Bitcoin Wiki - User contributions [en]

Satoshi Dice

2013-08-21T20:44:39Z

Evoorhees: Several statements were factually untrue.

SatoshiDice is a "blockchain-based betting game."

Some consider it to be DDoS attack against the Bitcoin network since it is responsible for a large number of bitcoin transactions. Others see it as proof that the incentives created by the bitcoin transaction fee scheme do not produce the results originally expected.

Unlike traditional online gaming software, wagers with SatoshiDice can be sent without access to the website nor running any client software. To play, a Bitcoin transaction is made to one of the static addresses operated by the service, each having differing payouts. The service determines if the wager wins or loses and sends a transaction in response with the payout to a winning bet or it returns a tiny fraction of the house's gain to a losing bet.
As a result, some claim the game spams the p2p network and blockchain with useless data.

There has been the suggestion that the service might be also be used as a [[mixing service]], as the composition of a wallet can be materially changed after running wagers through SatoshiDice<ref>[http://bitcointalk.org/index.php?topic=79079.0 Blockchain-based betting services function as mixing services?]</ref>.
Though this approach could change the makeup of the wallet, it does not sufficiently serve the mixing purpose as the coins returned in winning bets are tied to the coins from the wager transaction.

There is no reason to believe that [[Satoshi Nakamoto]] has anything to do with this website, other than the service choosing to include the noun Satoshi in the brand.

SatoshiDice.com was [https://bitcointalk.org/index.php?topic=77870.0 announced] on bitcointalk on April 24th, 2012, by its operator, Eric Voorhees. The site was sold in July 2013 to a private buyer.

SatoshiDice permanently blocked US players in May 2013 citing potential legal concern.

==Random Number Generation==

To determine if a wager is a winner or loser, the site uses a method to produce a number between 0 and 65,535, similar to how a random number generator (RNG) would be used. The service uses a combination of the transaction hash from the wager transaction from the blockchain and performs a 512-bit SHA2 hash for that transaction hash using a secret unknown to the player. The first four bytes of that hash become the lucky number in determining winner or loser.

==Odds==

Each wager address has different odds, and each gives the house an edge of 1.90% (i.e., payouts are 98.1% when including the payout to the losing bets). The website shows the full list of wager addresses and odds.

==Automated Betting==

Some gamblers have built automated betting bot scripts employing the Martingale betting system and variants thereof<ref>[http://bitcointalk.org/index.php?topic=80245.0 PHP martingale bot for satoshiDICE]</ref>.

==History==

SatoshiDice was the brand given the service initially created by [[BitcoinTalk]] forum user FireDuck before selling the system to another operator<ref>[http://www.reddit.com/r/Bitcoin/comments/segz0/anyone_want_to_run_my_bitcoin_casino Anyone want to run my bitcoin casino]</ref>. The service was announced on April 24, 2012<ref>[http://bitcointalk.org/index.php?topic=77870.0 SatoshiDICE.com - Verified rolls, up to 65,000x winning]</ref>.
Within weeks, the site became responsible for more Bitcoin transactions than all other uses of Bitcoin combined<ref>[http://bitcointalk.org/index.php?topic=79285.0 All-time transaction record was just hit]</ref>.

Since August 20, 2012 some SatoshiDice shares are traded<ref>https://bitcointalk.org/index.php?topic=101902.0 IPO shares announcement</ref> on the Romanian exchange platform [[MPEx]] under S.DICE symbol and paying monthly dividends.

==See Also==

* [[Mixing service]]
* [[Bitcoin Ladder]]

==External Links==

* [http://www.SatoshiDice.com SatoshiDice.com] website

==References==
<references />

[[Category:Gambling]]

Satoshi Dice

2013-05-26T16:48:09Z

Evoorhees:

SatoshiDice is a "blockchain-based betting game."

Some consider it to be DDoS attack against the Bitcoin network since it is bypassing the built-in anti-DDoS features of Bitcoin (transaction fees). Others see it as proof that the incentives created by the bitcoin transaction fee scheme do not produce the results originally expected.

Unlike traditional online gaming software, wagers with SatoshiDice can be sent without access to the website nor running any client software. To play, a Bitcoin transaction is made to one of the static addresses operated by the service, each having differing payouts. The service determines if the wager wins or loses and sends a transaction in response with the payout to a winning bet or it returns a tiny fraction of the house's gain to a losing bet.
As a result, the game spams the p2p network and blockchain with useless data.
SatoshiDice forces players to pay a transaction fee on each result so the spam will successfully flood both the p2p relay network and the blockchain.

There has been the suggestion that the service might be also be used as a [[mixing service]], as the composition of a wallet can be materially changed after running wagers through SatoshiDice<ref>[http://bitcointalk.org/index.php?topic=79079.0 Blockchain-based betting services function as mixing services?]</ref>.
Though this approach could change the makeup of the wallet, it does not sufficiently serve the mixing purpose as the coins returned in winning bets are tied to the coins from the wager transaction.

There is no reason to believe that [[Satoshi Nakamoto]] has anything to do with this attack, other than the service choosing to include the noun Satoshi in the brand.

It is operated by and licensed under Costa Rica-based Blockchain Limitada (no relation to ewallet site Blockchain.info).

SatoshiDice permanently blocked US players in May 2013 citing potential legal concern.

==Random Number Generation==

To determine if a wager is a winner or loser, the site uses a method to produce a number between 0 and 65,535, similar to how a random number generator (RNG) would be used. The service uses a combination of the transaction hash from the wager transaction from the blockchain and performs a 512-bit SHA2 hash for that transaction hash using a secret unknown to the player. The first four bytes of that hash become the lucky number in determining winner or loser.

==Odds==

Each wager address has different odds, and each gives the house an edge of 1.90% (i.e., payouts are 98.1% when including the payout to the losing bets). The website shows the full list of wager addresses and odds.

==Automated Betting==

Some gamblers have built automated betting bot scripts employing the Martingale betting system and variants thereof<ref>[http://bitcointalk.org/index.php?topic=80245.0 PHP martingale bot for satoshiDICE]</ref>.

==History==

SatoshiDice was the brand given the service initially created by [[BitcoinTalk]] forum user FireDuck before selling the system to another operator<ref>[http://www.reddit.com/r/Bitcoin/comments/segz0/anyone_want_to_run_my_bitcoin_casino Anyone want to run my bitcoin casino]</ref>. The service was announced on April 24, 2012<ref>[http://bitcointalk.org/index.php?topic=77870.0 SatoshiDICE.com - Verified rolls, up to 65,000x winning]</ref>.
Within weeks, the site became responsible for more Bitcoin transactions than all other uses of Bitcoin combined<ref>[http://bitcointalk.org/index.php?topic=79285.0 All-time transaction record was just hit]</ref>.

Since August 20, 2012 some SatoshiDice shares are traded<ref>https://bitcointalk.org/index.php?topic=101902.0 IPO shares announcement</ref> on the Romanian exchange platform [[MPEx]] under S.DICE symbol and paying monthly dividends.

==See Also==

* [[Mixing service]]
* [[Bitcoin Ladder]]

==External Links==

* [http://www.SatoshiDice.com SatoshiDice.com] website

==References==
<references />

[[Category:Gambling]]

Satoshi Dice

2013-05-25T17:36:53Z

Evoorhees:

SatoshiDice is a "blockchain-based betting game."

Some consider it to be DDoS attack against the Bitcoin network since it is bypassing the built-in anti-DDoS features of Bitcoin (transaction fees). Others see it as proof that the incentives created by the bitcoin transaction fee scheme do not produce the results originally expected.

Unlike traditional online gaming software, wagers with SatoshiDice can be sent without access to the website nor running any client software. To play, a Bitcoin transaction is made to one of the static addresses operated by the service, each having differing payouts. The service determines if the wager wins or loses and sends a transaction in response with the payout to a winning bet or it returns a tiny fraction of the house's gain to a losing bet.
As a result, the game spams the p2p network and blockchain with useless data.
SatoshiDice forces players to pay a transaction fee on each result so the spam will successfully flood both the p2p relay network and the blockchain.

There has been the suggestion that the service might be also be used as a [[mixing service]], as the composition of a wallet can be materially changed after running wagers through SatoshiDice<ref>[http://bitcointalk.org/index.php?topic=79079.0 Blockchain-based betting services function as mixing services?]</ref>.
Though this approach could change the makeup of the wallet, it does not sufficiently serve the mixing purpose as the coins returned in winning bets are tied to the coins from the wager transaction.

There is no reason to believe that [[Satoshi Nakamoto]] has anything to do with this attack, other than the service choosing to include the noun Satoshi in the brand.

SatoshiDice permanently blocked US players in May 2013 citing potential legal concern.

==Random Number Generation==

To determine if a wager is a winner or loser, the site uses a method to produce a number between 0 and 65,535, similar to how a random number generator (RNG) would be used. The service uses a combination of the transaction hash from the wager transaction from the blockchain and performs a 512-bit SHA2 hash for that transaction hash using a secret unknown to the player. The first four bytes of that hash become the lucky number in determining winner or loser.

==Odds==

Each wager address has different odds, and each gives the house an edge of 1.90% (i.e., payouts are 98.1% when including the payout to the losing bets). The website shows the full list of wager addresses and odds.

==Automated Betting==

Some gamblers have built automated betting bot scripts employing the Martingale betting system and variants thereof<ref>[http://bitcointalk.org/index.php?topic=80245.0 PHP martingale bot for satoshiDICE]</ref>.

==History==

SatoshiDice was the brand given the service initially created by [[BitcoinTalk]] forum user FireDuck before selling the system to another operator<ref>[http://www.reddit.com/r/Bitcoin/comments/segz0/anyone_want_to_run_my_bitcoin_casino Anyone want to run my bitcoin casino]</ref>. The service was announced on April 24, 2012<ref>[http://bitcointalk.org/index.php?topic=77870.0 SatoshiDICE.com - Verified rolls, up to 65,000x winning]</ref>.
Within weeks, the site became responsible for more Bitcoin transactions than all other uses of Bitcoin combined<ref>[http://bitcointalk.org/index.php?topic=79285.0 All-time transaction record was just hit]</ref>.

Since August 20, 2012 some SatoshiDice shares are traded<ref>https://bitcointalk.org/index.php?topic=101902.0 IPO shares announcement</ref> on the Romanian exchange platform [[MPEx]] under S.DICE symbol and paying monthly dividends.

==See Also==

* [[Mixing service]]
* [[Bitcoin Ladder]]

==External Links==

* [http://www.SatoshiDice.com SatoshiDice.com] website

==References==
<references />

[[Category:Gambling]]

Merchant Howto

2012-04-06T22:57:09Z

Evoorhees: /* Using a third-party API */

Accepting Bitcoins is easy, and there are several ways to do it.

==Manually==
# Download a bitcoin client
# When a customer wants to buy something, send them a Bitcoin address where their payment should be sent.
#* You can do this by clicking "New.." next to your address in the Bitcoin client and sending that address to the customer.
# When payment comes in to that address, send the goods to your customer. Depending on the value of what you're selling, you may wish to wait until the payment shows Confirmed.
# To issue a refund, obtain from the customer the [[Address|bitcoin address]] where the refund payment should be sent. The refund address will likely be different from the address used when the customer sent payment, especially if an [[EWallet]] was used by the customer.

