Surely many will ask "Why would I pay Dell in bitcoins?". Well Dell wants to promote the currency so much they will be giving a discount:
"we’ll be offering a special Alienware promotion wherein customers can save 10% off a new Alienware system purchase (up to $150 limit) when checking out with bitcoin"
Maybe. But that's probably just wishful thinking. Someone in marketing probably came up with this as a way to get some free publicity from all the raving bitcoin lunatics and get some sales. Offering 10% off of their Alienware systems, which are pretty well know as overpriced crap, is probably a fraction of their markup.
Like I say every time this comes up: lack of chargebacks is a mixed blessing. It puts risk on buyers, which shows up as lower demand for the product, with part of the economic incidence falling on the merchant.
To the extent that it's a benefit, I would prefer it be phrased as the ability to opt out of chargback insurance, the cost of which can be shared by merchant and buyer, if it's not worth the cost.
And that is a double-edged sword for the consumer. What if I purchase something and the vendor screws up and refuses to fix it? What if the vendor scams me? Having a credit card gives me the chargeback process to resolve a dispute. Using Dunning-Krugerrands... sorry, bitcoin, gives me no real recourse other than to piss and moan on Twitter.
I get using Bitcoin to purchase when it's questionable or you otherwise want something to be anonymous, although with a physical good it is much harder to be anonymous, but why in the hell would I care if someone knows I bought an Alienware laptop or a pack of socks on Overstock? And that is assuming they someone got ahold of my transaction records anyway.
> What if I purchase something and the vendor screws up and refuses to fix it?
You tell your friends or post on the Internet that they did so, and more importantly, you don't purchase things from vendors that don't have a good reputation.
What do you do if a restaurant gives you horrible service? You don't sue them, because litigation is much more expensive than it's worth to you. Restaurants don't tend to provide good service out of respect for the law or fear of litigation, but rather out of the desire for continued business from customers.
Or better yet, I just issue a chargeback and get my damned money back.
The restaurant is just a terrible retort. I'm physically in a location to receive a service. This has nothing to do with paying for a product and not receiving it.
Of course if I'm receiving bad service in a restaurant I will speak with the manager. If he refuses to speak or help I will demand a check and pay without tipping. Simple as that.
> Or better yet, I just issue a chargeback and get my damned money back.
Doesn't work with cash, and might not work depending on how the credit card company's arbitration works.
> The restaurant is just a terrible retort. I'm physically in a location to receive a service. This has nothing to do with paying for a product and not receiving it.
Your physical presence is irrelevant to the analogy. The point is that acting legitimately is in the interest of both the company and the customer.
> Of course if I'm receiving bad service in a restaurant I will speak with the manager. If he refuses to speak or help I will demand a check and pay without tipping. Simple as that.
Then you're out the cost of your meal. The restaurant gets your 20 bucks, and didn't have to provide good service, which is clearly profitable for them in this isolated case. So why don't all restaurants do that?
No, it's just fucking wrong. My point is that Bitcoin leaves the consumer defenseless. Eating at a restaurant Has nothing to do with that. I could in fact refuse to pay.
My point is that in most everyday transactions, the consumer's defense is not the legal system of the country he or she lives in (because it's too expensive to litigate most everyday transactions), but rather market mechanics like reputation and competition.
I've yet to be so scammed by a company I purchased products from since they inherently have MUCH more to lose by being dishonest. Obviously that's anecdotal but I'm still 100% convinced the chances of being scammed by a reputable merchant is absolutely miniscule.
Looking at the other side of the equation- I've had TONS of customers attempt to cheat me in one way or another. Buyers have very little to lose and are much more likely to be irrational/outright thieves than someone who took the time to build up a business.
As a buyer I'll happily take a discount equal to the cost of CC transaction fees over the "buyer protections" any day of the week.
I've also never been scammed. It's worth noting that I have initially had bad experiences with merchants, e.g. incorrect shipments, severely delayed shipments, etc. But the merchants have, so far, always gone to reasonable efforts to make things right.
As someone else said, all those protections causes merchants to just refuse transactions to people in various countries and contexts. It creates a payment alternative for those people to buy things because merchants don't have to expose themselves to the fraud risk.
There's no fees because you can't tell a merchant they are are going have to pay fees for handling the funny money. Do you think Dell is over the barrel with fees? It's one thing if you just got your first cheap card scanner as a merchant or use stripe. It's another thing if you bring volume.
Coinbase is out there begging to be allowed to put the "Bitcoin accepted here!" sticker on any window they can so that they can put consumers in exactly the same, or worse, spot they are in now should BC become more than funny money.
For moving money in shadows, there's Bitcoin. For everything else, there's MasterCard.
My company started accepting bitcoin a few months back. We use BitPay.com to offload risk (they instantly convert a BTC payment into your preferred currency and cash you out at the going rate).
We haven't made any sales with BTC yet... (as my VP reminds me weekly ;-), but none-the-less, the company views it as a great alternative to what normally would constitute a "high risk" shipment (usually to countries were high credit card fraud rates or other scams originate from... if we get our money now, and there is no risk of chargeback, etc, then we will ship the order).
So, it's not really a "marketing ploy" as you put it, but rather a good vehicle to accept orders the company may have normally rejected due to too much risk.
So, uh, what's the company? I got me some Bitcoins here. (Partially serious; chances are you don't sell what I need, but if you did, I'd rather support a Bitcoin accepting company.)
