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So, I'm a little confused. Why is it so hard to do this with paypal / credit cards and so easy with bitcoins? What sort of fraud do credit card companies have t

So, I'm a little confused. Why is it so hard to do this with paypal / credit cards and so easy with bitcoins? What sort of fraud do credit card companies have to deal with that bitcoin does not?

deleted 14y ago
[deleted]
Ntrails 14y ago
I think gittip does paypal etc donations to twitter accounts - it's not that bitcoin is inherently easier I guess
- jerguismi 14y ago
  Gittip has had its fair share of fraud. It is probably lots of hassle compared to the volumes they handle, which are fairly low. http://blog.gittip.com/post/35057426257/stolen-money-on-gittip-part-1 http://blog.gittip.com/post/35057426257/stolen-money-on-gitt...
jerguismi 14y ago
BItcoin "accounts" are not based on identities. Therefore it is very easy to accept and send payments, since there are no identities at all. No possibility for fraud, because there is only hard cash.
- kiba 14y ago
  There can be a possibility of fraud, it's just that bitcoin doesn't care or know if it's fraud. If you want to care about fraud, you could use escrows and additional layers on top of bitcoin.
kiba 14y ago
Bitcoin is a lower abstraction than paypal and credit cards. It doesn't worry about fraud at all, or have a bottom line, or anything like that. Think of it as the US dollars. The cash in your hand doesn't care where it's go and what kind of business it helps facilitate. Credit companies can be politically pressured, worry about the bottom line, and block payments, and so on.
lucb1e 14y ago
Excellent, excellent question. The thing is that money can be faked (that's why we need to fill out all of our personal details on every payment form we ever see), but Bitcoins are cryptographically secured. You have to be aware of the risks if you want to be really secure, but at least you can be assured that Bitcoins are legitimate and not counterfeited.
- rmc 14y ago
  Unless a software bug causes another fork.
moxie 14y ago
Any time you're in the position of moving money from one person to another with credit cards, you're in extreme risk. Your service becomes the perfect fraud target, because an attacker can essentially use your service to withdraw cash from stolen credit card numbers (set up two accounts, "tip" one from the other, repeat). Once the owner of the CC realizes that its been stolen, the CC company will issue a chargeback. If the money has already been withdrawn by the attacker, you lose. Chargebacks can happen three or four months from the date of the charge, so there's no way to effectively "hold" the charge for that long before allowing users to withdraw their money. BTC, on the other hand, is an irrevocable transaction.
- tejaswiy 14y ago
  But still, stolen credit cards == compromised bitcoin private keys right?
  - Retric 14y ago
    compromised bi-coin private key ~= lost cash. If you look into it the only thing bit coins have going for them is pseudo anonymity. You can't use them for vending machines as you can revoke transactions in the short them and nobody want's to wait 20 minutes for there soda with the same problem showing up on any fast transaction. You also have no protection vs a lost wallet.
    - MacsHeadroom 14y ago
      The likelihood of people double-spending against vending machines is very low. There is no reason a well placed vending machine could not give out cheap items without verification. Sure, don't put your vending machine in the ghetto. But an upscale mall should be fine.
      - diminoten 14y ago
        If I were the enterprising lawless sort, and bitcoin vending machines did let me double-spend, that's precisely what I would do.
Groxx 14y ago
Bitcoin is, at a very rough level, cash. If you give it to someone, you can't do any kind of automatic charge-back (lead pipes still work of course). You can't give the same cash to someone else (double-spending, easy with checks). You can't give someone cash you don't have (no debt / bounced checks). No transaction fee (technically. in practice, there may be none, or a very-tiny one compared to the amount transferred). No drivers license / social security number / home address required for either participant. Now imagine if you could send cash over the internet, to anyone. There are some extra tidbits (Bitcoin comes with a 'coin use history' essentially - all transactions are public knowledge, though the participants are anonymous. and other differences.), but that's basically the appeal.

So, I'm a little confused. Why is it so hard to do this with paypal / credit cards and so easy with bitcoins? What sort of fraud do credit card companies have to deal with that bitcoin does not?

deleted 14y ago

[deleted]

Ntrails 14y ago

I think gittip does paypal etc donations to twitter accounts - it's not that bitcoin is inherently easier I guess

jerguismi 14y ago
Gittip has had its fair share of fraud. It is probably lots of hassle compared to the volumes they handle, which are fairly low. http://blog.gittip.com/post/35057426257/stolen-money-on-gittip-part-1 http://blog.gittip.com/post/35057426257/stolen-money-on-gitt...

jerguismi 14y ago

BItcoin "accounts" are not based on identities. Therefore it is very easy to accept and send payments, since there are no identities at all. No possibility for fraud, because there is only hard cash.

kiba 14y ago
There can be a possibility of fraud, it's just that bitcoin doesn't care or know if it's fraud. If you want to care about fraud, you could use escrows and additional layers on top of bitcoin.

kiba 14y ago

Bitcoin is a lower abstraction than paypal and credit cards. It doesn't worry about fraud at all, or have a bottom line, or anything like that. Think of it as the US dollars. The cash in your hand doesn't care where it's go and what kind of business it helps facilitate. Credit companies can be politically pressured, worry about the bottom line, and block payments, and so on.

lucb1e 14y ago

Excellent, excellent question. The thing is that money can be faked (that's why we need to fill out all of our personal details on every payment form we ever see), but Bitcoins are cryptographically secured. You have to be aware of the risks if you want to be really secure, but at least you can be assured that Bitcoins are legitimate and not counterfeited.

rmc 14y ago
Unless a software bug causes another fork.

moxie 14y ago

Any time you're in the position of moving money from one person to another with credit cards, you're in extreme risk. Your service becomes the perfect fraud target, because an attacker can essentially use your service to withdraw cash from stolen credit card numbers (set up two accounts, "tip" one from the other, repeat). Once the owner of the CC realizes that its been stolen, the CC company will issue a chargeback. If the money has already been withdrawn by the attacker, you lose. Chargebacks can happen three or four months from the date of the charge, so there's no way to effectively "hold" the charge for that long before allowing users to withdraw their money. BTC, on the other hand, is an irrevocable transaction.

tejaswiy 14y ago
But still, stolen credit cards == compromised bitcoin private keys right?
- Retric 14y ago
  compromised bi-coin private key ~= lost cash. If you look into it the only thing bit coins have going for them is pseudo anonymity. You can't use them for vending machines as you can revoke transactions in the short them and nobody want's to wait 20 minutes for there soda with the same problem showing up on any fast transaction. You also have no protection vs a lost wallet.
  - MacsHeadroom 14y ago
    The likelihood of people double-spending against vending machines is very low. There is no reason a well placed vending machine could not give out cheap items without verification. Sure, don't put your vending machine in the ghetto. But an upscale mall should be fine.
    - diminoten 14y ago
      If I were the enterprising lawless sort, and bitcoin vending machines did let me double-spend, that's precisely what I would do.

Groxx 14y ago

Bitcoin is, at a very rough level, cash. If you give it to someone, you can't do any kind of automatic charge-back (lead pipes still work of course). You can't give the same cash to someone else (double-spending, easy with checks). You can't give someone cash you don't have (no debt / bounced checks). No transaction fee (technically. in practice, there may be none, or a very-tiny one compared to the amount transferred). No drivers license / social security number / home address required for either participant. Now imagine if you could send cash over the internet, to anyone. There are some extra tidbits (Bitcoin comes with a 'coin use history' essentially - all transactions are public knowledge, though the participants are anonymous. and other differences.), but that's basically the appeal.