==Automated==
===Pre-generating Bitcoin addresses===
You can accept Bitcoins on your website without needing to use Bitcoin APIs or third party services if you pre-generate a large number of receiving Bitcoin addresses and store them in a database on your web server, and dispense them one-by-one to customers when they are ready to pay. This way, your web server never actually handles the bitcoins - it simply gives out addresses belonging to a wallet you maintain elsewhere. By using a unique address per order, you will always know which payment belongs to which order. [https://www.casascius.com Example of website using this method]

To pre-generate addresses, use a tool such as [[Pywallet]] (which can generate a wallet.dat file) or [[Bitcoin Address Utility]] (which can generate a CSV file). In both cases, you will be generating a list of [[Address|Bitcoin address]]es along with their corresponding [[private key]]s. Only the Bitcoin addresses (not the private keys) should be loaded on the web server.

If you are shipping goods manually, you can use the Bitcoin software to check for incoming payments, or alternately consider using [[Block Explorer]] or [[Abe]] to verify payment when you're about to ship. To make this easy, make your website provide you a full hyperlink that includes the proper receiving address: ht<nowiki>tp://www</nowiki>.blockexplorer.com/address/ADDRESSGOESHERE.

If you are delivering digital goods or services and want to be able to deliver instantly upon payment and/or confirmation, you can use a third-party service such as [[Bitcoin Notify]] to tell your website when a payment has been received. This sort of service requires no significant API implementation - they will simply make a POST to your website or send you an e-mail when a payment has been received on one of your addresses.

If you keep Bitcoins off your web server, this ensures your wallet cannot be stolen if your web server experiences a security intrusion. Your risk becomes limited to the possibility that a successful intruder could add his own addresses to your address pool and steal funds from a few incoming orders until you detect the problem, however, this is a relatively controllable risk.

===Using a third-party plugin===
You can use an existing [[:Category:Shopping Cart Interfaces|shopping cart interface]] from a 3rd party to automatically handle all Bitcoin payments on your website. If you want to develop the system yourself, you can utilize the Bitcoin client's [[API tutorial (JSON-RPC)|JSON-RPC API]] to automatically accept payments.

Things to note if you build it yourself:
# When a customer orders something on your website it records:
#* Bitcoin address that payment should be sent to
#* Order details (delivery address etc.)
#* Customer's refund address (optional - if you wish you can ask for this later, only in cases a refund is required)
#* Payment amount
# When payment arrives, checks that they have paid the correct amount or not, and informs you
#* You dispatch the goods to the customer and mark the order as fulfilled
#* If you cannot dispatch the goods you mark the order as denied and ask the customer for a refund address (unless you already have it from earlier) to send a refund.
# Forwards the funds to bitcoin address of your choice

==Common Errors==
It has been observed on occasion that a business funnels all its orders through the same Bitcoin address, and asks people to send some BTC, then send email describing the timing and the amount of the transaction to 'claim' it. This is '''not''' secure, since anyone can see the transaction details using a tool such as [[Block Explorer]], and then try to claim someone else's transaction as theirs.

Do not do this. Give each customer a unique Bitcoin address.

==Listing your business on the Bitcoin Trade page==

Anyone can add and update a listing on the [[Trade|trade]] page. Just register if you haven't and add to the appropriate category. If you'ld like assistance, perhaps someone in the [http://webchat.freenode.net/?channels=#bitcoin-marketing #bitcoin-marketing] IRC channel would be willing to assist.

==See Also==
* [[In-store Transactions]]
* [[:Category:Shopping Cart Interfaces|Shopping Cart Interfaces]]
* [[Bitcoin Evolution]] handles sales tracking and order forms; requires Bitcoin client for actual payment
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins
* [[Bitcoin API Services]] an easy solution for securely accepting Bitcoins and updating BTC prices
* [[BitcoinNotify]] merchants solution for accepting Bitcoins and updating BTC prices
* [[Converter|Bitcoin Javascript Converter]] displays a price in BTCs after converting from USDs.
* [[How to accept Bitcoin, for small businesses]]
* [[:Category:Marketing|Marketing]]
* [[URI Scheme]]
* [[Promotional graphics]], buttons and logos
* [[Bit-Pay.com]] Merchant solutions for Bitcoin
* [http://paysius.com Paysius] Allows merchants to easily and securely accept Bitcoin payments on their website
[[Category:ECommerce]]

Merchant Howto

2012-04-06T22:52:53Z

Evoorhees:

Accepting Bitcoins is easy, and there are several ways to do it.

==Manually==
# Download a bitcoin client
# When a customer wants to buy something, send them a Bitcoin address where their payment should be sent.
#* You can do this by clicking "New.." next to your address in the Bitcoin client and sending that address to the customer.
# When payment comes in to that address, send the goods to your customer. Depending on the value of what you're selling, you may wish to wait until the payment shows Confirmed.
# To issue a refund, obtain from the customer the [[Address|bitcoin address]] where the refund payment should be sent. The refund address will likely be different from the address used when the customer sent payment, especially if an [[EWallet]] was used by the customer.

==Automated==
===Pre-generating Bitcoin addresses===
You can accept Bitcoins on your website without needing to use Bitcoin APIs or third party services if you pre-generate a large number of receiving Bitcoin addresses and store them in a database on your web server, and dispense them one-by-one to customers when they are ready to pay. This way, your web server never actually handles the bitcoins - it simply gives out addresses belonging to a wallet you maintain elsewhere. By using a unique address per order, you will always know which payment belongs to which order. [https://www.casascius.com Example of website using this method]

To pre-generate addresses, use a tool such as [[Pywallet]] (which can generate a wallet.dat file) or [[Bitcoin Address Utility]] (which can generate a CSV file). In both cases, you will be generating a list of [[Address|Bitcoin address]]es along with their corresponding [[private key]]s. Only the Bitcoin addresses (not the private keys) should be loaded on the web server.

If you are shipping goods manually, you can use the Bitcoin software to check for incoming payments, or alternately consider using [[Block Explorer]] or [[Abe]] to verify payment when you're about to ship. To make this easy, make your website provide you a full hyperlink that includes the proper receiving address: ht<nowiki>tp://www</nowiki>.blockexplorer.com/address/ADDRESSGOESHERE.

If you are delivering digital goods or services and want to be able to deliver instantly upon payment and/or confirmation, you can use a third-party service such as [[Bitcoin Notify]] to tell your website when a payment has been received. This sort of service requires no significant API implementation - they will simply make a POST to your website or send you an e-mail when a payment has been received on one of your addresses.

If you keep Bitcoins off your web server, this ensures your wallet cannot be stolen if your web server experiences a security intrusion. Your risk becomes limited to the possibility that a successful intruder could add his own addresses to your address pool and steal funds from a few incoming orders until you detect the problem, however, this is a relatively controllable risk.

===Using a third-party API===
You can use an existing [[:Category:Shopping Cart Interfaces|shopping cart interface]] or utilize the Bitcoin client's [[API tutorial (JSON-RPC)|JSON-RPC API]] to automatically accept payments.

Set up a system that:
# When a customer orders something on your website it records:
#* Bitcoin address that payment should be sent to
#* Order details (delivery address etc.)
#* Customer's refund address (optional - if you wish you can ask for this later, only in cases a refund is required)
#* Payment amount
# When payment arrives, checks that they have paid the correct amount or not, and informs you
#* You dispatch the goods to the customer and mark the order as fulfilled
#* If you cannot dispatch the goods you mark the order as denied and ask the customer for a refund address (unless you already have it from earlier) to send a refund.
# Forwards the funds to bitcoin address of your choice

==Common Errors==
It has been observed on occasion that a business funnels all its orders through the same Bitcoin address, and asks people to send some BTC, then send email describing the timing and the amount of the transaction to 'claim' it. This is '''not''' secure, since anyone can see the transaction details using a tool such as [[Block Explorer]], and then try to claim someone else's transaction as theirs.

Do not do this. Give each customer a unique Bitcoin address.

==Listing your business on the Bitcoin Trade page==

Anyone can add and update a listing on the [[Trade|trade]] page. Just register if you haven't and add to the appropriate category. If you'ld like assistance, perhaps someone in the [http://webchat.freenode.net/?channels=#bitcoin-marketing #bitcoin-marketing] IRC channel would be willing to assist.

==See Also==
* [[In-store Transactions]]
* [[:Category:Shopping Cart Interfaces|Shopping Cart Interfaces]]
* [[Bitcoin Evolution]] handles sales tracking and order forms; requires Bitcoin client for actual payment
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins
* [[Bitcoin API Services]] an easy solution for securely accepting Bitcoins and updating BTC prices
* [[BitcoinNotify]] merchants solution for accepting Bitcoins and updating BTC prices
* [[Converter|Bitcoin Javascript Converter]] displays a price in BTCs after converting from USDs.
* [[How to accept Bitcoin, for small businesses]]
* [[:Category:Marketing|Marketing]]
* [[URI Scheme]]
* [[Promotional graphics]], buttons and logos
* [[Bit-Pay.com]] Merchant solutions for Bitcoin
* [http://paysius.com Paysius] Allows merchants to easily and securely accept Bitcoin payments on their website
[[Category:ECommerce]]

How to accept Bitcoin, for small businesses

2012-04-06T22:51:16Z

Evoorhees: /* Utilize a merchant solution */

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Utilize a merchant solution===
If you sell things on your website (goods or services), you'll want to use a Bitcoin merchant solution (like [http://paysius.com Paysius] or [http://www.bit-pay.com Bit-pay]) to accept the Bitcoins (you can usually opt to have them converted to USD or other currencies automatically). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example [http://www.paytunia.com Paytunia] or [http://www.blockchain.info/wallet Blockchain.info's app]), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer (merchant services like [http://paysius.com Paysius] or [http://www.bit-pay.com Bit-pay] do this automatically).

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used (again done automatically by [http://paysius.com Paysius] or [http://www.bit-pay.com Bit-pay]). Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [http://paysius.com Paysius] Allows merchants to easily and securely accept Bitcoin on their website and track payments
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

How to accept Bitcoin, for small businesses

2012-04-06T22:50:50Z

Evoorhees: /* Setting Prices */

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Utilize a merchant solution===
If you sell things on your website (goods or services), you'll want to use a Bitcoin merchant solution (like [http://paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"]) to accept the Bitcoins (you can usually opt to have them converted to USD or other currencies automatically). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example [http://www.paytunia.com "Paytunia"] or [http://www.blockchain.info/wallet "Blockchain.info's app"]), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer (merchant services like [http://paysius.com Paysius] or [http://www.bit-pay.com Bit-pay] do this automatically).

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used (again done automatically by [http://paysius.com Paysius] or [http://www.bit-pay.com Bit-pay]). Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [http://paysius.com Paysius] Allows merchants to easily and securely accept Bitcoin on their website and track payments
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

How to accept Bitcoin, for small businesses

2012-04-06T22:50:16Z

Evoorhees: /* Setting Prices */

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Utilize a merchant solution===
If you sell things on your website (goods or services), you'll want to use a Bitcoin merchant solution (like [http://paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"]) to accept the Bitcoins (you can usually opt to have them converted to USD or other currencies automatically). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example [http://www.paytunia.com "Paytunia"] or [http://www.blockchain.info/wallet "Blockchain.info's app"]), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer (merchant services like [http://paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"] do this automatically).

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used (again done automatically by [http://paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"]). Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [http://paysius.com Paysius] Allows merchants to easily and securely accept Bitcoin on their website and track payments
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

How to accept Bitcoin, for small businesses

2012-04-06T22:46:07Z

Evoorhees: /* See Also */

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Utilize a merchant solution===
If you sell things on your website (goods or services), you'll want to use a Bitcoin merchant solution (like [http://paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"]) to accept the Bitcoins (you can usually opt to have them converted to USD or other currencies automatically). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example [http://www.paytunia.com "Paytunia"] or [http://www.blockchain.info/wallet "Blockchain.info's app"]), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer. The exchange rate could change if enough time passes before the sale is booked so it would be prudent for the business to add a time limit to the quotation so that exposure to significant changes to the rates become less likely.

