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Honey prices continue to free-fall as Bitcoin CEO continues to raise price of sats almost daily!

Today marks one month since we launched SweetSats and in that time we have had to regularly adjust our prices (in sats) to reflect the rapidly rising exchange rate of Bitcoin.

Honey is now more than 30% CHEAPER in sats than only THIRTY DAYS AGO! One of the difficulties of trying to run a small business based on a Bitcoin Standard– We try to keep our prices fair, but until Sats are the Standard we still have to account for exchange rates and keep things as balanced as best as possible.

Any thoughts? What’s the best way to deal with NgU when pricing products in Sats?

SweetSats 1y ago

Running a small business on a Bitcoin Standard 💎

My solution (so far) has been to continually adjust prices in sats (down) to reflect approximate fiat value that we sell the same product for locally (with a discount included for Bitcoin purchases). I have decided that as Bitcoin price rises, I will have to continue to drop prices in Sats– because let’s face it, most customers will compare the amount of sats they are spending to an approximate amount of their local currency. If I simply set a price in Sats today and did not adjust, as some point there’s no one left willing to buy at that price!

However, what about when Bitcoin price falls?? I have decided NOT to (re)adjust prices and will instead pass the discount on to customers. I’ll earn the same amount of sats as when the Bitcoin exchange rate was higher, but the corresponding fiat value will be lower. Bitcoin drops by 30%? Honey is now 30% cheaper for customers in fiat terms! That means hopefully more people would trade honey for sats and I can stack a few more sats than I would have.

As long as I can cover costs and keep things running, the fiat value of each sale should not matter over time. Sats stacked with honey sales are never traded back to fiat, so to me the fiat value is not particularly relevant. It only matters that the customers do not over pay.

But this brings us to yet another problem: Bitcoin is by nature SAVINGS technology. NgU tech means that there is a strong incentive to HOLD sats– since they will inherently be more valuable over time. Conversely, fiat dollars are best spent as soon as they are earned, for their value rapidly decreases over time. Fiat in a bank account is quickly shrinking in value and the price of products are rising just as fast. So it’s best to spend fiat NOW and acquire TODAY what you may need tomorrow. On a Bitcoin Standard however, it’s best to defer purchases, because on a long enough time horizon the products you need will trend lower when priced in sats.

So how can I convince people to part with their precious Bitcoin and trade it for a humble jar of Honey?? If they wait a week, or a month, it’s quite possible that their patience will be rewarded and the jar of honey will cost a few sats less than if they would have purchased it before.

To me, this is significantly different than simply pricing items in fiat and accepting Bitcoin as payment. Pricing items in sats on a Bitcoin Standard comes with a lot of added complexity, at least until Bitcoin becomes the standard unit of account and everyone understands that 1 sat = 1 sat.

I’d love to hear more thoughts about best practices when running a business on a #Bitcoin Standard. 🧡

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Discussion

Se7enZ 1y ago

Very interesting, thanks for sharing. It sounds to me like you're responding to volatility by accepting the additional complexity of timing your own transactions for periods when your sats will get you enough to keep the operations going... Right?

May I ask -- is this primary business for you or more of a sidegig?

I will be following as I hope to try something similar.

SweetSats 1y ago

Just a side gig for now– We run a small scale organic farm, selling at local farmer’s markets and to the local coop. But I do want SweetSats to stand on its own so I am doing all related accounting separately (in sats!) to see how it all works out long term.

Se7enZ 1y ago

That's great. I wager this experience is invaluable, keeping you several steps ahead of the curve toward a future of BTC-only businesses. Best of luck!

berean jones 1y ago

Fascinating insight, thanks for sharing transparently. Gives a sense of real world struggle, beyond stacking sats and resisting authority 😁

anubisSonOfRa 1y ago

Interesting read. I run a business where I’ve been trying to encourage payments in #bitcoin but without any luck so far. I had a discount for payments in bitcoin which I decided to increase this year. I wrote a note about it here.

https://damus.io/note1pxxeqsrtgzz9e2z5kmpqc033qqnqg9pl29cpg3ww0tn3c0lc0sxqv6cmeq

Joda 1y ago

https://stacker.news/items/451244

SweetSats 1y ago

Our IRL business offers customers a choice between added 3% credit card fees *on top* OR a 10% discount for bitcoin payments. Considering that most businesses operate on somewhere around a 30% margin or markup, being willing to offer customers a10% discount is basically already cutting any ‘profits’ by 1/3.

