9 ms·

Seems to me that most peoples' points is that Bitcoin solves problems that most people do not have. I still haven't had any Bitcoin advocates explain to me why

by srdev 13y ago

Seems to me that most peoples' points is that Bitcoin solves problems that most people do not have. I still haven't had any Bitcoin advocates explain to me why I should care. My credit card is vastly superior in pretty much every respect, and the decentralized nature of the network seems more like an albatross that makes it require vastly more resources than it needs (because I don't think central banking is bad). And yeah, no chargebacks is ok if you're a seller and can reasonably push risk off to the consumer without them shopping elsewhere. But I'm a buyer, so...

unreal37 13y ago
How about the fact that the banking system charges huge fees for the use of their networks and technology? Do you mind paying 4% more for all your purchases because the retailer has to take credit card fees into account? Do you mind paying $15 to send money to relatives overseas? Every time you want to transfer money from one place to another, it costs you way way way more than it actually costs because of marketing and profits. This is disruptive technology. Credit card companies and international money transfer companies are panicking right now.
- srdev 13y ago
  Credit card companies do not charge 4%. I worked in credit cards about a decade ago, so unless the marketplace is less competitive now than before, I assume this still holds true. Furthermore, the fees that do exist are not necessarily passed on the consumer, but taken out of profit. Prices can only be arbitrarily changed if demand is inelastic. None of the companies taking Bitcoin are taking it directly -- they are all paying fees -- and none of them are passing savings onto the consumer. Finally, no I don't mind paying a small percentage (1-2%) for paying with a convenient method that gives me 1% cash back and consumer protections like chargebacks. Its a service. > Do you mind paying $15 to send money to relatives overseas? I very rarely have to do this, and when I do $15 is a fraction of a percent. And certainly, its worth it in comparison to dealing with the Bitcoin ecosystem to get my money INTO Bitcoin and then out on the other side. So no, I don't mind. Now you may be saying "Well when everyone uses bitcoins in the future these problems won't exist, and furthermore..." Yeah but if bitcoins get market penetration then banks and other services can adjust prices to compete. > This is disruptive technology. Credit card companies and international money transfer companies are panicking right now. Everyone throws around the word "disruptive" on this site, but seldom is it really true. I keep an eye on the Bitcoin ecosystem because it is interesting, but I've seen literally nothing offered that appeals to me over existing services. When Bitcoin provides me with real, significant value, then I'll think about buying in. Also, its amusing how its advocates claim that traditional finance companies are "terrified." I've seen absolutely ZERO evidence of this. Its more of the Bitcoin community's lack of reality.
  - vinceguidry 13y ago
    > "Well when everyone uses bitcoins in the future these problems won't exist, and furthermore..." Question: What would happen if literally everyone started using bitcoin? Could the system handle that much of a load?
    - srdev 13y ago
      As currently implemented, no, because network traffic and disk size scales at O(n) with the number of transactions. There is currently a 7 transaction/sec limit in order to avoid the blockchain ballooning in place. The fact that Bitcoin is really a decentralized, shared ledge means that scaling horizontally is difficult (and is not possible with the current implementation). There was a video linked on Hacker News about the scalability issues by a well-respected researcher a while back, but I can't seem to find it. I'm not intelligent enough or well-versed enough to say whether the issues are insurmountable or not. I do know that some very smart people are working on Bitcoin, so they very well may be. I'm only speaking to the current system.
  - geminitojanus 13y ago
    > Credit card companies do not charge 4%. I worked in credit cards about a decade ago, so unless the marketplace is less competitive now than before, I assume this still holds true. Furthermore, the fees that do exist are not necessarily passed on the consumer, but taken out of profit. This isn't entirely accurate. Most credit card companies now tack on a 30c + 2.9% surcharge for processors that do fewer transactions than some arbitrarily defined limit, well known to most small companies as the "PayPal tax" because they started doing it first and the credit card companies realized they could get away with it too. And it's usually passed completely on to consumers, because eating it as a business owner with a low-margin business is pretty damned hard, and because the little guys are doing it, the big guys get away with doing it too. Or haven't you heard about the recent record profits being made by Mastercard et al?
    - srdev 13y ago
      > This isn't entirely accurate. Most credit card companies now tack on a 30c + 2.9% surcharge for processors that do fewer transactions than some arbitrarily defined limit, well known to most small companies as the "PayPal tax" because they started doing it first and the credit card companies realized they could get away with it too. Wasn't aware of that. We charged flat percentage rate, and added to the processor I think it was 1.5% or so. But like I said, a decade ago, so maybe I'm just wrong on that point and forgot. > And it's usually passed completely on to consumers, because eating it as a business owner with a low-margin business is pretty damned hard, and because the little guys are doing it, the big guys get away with doing it too. Is it actually proven that the costs are passed on (i.e. that the price would be lower in absence of credit cards)? Because, again, in theory that only works if the demand has enough inelasticity.
- geminitojanus 13y ago
  > How about the fact that the banking system charges huge fees for the use of their networks and technology? Yeah that sucks. But the only thing that's going to change this is regulation, not non-existent competition. > Do you mind paying $15 to send money to relatives overseas? Most of us don't have relatives overseas. And for the most part, if we did and we were sending money over seas, it'd probably be in denominations that make $15 a pittance. > This is disruptive technology. Credit card companies and international money transfer companies are panicking right now. This is hilarious and bullshit. Nobody's panicking. I doubt if most bankers even know what Bitcoin is. If they were scared, they'd go to their favorite lawmaker with a quarter billion dollars and tell them to make Bitcoin go away, and guess what? It would - "Silkroad"-style shutdowns would happen to all the Bitcoin companies, the value of bitcoin would plummet and this shanty economy would disappear overnight.