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

If you are concerned about unfavourable exchange rate fluctuations, you can use [http://polimedia.us/bitcoin/options.php options] to hedge your risk. Put contracts protect you against sudden BTC value depreciation, whereas Call contracts protect you against sudden BTC value appreciation.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [http://paysius.com Paysius] Allows merchants to easily and securely accept Bitcoin on their website and track payments
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

How to accept Bitcoin, for small businesses

2012-04-06T22:45:55Z

Evoorhees: /* See Also */

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Utilize a merchant solution===
If you sell things on your website (goods or services), you'll want to use a Bitcoin merchant solution (like [http://paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"]) to accept the Bitcoins (you can usually opt to have them converted to USD or other currencies automatically). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example [http://www.paytunia.com "Paytunia"] or [http://www.blockchain.info/wallet "Blockchain.info's app"]), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer. The exchange rate could change if enough time passes before the sale is booked so it would be prudent for the business to add a time limit to the quotation so that exposure to significant changes to the rates become less likely.

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

If you are concerned about unfavourable exchange rate fluctuations, you can use [http://polimedia.us/bitcoin/options.php options] to hedge your risk. Put contracts protect you against sudden BTC value depreciation, whereas Call contracts protect you against sudden BTC value appreciation.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [http://paysius.com "Paysius"] Allows merchants to easily and securely accept Bitcoin on their website and track payments
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

How to accept Bitcoin, for small businesses

2012-04-06T22:45:41Z

Evoorhees: /* See Also */

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Utilize a merchant solution===
If you sell things on your website (goods or services), you'll want to use a Bitcoin merchant solution (like [http://paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"]) to accept the Bitcoins (you can usually opt to have them converted to USD or other currencies automatically). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example [http://www.paytunia.com "Paytunia"] or [http://www.blockchain.info/wallet "Blockchain.info's app"]), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer. The exchange rate could change if enough time passes before the sale is booked so it would be prudent for the business to add a time limit to the quotation so that exposure to significant changes to the rates become less likely.

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

If you are concerned about unfavourable exchange rate fluctuations, you can use [http://polimedia.us/bitcoin/options.php options] to hedge your risk. Put contracts protect you against sudden BTC value depreciation, whereas Call contracts protect you against sudden BTC value appreciation.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [[http://paysius.com "Paysius"]] Allows merchants to easily and securely accept Bitcoin on their website and track payments
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

How to accept Bitcoin, for small businesses

2012-04-06T22:45:18Z

Evoorhees: /* See Also */

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Utilize a merchant solution===
If you sell things on your website (goods or services), you'll want to use a Bitcoin merchant solution (like [http://paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"]) to accept the Bitcoins (you can usually opt to have them converted to USD or other currencies automatically). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example [http://www.paytunia.com "Paytunia"] or [http://www.blockchain.info/wallet "Blockchain.info's app"]), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer. The exchange rate could change if enough time passes before the sale is booked so it would be prudent for the business to add a time limit to the quotation so that exposure to significant changes to the rates become less likely.

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

If you are concerned about unfavourable exchange rate fluctuations, you can use [http://polimedia.us/bitcoin/options.php options] to hedge your risk. Put contracts protect you against sudden BTC value depreciation, whereas Call contracts protect you against sudden BTC value appreciation.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [[Paysius]] Allows merchants to easily and securely accept Bitcoin on their website and track payments
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

How to accept Bitcoin, for small businesses

2012-04-06T22:44:04Z

Evoorhees:

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Utilize a merchant solution===
If you sell things on your website (goods or services), you'll want to use a Bitcoin merchant solution (like [http://paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"]) to accept the Bitcoins (you can usually opt to have them converted to USD or other currencies automatically). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example [http://www.paytunia.com "Paytunia"] or [http://www.blockchain.info/wallet "Blockchain.info's app"]), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer. The exchange rate could change if enough time passes before the sale is booked so it would be prudent for the business to add a time limit to the quotation so that exposure to significant changes to the rates become less likely.

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

If you are concerned about unfavourable exchange rate fluctuations, you can use [http://polimedia.us/bitcoin/options.php options] to hedge your risk. Put contracts protect you against sudden BTC value depreciation, whereas Call contracts protect you against sudden BTC value appreciation.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

How to accept Bitcoin, for small businesses

2012-04-06T22:40:12Z

Evoorhees:

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Retail businesses===
Are you a retail business? If you sell things on your website, you'll want to use a Bitcoin merchant solution (like [http://paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"]). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example Paytunia.com or Blockchain.info's app), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer. The exchange rate could change if enough time passes before the sale is booked so it would be prudent for the business to add a time limit to the quotation so that exposure to significant changes to the rates become less likely.

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

If you are concerned about unfavourable exchange rate fluctuations, you can use [http://polimedia.us/bitcoin/options.php options] to hedge your risk. Put contracts protect you against sudden BTC value depreciation, whereas Call contracts protect you against sudden BTC value appreciation.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

How to accept Bitcoin, for small businesses

2012-04-06T22:39:17Z

Evoorhees:

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Retail businesses===
Are you a retail business? If you sell things on your website, you'll want to use a Bitcoin merchant solution (like [http://www.paysius.com "Paysius"] or [http://www.bit-pay.com "Bit-pay"]). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example Paytunia.com or Blockchain.info's app), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer. The exchange rate could change if enough time passes before the sale is booked so it would be prudent for the business to add a time limit to the quotation so that exposure to significant changes to the rates become less likely.

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

If you are concerned about unfavourable exchange rate fluctuations, you can use [http://polimedia.us/bitcoin/options.php options] to hedge your risk. Put contracts protect you against sudden BTC value depreciation, whereas Call contracts protect you against sudden BTC value appreciation.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

How to accept Bitcoin, for small businesses

2012-04-06T22:35:34Z

Evoorhees:

This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It's written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as we know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency". But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or scrip, or gift cards or foreign currency. We think that it is pretty much the same as the local businesses of Great Barrington, Massachusetts choosing to accept their locally-printed [http://www.reuters.com/article/2007/06/19/us-usa-economy-berkshares-idUSN0530157720070619 "Berkshire Bucks"] to support their local economy.

==Starting to accept Bitcoin for transactions==
Accepting Bitcoin at a small business is best started in whichever manner keeps the accounting simple for you. This will vary by the type of business you are operating.

===Start with a sign===
[[{{ns:file}}:WeAcceptBitcoin.png‎]]

If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

===Retail businesses===
Are you a retail business? If you sell things on your website, you'll want to use a Bitcoin merchant solution (like Paysius.com or Bit-pay.com). If you sell things in a brick and mortar shop, customers can pay using their mobile phone app (for example Paytunia.com or Blockchain.info's app), so it's best if you can place a QR code near your register to which the customers can scan with their phone and pay (use http://ma.eatgold.com/accept to make a QR code sign).

===Accounting===
When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

===Businesses that offer gift cards===
If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the ability to support multiple applications on the same terminal. Gift cards are also highly profitable because of "breakage", or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label gift card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label gift card service provider necessarily have to handle your funds - they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that allow users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

===Businesses that mail invoices===
Does your business send out invoices to customers? Adding one line may make a huge impact for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand new Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you'll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to satisfy an invoice in full. Your invoice might suggest an amount. For example, if your invoice is for $100 and BTC's are currently worth $1.24 each, your invoice might suggest that it can be paid in full ''"with a payment of 80.65 BTC if paid by (date)"''.

You might be able to anticipate the possibility that even though a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should probably still do it anyway. The customer is probably going to want some paper trail for his payment. Giving him a pre-printed payment stub with a pre-printed address will satisfy that, because the customer can independently and publicly prove through [[Block Explorer]] that the payment took place.

Does your business have a website? On your invoice, consider allowing them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. For example, ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc'' with a form they can enter their invoice number, or just ''ht<nowiki>tps://ww</nowiki>w.yoursite.com/paybtc/60365'' for paying invoice #60365. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand new address for each invoice whenever possible, and use it only once. This benefits the customer as it removes any ambiguity as to which customer is making which payment and for which invoice.

===Avoiding fraud===

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn't likely in general - it depends on how well a fraudster could find out who your customers are in the first place - it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people try to type Bitcoin addresses off payment stubs - instead, force people to get the full Bitcoin address from your website via secure SSL. But, still print ''most'' of the address on the payment stub (perhaps with four or five characters starred out), so that the customer's need for a paper trail can be satisfied, so they can prove they paid if there is ever a dispute.

==Setting Prices==

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is presented to the customer. The exchange rate could change if enough time passes before the sale is booked so it would be prudent for the business to add a time limit to the quotation so that exposure to significant changes to the rates become less likely.

[[Bitcoin Prices]] lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis. [[Bitcoin Charts]] provides a [http://bitcoincharts.com/about/markets-api data feed that provides weighted prices].

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can nearly entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

If you are concerned about unfavourable exchange rate fluctuations, you can use [http://polimedia.us/bitcoin/options.php options] to hedge your risk. Put contracts protect you against sudden BTC value depreciation, whereas Call contracts protect you against sudden BTC value appreciation.

==Contract==

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any [[transaction fee]] that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn't confirmed quickly.

Other items that might be addressed in a contract:

* Requirement and handling of escrow through an [[:Category:Escrow_services|escrow service]].
* Jurisdiction for disputes.
* Refund policy (particularly with the exchange rate being volatile)

==Paying taxes on Bitcoin income==
[[Tax compliance]] is a topic of concern for small businesses. We aren't accountants or lawyers, and can't give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth... the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or "cash equivalents". We imagine the accounting would be similar.

With Bitcoins, there's likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don't need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept ''Berkshire Bucks'' or 1-ounce gold coins as payment?

== Help this article ==

This article is a stub, please add to it!

==See Also==

* [[Merchant Howto]]
* [[In-store Transactions]]
* [[Tax compliance]]
* [[BitCoins Mobile]] provides accurate up to date pricing from multiple exchanges from your Apple iPad, iPhone, or iPod Touch.
* [[Bitcoin PayFlow]] automates the process for accepting bitcoins

[[Category:ECommerce]]
[[Category:Local]]

Buying bitcoins

2012-04-03T00:50:02Z

Evoorhees: /* Fixed Rate Exchanges & Others */

There are various methods available for buying bitcoins.

Warning: Please be careful with your money. When sending money to an exchange or seller you are trusting that the operator will not abscond with your funds and that the operator maintains secure systems that protect against theft -- internal or external. It is recommended that you obtain the real-world identity of the operator and ensure that sufficient recourse is available. Exchanging or storing significant funds with exchanges is not recommended.

==Major Exchanges==

The least expensive methods for buying bitcoins involve transferring funds using a bank wire, ACH, bank transfer (ACH, EUR / SEPA).

