Virtual data room company, Ruby Datum, has announced it will accept payments in cryptocurrencies such as Bitcoin and Ether, now that these blockchain-based currencies have reached a sufficient level of maturity.
While there has been a lot of talk in the legal market about accepting Bitcoin as a payment for services and products, few companies or law firms have yet to formally state that they are actually doing so. In part this is because cryptocurrencies, though now familiar to most people, remain volatile.
Artificial Lawyer caught up with Ruby Datum’s UK-based boss, Nick Watson, to hear why he’s making this move.
‘While Bitcoin, Ethereum and Litecoin have been rising over the years, Ruby Datum has been paying close attention…. [we] will now be one of the first legal technology companies to accept cryptocurrency payments,’ said Watson.
‘At what appears to be a mature stage of the market, we feel that the longterm credibility of cryptocurrencies have demonstrated their longevity…and the future of payments will change, particularly for settling international transactions. We’re excited to be involved at the early stages of this,’ he added.
Indeed, it does sound exciting, especially when Bitcoin has been increasing in value like a rollercoaster climbing up a slope. But, what happens when Bitcoin goes back down the other side of the curve and rockets downward in value? How can two businesses transact when the medium of exchange can see changes in value of 30% in a single day, and even more over a weekend?
Artificial Lawyer can certainly see the value in digital currencies, especially for international exchange, but if company A needs to pay 100X to company B, and chooses a digital currency that is whipping up and down in value how can you conduct business?
How can you even know how much revenue you have earned as a business? For example, company A gets paid 100X in a digital currency, it looks like it’s met its financial targets for the Quarter, then the value of that currency drops wildly. Suddenly – unless the company has already cashed out of the digital currency into fiat currency such as US$ – then the Quarter is now a miss.
Moreover, if company A is paid in a digital currency that seems to be going up in value there is a strong incentive not to cash out, but instead to keep the Bitcoin, or whichever currency, in a digital wallet in the hope of even greater returns. But, that can then hamper future business needs, effectively creating a cashflow problem.
In short, although running a business using digital currencies is entirely possible, and an exciting prospect at that, it appears to add new challenges. Artificial Lawyer asked Watson about these issues.
– Is it a challenge to pay in a cyrpto currency when it is fluctuating in price, i.e. how can we pay what we mean to?
‘The volatility of Bitcoin has been a concern towards the end of 2017, but we feel things are stablising. Other cryptocurrencies haven’t seen as much fluctuation.
Communication with the client is key, and we would need to agree a time, method and type of cryptocurrency for payment to ensure things run smoothly. We would analyse the market at the time, to determine the best way forward.’
– Is this like being paid in a security?
‘We will be treating any payments in accordance with current HMRC [the UK tax office] guidelines at the time. These are currently available here (although we expect an update relatively soon).’
– If prices are rising will people actually want to pay with Bitcoin, rather than just keeping hold of it?
‘Each cryptocurrency has its merits and times change, so it’s hard to answer this question.
With the introduction of the lightning network and segwit into Bitcoin transactions across more exchanges, we expect things to start stablising further. With the transaction fees reduced enough to make this a more appealing method of payment, particularly for our international customers [this will also help].’
There you go. Kudos to Ruby Datum for taking the leap. It will be interesting to see which law firms decide to pay in this way.
Also, one other point is that as lawyers and vendors work more closely with smart contracts on a blockchain such as Ethereum, which may involve a token with a currency value, such as Ether for example, then opening up to ‘retail’ payments in digital currencies may become part and parcel of doing business in the legal sector. In which case, Ruby Datum’s move may be a lot less risky than it first appears and in fact simply be the shape of things to come.
Watch this space.