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> So the question is whether someone will develop a "killer app" that will push Bitcoin into the mainstream. If that happens, the value of Bitcoin could go even

> So the question is whether someone will develop a "killer app" that will push Bitcoin into the mainstream. If that happens, the value of Bitcoin could go even higher. If it doesn't, then sooner or later the currency's value will plummet. This right here is the heart of the problem. What we need is a way to incentivise merchants to accept bitcoin, and make the payment process from the consumer end easier, safer, and cheaper than using a credit card. What would need to happen for your locally owned restaurant to accept bitcoin?

modeless 13y ago
All that would need to happen is for the POS vendors they already use to add support. Around here (Seattle) the bigger restaurants and bars seem dominated by http://www.dinerware.com/ http://www.dinerware.com/, but there's a lot of innovation at the low end, e.g. sandwich shops, burger joints, and food trucks. I've seen a lot of people using Square and other iOS-based POS systems, and also one place using LevelUp. Separately there are also online ordering systems like Eat24, NetWaiter, and GrubHub, which can act as payment processors for online orders.
- gst 13y ago
  But which advantages would this have for me as a user? As far as I know the merchant contracts with the credit card companies require merchants to charge the same fee, independent of the payment method. But then, when I pay via credit card I get some cashback from my credit card company, and it's also easy to cancel transactions in case of fraud. So paying with Bitcoin is not only more expensive, but also shifts the risk of fraud to the user. The main area where I could see potential adoption of Bitcoin are some business models, where it's currently very hard to get merchant contracts for credit card (due to the high fraud risk). If I'd found a startup in that area, I'd probably just use Bitcoin (via Coinbase or Bitpay) for the early prototype, instead of spending considerable resources trying to get credit card processing to work.
  - modeless 13y ago
    > the merchant contracts with the credit card companies require merchants to charge the same fee, independent of the payment method That's not true. There used to be clauses in the contracts prohibiting merchants from charging an extra fee for credit card transactions. However, these clauses were recently (this year) removed by the credit card industry as a result of litigation. Also, it has always been possible to give a discount for non credit card transactions. You're right, it doesn't make sense, but it's true. Since merchants usually eat the credit card fees themselves instead of passing them on to the customer, they have a big incentive to encourage consumers to switch to bitcoin. It will lower the fees they pay, which probably means discounts for bitcoin users. Merchants will also like the lack of chargebacks. On the other hand, consumers like chargebacks. There's no reason why a payment processor couldn't implement a chargeback-like system on top of bitcoin. The next Visa might be something like that, in fact.
jellicle 13y ago
> easier, safer, and cheaper than using a credit card. Well, let's see. Easier - the credit card process is already about as easy as is possible given some authentication requirements, but bitcoin could certainly tie that process. Cheaper - the credit card process costs the consumer nothing, so you can't be cheaper, but you could tie that as well. Safer - the credit card process has substantial fraud protections for the consumer, but bitcoin by design does not have those fraud protections, so I don't see any way bitcoin could ever be safer. So, the score at best can be: TIE-TIE-LOSE. And IMHO, TIE-TIE-LOSE vs. a heavily entrenched technology used around the world is not going to win, except for those rare items where credit cards cannot be used - purchasing drugs, or child pornography, or donating to Wikileaks.
- nadaviv 13y ago
  > Easier - the credit card process is already about as easy as is possible Credit cards requires giving a physical card to someone when ordering offline, or typing a series of numbers when ordering online. There's a lot of room for improvement with Bitcoin. In addition to that, Bitcoin can make some less standard payments easier, like splitting a payment between multiple users, using an arbiter for the transaction, micro payments, etc > Cheaper - the credit card process costs the consumer nothing Perhaps the consumer doesn't pay for it, but there's significant cost for the merchant that can be saved with Bitcoin. edit: which could also effect the total price the merchant is asking for, giving some of the cost reduction to the consumer > Safer - the credit card process has substantial fraud protections for the consumer, but bitcoin by design does not have those fraud protections, so I don't see any way bitcoin could ever be safer. Bitcoin doesn't have fraud protections because its outside the scope of what Bitcoin is. Its like saying that the US dollar doesn't have fraud protection. Companies can be built around Bitcoin to provide that service for a fee. In addition to that, its actually much harder to steal (locally stored [1]) Bitcoin private keys than it is to steal credit cards. When an attacker breaks into a service that accepts credit cards, he can easily copy and re-use the credit card numbers because the one accepting the payment has everything needed to make more payments. With Bitcoin, the one accepting the payments can't make more payments. An attacker has to gain access to the consumer computer that stores the private keys. In other words - gaining access to a website that has 100,000 credit cards gives you a lot of power. Gaining access to a website that received 100,000 Bitcoin payments gives you nothing. You'd have to break into 100,000 individual computers. [1] I'm assuming here that people either use local Bitcoin clients or m-of-n transaction where one key is stored locally. There are online wallets that stores private keys that creates significant security risks, but at least I have a choice as a Bitcoin user.
kybernetikos 13y ago
Actually, I think that the biggest driver would be if my bank account gave me a bitcoin address that could receive money into which would be immediately transferred at the current rate into my account, and allow me to make payments to bitcoin addresses in the same way that it lets me (through online banking) make payments to other bank accounts.
- MichaelGG 13y ago
  Coinbase could quickly do this as an add-on. They can give you an account and auto-deposit. And sending payments can auto-debit. Apart from latency because they aren't the bank and need to wait for confirmation, it's fairly smooth. (Assuming the purchase supply issue has been fixed.) I would think it'd be extremely difficult for a bank to offer a bitcoin system. It'll be confusing for many users, and open a security problem (once BTC is sent, that's it, whereas intra-bank payments can be reversed). I'd also bet there's some regulatory stuff regarding buying and converting virtual currency.
  - kybernetikos 13y ago
    maybe. At the moment it looks like its US bank accounts only, and then there's the question of what happens if one of the employees absconds with a bunch of money or the company as a whole goes out of business while they've got large chunks of my money. At least in my jurisdiction if any of those things happened to my bank, I would be paid out of government mandated and controlled insurance.