{| class="wikitable"
|-
| Exchange || Type || Adding Funds || Withdrawing Funds || [[eWallet]] || Notes
|-
| [[MtGox]] || Market || BTC BTC (Redeemable code) USD ([[Dwolla]]) USD (International bank wire) USD (Wire to [[AurumXChange Company|AurumXChange]]) AUD (Bank wire) GBP (Bank wire) USD (Redeemable code) Liberty Reserve USD || BTC BTC (Redeemable code) USD ([[Dwolla]]) USD (Wire via [[AurumXChange Company|AurumXChange]]) AUD (Bank wire) USD (Redeemable code) Liberty Reserve USD Liberty Reserve USD (via AurumXChange) || {{Table Value Yes}} || Oldest running exchange. Higest daily volume. Respecting AML laws, Restrictions and limits on withdrawals.
|-
| [[Britcoin]] & [[Intersango]] || Market || BTC GBP (bank deposit) USD ([[Dwolla]]) USD (Domestic bank wire) USD (ACH) EUR (SEPA bank wire) PLN (Bank Wire) || BTC GBP (bank transfer) USD ([[Dwolla]]) EUR (SEPA bank wire) PLN (Bank Wire) || {{Table Value Yes}} || Operated by the [https://bitcoinconsultancy.com/ BitcoinConsultancy] [https://intersango.com Intersango] is a completely custom trading platform built from the ground up with security, scalability and extensibility in mind. [https://bitcointalk.org/index.php?topic=43745.0 More Information] Boasts an [https://bitcoinconsultancy.com/wiki/index.php/Intersango/API ever expanding API]
|-
| [[VirWoX]] || Market || BTC SLL (Second Life) ACD (Avination) OMC (OpenSim) USD,EUR,GBP,CHF ([[PayPal]]) USD,EUR,GBP (Credit & Debit cards via [[Moneybookers]]) USD,EUR,GBP ([[NETELLER]]) EUR (DIRECTebanking / Sofortüberweisung) USD,EUR,GBP,CHF ([[paysafecard]]) EUR (SEPA bank transfer) || BTC SLL (Second Life) ACD (Avination) OMC (OpenSim) USD,EUR,GBP,CHF ([[PayPal]]) USD,EUR,GBP ([[Moneybookers]]) USD,EUR,GBP ([[NETELLER]]) EUR (SEPA bank transfer) || {{Table Value Yes}} || Trading through Second Life Linden Dollars. Variable limits on PayPal and Credit Card deposits.
|-
| [[BTC-E]] || Market || BTC USD ([[Liberty Reserve]]) USD (Interkassa) || BTC USD (Webmoney) || {{Table Value Yes}} || Language: Russian. Interkassa can be funded from Webmoney and many other methods.
|-
| [[VirtEx]] || Market || BTC CAD (online bill pay) CAD (cash at TDBank) || BTC CAD (direct deposit) || {{Table Value Yes}} ||
|-
| [[Camp BX]] (CBX) || Market || BTC USD (Check / ACH Direct Deposit) USPS Postal Money Order USD ([[Dwolla]]) USD Bill Pay Walmart MoneyGram || BTC USD (Check / ACH Direct Deposit) USPS Postal Money Order USD ([[Dwolla]]) USD (Domestic bank wire) USD (International bank wire) || {{Table Value Yes}} || <ul> <li> Security certification from McAfee</li><li> Advanced trading options with AON/FOK/Market</li> <li>STOPLOSS and Short-Selling in Pipeline</li><li> Trading API available</li><li> Wallet API available </li><li> CBX Instant Bitcoin Transfers Feature </li><li> Stoploss / Custom Order Expiry Date/Time </li><li> SMS (Text Message) Notifications </li> <li> Two-Factor Authentication </li> <li> Based in USA - Atlanta </li> </ul>
|-
| [[Mercado Bitcoin]] || Market || BTC BRL (Bank transfer) BRL (Bank transfer - MoIP) Liberty Reserve USD || BTC BRL (Bank transfer - MoIP) || {{Table Value Yes}} || Language: Portugese
|-
| [[Bitcoin-Central]] || Market || BTC CAD (Interac) CAD (Bank wire) CAD (Cash deposit) EUR (SEPA) INR (Bank wire) Liberty Reserve USD Liberty Reserve EUR PGAU [[Pecunix]] Gold || BTC CAD (Interac) CAD (Bank wire) EUR (SEPA) INR (Bank wire) Liberty Reserve USD Liberty Reserve EUR [[Pecunix]] Gold || {{Table Value Yes}} || [https://github.com/davout/bitcoin-central Open-source], community reviewed platform Available in French and English languages
|-
| [[HelloBitcoin]] || Market || BTC USD (Dwolla) USD (Bank wire) USD (Check) || BTC USD (Check) USD (Bank wire) USD (ACH) || {{Table Value Yes}} || Offers margin trading and shorting.
|-
| [[Brasil Bitcoin Market]] || Market || BTC BRL (Bank transfer - MoIP) || BTC BRL (Bank transfer - MoIP) || {{Table Value Yes}} || Language: Portugese
|-
| [[Australian Bitcoin Exchange]] || Market || BTC AUD (Electronic funds deposit) AUD (Mtgox Redeemable code) || BTC AUD (Electronic funds transfer) || {{Table Value Yes}} ||
|-
| [[BitStamp]] || Market || BTC BTC (Redeemable code) EUR (SEPA transfer) USD (Intl wire) USD (Redeemable code) CHF || BTC BTC (Redeemable code) EUR (SEPA transfer) USD (Intl wire) USD (Redeemable code) CHF || {{Table Value Yes}} || EUR and CHF deposits converted to/from USD for trading
|-
| [[Rock Currency Exchange]] || Market || BTC EUR (SEPA transfer) SLL (Second Life) USD (Dwolla) || BTC EUR (SEPA transfer) SLL (Second Life) USD (Dwolla) || {{Table Value Yes}} ||
|-
| [[CryptoXchange]] || Market || BTC NMC LTC USD AUD (Bank Transfer) GBP || BTC NMC LTC USD AUD (Bank Transfer) GBP || {{Table Value Yes}} || <ul> <li> Buy Gold,Silver,Palladium and Casascius physical bitcoins plus other items in the store.</li> <li> Affiliate program.</li> <li> Mining Pool integration program.</li> <li> Bitcoin, Namecoin and Litecoin </li> <li>Multiple Authentication Levels</li> <li> API </li> <li> Free Yubikey's to High Volume Traders </li> <li> An Australian Owned and Operated Registered Company.</li> <li>
Inquiries: contact@cryptoxchanger.com or Phone: +61280050602 </li> </ul>
|-
| [[WM-Center]] || Exchanger || BTC USD (International bank wire, Western Unon, Moneygram, Xoom etc, cash) EUR (IBAN bank wire) RUB (bank wire, WU, Anelik and etc, cash) AUD (Bank wire) Liberty Reserve USD/EUR, Perfect Money USD/EUR, Pecunix, Paxum, c-gold, Hoopay, GDP || BTC USD (International bank wire, Western Unon, Moneygram, Xoom etc, cash) EUR (IBAN bank wire) RUB (bank wire, WU, Anelik and etc, cash) AUD (Bank wire) Liberty Reserve USD/EUR, Perfect Money USD/EUR, Pecunix, Paxum, c-gold, Hoopay, GDP PayPal USD/EUR, Moneybookers, Neteller || {{Table Value No}} || 24/7/365 support in english, spanish and russian!
|-
| [[bitNZ]] || Market || BTC NZD (Domestic bank transfer) || BTC NZD (Domestic bank transfer) || {{Table Value Yes}} ||
|-
| [[Bitfloor]] || Market || BTC USD (Dwolla) USD (Mt. Gox Redeemable Code) || BTC USD (Dwolla) || {{Table Value Yes}} ||
|}

==Fixed Rate Exchanges & Others==

For smaller amounts, the options are limited due to bank transfer fees, conversion fees and transaction size restrictions. Options include:

{| class="wikitable"
|-
| Service || Type || Payment Method || Notes
|-
| [https://bitinstant.com BitInstant.com] || Market Rate || USD (Cash Deposit) USD (Dwolla) USD (Liberty Reserve) || Deposit cash at 700,000 locations around the world and have your Bitcoins within 30 minutes. Absolute fastest and easiest way to buy Bitcoins.
|-
| [https://blockchain.info/wallet/sms-phone-deposits Blockchain.info] || Fixed Rate || USD, AUD, CAD, JPY, EUR, CHF, GBP, PLN, CZK, RON, RUB, SEK, NOK, DKK || Purchased using SMS or premium phone call.
|-
| [http://au.spendbitcoins.com au.spendbitcoins.com] || Fixed Rate || AUD || cash deposit at NAB
|-
| [http://buybitcoin.com BuyBitcoin] || Market || USD (Cash) USD (Western Union) USD (PayPal) USD (Credit Card) USD (Dwolla) USD (Cash deposit) USD (Bank wire) USD (Cash in the mail) USD (Money Order) USD (Cashier's Check/Certified Check) USD (Traveler's Check) USD (Prepaid Debit Card) || Instant Bitcoin delivery over the phone. Public office address: 290 5th Ave, 5th floor, New York, NY 10001 Telephone or SMS text message 24 hours: +1 646-580-0044
|-
| [[bitcoin.de]] || Market || EUR (bank wire) EUR (SEPA bank transfer) EUR (Liberty Reserve) EUR (MoneyBookers) || Varies (person to person) 0.01 free Bitcoins for every new user eWallet Affiliate program Language: German, Englisch News
|-
| [[Bitcoinmarket24.com]] || Fixed Rate || EUR (SEPA bank transfer) || Instant Bitcoin purchases via SEPA. No registration needed!
|-
| [[Blizzcoin]] || Fixed Rate || EUR (SEPA bank transfer) || Buy Bitcoins within minutes. Instant exchange. No registration.
|-
| [[Bitcoin Market]] || Market || USD (Liberty Reserve) USD (MoneyBookers) GAU (Pecunix) || Varies (person to person)
|-
| [[BitMarket.eu]] || Market || EUR (Euro) GBP (British Sterling Pound) USD (U.S. Dollar) PLN (Polish złoty) AUD (Australian Dollar) CAD (Canadian Dollar) ZAR (South African Rand) ILS (Israeli Shekel) CHF (Swiss Franc) RUB (Russian Ruble) || Varies (person to person)
|-
| [[Bitcoiny.cz]] || Market || CZK || Varies (person to person)
|-
| [[BTCX.se]] || Fixed Rate || SEK || Transfer to and banks in Sweden.
|-
| [[Bit]] / BTC China || Market || n/a || n/a
|-
| [[Bitfunnel]] || Credit Card payment exchange/brokering services || Varies (person to person)
|-
| [[bitcoin-otc|#bitcoin-otc]] || [http://bitcoin-otc.com/vieworderbook.php Order Book] || Varies (person to person) || IRC trading marketplace will usually have people willing to deal for small and larger amounts using various payment methods, including [[PayPal]], [[Dwolla]], [[Linden Dollars]], etc.
|-
| [[Lilion Transfer]] || Fixed Rate || Bank Transfer: USD, AUD, CAD, JPY, EUR, CHF, GBP, PLN, CZK, RON, RUB, SEK, NOK, DKK Liberty Reserve Perfect Money Monetto OK Pay Cosmic Pay Pecunix C-Gold E-Pay Payments PayPal|| 122 accounts worldwide. Support in 30 languages
|-
| [[Nanaimo Gold]] || Fixed Rate || USD (Liberty Reserve) Western Union money transfer Moneygram money transfer Cash in the mail || LR <--> Bitcoin exchange is automated For cash in the mail send USD, EUR, CAD, or GBP. Canada mailing address.
|-
| [[Bitcoin Argentina]] || Fixed Rate || Cash: ARS, BRL, USD Bank transfer: ARS || No exchange fees!
|-
| [[Bitcoin.com.es]] || Fixed Rate || EUR (bank deposit) || Bank transfer or cash deposits at OpenBank in Spain.
|-
| [[Bahtcoin]] || Fixed Rate || Cash, Webmoney Liberty Reserve USD || Will cash out to Thai mobile and gaming prepaid cards as well.
|-
| [[DialCoin]] || Fixed Rate || EUR || Purchased using SMS. Charges made to mobile carrier.
|-
| [[Bitcoin Brasil]] || Fixed Rate || BRL (Brazilian Real) USD || Cash exchange
|-
| [[BitPiggy]] || Fixed Rate || AUD (Australian Dollar)|| Payment via bank transfer.
|-
| [[GetBitcoin]] || Fixed Rate || USD (Dwolla) USD (Cash deposit) USD (Bank wire) USD (Cash in the mail) USD (Money Order) USD (Cashier's Check/Certified Check) USD (Western Union) USD (Traveler's Check) USD (Prepaid Debit Card) || For cash in mail, send USD. U.S. mailing address.
|-
| [[bitcoin.local]] || Directory || Varies (person to person) ||
|-
| [[bcchanger.com]] || Directory || Enables person to person purchases and sales via PayPal, MoneyBookers and other e-currency platforms ||
|-
| [[SimpleCoin]] || Fixed Rate || USD|| Payment via credit or debit card.
|-
| [[YouTipIt]] || Fixed Rate || USD EUR GBP || Purchase bitcoins to add to your balance with YouTipIt using credit card through ClickAndBuy.
|-
| [[Ubitex]] || In person exchange || Varies (person to person) ||
|-
| [[Bitcoil]] || Fixed Rate || ILS (bank transfer) ||
|-
|[[btcnow]] || Market || USD (OKPay, Dwolla) || bitcoins transferred instantly
|-
|[http://www.Btc-Direct.fr Btc-Direct] || Market || Paid by phone or SMS USD EUR GBP || Incredible: Purchase your Bitcoins with your phone !!. We are the first to offer you the easiest way to buy Bitcoins.
|}

