Three Reasons I Won’t Accept Bitcoin to Sell a Domain Name

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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.

27 COMMENTS

  1. The trading right now on Mt. Gox isn’t even for bitcoins… it is for the option to own a Bitcoin if Mt. Gox still has them (there was a bug in the Bitcoin process that allowed hackers to easily steal Bitcoins, it caused Silk Road 2 to lose $2.7M worth of customer’s Bitcoins). People don’t know if Mt. Gox can recover people’s Bitcoins so now people are placing their bets at around $100 per Bitcoin option.

    If Mt. Gox recovers then the prices will go back up to what they are elsewhere and some people will make a nice 5 bagger on their wager.

  2. Interesting.
    I actually set up a few for sale landing pages where paying via Bitcoin is an option.

    See:

    http://www.Jets.co.uk

    There is an option to send an inquiry or pay with Bitcoin.
    The payment goes directly into my CoinBase account.

    One problem is that I need to keep an eye on the price of Bitcon, because if it drops substantially, I need to update the price.

    I don’t know if it exists yet, but it would be nice if someone made a Bitcoin payment system that adjusts the Bitcoin price, on the fly, to match the exact $ amount that a seller needs.

    Just my thoughts on the topic…

    Aron

  3. Elliott,

    It’s the wild-wild west this virtual currency, it’s like domaining 1994, and I love it, that is what I been doing, investing in virtual currency, but not in Bitcoin, other one’s. Lot’s more money to be made in virtual currency than domains right now, but you can also lose your ass. MT Gox is not Bitcoin, but control 60% or more of the trading of Bitoin, and as a investor, the worst they do or the more bitcoin goes down, the better for me on buying opportunities. I am selling my domains and reinvesting in virtual currency. Personally, I don’t listen to naysayers, I heard them in 1998 when I got into domaining, and worked out well. I will give you an update in 1 year how this virtual currency works out for me. Good luck to everybody involved!

  4. The week you were at NamesCon.com it has been advertised all the week that the escrow service eCOP.com supports bitcoins (I will advertise it again a full week then).
    It is currently the first and only one securing domain sales with this crypto-currency.

  5. The clearing of the trades is the problem. That’s why arbitrage doesn’t work in the marketplace yet. If You own BitCoins You just use BitPay to convert into dollars.

  6. I am glad to read this article. I think I am the opposite, I understand bitcoin and why prices are different from an exchange to another, but I do not really understand domain name market. I don’t understand why bitcoinwallet.com was sold for 250 000 dollars in a private sale and why bitcoinwallets.com was sold only for 3000 dollars on sedo. The difference is unlogical. I own portefeuillebitcoin.com, French translation of bitcoinwallet.com, I bought it for fun and I wonder now if the value is 5 dollars or 1000 or more… I suspect a lot of domain name sales and prices are an arrangement between the buyer and the seller and do not reflect the real value, lower. I hope I am wrong about it..

  7. I personally would gladly take Bitcoins for a domain.

    And you should not confuse the stupidity of one company like Mt. Gox with the overall Bitcoin market. I remember creating an account with them and having to send them a copy of my passport, I scanned it and sent them a 600dpi picture, they rejected it and said it needed to be 300dpi. Really?

  8. Bitcoin has been our preferred method of payment since we first started in early 2013, and is now a central element to our entire business. We buy and sell many names for bitcoin and speaking from experience, bitcoin can act as an amazing hedge (even in capitulations) against renewal fees. For those getting in now, YMMV. Maybe consider something like Litecoin (<$20 USD) since it's not a dog meme (no offense), it's directly tied to Bitcoin's price and has the third largest market cap.

    Note: We are not recommending investment strategies to others, just sharing how out of the box thinking can bring a new dimension to domaining.

    Additionally, we have been doing bitcoin domain name escrow transactions for a year already. It's a painless process and if anybody would like escrow assistance, feel free to get in touch with us. We'll match any price and can offer assistance and best practices advice.

    A word of wisdom to anybody thinking of opening up their own Bitcoin Domain Escrow service – don't bother. Do some research on the topic and you'll find that it is already in the works of being automated via the same decentralized ledger technologies (i.e. blockchain) that acts as the backbone to Bitcoin's resiliency.

    Thanks for the bitcoin coverage Elliot!

    • Why do you say that?

      The income is properly reported to the IRS and as far as we are aware of, domain names aren’t illegal; referring to the Silk Road debacle and money laundering charges in the recent news. When clear-cut regulation is announced, it will become even easier. For now, here’s some info on how to report Bitcoin on your taxes – http://www.bitcointax.info/#_summary_1

      Have some optimism in the future of finance friend! 🙂

    • You need to ask yourself, the primary reason people choose to use bitcoins for set purchases rather than pulling out their CC?

