Regarding BTC, I absolutely see it as store of value. I think it can work as a payment service with stuff like the lightning network, that might happen but its not why I back it or how I see its use case...

Section62

DannyCarey said:

In the end it neither matters if the shop owner takes Bitcoin or fiat currency, what matters to them is paying less of a merchant fee every time someone comes into their shop.

HCIMbtw said:

They vary based on the contract for company I think and the format of card, they are either a % of transaction value either 1-3% or minimum transaction value, hence why you get shops applying 50p charge per card 

lots of articles about people moaning that visa have them over a barrel, paying thousands a year and for a small business that can be material... you even have the biggest companies in the world weighing into this as an issue - https://www.theguardian.com/technology/2022/feb/17/amazon-visa-resolve-credit-card-dispute-global-deal-payments - I don't need the 'detail' to know that it's an opportunity 

Visa market cap $500bn, to help one person pay another when software can do it for $0..

Paying less of a merchant fee isn't the most important thing.

Businesses pay the fees (not withstanding the grumbling) because they want as much certainty they will get paid for their goods/services with the least admin overhead.

Card payments through the Visa/Mastercard system represent a sweet spot between cost and certainty of getting paid the value of the goods/services.  Businesses also need reliability, so when a customer wants to pay they can pay.

Saving a transaction fee (I'd accept somewhere in the 1% to 3% range) doesn't make any sense if it means using an alternative system whose characteristics are such that by the end of the day the £1-equivalent you took in the morning could be worth 5, 10, 20, 50% less than when you accepted payment.

You can't know whether something is an opportunity without having a good understanding of the detail of the thing you aim to replace.  Lord Sugar would be excoriating of a candidate whose brilliant idea was based on a lack of understanding of how the current business arrangement works.

If there were a massive opportunity for some kind of alternative to Visa/Mastercard then the market would already be flooded with those alternatives and/or we'd be crushed in the retailer stampede to adopt crypto payments.

The reality is the current system - as expensive as it is - ticks the important boxes for the people using it.

HCIMbtw said:

Also note my comments aren't bitcoin related, just generally about crypto opportunity, it is disruptive to traditional finance.. so you can conflate points around bitcoin and coffee, but your missing the point

I wasn't missing the point. Paying for a coffee (or pizza) is a shorthand for utility.  Technology can't be disruptive if it doesn't have utility.