==Other Financial Services==

{| class="wikitable"
|-
| Service || Type || Payment || Settled || Notes
|-
| [https://Bitcoinica.com Bitcoinica] || BTC/USD Contract for Difference (CFD) trading || BTC, USD, EUR, GBP || BTC, USD || Leveraged trading from 2.5X and higher.
|-
| [http://polimedia.us/bitcoin/options.php Derivatives] || Buy / Sell / Exercise CALLs / PUTs, American style. 52 strikes offered (by .5), current month + 2. No shorting available yet.|| BTC || BTC || Transactions encoded via amt. Must use non-rounding client (0.3.24 or later)
|-
| [https://vircurex.com Vircurex] || Buy / Sell Options Loan / Borrow || BTC, NMC, LTC, DVC, GG, I0C, IXC, SC || BTC, NMC, LTC, DVC, GG, I0C, IXC, SC ||
|}

==Physical Bitcoins==

Physical Bitcoins are bearer tokens that have an embedded redeemable digital bitcoin value if torn open. While they are somewhat expensive if bought purely for the digital bitcoins, they are relatively easy to get, because they can be purchased with PayPal or credit card - payment methods not typically not accepted for pure digital bitcoin purchases.

{| class="wikitable"
|-
| Service || Type || Payment || Notes
|-
| [http://www.memorydealers.com Memory Dealers] || Casascius Physical Bitcoins || USD (PayPal/Credit Card) ||
|-
| [https://www.casascius.com Casascius.com] || Casascius Physical Bitcoins || BTC ||
|-
| [https://www.giftcoin.net/card Bitcoin Gift Card] || Bitcioin Gift Card Physical Bitcoin Issued By GiftCoin || BTC ||
|-
| [http://www.bitbills.com Bitbills] || Bitbills cards || BTC || Not taking orders as of Nov 2011.
|}

==See Also==

* [[:Category:Digital_currencies|Digital Currencies]]
* [[Selling bitcoins]]
* [[Secure Trading]]
* [[:Category:Local|Local]] exchanges

[[Category:Exchanges]]
[[Category:Introduction]]
[[zh-cn:购买bitcoins]]

Buying bitcoins

2012-04-03T00:49:19Z

Evoorhees:

There are various methods available for buying bitcoins.

Warning: Please be careful with your money. When sending money to an exchange or seller you are trusting that the operator will not abscond with your funds and that the operator maintains secure systems that protect against theft -- internal or external. It is recommended that you obtain the real-world identity of the operator and ensure that sufficient recourse is available. Exchanging or storing significant funds with exchanges is not recommended.

==Major Exchanges==

The least expensive methods for buying bitcoins involve transferring funds using a bank wire, ACH, bank transfer (ACH, EUR / SEPA).

{| class="wikitable"
|-
| Exchange || Type || Adding Funds || Withdrawing Funds || [[eWallet]] || Notes
|-
| [[MtGox]] || Market || BTC BTC (Redeemable code) USD ([[Dwolla]]) USD (International bank wire) USD (Wire to [[AurumXChange Company|AurumXChange]]) AUD (Bank wire) GBP (Bank wire) USD (Redeemable code) Liberty Reserve USD || BTC BTC (Redeemable code) USD ([[Dwolla]]) USD (Wire via [[AurumXChange Company|AurumXChange]]) AUD (Bank wire) USD (Redeemable code) Liberty Reserve USD Liberty Reserve USD (via AurumXChange) || {{Table Value Yes}} || Oldest running exchange. Higest daily volume. Respecting AML laws, Restrictions and limits on withdrawals.
|-
| [[Britcoin]] & [[Intersango]] || Market || BTC GBP (bank deposit) USD ([[Dwolla]]) USD (Domestic bank wire) USD (ACH) EUR (SEPA bank wire) PLN (Bank Wire) || BTC GBP (bank transfer) USD ([[Dwolla]]) EUR (SEPA bank wire) PLN (Bank Wire) || {{Table Value Yes}} || Operated by the [https://bitcoinconsultancy.com/ BitcoinConsultancy] [https://intersango.com Intersango] is a completely custom trading platform built from the ground up with security, scalability and extensibility in mind. [https://bitcointalk.org/index.php?topic=43745.0 More Information] Boasts an [https://bitcoinconsultancy.com/wiki/index.php/Intersango/API ever expanding API]
|-
| [[VirWoX]] || Market || BTC SLL (Second Life) ACD (Avination) OMC (OpenSim) USD,EUR,GBP,CHF ([[PayPal]]) USD,EUR,GBP (Credit & Debit cards via [[Moneybookers]]) USD,EUR,GBP ([[NETELLER]]) EUR (DIRECTebanking / Sofortüberweisung) USD,EUR,GBP,CHF ([[paysafecard]]) EUR (SEPA bank transfer) || BTC SLL (Second Life) ACD (Avination) OMC (OpenSim) USD,EUR,GBP,CHF ([[PayPal]]) USD,EUR,GBP ([[Moneybookers]]) USD,EUR,GBP ([[NETELLER]]) EUR (SEPA bank transfer) || {{Table Value Yes}} || Trading through Second Life Linden Dollars. Variable limits on PayPal and Credit Card deposits.
|-
| [[BTC-E]] || Market || BTC USD ([[Liberty Reserve]]) USD (Interkassa) || BTC USD (Webmoney) || {{Table Value Yes}} || Language: Russian. Interkassa can be funded from Webmoney and many other methods.
|-
| [[VirtEx]] || Market || BTC CAD (online bill pay) CAD (cash at TDBank) || BTC CAD (direct deposit) || {{Table Value Yes}} ||
|-
| [[Camp BX]] (CBX) || Market || BTC USD (Check / ACH Direct Deposit) USPS Postal Money Order USD ([[Dwolla]]) USD Bill Pay Walmart MoneyGram || BTC USD (Check / ACH Direct Deposit) USPS Postal Money Order USD ([[Dwolla]]) USD (Domestic bank wire) USD (International bank wire) || {{Table Value Yes}} || <ul> <li> Security certification from McAfee</li><li> Advanced trading options with AON/FOK/Market</li> <li>STOPLOSS and Short-Selling in Pipeline</li><li> Trading API available</li><li> Wallet API available </li><li> CBX Instant Bitcoin Transfers Feature </li><li> Stoploss / Custom Order Expiry Date/Time </li><li> SMS (Text Message) Notifications </li> <li> Two-Factor Authentication </li> <li> Based in USA - Atlanta </li> </ul>
|-
| [[Mercado Bitcoin]] || Market || BTC BRL (Bank transfer) BRL (Bank transfer - MoIP) Liberty Reserve USD || BTC BRL (Bank transfer - MoIP) || {{Table Value Yes}} || Language: Portugese
|-
| [[Bitcoin-Central]] || Market || BTC CAD (Interac) CAD (Bank wire) CAD (Cash deposit) EUR (SEPA) INR (Bank wire) Liberty Reserve USD Liberty Reserve EUR PGAU [[Pecunix]] Gold || BTC CAD (Interac) CAD (Bank wire) EUR (SEPA) INR (Bank wire) Liberty Reserve USD Liberty Reserve EUR [[Pecunix]] Gold || {{Table Value Yes}} || [https://github.com/davout/bitcoin-central Open-source], community reviewed platform Available in French and English languages
|-
| [[HelloBitcoin]] || Market || BTC USD (Dwolla) USD (Bank wire) USD (Check) || BTC USD (Check) USD (Bank wire) USD (ACH) || {{Table Value Yes}} || Offers margin trading and shorting.
|-
| [[Brasil Bitcoin Market]] || Market || BTC BRL (Bank transfer - MoIP) || BTC BRL (Bank transfer - MoIP) || {{Table Value Yes}} || Language: Portugese
|-
| [[Australian Bitcoin Exchange]] || Market || BTC AUD (Electronic funds deposit) AUD (Mtgox Redeemable code) || BTC AUD (Electronic funds transfer) || {{Table Value Yes}} ||
|-
| [[BitStamp]] || Market || BTC BTC (Redeemable code) EUR (SEPA transfer) USD (Intl wire) USD (Redeemable code) CHF || BTC BTC (Redeemable code) EUR (SEPA transfer) USD (Intl wire) USD (Redeemable code) CHF || {{Table Value Yes}} || EUR and CHF deposits converted to/from USD for trading
|-
| [[Rock Currency Exchange]] || Market || BTC EUR (SEPA transfer) SLL (Second Life) USD (Dwolla) || BTC EUR (SEPA transfer) SLL (Second Life) USD (Dwolla) || {{Table Value Yes}} ||
|-
| [[CryptoXchange]] || Market || BTC NMC LTC USD AUD (Bank Transfer) GBP || BTC NMC LTC USD AUD (Bank Transfer) GBP || {{Table Value Yes}} || <ul> <li> Buy Gold,Silver,Palladium and Casascius physical bitcoins plus other items in the store.</li> <li> Affiliate program.</li> <li> Mining Pool integration program.</li> <li> Bitcoin, Namecoin and Litecoin </li> <li>Multiple Authentication Levels</li> <li> API </li> <li> Free Yubikey's to High Volume Traders </li> <li> An Australian Owned and Operated Registered Company.</li> <li>
Inquiries: contact@cryptoxchanger.com or Phone: +61280050602 </li> </ul>
|-
| [[WM-Center]] || Exchanger || BTC USD (International bank wire, Western Unon, Moneygram, Xoom etc, cash) EUR (IBAN bank wire) RUB (bank wire, WU, Anelik and etc, cash) AUD (Bank wire) Liberty Reserve USD/EUR, Perfect Money USD/EUR, Pecunix, Paxum, c-gold, Hoopay, GDP || BTC USD (International bank wire, Western Unon, Moneygram, Xoom etc, cash) EUR (IBAN bank wire) RUB (bank wire, WU, Anelik and etc, cash) AUD (Bank wire) Liberty Reserve USD/EUR, Perfect Money USD/EUR, Pecunix, Paxum, c-gold, Hoopay, GDP PayPal USD/EUR, Moneybookers, Neteller || {{Table Value No}} || 24/7/365 support in english, spanish and russian!
|-
| [[bitNZ]] || Market || BTC NZD (Domestic bank transfer) || BTC NZD (Domestic bank transfer) || {{Table Value Yes}} ||
|-
| [[Bitfloor]] || Market || BTC USD (Dwolla) USD (Mt. Gox Redeemable Code) || BTC USD (Dwolla) || {{Table Value Yes}} ||
|}