On the other hand, I personally believe when it comes to incentivizing #Bitcoin use, the onus shouldn’t be on small businesses at all. IMO it should really fall on #Bitcoiners who want to incentivize bitcoin adoption to be willing to pay MORE in order to convince businesses to accept bitcoin as payment. Flip the tables. We *want* to be able to SPEND bitcoin everywhere and anywhere. The only way to make that happen is to make it worth while for everyone involved.

The more we are willing to spend our bitcoin, the more businesses will accept it, the more valuable it becomes – and the cycle continues.

I know I am personally happy to pay a small mark up to help support Bitcoin-based businesses and services. I’m also glad to offer a discount on my proof of work if you #paymeinbitcoin instead of fiat 🤙

Black Sheep Rehab 1y ago

As a landlord, I offer 10% discount on rent paid in BTC. I also offer to walk a tenant through how to source it and pay for it (using Strike, so they never need to own it) Only 1 has taken me up on it, which requires patience with the initially low limits on Strike.

I am required by our charter to pay out income quarterly, so any more of a discount creates more risk of covering a significant 3 month drop. Trying to get all my investors to take a split payout in fiat and BTC to alleviate the need to convert back to fiat to cover. No clean way in Quickbooks to track income in 2 currencies.

Chuckin Bitcoin 1y ago

That 1 tenant might eventually orange pill many others in their life. It's definitely going to be a slow grind to help people adopt it and use it though. I'm trying to orange pill my landlord. He's slowly starting to come along.

If you ever want to ditch quickbooks, Firefly III is a FOSS accounting software that supports multiple currencies including Bitcoin. I am using it for my business. https://www.firefly-iii.org/

Joda 1y ago

good points. I think the most important thing is to be kind and patient. Not everyone "gets it" or has the time or interest.

As a customer, I like to just always *ask* any business I'm paying if they accept bitcoin. I don't feel the need to throw them down the rabbit hole. We're still early. Planting a seed and answering questions is my vibe. If they get a couple more customers asking to pay in bitcoin, then they might start thinking about it.

But I've seen quick adoption go poorly. Hard-core bitcoiners talk someone into accepting bitcoin, then they get zero customers paying in bitcoin.

This bootstrapping catch-22 is talked about a lot by the guys who try to start circular economies.

SweetSats 1y ago

Definitely sounds like the right approach. I always try to ask, "You guys don''t accept Bitcoin (yet), do you?" And if they say No, then just just smile and move on– but planting the seed is enough! If enough people ask, they maybe eventually they will get the bug and do the work on their own to start to look into it.

But like you mentioned, if you really push adoption and convince someone who is skeptical to accept Bitcoin, then they go through the setup and cost of doing it and then no one actually pays with Bitcoin, it can be counterproductive! They feel like they were right to be skeptical.

Baby steps! Plant the seeds, the rest will follow 🌱

anubisSonOfRa 1y ago

Valid points. With that said I'm not sure I'd pay more to use #Bitcoin. I might do it if I'd feel I had enough bitcoin which I've a hard time seeing I'll ever have. I suspect I'm not the only feeling this way.

I try to incentivise the usage of bitcoin when I can though. My business offers a 20% discount if invoice is paid in bitcoin. It's more of a statement though since the customers are a few large corporations. Maybe some day.

Water Blower 1y ago

Very insightful. If I have a business, I will

1. Sat price always 80% of fiat price.

2. Customers have the right to claim fiat diff back if bitcoin goes up, within 1 month time. For example, if customers spend 10 dollars worth of sats and bitcoin goes up by 30%, customers can claim 3 dollars back within a month or get the same amount of goods in the same fiat price.

people won’t think in investment for every single purchase. It’s just too much to think about.

Money back policy will be great. If there is a software to automate it, better. The software can automatically redeem customers without them claiming at the end of month.