  - ojr 13y ago
    Total Market Cap: $ 12,947,277,234 http://coinmarketcap.com/ http://coinmarketcap.com/ I think they're going to need more than a quarter of a billion...
    - dragonwriter 13y ago
      What does the market cap of bitcoin have to do with the cost of getting government to legislate so that it isn't viable?
      - ojr 13y ago
        nothing at all, cost doesn't matter security of the software is all that matters
    - geminitojanus 13y ago
      Good luck finding a congressman to buy who will accept bitcoin as payment.
- skybrian 13y ago
  As far as I can tell the payment industry is about hiding the fees. To consumers, credit cards seem not to have any fees because the merchants pay them. (This is why they can give you cash back.) Accepting Bitcoin is a different way of hiding fees. It's somewhat difficult to compare prices to USD because you have to do the exchange rate calculation yourself. Merchants could easily charge a small premium for Bitcoin transactions and consumers can't easily tell if the deal is slightly better or slightly worse. As a result, there's little incentive to give a discount for Bitcoin since it's unlikely to get more sales. The fees are still there; they're hidden in the bid/ask spread for exchanging bitcoin for dollars. So yeah, this is "innovative" and possibly disruptive but only in the same way as other financial innovations that seem to give you a good deal while actually charging more.
- nly 13y ago
  Bitcoin hash difficulty rises to ensure the block rate remains relatively stable at 1 block every ~10 minutes. Meanwhile the block reward falls exponentially. By definition then, it requires that other variables change such that mining remains profitable for someone to survive, otherwise all incentive of maintaining the blockchain collapses. Sure, you could argue that mining will reach a state of neutral ROI just to serve the public good... but guess what, there's a fee system in the protocol that will ensure that probably won't happen. The 'but banks charge fees' argument just doesn't hold water long term. Blockchain resources are finite, and all indications are solving Bitcoins long term scalability problems (in terms of number of transactions per second) is still quite hard. Unless the value of Bitcoin grows with hash difficulty and the inverse of block reward sizes, fees will rise in the Bitcoin network. It's naive to think it'll be a free ride payment network forever.
CamperBob2 13y ago
Seems to me that most peoples' points is that Bitcoin solves problems that most people do not have. Everyone who has ever dealt with a bank has a problem that Bitcoin can solve, even if they don't realize it yet.
- srdev 13y ago
  Can you list one? I don't want to "be my own bank," as the advocates so cheerfully put it. I stopped working at a bank for a reason.
  - CamperBob2 13y ago
    How about this one, which affected my own business? http://www.peaktopeak.org/modules/groups/homepagefiles/cms/944821/File/Governing%20Documents/Financial%20Documents/September%202013%20Investment%20Reports.pdf http://www.peaktopeak.org/modules/groups/homepagefiles/cms/9... (1 MB .PDF) The reality is that this was a very poorly implemented and marketed attempt on Chase's part to herd its business customers into accounts with higher fees. But who has time to deconstruct their bank's motivations when they decide to jerk their customers around, with or without a government mandate to do so?
    - srdev 13y ago
      That's unfortunate but I have not run into that problem. Your claim was that everyone who has dealt with bank has had a problem Bitcoin has solved. You provided a problem that is specific to people with business accounts at a certain bank. I cannot recall having any problem with my many bank accounts that would be solved by Bitcoin.
      - CamperBob2 13y ago
        Here's another good 'un: http://www.bbc.co.uk/news/business-25861717 http://www.bbc.co.uk/news/business-25861717 But yeah, you're probably right, I'm sure it's always going to be somebody else's problem.
base698 13y ago
The Target hack a month back effected my wife. Paying with bitcoin would have removed the possibility of her account being compromised shifting the burden to the retailer. All kinds of possibilities are there to mitigate that risk: cold storage wallets, third party services. Some other accounting implication off the top of my head: create a new payment address for each day, month, or year and automatically reconcile an accounts based on wallet address. I imagine banks and other bitcoin service venders will solve the charge back issue or 3rd party arbitrators will be common with this: https://en.bitcoin.it/wiki/Contracts#Example_2:_Escrow_and_dispute_mediation https://en.bitcoin.it/wiki/Contracts#Example_2:_Escrow_and_d...
mrb 13y ago
Here is a problem that all people have: inflation. 4% in the US. 20% in Argentina. Etc. All this means your current life savings will have lost tremendous value decades from now when you will need them. Bitcoin, by being deflationary, solves this. Another problem: my landlord and I are both Wells Fargo customers, but I can't even pay my rent electronically because WF arbitrarily limits electronic ("SurePay") payements to $2000/month. Instead we have to use plain old checks. This is an aberration for the 21st century... With Bitcoin, nobody dictates me I can only send $X/month. How about the underbanked with no ability to receive payments from remote friends/family? How about Chinese dissidents getting their financial accounts seized by an evil government? And so on... Bitcoin can solve numerous societal and economic problems. Too often people are blind to them because we have always lived with these problems.
- Nursie 13y ago
  Inflation is not a problem. It encourages spending and investment. Deflation encourages hoarding and rewards people who sit on piles of cash. It also values work yesterday more highly then work today. Bitcoin, as a currency model, creates lots of problems.
  - chii 13y ago
    Work that I did yesterday should be worth the same, not less! Inflation is a silent tax on the poor.
    - lmm 13y ago
      More like a silent tax on the rich and hoarders. For people who are in net cash debt inflation is a bonus.
    - Nursie 13y ago
      It certainly shouldn't be worth more. Why should it be worth the same? If you farm vegetables they don't stay the same forever, nor do they appreciate in value. Inflation is a tax on the cash-rich. This does not describe the poor, who are typically in debt.