==Fixed Rate Exchanges & Others==

For smaller amounts, the options are limited due to bank transfer fees, conversion fees and transaction size restrictions. Options include:

{| class="wikitable"
|-
| Service || Type || Payment Method || Notes
|-
[https://bitinstant.com BitInstant.com] || Market Rate || USD (Cash Deposit) USD (Dwolla) USD (Liberty Reserve) || Deposit cash at 700,000 locations around the world and have your Bitcoins within 30 minutes. Absolute fastest and easiest way to buy Bitcoins.
|-
| [https://blockchain.info/wallet/sms-phone-deposits Blockchain.info] || Fixed Rate || USD, AUD, CAD, JPY, EUR, CHF, GBP, PLN, CZK, RON, RUB, SEK, NOK, DKK || Purchased using SMS or premium phone call.
|-
| [http://au.spendbitcoins.com au.spendbitcoins.com] || Fixed Rate || AUD || cash deposit at NAB
|-
| [http://buybitcoin.com BuyBitcoin] || Market || USD (Cash) USD (Western Union) USD (PayPal) USD (Credit Card) USD (Dwolla) USD (Cash deposit) USD (Bank wire) USD (Cash in the mail) USD (Money Order) USD (Cashier's Check/Certified Check) USD (Traveler's Check) USD (Prepaid Debit Card) || Instant Bitcoin delivery over the phone. Public office address: 290 5th Ave, 5th floor, New York, NY 10001 Telephone or SMS text message 24 hours: +1 646-580-0044
|-
| [[bitcoin.de]] || Market || EUR (bank wire) EUR (SEPA bank transfer) EUR (Liberty Reserve) EUR (MoneyBookers) || Varies (person to person) 0.01 free Bitcoins for every new user eWallet Affiliate program Language: German, Englisch News
|-
| [[Bitcoinmarket24.com]] || Fixed Rate || EUR (SEPA bank transfer) || Instant Bitcoin purchases via SEPA. No registration needed!
|-
| [[Blizzcoin]] || Fixed Rate || EUR (SEPA bank transfer) || Buy Bitcoins within minutes. Instant exchange. No registration.
|-
| [[Bitcoin Market]] || Market || USD (Liberty Reserve) USD (MoneyBookers) GAU (Pecunix) || Varies (person to person)
|-
| [[BitMarket.eu]] || Market || EUR (Euro) GBP (British Sterling Pound) USD (U.S. Dollar) PLN (Polish złoty) AUD (Australian Dollar) CAD (Canadian Dollar) ZAR (South African Rand) ILS (Israeli Shekel) CHF (Swiss Franc) RUB (Russian Ruble) || Varies (person to person)
|-
| [[Bitcoiny.cz]] || Market || CZK || Varies (person to person)
|-
| [[BTCX.se]] || Fixed Rate || SEK || Transfer to and banks in Sweden.
|-
| [[Bit]] / BTC China || Market || n/a || n/a
|-
| [[Bitfunnel]] || Credit Card payment exchange/brokering services || Varies (person to person)
|-
| [[bitcoin-otc|#bitcoin-otc]] || [http://bitcoin-otc.com/vieworderbook.php Order Book] || Varies (person to person) || IRC trading marketplace will usually have people willing to deal for small and larger amounts using various payment methods, including [[PayPal]], [[Dwolla]], [[Linden Dollars]], etc.
|-
| [[Lilion Transfer]] || Fixed Rate || Bank Transfer: USD, AUD, CAD, JPY, EUR, CHF, GBP, PLN, CZK, RON, RUB, SEK, NOK, DKK Liberty Reserve Perfect Money Monetto OK Pay Cosmic Pay Pecunix C-Gold E-Pay Payments PayPal|| 122 accounts worldwide. Support in 30 languages
|-
| [[Nanaimo Gold]] || Fixed Rate || USD (Liberty Reserve) Western Union money transfer Moneygram money transfer Cash in the mail || LR <--> Bitcoin exchange is automated For cash in the mail send USD, EUR, CAD, or GBP. Canada mailing address.
|-
| [[Bitcoin Argentina]] || Fixed Rate || Cash: ARS, BRL, USD Bank transfer: ARS || No exchange fees!
|-
| [[Bitcoin.com.es]] || Fixed Rate || EUR (bank deposit) || Bank transfer or cash deposits at OpenBank in Spain.
|-
| [[Bahtcoin]] || Fixed Rate || Cash, Webmoney Liberty Reserve USD || Will cash out to Thai mobile and gaming prepaid cards as well.
|-
| [[DialCoin]] || Fixed Rate || EUR || Purchased using SMS. Charges made to mobile carrier.
|-
| [[Bitcoin Brasil]] || Fixed Rate || BRL (Brazilian Real) USD || Cash exchange
|-
| [[BitPiggy]] || Fixed Rate || AUD (Australian Dollar)|| Payment via bank transfer.
|-
| [[GetBitcoin]] || Fixed Rate || USD (Dwolla) USD (Cash deposit) USD (Bank wire) USD (Cash in the mail) USD (Money Order) USD (Cashier's Check/Certified Check) USD (Western Union) USD (Traveler's Check) USD (Prepaid Debit Card) || For cash in mail, send USD. U.S. mailing address.
|-
| [[bitcoin.local]] || Directory || Varies (person to person) ||
|-
| [[bcchanger.com]] || Directory || Enables person to person purchases and sales via PayPal, MoneyBookers and other e-currency platforms ||
|-
| [[SimpleCoin]] || Fixed Rate || USD|| Payment via credit or debit card.
|-
| [[YouTipIt]] || Fixed Rate || USD EUR GBP || Purchase bitcoins to add to your balance with YouTipIt using credit card through ClickAndBuy.
|-
| [[Ubitex]] || In person exchange || Varies (person to person) ||
|-
| [[Bitcoil]] || Fixed Rate || ILS (bank transfer) ||
|-
|[[btcnow]] || Market || USD (OKPay, Dwolla) || bitcoins transferred instantly
|-
|[http://www.Btc-Direct.fr Btc-Direct] || Market || Paid by phone or SMS USD EUR GBP || Incredible: Purchase your Bitcoins with your phone !!. We are the first to offer you the easiest way to buy Bitcoins.
|}

==Other Financial Services==

{| class="wikitable"
|-
| Service || Type || Payment || Settled || Notes
|-
| [https://Bitcoinica.com Bitcoinica] || BTC/USD Contract for Difference (CFD) trading || BTC, USD, EUR, GBP || BTC, USD || Leveraged trading from 2.5X and higher.
|-
| [http://polimedia.us/bitcoin/options.php Derivatives] || Buy / Sell / Exercise CALLs / PUTs, American style. 52 strikes offered (by .5), current month + 2. No shorting available yet.|| BTC || BTC || Transactions encoded via amt. Must use non-rounding client (0.3.24 or later)
|-
| [https://vircurex.com Vircurex] || Buy / Sell Options Loan / Borrow || BTC, NMC, LTC, DVC, GG, I0C, IXC, SC || BTC, NMC, LTC, DVC, GG, I0C, IXC, SC ||
|}

==Physical Bitcoins==

Physical Bitcoins are bearer tokens that have an embedded redeemable digital bitcoin value if torn open. While they are somewhat expensive if bought purely for the digital bitcoins, they are relatively easy to get, because they can be purchased with PayPal or credit card - payment methods not typically not accepted for pure digital bitcoin purchases.

{| class="wikitable"
|-
| Service || Type || Payment || Notes
|-
| [http://www.memorydealers.com Memory Dealers] || Casascius Physical Bitcoins || USD (PayPal/Credit Card) ||
|-
| [https://www.casascius.com Casascius.com] || Casascius Physical Bitcoins || BTC ||
|-
| [https://www.giftcoin.net/card Bitcoin Gift Card] || Bitcioin Gift Card Physical Bitcoin Issued By GiftCoin || BTC ||
|-
| [http://www.bitbills.com Bitbills] || Bitbills cards || BTC || Not taking orders as of Nov 2011.
|}

==See Also==

* [[:Category:Digital_currencies|Digital Currencies]]
* [[Selling bitcoins]]
* [[Secure Trading]]
* [[:Category:Local|Local]] exchanges

[[Category:Exchanges]]
[[Category:Introduction]]
[[zh-cn:购买bitcoins]]

Crypto X Change

2011-12-12T20:59:18Z

Evoorhees:

A global Bitcoin [[currency exchange]] based in Australia.

The exchange is owned and operated by Australian company Kenseycol PNY LTD based near Sydney, Australia. Users of Crypto X Change can buy and sell Bitcoin by depositing USD, AUD, GBP, CAD, EUR, or twenty other currencies. Withdraws are possible in 120 outbound currencies to almost any bank in the world.

== Features ==
Crypto X Change allows customer deposits in over 25 national currencies, and withdraws in over 120. Additionally, the usage of [[MtGox]] voucher codes is supported. Customers usually have deposits arrive in 24-48 hrs.

Quicker funds are available when depositing cash at certain banks, including at the Bank of America in the U.S.<ref>[http://bitcointalk.org/index.php?topic=53898.0 Deposit cash at any Bank of America - Crypto X Change]</ref>.

A fully-transparent order book is provided with no dark pools and market manipulation. Crypto X Change also includes an API to make automated trading easier. They also provide customers with live chat support 24/7, and have phone numbers for most countries. A forum is also provided for users to discuss topics that are important to them. A web store sells gold and silver bullion products at Crypto X Change.

== Communication ==
{{Communication|org=Crypto X Change|email=contact@cryptoxchange.com|website=[http://www.cryptoxchange.com Crypto X Change]|livesupport=[https://help.cryptoxchange.com/chat.php Live Chat]|phone=+61280050602}}

==History==

The exchange launched on November 10, 2011<ref>[http://bitcointalk.org/index.php?topic=51457.0 Crypto X Change Now OPEN]</ref>.

==See Also==

* [[Buying bitcoins]]
* [[Selling bitcoins]]

==External Links==

* [http://www.cryptoxchange.com Crypto X Change]] website

==References==
<references />

[[Category:Exchanges]]
[[Category:EWallets]]

Myths

2011-11-28T06:53:27Z

Evoorhees: /* Bitcoins will be shut down by the government just like Liberty Dollars were */

Let's clear up some common Bitcoin misconceptions.

== Bitcoin is just like all other digital currencies; nothing new ==

Nearly all other digital currencies are centrally controlled. This means that:
* they can be printed at the subjective whims of the controllers
* they can be destroyed by attacking the central point of control
* arbitrary rules can be imposed upon their users by the controllers

Being decentralized, Bitcoin solves all of these problems.

== Bitcoins don't solve any problems that fiat currency and/or gold doesn't solve ==

Unlike gold, bitcoins are:
* easy to transfer
* easy to secure
* easy to verify
* easy to granulate

Unlike fiat currencies, bitcoins are:
* predictable and limited in [[Controlled_Currency_Supply|supply]]
* not controlled by a central authority(Ex. Fed)

Unlike electronic fiat currency systems, bitcoins are:
* potentially anonymous
* freeze proof
* faster to transfer
* cheaper to transfer

== Bitcoin is backed by processing power ==

It is not correct to say that Bitcoin is backed by processing power. A currency being "backed" by something means that it is pegged to something else via a central party at a certain exchange rate. You cannot exchange bitcoins for the computing power that was used to create them. Bitcoin is in this sense not backed by anything. It is a currency in its own right. Similar to gold - is gold backed by anything? No! It's just gold. The same applies with Bitcoin.

