| HN Mirror

Here's my real life example (simplified)

I work for clients in countries A, B and C, who pay me in bitcoins. I subcontract some parts of this work, such as design, coding, or translation, to workers in countries X,Y and Z who also accept bitcoins. I spend the majority of the bitcoins I earn on various products and services, but I keep a proportion long term. (I also do a lot of work that is paid in USD and other currencies).

The advantages that bitcoin offers in this situation are:

Much lower transaction fees than any other payment method. About 5 cents per transaction of any size (Though maybe fees could increase in the future)

No foreign currency exchange fees at all.

All fees are known in advance. This is a big advantage. We never know what fees banks are going to charge. Even the banks can't tell us before they route an international transaction via intermediate banks. So people may get underpaid several percent, and this causes dissatisfaction, and additional fees to make up the missing amount. With Bitcoin we know the upper bound for the fees, so we can account for them easily, and the fees are insignificant, as well.

We know the money will arrive immediately. With banks or paypal, even this is uncertain. International transactions, especially involving developing countries, are often frozen for opaque reasons, for unknown lengths of time, with limited recourse. If their payment doesn't arrive, subcontractors may stop work and the project stalls. Frozen payments are trapped in the system and they cannot be returned back to the sender on request. So we don't even know where the money will go. It depends on the opaque internal review. It could be returned, or it might continue on its journey to the next bank, or it may remain locked up for weeks. The uncertainty of delivery makes everyone reluctant to send large amounts in a single transaction. So they often split the payments into smaller amounts for safety. This raises the fees and time required.

Zero chance of chargebacks, clawbacks or advance fee fraud. I find that other people never understand how major this issue is, if they haven't experienced it themselves. The lack of confidence is a very significant problem with credit cards, paypal, checks and etc. Under the traditional payment systems used by small businesses, you usually need 2 way trust, but with bitcoin, 1 way trust is OK. Trust is expensive. Bitcoin makes it a lot simpler to work with new clients, or to accept payments from higher risk countries, because it deletes that uncertainty. In this case I take payment in bitcoins in advance, and then I know that I have the money, permanently. There's no chance that the funds will be suddenly get removed from the account weeks later.

Ability to work with people who don't have a healthy banking situation. For example, we can quickly and easily pay money to a subcontractor in China or India or the former Soviet Union who has difficulty receiving international remittances to their bank account due to high fees or bureaucratic issues. In reality, I don't know if some of those guys have regular bank accounts. (Apart from saving money overall, fees are currently low enough to provide the useful option of sending regular small payments during the course of the work, which some subcontractors prefer).

tl;dr Having bitcoin as one payment option significantly reduces costs and hassle. I prefer to use bitcoin if the other party will accept it. The benefit is only a small percentage of revenue (a greater percentage of profit of course), but implementation costs have been negligible, so why not take it? It also gives us access to a wider pool of clients and subcontractors.

Disadvantages of bitcoin in this situation:

As we're holding some money in bitcoin, bitcoin's price volatility is the most serious issue. Over the last two years, the long term price rise has been so profitable that short term volatility fades into insignificance as a percentage of profit, but past performance is not any guarantee of future results.

My own options for spending the bitcoins I earn are fewer than I would like. There are many things I need to buy that I cannot buy with bitcoins at a reasonable price. This puts a limit on the quantity of bitcoin-paid work I can accept, because I want to spend bitcoins instead of getting overexposure to the price volatility risk. There's been a big increase in the number of places to spend bitcoins during the last year, though, so now I have more options for spending, which allows me to accept more bitcoin-paid work than before.

Some of my subcontractors have it worse than me, I'm sure. They have very few places they can spend bitcoins. They may need to convert them to other currencies, at an additional cost. Some are keeping a lot of the bitcoins they earn and hope the price increases, I think. That is risky, of course. If the price fell too much in future, maybe some would even stop accepting bitcoins.

Clients who require the security of chargebacks will not use bitcoin. There are a few bitcoin escrow services, but they aren't useful, because they are too new and too small to be trusted. I need to use other payment methods if I want to work with these clients. (It has turned out that the knowledge that a client wants the ability to chargeback is a useful factor when making a decision about working with them. It can be a sign that the client has not clearly planned out reasonable requirements and goals for the project. I think these clients tend to communicate badly and they are far more likely to require work to be amended or redone).

There has been a lot of growth, but only a very small proportion of clients and subcontractors understand or use bitcoin. The potential market size in which bitcoin can be used is 50 or 100 times bigger than in 2012, but still it is a very tiny niche.