Have patiencce. Bitcoin is a very new technology and mass adoption will definitively take time, but precisely because of that you will see significant rewards by being an early adopter.
I wish I could find the link but I read an interesting story about the history of successful new payment types. Dwolla (not), mPesa, PayPal, Venmo, btc. The successful ones all had an early sustained uptick. btc looked more like Dwolla which had not. So it appears that the patience argument, which in general makes sense, may not apply here.
I can't understand the point of your argument. You're saying that Dell chose to integrate Bitcoin because it will be noticed by Bitcoin users, who will then purchase Dell products with bitcoins. What is wrong with this motivation, and what other possible motivation would there be to integrate any payment method?
Major companies accepting bitcoin have gotten a fair bit of free press even if they haven't converted to sales in bitcoin.
So they aren't doing it to get bitcoin users they are doing it so that they get free publicity from the news media and bitcoin users going around talking about them all the time.
For example I've heard about Overstock more in the past year than I have in the past decade and they are constantly in the news. Despite the fact that bitcoin sales figures are low and have been in decline since day one for them.
> So they aren't doing it to get bitcoin users they are doing it so that they get free publicity from the news media and bitcoin users going around talking about them all the time.
That's almost certainly part of the story. But the only reason they get free publicity that they believe will benefit them is that some people are genuinely fans of Bitcoin, enough so that the negative effects of potential customers who hate Bitcoin will be outweighed by the positive effects of potential customers who love Bitcoin.
Any publicity that isn't negative will benefit them even if it is a neutral story for most people it still gets their name in front of the news watching public.
>enough so that the negative effects of potential customers who hate Bitcoin will be outweighed by the positive effects of potential customers who love Bitcoin.
I don't think people who hate bitcoin will avoid a store because they accept it. I mean I'm pretty vocally outspoken about bitcoin in that I don't think it offers anything for consumers and I don't think it will ultimately succeed but its not like I'm going to avoid Newegg from now on. :)
So ultimately by accepting bitcoin even if you don't get a single bitcoin customer you probably get spoken about in the news a bit which will maybe add more general customers. Thats more of a belief in free publicity then bitcoin though.
Overstock acceptance is absolutely not a marketing ploy. The CEO of overstock gave a talk at a Bitcoin conference. He is very passionate about certain areas of philosophy, and Bitcoin tickles his philosophical fancy.
I think it's probable that someone in marketing created this campaign ... and they're careful to call it a "pilot" in the announcement (so they can pretty easily back out). On the other hand, if Bitcoin sales are adding to their gross income, why would they get rid of the program? If it's cannibalizing other sales channels, it may not be worth the extra effort.
> Someone in marketing probably came up with this as a way to get some free publicity
Bitcoin comes with essentially none of the consumer protections associated with credit card payments[0]. All of those consumer protections represent liabilities to merchants.
Similarly, merchants usually bear the costs associated with disputes and/or fraud (depending on how they're resolved, and this depends on the company). Bitcoin offers a great way to process these transactions without any of these risks for the merchants (oftentimes at the cost of shifting those risks onto the customer).
So, it's not marketing so much as some higher-up realizing that they can now offload some of their liabilities onto their customers. At this point, why wouldn't they?
[0] There are other consumer protections that are independent of payment method, but I'm referring to those specifically.
And the Alienware promotion? Alienware is used primarily for video gaming. There's quite an overlap between the demographics that play video games and own bitcoin ("geeks").
A partnership with Coinbase is seen as low enough risk (they're backed by A16Z!), that conventional merchants are prepared to use them as a payment processor; first, probably, in exchange for publicity, and later, because they will be at a competitive disadvantage if they don't.
But most people have to pay extra to acquire Bitcoins in the first place. And 10% is a promotion not a persistent discount. Why would I pay Dell in bitcoins in the long term given that Coinbase doesn't have any obvious cost advantage over other payment processors?
You say "why would I spend bitcoins if I don't have any?" That's the problem of bootstrapping an economy. But I would like to point out that the history of Bitcoin demonstrates it is not such a big problem. Indeed more and more merchants are accepting it, more and more users are setting up wallets, more and more people are giving bitcoins to friends and family, etc.
So given this adoption, at some point you will probably receive some bitcoins. Perhaps a friend will give you bitcoins as a birthday gift, or a coworker will insist to pay you back his sandwich in Bitcoin. Then you will say to yourself "hey, why not spend it on that ergonomic Dell keyboard"?
And you will have played a role in bootstrapping the Bitcoin economy.
I don't think it is plausible that a significant number of people will receive a material portion of their income from Bitcoin. Your examples of ways in which I can receive BTC are trivial in amount and frequency.
If you don't use bitcoin, there's absolutely no reason. Same reason for paypal et al. There are a group of people who prefer to use bitcoin as their payment method, and this is for them.
Trading costs are an expense and you pay Coinbase more than the market spread (they need to make money). If you use a credit card to buy BTC you pay those fees directly or indirectly.
> Well Dell wants to promote the currency so much they will be giving a discount
What could be going on here is, Dell is speculating on BTC. So a 10% discount today in exchange for products they still make profit on, will result in potentially multitude of additional profit later. (The discount encourages people to give Dell their BTC, so Dell can sit on them and speculate... it's what a lot of the BTC payment processors are doing presumably).
"we’ll be offering a special Alienware promotion wherein customers can save 10% off a new Alienware system purchase (up to $150 limit) when checking out with bitcoin"