The Bitcoin currency is ''created'' via processing power, and the integrity of the block chain is ''protected'' by the existence of a large network of computing nodes from certain possible [[Weaknesses#Attacker_has_a_lot_of_computing_power|attacks]]. And that is all.

== Bitcoins are worthless because they aren't backed by anything ==

Gold isn't backed by anything either. Bitcoins have properties inherent to its design that are subjectively valued by individuals. This valuation is demonstrated when individuals freely exchange for or with bitcoins. Please refer to the [http://en.wikipedia.org/wiki/Subjective_theory_of_value Subjective Theory of Value]. See also myth [[#Bitcoin_is_backed_by_processing_power|Bitcoin is backed by processing power]].

== Bitcoins value is based on how much electricity and computing power it takes to mine them ==

This statement is an attempt to apply to Bitcoin the [http://en.wikipedia.org/wiki/Labor_theory_of_value labor theory of value], which is generally accepted as false. Just because something takes X resources to create does not mean that the resulting product will be worth X. It can be worth more, or less, depending on the utility thereof to its users.

In fact the causality is the reverse of that (this applies to the labor theory of value in general). The cost to mine Bitcoins is based on how much they are worth. If Bitcoins go up in value, more people will mine (because [[Mining|mining]] is profitable), thus [[difficulty]] will go up, thus the cost of mining will go up. The inverse happens if bitcoins go down in value. These effects balance out to cause mining to always cost the amount of bitcoins it produces.

== Bitcoins have no intrinsic value (unlike some other things) ==

It is true that bitcoins have no intrinsic value, in the [http://en.wikipedia.org/wiki/Intrinsic_value_%28numismatics%29 numismatic sense], in other words, value in any realm outside of being used as a medium of exchange.

However, while some tangible commodities do have intrinsic value, that value is generally much less than its trading price. Consider for example that gold, if it were not used as an inflation-proof store of value, but rather only for its industrial uses, would certainly not be worth what it is today, since the industrial requirements for gold are far smaller than the available supply thereof.

While historically intrinsic value, as well as other attributes like divisibility, fungibility, scarcity, durability, helped establish certain commodities as mediums of exchange, it is certainly not a prerequisite. While bitcoins lack 'intrinsic value' in this sense, they make up for it in spades by possessing the other qualities necessary to make it a good medium of exchange, equal to or better than [http://en.wikipedia.org/wiki/Commodity_money commodity money].

Value is ultimately determined by what people are willing to trade for - by supply and demand.

== Bitcoins are illegal because they're not legal tender ==

Short answer: chickens aren't legal tender either, but bartering with chickens is not illegal.

There are a [http://en.wikipedia.org/wiki/Local_currency number of currencies] in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, game currencies like WoW gold or Linden dollars, is not illegal.

== Bitcoin is a form of domestic terrorism because it only harms the economic stability of the USA and its currency ==

http://en.wikipedia.org/wiki/Definitions_of_terrorism#United_States according to this, you need to do violent activities to be considered a terrorist for legal purposes. This has no bearing on politicians and idiotic US attorney's public remarks.

Also, Bitcoin isn't domestic. It's a worldwide community. See this map of Bitcoin nodes
http://forum.bitcoin.org/?topic=2346.0

== Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization ==

Cash transactions hold the same level of anonymity but are still taxed successfully. It is up to you to follow the applicable state laws in your home country, or face the consequences.

While it may be easy to transfer bitcoins anonymously, ''spending'' them anonymously on tangibles is just as hard as spending any other kind of money anonymously. Tax evaders are often caught because of suspicious purchases, or undeclared assets, not because government is able to follow their money.

== Bitcoins can be printed/minted by anyone and are therefore worthless ==

Bitcoins are not printed/minted. Instead, [[Blocks]] are computed by miners and for their efforts they are awarded a specific amount of bitcoins + transaction fees. See [[Blocks]] for more information on how this process works.

== Bitcoins are worthless because they're based on unproven cryptography ==

SHA256 and ECDSA which are used in Bitcoin are well-known industry standard algorithms. If you believe that these algorithms are untrustworthy then you should not trust Bitcoin, credit card transactions or any type of electronic bank transfer.

== Early adopters are unfairly rewarded ==

Early adopters are rewarded for taking the higher risk with their time and money.

In more pragmatic terms, "fairness" is an arbitrary concept that is improbable to be agreed upon by a large population. Establishing "fairness" is no goal of Bitcoin, as this would be impossible.

The vast majority of the 21 million Bitcoins still have not been distributed. By starting to mine or acquire bitcoins today, you too can become an early adopter.

== 21 million coins isn't enough; doesn't scale ==

One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.

The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.

As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller [[Units|units]], such as milli-bitcoins (mBTC) or micro-bitcoins (μBTC).

== Bitcoins are stored in wallet files, just copy the wallet file to get more coins! ==

No, your wallet contains your secret keys, giving you the rights to spend your bitcoins. Think of it like having bank details stored in a file. If you give your bank details (or bitcoin wallet) to someone else, that doesn't double the amount of money in your account. You can spend your money or they can spend your money, but not both.

== Lost coins can't be replaced and this is bad ==

Bitcoins are divisible to 0.00000001, so this is not a problem. If you lose your coins, all other coins will go up in value a little. Consider it a donation to all other bitcoin users.

A related question is: Why don't we have a mechanism to replace lost coins? The answer is that it is impossible to distinguish between a 'lost' coin and one that is simply sitting unused in someone's safe.

== It's a giant ponzi scheme ==
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.

A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters profit from the usefulness of a stable and widely accepted p2p currency.

Not to be confused with the [[Bitcoin randomizer|Bitcoin Randomizer]] which is a game that really is self-described as a Ponzi scheme.

== Finite coins plus lost coins means deflationary spiral ==
As deflationary forces may apply, economic factors such as hoarding are offset by human factors that may lessen the chances that a [[Deflationary spiral]] will occur.

== Bitcoin can't work because there is no way to control inflation ==

Inflation is simply a rise of prices over time, which is generally the result of the devaluing of a currency. This is a function of supply and demand. Given the fact that the supply of bitcoins is fixed at a certain amount, unlike fiat money, the only way for inflation to get out of control is for demand to disappear. Temporary inflation is possible with a rapid adoption of Fractional Reserve Banking but will stabilize once a substantial number of the 21 million "hard" bitcoins are stored as reserves by banks.

Given the fact that Bitcoin is a distributed system of currency, if demand were to decrease to almost nothing, the currency would be doomed anyway.

The key point here is that Bitcoin as a currency can't be inflated by any single person or entity, like a government, as there's no way to increase supply past a certain amount.

Indeed, the most likely scenario, as Bitcoin becomes more popular and demand increases, is for the currency to increase in value, or deflate, until demand stabilizes.

== The Bitcoin community consists of anarchist/conspiracy theorist/gold standard 'weenies' ==

The members of the community vary in their ideological stances.

== Anyone with enough computing power can take over the network ==

CONFIRMED, see [[Weaknesses]].

That said, as the network grows, it becomes harder and harder for a single entity to do so. Already the Bitcoin network's computing power is quite ahead of the world's fastest supercomputers, together.

What an attacker can do once the network is taken over is quite limited. Under no circumstances could an attacker take anybody else's money. An attacker's capabilities are limited to taking back their own money that they very recently spent, and preventing other people's transactions from receiving confirmations. Such an attack would be very costly in resources, and for such meager benefits there is little rational economic incentive to do such a thing.

Furthermore, this attack scenario would only be feasible for as long as it was actively underway. As soon as the attack stopped, the network would resume normal operation.

== Bitcoin violates governmental regulations ==

Name them if you can.

See also the [[Myths#Bitcoins_are_illegal_because_it_s_not_legal_tender|legal tender]] question.

== Fractional reserve banking is not possible ==

Please see the main article, [[Fractional Reserve Banking and Bitcoin]]

== Point of sale with bitcoins isn't possible because of the 10 minute wait for confirmation ==

Transactions [[FAQ#Why_do_I_have_to_wait_10_minutes_before_I_can_spend_money_I_received.3F|can]] take tens of minutes to become ''confirmed'', and this won't change for the foreseeable future. Even after the computing power of the network is orders of magnitude larger than today, the difficulty of generating a block will self-adjust to maintain a target of 6 blocks per hour. Three potential solutions to allow POS transactions are:

'''1.''' For small transactions, simply assume the customer isn't ripping you off. Give the customer his latte immediately after the transaction posts to the network. The transaction should propagate through the network almost instantly, allowing the seller to see the transaction within seconds (albeit with zero confirmations.) The cost of a double-spend attack should make small-scale fraud not worthwhile.

'''2.''' Utilize a [https://bitcointalk.org/index.php?topic=423.msg3819#msg3819 'listening' period] prior to rendering the service or good. This has yet to be formally implemented in the standard Bitcoin client, but would allow a vendor to receive the transaction and then monitor the Bitcoin network for a certain period of time (maybe 10 seconds) for possible double spends. Vendors might utilize specialized payment processors with multiple well-connected nodes for this purpose. As explained by Satoshi, the network nodes only accept the first version of a transaction they receive to incorporate into the block they're trying to generate. When you broadcast a transaction, if someone else broadcasts a double-spend at the same time, it is a race to propagate them to the most nodes first. If one has a slight head start, it will geometrically spread through the network and get many times more nodes. Additionally, a payment "processing" company could blast out the transaction to thousands of nodes instantly and listen for double spend attempts. The probability of the attacker thwarting such a system would be so low that a payment processor could ''guarantee'' payments and eat the cost if a double-spend attempt actually succeeds. If a double-spend attempt is detected, the vendor is notified: no latte, and a call to the police should be put in immediately.

'''3.''' Create a network of transaction hubs. These entities would communicate using a common API. They would float short-term loans between each other to facilitate instant transactions.

Imagine that Alice uses Carol's Clearinghouse as her hub, and Bob uses Dave's Anonymous Exchange. Both Alice and Bob have accounts with their respective hubs, and have already deposited some bitcoins in their accounts. When Alice wants to buy a latte from Bob at a point of sale, Alice tells Carol "I want to send Bob ''x'' bitcoins. He uses Dave's Anonymous Exchange." After checking that Alice's account does contain at least ''x'' bitcoins, Carol sends a message to Dave, saying "Credit Bob's account with ''x'' bitcoins immediately; I'll send you the real bitcoins in the next block." Bob instantly sees his balance increase, and gives Alice her latte.

Optionally, option 3 allows all parties to circumvent use of the block-chain and its associated fees altogether. If Alice and Bob have accounts with Carol and Dave, then Carol and Dave are effectively functioning as banks. Carol and Dave can credit and debit millions of accounts millions of times daily and only "re-balance" money owed at the end of each business day through a single transaction in the Bitcoin block-chain.

Option 3 requires trust. Alice has to trust Carol's Clearinghouse, and the hubs have to trust each other. Due to competition, various hubs could develop with vastly different fee structures, membership requirements, trustability, etc. The advantage of option 3 is that it is instant. The disadvantage of option 3 is that trust is required. If trust is not established, option 2 can be used.

== After 21 million coins are mined, no one will generate new blocks ==

When operating costs can't be covered by the block creation bounty, which will happen some time before the total amount of BTC is reached, miners will earn some profit from [[transaction fees]]. However unlike the block reward, there is [http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be/895#895 no coupling between transaction fees and the need for security], so there is less of a guarantee that the amount of [[Mining|mining]] being performed will be sufficient to maintain the network's security.

