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by nedwin·12y ago·view on hn ↗
We were looking at adding Bitcoin to our startup but worried about the volatility. What if all our customers paid in Bitcoin and it crashed?

The reverse is also true - we might gain upside if the price continues to Skyrocket - but how do you protect yourself from this?

6 comments
Bitpay immediately converts your Bitcoin payments to USD. Customers pay with BTC, but you receive USD.
Well, assuming Bitpay can afford to meet the USD payments. Behind the scenes they can't actually convert Bitcoin to USD instantly, so they're basically eating any change in the Bitcoin-USD rate between the transaction happening and them cashing out. If there's a big enough crash or they receive so many payments that the market cannot absorb the Bitcoin sales, they could easily find themselves unable to meet their obligations. (Things actually looked a bit hairy when BFL used them for payments just because of the sheer amount of Bitcoin they had to convert in a short period.)
> Behind the scenes they can't actually convert Bitcoin to USD instantly

What if they have an agreement with one or more exchanges, and complete the transaction by satisfying the current highest bids?

I hope this will not always be the case with merchants, otherwise Bitcoin will never sever its ties with the dollar.
My bet is that you don't have to worry about it, because only a VERY small percentage of your customers will actually pay using bitcoin.

If all your customers paid in BTC, it's very true that you might take on an unacceptable level of risk. But as a practical matter, accepting BTC as an alternate form of payment might be a great way to diversify your holdings.

It's called variance. It will either go up or down. However, the general trend of Bitcoin is upwards so it's easier to argue that it's more likely to go up in value. So accepting Bitcoin as payment is +EV in my opinion.

However, some businesses currently could suffer if they accepted Bitcoin due to it's volatily. If you're selling SAAS your cost is tiny so accepting a more +EV payment currency is probably beneficial.

However if you're selling physical widgets on very slim margins and don't have anything in place to reduce your exposure via quick selling of Bitcoin, and cashflow is/could be an issue it's probably not suitable.

The BTC support we offer is through a 3rd party merchant gateway. As a shop-owner, you are simply accepting payments via BitPay (our partner) which converts the BTC into a currency you find acceptable and deposits it into your accounts.
Awesome, thanks for letting me know. Time we revisited BTC payments then! :)
The integration uses Bitpay, which can either a) Convert the bitcoin to your local currency upon payment, or b) deposit the bitcoin directly into your wallet (in bitcoin).

If you go with the first option, nothing is really different. You accept bitcoin, but you get the payment in your currency.

I suppose you could just withdraw your money as and when you get it.