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A while back, I had an idea for a strategy to incentivize Bitcoin transactions for a business I might run. One of the primary drawbacks to using Bitcoin for everyday transactions is its price volatility, so I could perhaps do something like the following to make transaction prices more reliable:

  • Set prices for my goods/services in a relatively stable currency, such as USD.
  • When accepting Bitcoin as payment, value it at either its highest level over the past month, or at 300% of its current value, whichever is lower. (e.g. if Bitcoin reaches a high of 60,000 USD, I will value incoming Bitcoin at 60,000 USD for the next 30 days unless the price falls below 20,000 USD, meaning that someone buying with Bitcoin while it's valued at 45,000 USD gets a 25% discount).
  • When paying employees in Bitcoin, use daily dollar-cost-averaging throughout the pay period, but value the coins bought each day at either the lowest price during that day or 33% of the coin's value at the time of payment, whichever is higher (e.g. if Bitcoin reaches a low of 30,000 USD on a particular day, but the coin is worth 60,000 USD on payday, employees being paid in Bitcoin will effectively receive double their salary for that day).

In short, when accepting payment from customers and paying employees, I would relieve them of having to time the market and instead treat the Bitcoin prices as if they were the price in the recent past that most benefits that customer or that employee, and eat the cost difference.

Obviously, one risk with such a scheme is that the cost I eat might be quite severe (those cutoff percentages, tuned here at 300% and 33%, could cut me off from up to 89% of my revenue in USD). However, is there anything else I'm overlooking that would make this more fundamentally not work or be even riskier than that? I've never seen anything close to this proposed on the Internet, which makes me wonder if I'm missing something, though it's also possible that I'm not looking in the right places - does a scheme like this have a name?

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