modeless 13y ago

All that would need to happen is for the POS vendors they already use to add support. Around here (Seattle) the bigger restaurants and bars seem dominated by http://www.dinerware.com/ http://www.dinerware.com/, but there's a lot of innovation at the low end, e.g. sandwich shops, burger joints, and food trucks. I've seen a lot of people using Square and other iOS-based POS systems, and also one place using LevelUp. Separately there are also online ordering systems like Eat24, NetWaiter, and GrubHub, which can act as payment processors for online orders.

gst 13y ago
But which advantages would this have for me as a user? As far as I know the merchant contracts with the credit card companies require merchants to charge the same fee, independent of the payment method. But then, when I pay via credit card I get some cashback from my credit card company, and it's also easy to cancel transactions in case of fraud. So paying with Bitcoin is not only more expensive, but also shifts the risk of fraud to the user. The main area where I could see potential adoption of Bitcoin are some business models, where it's currently very hard to get merchant contracts for credit card (due to the high fraud risk). If I'd found a startup in that area, I'd probably just use Bitcoin (via Coinbase or Bitpay) for the early prototype, instead of spending considerable resources trying to get credit card processing to work.
- modeless 13y ago
  > the merchant contracts with the credit card companies require merchants to charge the same fee, independent of the payment method That's not true. There used to be clauses in the contracts prohibiting merchants from charging an extra fee for credit card transactions. However, these clauses were recently (this year) removed by the credit card industry as a result of litigation. Also, it has always been possible to give a discount for non credit card transactions. You're right, it doesn't make sense, but it's true. Since merchants usually eat the credit card fees themselves instead of passing them on to the customer, they have a big incentive to encourage consumers to switch to bitcoin. It will lower the fees they pay, which probably means discounts for bitcoin users. Merchants will also like the lack of chargebacks. On the other hand, consumers like chargebacks. There's no reason why a payment processor couldn't implement a chargeback-like system on top of bitcoin. The next Visa might be something like that, in fact.

