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Comment by slg | Hacker News Reader

This is a very interesting idea. However I think the ordering process for this highlights a crucial problem with Bitcoin, instability of value. They aren't planning to deliver the device for four to five months. Using the last four months as prediction of future fluctuation in Bitcoin value (insert usual caveat about past performance predicting future performance), the more expensive version of the device could cost anywhere from $100 to $700 USD when you actually receive the product.

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I don't understand this. Unless all of your money is already in Bitcoin, just buy exactly 1 bitcoin right now and immediately send it to them, rather than sending 1 bitcoin from your existing holdings (or send from your existing holdings and immediately buy 1 more bitcoin, it's exactly the same effect).

If you'd rather speculate on the price of that 1 bitcoin, then you're free to do so.

If Bitcoin ever gets to the point where it's used for everything the deflation should be much more reasonable and predictable. Then maybe companies will offer a discount for prepaid preorders.

If you pre-order with one Bitcoin today, then you paid the dollar value of one Bitcoin today, plus transaction costs. Future fluctuations in Bitcoin value are irrelevant.

1 Bitcoin today and 1 Bitcoin in six months is not the same at all because you lose all the value you could have add from this Bitcoin during the six months so you have to discount it. That's called present value of money and that's one of the way companies manage their investments.

Theoretically, you have to use the real rate of return of your money and discount it on the time period. Of course, estimating the real rate of return is an art in itself. Considering value of bitcoin has been shown to be highly volatile, doing any semi-long term investment with it is basically gambling.

That's true, but you're talking "just" about time value (interest), sig's comment was about the volatility of BTC in terms of USD, different things. You'd also lose the interest if the product was denominated in USD or another major currency.

I would agree with you if it wasn't a pre-order. You pay, you get your goods, deal closed.

With a pre-order on the other hand, you give them the money and you get nothing for four months. Probably longer.

I'm not sure I see the difference. Once you've commited your 1 Bitcoin at today's value, you have effectively paid that price, irrespective of when you receive the product.

If the value of Bitcoin fluctuates between now and the time you receive your product, then you may "lose" or "win", but that's a chance you take, even with the product in hand. In other words, there is still the possibility that your 1 Bitcoin could have allowed you to purchase something more valuable than the product in hand at some point down the road.

Seems that the only thing you give up with a preorder is the interest potential or use of the money for some period before receiving the value (i.e. product). But, that would be the case with a preorder irrespective of the currency used.

Yes, but in that case you jusr lose the intrest of 4 months on your money which is close to nothing and not something to worry about.

Yeah the value of a BTC could increase, but it could also stay the same or even decrease, somehow. I'm not sure on the economic theory of this, but the people who pay are basically saying, in X months I will value this device more than I value 1 BTC now.

real currency has the same issue as well.

this is dealt with currency futures and forwards.

You honestly think the US Dollar will change in value by 700% in a few months?

Tone down the lack of clue.

Imagine you are buying goods denominated in euros and it takes two weeks for them to be delivered. You don't want to incur any P&L due to the change in exchange rate between now and delivery.

The exchange rate changes all the time. You would use a currency forward to hedge out that change.

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