A bit of confusion about Bitcoins

Bitcoins are one of the hottest and most controversial topics of discussion.  It is a virtual currency that is not tied to any government. The value of Bitcoins is highly volatile with price swings of several hundreds of dollars. I’ll be the first to say that I do not understand them and I would never invest in them. If you want to know more about what they are and how to own or use them, there is plenty of information available online.

Bitcoins do have a couple of features that I can understand and that may have some value to the jewellery industry. Bitcoins can be used simply as a merchant payment system and not necessarily as a currency.< Bitcoin users are fanatical about them. They use the volatility to their advantage by spending them with vendors that are willing to accept them. Overstock.com began accepting Bitcoin in January and processed 800 orders totalling $126,000 on their first day. Why would a vendor want to be paid in a virtual currency that may lose half of its value overnight? The answer is…they don’t. Bitcoins are a way of quickly transferring value in a digital form, similar to Visa, Amex or Paypal but with fewer restrictions and greater privacy. It is a non-reversible transaction. There is no way a customer can demand a chargeback through the processors as they can with a credit card. A store that accepts them as payment for goods or services can instantly convert them to dollars or any other recognized currency without ever actually owning a Bitcoin.   Jacques Voorhees, visionary founder of Polygon and Verichannel, just announced: “Bitcoin for jewellery retailers.  Jewellers can now accept Bitcoin and receive dollars directly, just like with Visa or PayPal.” In an online discussion of Bitcoin payment processing Voorhees stated: “There's never actually a conversion, because you never hold the Bitcoins. Let's say you sell an item for $5,000. You receive $5,000 into your bank account, typically within 24 hours, less the $3.00 fee.  If I were the merchant, I'd not ship (or deliver) the item until the cash was received. Hence: zero payment risk….And what's really cool is that there is a whole population of young demographics out there who vastly prefer to pay in Bitcoin, and who are seeking out merchants who take Bitcoin.” The volatility of the Bitcoins value is similar to the stock price of Amex or Visa. The value of the stock has no bearing on the merchant transaction itself. For right now I see Bitcoin as another form of electronic payment processing that appears to have very little risk for an online jewellery store but has a following of fanatical users that are actively seeking out vendors willing to participate. Admittedly, I am still on the fence about this but it is certainly worth looking into further.