Thursday, January 2, 2014

Let's Talk Bitcoin, Movers and Shakers, Podcast E-13

The bitcoin logo
The bitcoin logo (Photo credit: Wikipedia)

Movers and Shakers, Let's Talk Bitcoin podcast.  Now this is from back in the late spring of 2013, however, the objective is to catch people up on the news and information all surrounding the Bitcoin revolution.  Don't have time to listen to the show here on the site?  Download an Mp3 copy to play later when you do have the time.  The show is an hour and a half long.  We have found these shows to be very helpful and informational in understanding everything going on in the Bitcoin revolution.  As we go to print on this post, the present Bitcoin to dollar ratio is about $778.00 per single Bitcoin.  It's been pretty well all over the board of the 700's these past few days.

  From the point of speculation, Bitcoin is a very wild ride.  How do you hedge against it's constant price swings?  Stack your buys and or sells.  (What?)  Do not buy all your coins or sell all your coins on one single order at one time.  Spread out either the purchase or selling of Bitcoins over a period of several days, weeks months or what have you.  Do not seek to buy 10 bitcoins at one time.  You will suffer the market fluctuation swings more harshly if you do.  If you buy or sell over a period of time, you will have a more stable holding that is not being scrambled to death by these market shifts.  Within a 10 minute period we have seen swings of up to $10.00.

  The very good news is that you can buy or sell fractions of a single coin.  You are not locked into buying a full coin at anytime.  So if you want to put say one thousand dollars into Bitcoins?  Stack the buy to spread over several days.  Buy at $50.00 or $100.00 intervals.  Is there any time of day better than another?  No.  It's a world market and so as one nation sleeps, another is actively trading.  This isn't crude oil futures where the market closes at 5:00 PM, Monday through Friday.  This is a world market that is 24/7.

  Bitcoin as an investment vehicle in our own opinion is insane at this point and not really recommended.  Bitcoin as a speculation is also insane.  Bitcoin wallet setup is incredibly easy.  Buying or selling Bitcoin, at least in the US is still a nightmare however and has a long way to go.

  Any business can set up an account to accept Bitcoin payments.  Once you start taking Bitcoin payments, you can also refund Bitcoin payments as easily as you accept them.  But how do you know if you are making any money with the wild swings in the market that can wipe out 10% of your holdings in a matter of hours or even minuets?  It's going to be a long time before you can stabilize Bitcoin like other real world currencies.  Here is the issue.  Let's say you sell an item for the Bitcoin equivalent of $100.00 US.  Let's say that Bitcoin was trading at $1,000.00 per coin.  The next day you need cash for whatever reason and need to cash out your Bitcoin.  Some country decides that Bitcoin has violated some International law and now your Bitcoin holding that was trading at $1,000.00 US yesterday is now only $500.00 US today.  You just took a major 50% loss.

  Now Bitcoin is supposed to make life and accounting much easier for everyone.  If it is the only currency, we would agree.  If you have to translate every transaction with it's subsequent inventory and dollar conversion value, then you have just created one of the worst accounting nightmares anyone could ever imagine.  How can anyone possibly do that?  If you only sell one item a day, you spend half the day just doing the accounting for that one sale.  How could Wal Mart, with thousands of sales per minute, ever do that with all of these wild fluctuations in the Bitcoin to dollar value?

  This is why businesses are not jumping in on accepting Bitcoin as a form of payment, especially in the US.  At the moment there are to many issues that are not addressed that need to be looked at more closely.  Most US businesses simply can not afford all the hits from the accounting perspective, legal and government intervention perspectives and possible need for an influx of specialists that do not exist to handle all of these new issues.  More to come.
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