jellicle 13y ago

> easier, safer, and cheaper than using a credit card. Well, let's see. Easier - the credit card process is already about as easy as is possible given some authentication requirements, but bitcoin could certainly tie that process. Cheaper - the credit card process costs the consumer nothing, so you can't be cheaper, but you could tie that as well. Safer - the credit card process has substantial fraud protections for the consumer, but bitcoin by design does not have those fraud protections, so I don't see any way bitcoin could ever be safer. So, the score at best can be: TIE-TIE-LOSE. And IMHO, TIE-TIE-LOSE vs. a heavily entrenched technology used around the world is not going to win, except for those rare items where credit cards cannot be used - purchasing drugs, or child pornography, or donating to Wikileaks.

nadaviv 13y ago
> Easier - the credit card process is already about as easy as is possible Credit cards requires giving a physical card to someone when ordering offline, or typing a series of numbers when ordering online. There's a lot of room for improvement with Bitcoin. In addition to that, Bitcoin can make some less standard payments easier, like splitting a payment between multiple users, using an arbiter for the transaction, micro payments, etc > Cheaper - the credit card process costs the consumer nothing Perhaps the consumer doesn't pay for it, but there's significant cost for the merchant that can be saved with Bitcoin. edit: which could also effect the total price the merchant is asking for, giving some of the cost reduction to the consumer > Safer - the credit card process has substantial fraud protections for the consumer, but bitcoin by design does not have those fraud protections, so I don't see any way bitcoin could ever be safer. Bitcoin doesn't have fraud protections because its outside the scope of what Bitcoin is. Its like saying that the US dollar doesn't have fraud protection. Companies can be built around Bitcoin to provide that service for a fee. In addition to that, its actually much harder to steal (locally stored [1]) Bitcoin private keys than it is to steal credit cards. When an attacker breaks into a service that accepts credit cards, he can easily copy and re-use the credit card numbers because the one accepting the payment has everything needed to make more payments. With Bitcoin, the one accepting the payments can't make more payments. An attacker has to gain access to the consumer computer that stores the private keys. In other words - gaining access to a website that has 100,000 credit cards gives you a lot of power. Gaining access to a website that received 100,000 Bitcoin payments gives you nothing. You'd have to break into 100,000 individual computers. [1] I'm assuming here that people either use local Bitcoin clients or m-of-n transaction where one key is stored locally. There are online wallets that stores private keys that creates significant security risks, but at least I have a choice as a Bitcoin user.

kybernetikos 13y ago

Actually, I think that the biggest driver would be if my bank account gave me a bitcoin address that could receive money into which would be immediately transferred at the current rate into my account, and allow me to make payments to bitcoin addresses in the same way that it lets me (through online banking) make payments to other bank accounts.

MichaelGG 13y ago
Coinbase could quickly do this as an add-on. They can give you an account and auto-deposit. And sending payments can auto-debit. Apart from latency because they aren't the bank and need to wait for confirmation, it's fairly smooth. (Assuming the purchase supply issue has been fixed.) I would think it'd be extremely difficult for a bank to offer a bitcoin system. It'll be confusing for many users, and open a security problem (once BTC is sent, that's it, whereas intra-bank payments can be reversed). I'd also bet there's some regulatory stuff regarding buying and converting virtual currency.
- kybernetikos 13y ago
  maybe. At the moment it looks like its US bank accounts only, and then there's the question of what happens if one of the employees absconds with a bunch of money or the company as a whole goes out of business while they've got large chunks of my money. At least in my jurisdiction if any of those things happened to my bank, I would be paid out of government mandated and controlled insurance.