by srdev 13y ago

unreal37 13y ago

How about the fact that the banking system charges huge fees for the use of their networks and technology? Do you mind paying 4% more for all your purchases because the retailer has to take credit card fees into account? Do you mind paying $15 to send money to relatives overseas? Every time you want to transfer money from one place to another, it costs you way way way more than it actually costs because of marketing and profits. This is disruptive technology. Credit card companies and international money transfer companies are panicking right now.

srdev 13y ago
Credit card companies do not charge 4%. I worked in credit cards about a decade ago, so unless the marketplace is less competitive now than before, I assume this still holds true. Furthermore, the fees that do exist are not necessarily passed on the consumer, but taken out of profit. Prices can only be arbitrarily changed if demand is inelastic. None of the companies taking Bitcoin are taking it directly -- they are all paying fees -- and none of them are passing savings onto the consumer. Finally, no I don't mind paying a small percentage (1-2%) for paying with a convenient method that gives me 1% cash back and consumer protections like chargebacks. Its a service. > Do you mind paying $15 to send money to relatives overseas? I very rarely have to do this, and when I do $15 is a fraction of a percent. And certainly, its worth it in comparison to dealing with the Bitcoin ecosystem to get my money INTO Bitcoin and then out on the other side. So no, I don't mind. Now you may be saying "Well when everyone uses bitcoins in the future these problems won't exist, and furthermore..." Yeah but if bitcoins get market penetration then banks and other services can adjust prices to compete. > This is disruptive technology. Credit card companies and international money transfer companies are panicking right now. Everyone throws around the word "disruptive" on this site, but seldom is it really true. I keep an eye on the Bitcoin ecosystem because it is interesting, but I've seen literally nothing offered that appeals to me over existing services. When Bitcoin provides me with real, significant value, then I'll think about buying in. Also, its amusing how its advocates claim that traditional finance companies are "terrified." I've seen absolutely ZERO evidence of this. Its more of the Bitcoin community's lack of reality.
- vinceguidry 13y ago
  > "Well when everyone uses bitcoins in the future these problems won't exist, and furthermore..." Question: What would happen if literally everyone started using bitcoin? Could the system handle that much of a load?
  - srdev 13y ago
    As currently implemented, no, because network traffic and disk size scales at O(n) with the number of transactions. There is currently a 7 transaction/sec limit in order to avoid the blockchain ballooning in place. The fact that Bitcoin is really a decentralized, shared ledge means that scaling horizontally is difficult (and is not possible with the current implementation). There was a video linked on Hacker News about the scalability issues by a well-respected researcher a while back, but I can't seem to find it. I'm not intelligent enough or well-versed enough to say whether the issues are insurmountable or not. I do know that some very smart people are working on Bitcoin, so they very well may be. I'm only speaking to the current system.
- geminitojanus 13y ago
  > Credit card companies do not charge 4%. I worked in credit cards about a decade ago, so unless the marketplace is less competitive now than before, I assume this still holds true. Furthermore, the fees that do exist are not necessarily passed on the consumer, but taken out of profit. This isn't entirely accurate. Most credit card companies now tack on a 30c + 2.9% surcharge for processors that do fewer transactions than some arbitrarily defined limit, well known to most small companies as the "PayPal tax" because they started doing it first and the credit card companies realized they could get away with it too. And it's usually passed completely on to consumers, because eating it as a business owner with a low-margin business is pretty damned hard, and because the little guys are doing it, the big guys get away with doing it too. Or haven't you heard about the recent record profits being made by Mastercard et al?