== Bitcoin has no built-in chargeback mechanism, and this isn't good ==

'''Why some people think this is bad''': Chargebacks are useful for limiting fraud. The person handling your money has a responsibility to prevent fraud. If you buy something on eBay and the seller never ships it, PayPal takes funds from the seller's account and gives you back the money. This strengthens the eBay economy, because people recognize that their risk is limited and are more willing to purchase items from risky sellers.

'''Why it's actually a good thing''': Bitcoin is designed such that your money is yours and yours alone. Allowing chargebacks implies that it is possible for another entity to take your money from you. You can have either total ownership rights of your money, or fraud protection, but not both. That said, nothing prevents the creation of services overlayed on top of Bitcoin that provide fraud protection services.

The statement "The person handling your money has a responsibility to prevent fraud" is still true; the power has been shifted into your own hands. Fraud will always exist. It's up to you to only send bitcoins to trusted entities. It is possible to trust an online identity without ever knowing their physical identity; see the [http://wiki.bitcoin-otc.com/wiki/OTC_Rating_System OTC Web of Trust].

== Quantum computers would break Bitcoin's security ==

Yes, but quantum computers don't yet exist and probably won't for a while. Bitcoin's security can be [http://en.wikipedia.org/wiki/Post-quantum_cryptography upgraded] if this were considered an imminent threat.

See the implications of quantum computers on public key cryptography here http://en.wikipedia.org/wiki/Quantum_computer#Potential

The ''risk'' of quantum computers is also there for financial institutions, like banks, because they heavily rely on cryptography when doing transactions.

== [[Mining|Bitcoin mining]] is a waste of energy and harmful for ecology ==

No more so than the wastefulness of mining gold out of the ground, melting it down and shaping it into bars, and then putting it back underground again. Not to mention the building of big fancy buildings, the waste of energy printing and minting all the various fiat currencies, the transportation thereof in armored cars by no less than two security guards for each who could probably be doing something more productive, etc.

As far as mediums of exchange go, Bitcoin is actually quite economical of resources, compared to others.

'''Economic Argument 1'''

[[Mining|Bitcoin mining]] is a highly competitive, dynamic, almost [http://en.wikipedia.org/wiki/Perfect_market perfect], market. Mining rigs can be set up and dismantled almost anywhere in the world with relative ease. Thus, market forces are constantly pushing mining activity to ''places'' and ''times'' where the marginal price of electricity is low or zero. These electricity products are cheap for a reason. Often it’s because the electricity is difficult (and wasteful) to transport, difficult to store, or because there is low demand and high supply. Using electricity in this way is a lot less wasteful than simply plugging a mining rig into the mains indiscriminately.

For example, Iceland produces an excess of cheap electricity from renewable sources, but it has no way of exporting electricity because of its remote location. It is conceivable that at some point in future Bitcoin mining will only be profitable in places like Iceland, and unprofitable in places like central Europe, where electricity comes mostly from nuclear and fossil sources.

Market forces could even push mining into innovative solutions that have a ''net'' electricity consumption of ''zero''. For example, electric heaters could come equipped with a cheap CPU instead of a resistance coil.

'''Economic Argument 2'''

When the environmental costs of mining are considered, they need to be weighed up against the benefits. If you question Bitcoin on the grounds that it consumes electricity, then you should also ask questions like this: Will Bitcoin promote economic growth by freeing up trade? Will this speed up the rate of technological innovation? Will this lead to faster development of green technologies? Will Bitcoin enable new, border crossing [http://en.wikipedia.org/wiki/Smart_grid smart grid] technologies? …

Dismissal of Bitcoin because of its costs, while ignoring is benefits, is a dishonest argument. In fact, any environmental argument of this type is dishonest, not just pertaining to Bitcoin. Along similar lines, it could be argued that wind turbines are bad for the environment because making the steel structure consumes energy.

== Shopkeepers can't seriously set prices in bitcoins because of the volatile exchange rate ==

Your assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper's back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of Bitcoin would make prices [http://en.wikipedia.org/wiki/Sticky_%28economics%29 sticky]. Future volatility is expected to decrease, as the size and depth of the market grows.

In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.

== Like Flooz and e-gold, bitcoins serve as opportunities for criminals and will be shut down ==

* Hopefully Bitcoin will grow to the point where no single organization can disrupt the network, or would be better served by helping it.
* Terrorists fly aircraft into buildings, but the governments have not yet abolished consumer air travel. Obviously the public good outweighs the possible bad in their opinion.
* Criminal law differs between jurisdictions.

== Bitcoins will be shut down by the government just like Liberty Dollars were ==

Liberty Dollars started as a commercial venture to establish an alternative US currency, including physical banknotes and coins, backed by precious metals. This, in and of itself, is not illegal. They were prosecuted under counterfeiting laws because the silver coins allegedly resembled US currency (or at least that was the argument).

Bitcoins are not coins at all, nor are they banknotes. They do not resemble US currency in any way, shape, or form. The word "dollar" is not attached to them in any way. The "$" is not used in any way.

Bitcoins have no representational similarity whatsoever to US dollars.

Of course, actually 'shutting down' Liberty Dollars was as easy as arresting the head of the company and seizing the offices. The decentralized Bitcoin, with no leader, no servers, and no office, does not have the same vulnerability.

== Bitcoin is not decentralized because the developers can dictate the software's behaviour ==

The Bitcoin protocol was originally defined by Bitcoin's inventor, [[Satoshi Nakamoto]], and this protocol has now been widely accepted as the standard by the community of miners and users.

Though the developers of the original Bitcoin client still exert influence over the Bitcoin community, their power to arbitrarily modify the protocol is very limited. Since the release of Bitcoin v0.3, changes to the protocol have been minor and always in agreement with community consensus.

Protocol modifications, such as increasing the block award from 50 to 100 BTC, are not compatible with clients already running in the network. If the developers were to release a new client that the majority of miners perceives as corrupt, or in violation of the project’s aims, that client would simply not catch on, and the few users who do try to use it would find that their transactions get rejected by the network.

There are also other Bitcoin clients made by other groups of developers that adhere to the Bitcoin protocol. As more developers create alternative clients, less power will lie with the developers of the original Bitcoin client.

[[de:Mythen]]

Crypto X Change

2011-11-14T18:03:04Z

Evoorhees:

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Crypto X Change

2011-11-14T18:02:45Z

Evoorhees:

'''Crypto X Change'''

Based in Australia, we enable buyers and sellers from all over the world to trade national currencies in and out of Bitcoin.
 
Crypto X Change has been built with painstaking attention to security. It’s been developed with the due diligence you should expect from a company that handles your money.
 
We’ve enabled customer deposits in over 25+ national currencies, and withdraws in over 100+. Using our proprietary funding system, you can have your deposits arrive in your account usually in less than 24 hours. That’s an industry first. We also accept MtGox voucher codes, so you can move your money here immediately.
 
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Live chat support 24/7. Call us at all hours, with local phone numbers for most countries. Emails are answered quickly, and we provide forums for users to discuss the topics that are important to them. Our communication lines are open and swift.
 
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Crypto X Change

2011-11-14T18:02:27Z

Evoorhees:

'''Crypto X Change'''

Based in Australia, we enable buyers and sellers from all over the world to trade national currencies in and out of Bitcoin.
 
Crypto X Change has been built with painstaking attention to security. It’s been developed with the due diligence you should expect from a company that handles your money.
 
We’ve enabled customer deposits in over 25+ national currencies, and withdraws in over 100+. Using our proprietary funding system, you can have your deposits arrive in your account usually in less than 24 hours. That’s an industry first. We also accept MtGox voucher codes, so you can move your money here immediately.
 
Fast, professional trading engine. No hiccups. No lost orders. No weird behaviors. We provide a fully-transparent order book, with no dark pools, and zero market manipulation. Our professional API let’s you write custom scripts and connect your trading software.
 
Crypto X Change has been built with painstaking attention to security. It’s been developed with the due diligence you should expect from a company that handles your money. Learn why we’re more secure.
 
Live chat support 24/7. Call us at all hours, with local phone numbers for most countries. Emails are answered quickly, and we provide forums for users to discuss the topics that are important to them. Our communication lines are open and swift.
 
We know Bitcoin is the currency of the future, and we’re here to stay and nurture it. We share your passion for this new phenomenon, and have invested significant time and funding into creating the best exchange on the market. We’ll adapt and evolve with our customers’ needs, and we’ve got an exciting pipeline of innovations launching over the coming months.
 
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Crypto X Change

2011-11-14T17:57:35Z

Evoorhees:

'''Crypto X Change'''

Based in Australia, we enable buyers and sellers from all over the world to trade national currencies in and out of Bitcoin.
 
Crypto X Change has been built with painstaking attention to security. It’s been developed with the due diligence you should expect from a company that handles your money.
 
We’ve enabled customer deposits in over 25+ national currencies, and withdraws in over 100+. Using our proprietary funding system, you can have your deposits arrive in your account usually in less than 24 hours. That’s an industry first. We also accept MtGox voucher codes, so you can move your money here immediately.

Fast, professional trading engine. No hiccups. No lost orders. No weird behaviors. We provide a fully-transparent order book, with no dark pools, and zero market manipulation. Our professional API let’s you write custom scripts and connect your trading software.

Crypto X Change has been built with painstaking attention to security. It’s been developed with the due diligence you should expect from a company that handles your money. Learn why we’re more secure.

Live chat support 24/7. Call us at all hours, with local phone numbers for most countries. Emails are answered quickly, and we provide forums for users to discuss the topics that are important to them. Our communication lines are open and swift.

We know Bitcoin is the currency of the future, and we’re here to stay and nurture it. We share your passion for this new phenomenon, and have invested significant time and funding into creating the best exchange on the market. We’ll adapt and evolve with our customers’ needs, and we’ve got an exciting pipeline of innovations launching over the coming months.

Stay Tuned : [http://www.cryptoxchanger.com www.cryptoxchanger.com]

Inquiries: contact@cryptoxchanger.com or Phone: +61280050602

Crypto X Change

2011-11-14T17:55:50Z

Evoorhees:

'''Crypto X Change'''

Based in Australia, we enable buyers and sellers from all over the world to trade national currencies in and out of Bitcoin.

Crypto X Change has been built with painstaking attention to security. It’s been developed with the due diligence you should expect from a company that handles your money.

We’ve enabled customer deposits in over 25+ national currencies, and withdraws in over 100+. Using our proprietary funding system, you can have your deposits arrive in your account usually in less than 24 hours. That’s an industry first. We also accept MtGox voucher codes, so you can move your money here immediately.

Fast, professional trading engine. No hiccups. No lost orders. No weird behaviors. We provide a fully-transparent order book, with no dark pools, and zero market manipulation. Our professional API let’s you write custom scripts and connect your trading software.

Crypto X Change has been built with painstaking attention to security. It’s been developed with the due diligence you should expect from a company that handles your money. Learn why we’re more secure.

Live chat support 24/7. Call us at all hours, with local phone numbers for most countries. Emails are answered quickly, and we provide forums for users to discuss the topics that are important to them. Our communication lines are open and swift.

We know Bitcoin is the currency of the future, and we’re here to stay and nurture it. We share your passion for this new phenomenon, and have invested significant time and funding into creating the best exchange on the market. We’ll adapt and evolve with our customers’ needs, and we’ve got an exciting pipeline of innovations launching over the coming months.

Stay Tuned : [http://www.cryptoxchanger.com www.cryptoxchanger.com]

Inquiries: contact@cryptoxchanger.com or Phone: +61280050602