I assume they are using a bitpay or similar which allows merchants to instantly convert bitcoin to USD (or equiv) funds at the time of purchase. Using this system, the merchant always receives the correct fiat amount, while still benefiting from the other advantages that bitcoin brings (low fees, no chargebacks).
Wow. No chargebacks? I know almost zip about BTC but this seems a bit dangerous for the consumer, though VERY merchant friendly. If BTC goes mainstream, do we expect a middleman-type escrow service to arise for everyday purchases?
You can do clever things with BTC to make them reversible in cases where reversibility is nice. First, you can implement a centralized PayPal-type company that clears after X days to implement chargebacks. Boring, but easy to understand and effective. The clever way to do it is with M-of-N transactions, http://www.bitescrow.org/
PS. When I order from Amazon, etc. I trust them. I get 2% back using bitcoins (from Coinbase.com (-1%) -> Gyft (+3%)). I like the 2% discount more than the credit risk of Amazon not making me happy at the end of the day : )
Fidelity offers a 2% cash back on everything card. Amazon's credit card also gives you higher than 2% on Amazon purchases. Could you elaborate more why you do a double conversion to buy something rather than a straight credit card transaction?
Basically at this point it is tax avoidance. By using btc you avoid paying capital gains tax since basically everyone who holds bitcoins right now has seen their investment go up in value. Converting back to usd is not as good as spending the btc.
It is kind of nice having a currency that appreciates in value over time vs slowly getting robbed by inflation or capital gains tax.
You can't reverse an ACH or a wire, yet, both are widely used. Once company duped an ACH payment for nearly $1,000 and then they went out of business (one can wonder if this was done on purpose), and I couldn't do anything to get it back working with Bank of America. So, every time you write somebody a check, think twice!
Bitcoin definitely favours the merchant/receiver in this aspect. Escrow can be used where desired, though it probably won't make sense for all everyday purchases (escrow for a cup of coffee over the counter is probably a bit overkill). The upcoming payment protocol in Bitcoin 0.9 explicitly allows the merchant to issue refunds if he wants to.
There was a prolonged dip in the price in this weekend, and I was wondering if this had an effect. There've been many large Bitcoin transactions recently, especially on Bitcoin Black Friday. For instance, Amagi Metals apparently sold $900,000 worth of gold and silver for Bitcoin using Bitpay as their processor.
That alone is currently a significant volume to liquidate. Enough to move the price 4-5% on some exchanges. Bitpay only takes a ~1% fee, but I assume their exchange rate is padded to absorb some of that risk. They may also sell bitcoin off the exchanges, which doesn't have a direct impact on the price.
BitPay takes 1% if you're on the free plan. Otherwise, there's just a monthly fee (well, you need to be on the $300/mo plan to get unlimited volume otherwise you're limited to $300,000/mo and $10,000/transaction)! https://bitpay.com/pricing
The payment processor (eg BitPay) takes that on. Markets are still razor thin by fiat currency standards, but are 10x to 100x thicker than a year ago. For example, buying 1.5 million USD instantly would raise the price about 4% (using just one exchange, Bitstamp)
Sometimes, a purchase or a sale of Bitcoins in the hundreds can take the market up and down by as much as 5-10% depending on the order book. I'm not sure if anybody has noticed, but Coinbase bases the price on quantity as they need to place a market order and then you depending on Bitstamp's order book state at the moment, the price difference can be huge! How are you gonna explain to consumers that they have to pay more, because they're placing a bigger order?
Since most transactions are on the order of 1/1000 of a Bitcoin, it's useful to rephrase what you said as: around 150 million mBTC are being transacted (on the blockchain) per day.
Yes, that's the first thing that came to my mind as well. I guess they'll stay on the safe side as much as they can by inflating the prices in bitcoin.