  - srdev 13y ago
    > This isn't entirely accurate. Most credit card companies now tack on a 30c + 2.9% surcharge for processors that do fewer transactions than some arbitrarily defined limit, well known to most small companies as the "PayPal tax" because they started doing it first and the credit card companies realized they could get away with it too. Wasn't aware of that. We charged flat percentage rate, and added to the processor I think it was 1.5% or so. But like I said, a decade ago, so maybe I'm just wrong on that point and forgot. > And it's usually passed completely on to consumers, because eating it as a business owner with a low-margin business is pretty damned hard, and because the little guys are doing it, the big guys get away with doing it too. Is it actually proven that the costs are passed on (i.e. that the price would be lower in absence of credit cards)? Because, again, in theory that only works if the demand has enough inelasticity.
geminitojanus 13y ago
> How about the fact that the banking system charges huge fees for the use of their networks and technology? Yeah that sucks. But the only thing that's going to change this is regulation, not non-existent competition. > Do you mind paying $15 to send money to relatives overseas? Most of us don't have relatives overseas. And for the most part, if we did and we were sending money over seas, it'd probably be in denominations that make $15 a pittance. > This is disruptive technology. Credit card companies and international money transfer companies are panicking right now. This is hilarious and bullshit. Nobody's panicking. I doubt if most bankers even know what Bitcoin is. If they were scared, they'd go to their favorite lawmaker with a quarter billion dollars and tell them to make Bitcoin go away, and guess what? It would - "Silkroad"-style shutdowns would happen to all the Bitcoin companies, the value of bitcoin would plummet and this shanty economy would disappear overnight.
- ojr 13y ago
  Total Market Cap: $ 12,947,277,234 http://coinmarketcap.com/ http://coinmarketcap.com/ I think they're going to need more than a quarter of a billion...
  - dragonwriter 13y ago
    What does the market cap of bitcoin have to do with the cost of getting government to legislate so that it isn't viable?
    - ojr 13y ago
      nothing at all, cost doesn't matter security of the software is all that matters
  - geminitojanus 13y ago
    Good luck finding a congressman to buy who will accept bitcoin as payment.
skybrian 13y ago
As far as I can tell the payment industry is about hiding the fees. To consumers, credit cards seem not to have any fees because the merchants pay them. (This is why they can give you cash back.) Accepting Bitcoin is a different way of hiding fees. It's somewhat difficult to compare prices to USD because you have to do the exchange rate calculation yourself. Merchants could easily charge a small premium for Bitcoin transactions and consumers can't easily tell if the deal is slightly better or slightly worse. As a result, there's little incentive to give a discount for Bitcoin since it's unlikely to get more sales. The fees are still there; they're hidden in the bid/ask spread for exchanging bitcoin for dollars. So yeah, this is "innovative" and possibly disruptive but only in the same way as other financial innovations that seem to give you a good deal while actually charging more.
nly 13y ago
Bitcoin hash difficulty rises to ensure the block rate remains relatively stable at 1 block every ~10 minutes. Meanwhile the block reward falls exponentially. By definition then, it requires that other variables change such that mining remains profitable for someone to survive, otherwise all incentive of maintaining the blockchain collapses. Sure, you could argue that mining will reach a state of neutral ROI just to serve the public good... but guess what, there's a fee system in the protocol that will ensure that probably won't happen. The 'but banks charge fees' argument just doesn't hold water long term. Blockchain resources are finite, and all indications are solving Bitcoins long term scalability problems (in terms of number of transactions per second) is still quite hard. Unless the value of Bitcoin grows with hash difficulty and the inverse of block reward sizes, fees will rise in the Bitcoin network. It's naive to think it'll be a free ride payment network forever.