      Maybe some of these people are up to no good, POT was illegal until it could be taxed, online gaming was frowned upon until it could be taxed, Bitcoin will go the same way, at which point it serves no useful purpose.

  9. Hi. I do accept bitcoin payment for may domains.
    I just wonder what is more valuable: the dot com extension of a domain name or the new extension of the same domain name ???

    Example: (what is better):

    Sex.com or Sex.sex
    Dating.com or Dating.com
    VacationRentals.com or Vacation.rentals

    What do you think about, guys ???

  10. Elliot,

    I have been working with Bitcoin for a couple years now. I appreciate your contra-perspective, but your article reflects a fundamental misunderstanding or lack of knowledge about how BTC works.

    BTC is HIGHLY traceable and not nearly as anonymous as people think. Every transaction — every single transaction, is recorded in a permanent ledger that all parties have access to. Does that sound like a fundamental cornerstone of a system where transactions are not traceable? No, it’s the exact opposite. Recently, I actually “lost” 30 BTC and was able to locate it by tracing backwards wallet to wallet until I found I had transferred it to myself! All I had to do was follow the blockchain.

    What is going on with Mt Gox is a necessary correction — nobody with half a brain should have had any money on deposit there in the first place.

    In the “real” world — massive companies like AIG, General Motors, Lehman Brothers, Merrill Lynch, Wachovia, etc. — FAIL. Some companies in the BTC space are well managed, and some are not. In the long run, the poorly run companies will be washed away, and regulation will enter at some point in order to elevate the bar of who is allowed to operate exchanges.

    Most of the BTC naysayers I come across have never actually used Bitcoin in a transaction and most do not even have wallets. So it is hard to have a serious debate about BTC with individuals who haven’t done the diligence to understand what makes Bitcoin such a tech leap.

    If two people are competing to by a Domain name at $X price, and the first person to get their money to the domain seller wins — fiat currency doesn’t stand a chance against BTC. A wire or credit card could take a day to up to 5 days for AMEX. BTC transfers instantly, or close enough to instantly. So the domain buyer using BTC to acquire a domain vs. somebody using traditional fiat will always lose in that scenario.

    I recently purchased a 20% interest in Conferences.com domain name from Merlin Kauffman using Bitcoin. It was great – we just did the transaction over dinner in about 15 seconds Merlin had his $50,000 from me. Try doing that with fiat– can’t be done.

    Elliot – I would recommend studying up a bit on what Bitcoin actually does and what utility it provides instead of just a knee-jerk uninformed notion of why Bitconi is bad.

    Regards,

    Josh

    Josh

  11. that would be: “So the domain buyer using BTC to acquire a domain vs. somebody using traditional fiat will always lose in that scenario.”

    Should read: ” “So the domain buyer using BTC to acquire a domain vs. somebody using traditional fiat will always win in that scenario.”

    😉

  12. I use bitpay.com to take payments for my http://www.cheapflowers.com website and have not had any problems, and I use coinbase.com to send and receive bitcoin payments manually, like when I need to give a refund to a CheapFlowers.com customer. I have not had anybody want to buy a domain from me using Bitcoin, but I would have no problem with it. Whatever change in Bitcoin price might happen in the small amount of time the transaction takes to happen would be made up for in savings of not having to pay the 3% paypal fee, or a wire fee. Plus, there is a 50/50 chance the bitoin value would go up instead of going down.

    I don’t see any reason to care about the payment being traceable. All I care about it getting paid. Using bitcoin at ecop.com sounds like a option also though.

  13. Bitcoin is for losers. End of story. It is for those who have lost in life, or who want to get over on someone else by selling their bitcoins at a higher price, or for those who want to engage in illegal activity or avoid paying taxes. It is a scam. There is no recourse if someone robs you, and there are many ways to get robbed. Someone could hack your computer, and you would not be able to get those bitcoins back. Someone always has to send first, either bitcoin or merchandise. There is no buyer protection.

    That is why PayPal is so strong. They err on the side of total buyer protection, so that is where the transactions take place. If you don’t understand the flaws in bitcoin that makes it a non-starter, then you are basically the biggest scammer on the planet….or just the most ignorant person on earth. The bitcoin crowd is very similar to the alternate extension crowd. Most businesses now who are accepting bitcoin are doing it for PR reasons, like the scammer from Overstock.com, who also played a role in the .co scam.

    Businesses who advertise that they accept bitcoin are really the lowest form of scum on earth. They should learn how to run a business so that they can pay for their own advertising without trying to ride on the backs of the bitcoin scammer’s and their current time in the media spotlight.

  14. Imagine owning the Bitco.org domain name.

    I believe it could easily become recognized as the ‘official’ unofficial bitcoin exchange site given its url likeness to bitcoin.org. Particularly if one used the same look and feel.

    Please let me know if you are interested.

    Thanks!
    Darrin

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