Adam Dicker recently opened a subforum at DNForum for people to sell domain names for Bitcoin (I wrote about it here). At the time, I said “I would accept any form of spendable and reportable currency for a domain name if the value was right and I could use or convert the currency. You can pay me in US dollars, gold, Bitcoins, or even a luxury watch if you wish.” After careful consideration, I do not think I would accept Bitcoin for three reasons.
For speculators, the large swings in Bitcoin values can be a good way to make money. It’s probably a high risk trade, but for people who are experts in that space (and/or use algorithmic trading perhaps), there is money to be made – and probably quite a bit of it. In addition, there are massive price differences at trading exchanges such as Mt. Gox and Coinbase. On Mt. Gox right now, a Bitcoin is worth around $150, and at Coinbase, a Bitcoin is worth about $590. I wouldn’t want to sell a domain name for $5,000 in Bitcoin only to find out that it is worth much less when I try to cash out.
As far as I am aware, Bitcoin isn’t traceable. If there is an issue with the sale, tracking down the buyer could prove to be difficult. When I use a service like Escrow.com, the buyer leaves a paper trail with his payment. With Bitcoin, there isn’t much of a paper trail aside from the email communications I had prior to the sale. There also isn’t an escrow service that handles Bitcoin payments for domain names, so I’d most likely be on my own with this.
Those two factors are very important, but there is a third issue that has solidified my current position. Before I get to it, I will say that some Bitcoin experts are probably shaking their head at my rationale and have counter points to what I’ve said so far. Their counter points are most likely valid, and I probably don’t understand Bitcoin well enough to have formed this position… and that brings me to my third reason.
I just don’t totally understand Bitcoin. In theory, I understand, but it’s a bit too technical for me. I don’t understand how I could buy Bitcoin at an exchange like Mt. Gox and then not be able to withdraw them or transfer them to another exchange. I don’t fully understand why Mt. Gox Bitcoin seemed to trade for $100 +/- more than Coinbase Bitcoin. Why didn’t people buy at Coinbase two months ago and re-sell them for $100 +/- more at Mt. Gox? There is a lot that I don’t understand about Bitcoin.
I am sure there are many people who do transactions with Bitcoin. By this point, there are probably people who exclusively use Bitcoin for a majority of their daily transactions. I understand the allure of Bitcoin, I believe there is a good reason for Bitcoin, but I don’t understand it well enough to sell my company’s assets for Bitcoin. There is too much risk for me at this point, although my position could change in the future.