CamperBob2 13y ago

Seems to me that most peoples' points is that Bitcoin solves problems that most people do not have. Everyone who has ever dealt with a bank has a problem that Bitcoin can solve, even if they don't realize it yet.

srdev 13y ago
Can you list one? I don't want to "be my own bank," as the advocates so cheerfully put it. I stopped working at a bank for a reason.
- CamperBob2 13y ago
  How about this one, which affected my own business? http://www.peaktopeak.org/modules/groups/homepagefiles/cms/944821/File/Governing%20Documents/Financial%20Documents/September%202013%20Investment%20Reports.pdf http://www.peaktopeak.org/modules/groups/homepagefiles/cms/9... (1 MB .PDF) The reality is that this was a very poorly implemented and marketed attempt on Chase's part to herd its business customers into accounts with higher fees. But who has time to deconstruct their bank's motivations when they decide to jerk their customers around, with or without a government mandate to do so?
  - srdev 13y ago
    That's unfortunate but I have not run into that problem. Your claim was that everyone who has dealt with bank has had a problem Bitcoin has solved. You provided a problem that is specific to people with business accounts at a certain bank. I cannot recall having any problem with my many bank accounts that would be solved by Bitcoin.
    - CamperBob2 13y ago
      Here's another good 'un: http://www.bbc.co.uk/news/business-25861717 http://www.bbc.co.uk/news/business-25861717 But yeah, you're probably right, I'm sure it's always going to be somebody else's problem.

base698 13y ago

The Target hack a month back effected my wife. Paying with bitcoin would have removed the possibility of her account being compromised shifting the burden to the retailer. All kinds of possibilities are there to mitigate that risk: cold storage wallets, third party services. Some other accounting implication off the top of my head: create a new payment address for each day, month, or year and automatically reconcile an accounts based on wallet address. I imagine banks and other bitcoin service venders will solve the charge back issue or 3rd party arbitrators will be common with this: https://en.bitcoin.it/wiki/Contracts#Example_2:_Escrow_and_dispute_mediation https://en.bitcoin.it/wiki/Contracts#Example_2:_Escrow_and_d...

mrb 13y ago

Here is a problem that all people have: inflation. 4% in the US. 20% in Argentina. Etc. All this means your current life savings will have lost tremendous value decades from now when you will need them. Bitcoin, by being deflationary, solves this. Another problem: my landlord and I are both Wells Fargo customers, but I can't even pay my rent electronically because WF arbitrarily limits electronic ("SurePay") payements to $2000/month. Instead we have to use plain old checks. This is an aberration for the 21st century... With Bitcoin, nobody dictates me I can only send $X/month. How about the underbanked with no ability to receive payments from remote friends/family? How about Chinese dissidents getting their financial accounts seized by an evil government? And so on... Bitcoin can solve numerous societal and economic problems. Too often people are blind to them because we have always lived with these problems.

Nursie 13y ago
Inflation is not a problem. It encourages spending and investment. Deflation encourages hoarding and rewards people who sit on piles of cash. It also values work yesterday more highly then work today. Bitcoin, as a currency model, creates lots of problems.
- chii 13y ago
  Work that I did yesterday should be worth the same, not less! Inflation is a silent tax on the poor.
  - lmm 13y ago
    More like a silent tax on the rich and hoarders. For people who are in net cash debt inflation is a bonus.
  - Nursie 13y ago
    It certainly shouldn't be worth more. Why should it be worth the same? If you farm vegetables they don't stay the same forever, nor do they appreciate in value. Inflation is a tax on the cash-rich. This does not describe the poor, who are typically in debt.