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The appeal for irreversibility is the complete removal of counterparty risk. It's a sharp edge and you need to be structured/careful, but for certain types of t

by Taek 5y ago

The appeal for irreversibility is the complete removal of counterparty risk. It's a sharp edge and you need to be structured/careful, but for certain types of transactions, the cost of being careful is 100x cheaper than the cost of finding and using a trustworthy counterparty. A strong example of where the irreversibility of crypto is very useful is in the online sale of expensive electronic goods. Especially for things like speakers, TVs, and projectors, fraud rates are extremely high and boutique shops struggle to effectively support online customers, because such a large percentage of their sales get chargebacks after they've shipped the goods. If you accept crypto, you have a 100% guarantee that when the money has hit your wallet, the money is good and will stay in your wallet. You don't need to deal with an anti-fraud firm, you don't need to check whether this person is trying to have the goods shipped to a sketchy country, and you don't need to fear that your $6,000 item is going to sail away from you without payment. Yes, this means that the consumer has to fully trust the merchant, but in the case of online sales, the merchant is the known quantity with a reputation. Every consumer is a random, unknown person to the merchant and so it's much harder (and therefore more expensive) for the merchant to establish trustworthyness.

yunohn 5y ago
> in the case of online sales, the merchant is the known quantity with a reputation This is absolutely not true. There’s plenty of risk buying expensive goods online, lots of problematic merchants. I don’t understand why merchants are inherently more trustworthy than customers?
- Taek 5y ago
  It's not that merchants are inherently more trustworthy, it's that the buyer has ample opportunity to research the merchant and establish credibility. If there's a merchant that only accepts crypto and the buyer can't get comfortable that the merchant is trustworthy, the buyer can walk away instead of making a purchase. The merchant has much less to go on. There aren't review websites detailing the reputation and history of every random buyer that enters a credit card onto your website.
  - barrkel 5y ago
    I don't quite buy that. The ability to claw back credit card payments to fraudulent merchants enables commerce before credibility is established. This is in the merchant's interest too, especially when they're starting out.
    - Taek 5y ago
      It's only in the interest of the merchant if they are selling items that have a low enough chargeback rate. Credit cards and clawbacks work great in-person and for low value online merchandise but it's non-viable for online high resale value merchandise.
      - perl4ever 5y ago
        >it's non-viable for online high resale value merchandise. What does that mean? The phrase "high resale value merchandise" sounds like it refers to the stuff that, in physical stores, is kept in a locked case so you have to ask someone to open it. But that stuff is readily available online, isn't it?
yarcob 5y ago
This just moves the risk from the vendor to the consumer. I assume that most chargebacks happen for purchases made with stolen credit cards. So the chargeback just returns the money to the rightful owner. If the consumer used bitcoin, and someone stole their credentials to buy something, then they would have no way to get their money back.
- Taek 5y ago
  The chargeback returning the money to the rightful owner doesn't help the merchant who shipped $6,000 of hardware to some stranger. Certain types of electronic sales simply can't be done online because of the high rates of fraud. When you add crypto, these sales become possible. Yes, they become possible at the cost of putting the counterparty risk onto the consumer, but that's better than the sale being entirely non-viable.
  - yunohn 5y ago
    I don’t understand your line of reasoning at all. Like the others have said, moving risk from sellers to customers is not a solution. Especially when the risk of customers committing fraud is incredibly low. Why would you start with an assumption that this is something so rampant it needs to be solved in a way that harms literally all honest customers?
    - Taek 5y ago
      I operated an online store selling $2,000 pieces of computer hardware, and both credit card companies and banks alike refused to service us because fraud rates were extremely high. If you think fraud rates are extremely low, you've never tried to sell $2,000 electronics online as a boutique electronics store. Bitcoin was the only option.
      - yunohn 5y ago
        It’s not that I don’t believe there is fraud, I’m saying the vast majority of customers are well-intentioned. If this is not the case, could you point me to some sources and not just your anecdote? Regardless, how does Bitcoin solve this? There’s a lot of illegitimate users of crypto, how are you solving fraud with irreversible transactions?

by Taek 5y ago

yunohn 5y ago

> in the case of online sales, the merchant is the known quantity with a reputation This is absolutely not true. There’s plenty of risk buying expensive goods online, lots of problematic merchants. I don’t understand why merchants are inherently more trustworthy than customers?

Taek 5y ago
It's not that merchants are inherently more trustworthy, it's that the buyer has ample opportunity to research the merchant and establish credibility. If there's a merchant that only accepts crypto and the buyer can't get comfortable that the merchant is trustworthy, the buyer can walk away instead of making a purchase. The merchant has much less to go on. There aren't review websites detailing the reputation and history of every random buyer that enters a credit card onto your website.
- barrkel 5y ago
  I don't quite buy that. The ability to claw back credit card payments to fraudulent merchants enables commerce before credibility is established. This is in the merchant's interest too, especially when they're starting out.
  - Taek 5y ago
    It's only in the interest of the merchant if they are selling items that have a low enough chargeback rate. Credit cards and clawbacks work great in-person and for low value online merchandise but it's non-viable for online high resale value merchandise.
    - perl4ever 5y ago
      >it's non-viable for online high resale value merchandise. What does that mean? The phrase "high resale value merchandise" sounds like it refers to the stuff that, in physical stores, is kept in a locked case so you have to ask someone to open it. But that stuff is readily available online, isn't it?

yarcob 5y ago

This just moves the risk from the vendor to the consumer. I assume that most chargebacks happen for purchases made with stolen credit cards. So the chargeback just returns the money to the rightful owner. If the consumer used bitcoin, and someone stole their credentials to buy something, then they would have no way to get their money back.

Taek 5y ago
The chargeback returning the money to the rightful owner doesn't help the merchant who shipped $6,000 of hardware to some stranger. Certain types of electronic sales simply can't be done online because of the high rates of fraud. When you add crypto, these sales become possible. Yes, they become possible at the cost of putting the counterparty risk onto the consumer, but that's better than the sale being entirely non-viable.
- yunohn 5y ago
  I don’t understand your line of reasoning at all. Like the others have said, moving risk from sellers to customers is not a solution. Especially when the risk of customers committing fraud is incredibly low. Why would you start with an assumption that this is something so rampant it needs to be solved in a way that harms literally all honest customers?
  - Taek 5y ago
    I operated an online store selling $2,000 pieces of computer hardware, and both credit card companies and banks alike refused to service us because fraud rates were extremely high. If you think fraud rates are extremely low, you've never tried to sell $2,000 electronics online as a boutique electronics store. Bitcoin was the only option.
    - yunohn 5y ago
      It’s not that I don’t believe there is fraud, I’m saying the vast majority of customers are well-intentioned. If this is not the case, could you point me to some sources and not just your anecdote? Regardless, how does Bitcoin solve this? There’s a lot of illegitimate users of crypto, how are you solving fraud with irreversible transactions?