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This is a strange case for bitcoin, competing with credit cards. Most consumers would be better off paying with a card: same cost (none), more protections (the

by abalone 13y ago

This is a strange case for bitcoin, competing with credit cards. Most consumers would be better off paying with a card: same cost (none), more protections (the ability to dispute bad merchants over defective goods). It's not a bad idea for Square to add it, since some people have bitcoins obtained through speculation, mining, cheap money transfers, and so forth. But even so, they would be a little better served paying by card, due to the extra consumer protections they'd enjoy. Where bitcoin makes more sense to me is in replacing cash. But that mostly makes sense to me in the real world where you can inspect goods and whatnot in advance of cash payments. (There's maybe some potential for it online in the form of micropayments, where trust and protections don't matter so much.) But for online sellers that already accept cards, I have yet to hear why bitcoin reflects a better choice than cards for the consumer. Anonymity maybe? For the average consumer, not worth the tradeoff in lack of ripoff protection. Sellers would be better off, sure, but don't forget it's a two-sided market and consumers are heavily incentivized to use cards. Most of those "high fees" are funneled back to the consumer's pocket in the form of benefits and rewards. It's a form of lock-in to the CC system.

meowface 13y ago
> I have yet to hear why bitcoin reflects a better choice than cards for the consumer. I think security would be an obvious answer. Credit cards are like symmetric cryptography: there's only one secret (a number), which you must share with everyone you ever want to send or receive money from. Any malicious actor who gets that number can then use it to extract money from your card. Sure, it's probably FDIC insured, but they still make out with some of your money. With Bitcoin, you only ever share your public key. It operates entirely on public key crypto. You can safely share your Bitcoin account public key with anyone and everyone to send and receive funds. Plus, anyone can verify any time you send or receive a payment very quickly. That way you can't lie and say you paid when you didn't (no checks in the mail). You also can't do chargebacks or otherwise recall your funds, like you can easily do to scam with credit cards or Paypal.
- sillysaurus3 13y ago
  Any malicious actor who gets that number can then use it to extract money from your card. Sure, it's probably FDIC insured, but they still make out with some of your money. Actually, you lose none of your money. The credit card company completely refunds you. Someone once stole my card and got some gas with it, and the next day I got the transaction refunded and a new card issued within 10 minutes. Bitcoin is far less secure than a credit card. The best way to lose thousands of dollars is to invest it into bitcoin and then trust any webservice to hold onto your coins for you. It's what happened to me. If I had experienced credit card fraud instead of bitcoin fraud, I'd still have my money. Now I don't. What you're describing is security for a merchant. Preventing chargebacks sounds great... for merchants. But security for consumers is obviously more important, because consumer adoption is the single most important factor.
  - stuhood 13y ago
    Considering that every restaurant, store or bar you've ever used your card at potentially stashed away your secret, how closely have you been monitoring your card for siphoning of funds? It is not in the credit card companies best interest to even acknowledge this type of theft, because they have no way except machine learning to protect you from it. On the other hand, it IS useful for them to acknowledge huge security breaches at corporations, because they can point to them and say: and look at how we protected you! (after their dumb security system endangered you in the first place)
    - sillysaurus3 13y ago
      how closely have you been monitoring your card for siphoning of funds? Closely. In fact, I get an email every time a transaction is made. Any fraud would be detected immediately: an email would arrive saying I've been charged, and I'd call up the credit card company and get it refunded in 10 minutes. So it seems to me that siphoning of funds from my credit card can't happen. I needed protection from bitcoin fraud, not credit card fraud. The best thing for the bitcoin ecosystem would be to learn from credit card companies rather than villify them. Also, people go to prison for many years for credit card fraud, whereas the legal system is still adjusting to bitcoin. I haven't heard of any bitcoin-related prosecutions yet. So bitcoin fraud is far less risky.
lectrick 13y ago
> Most consumers would be better off paying with a card: same cost (none) Correction here: There IS a credit card cost, but it is billed to the merchant and passed along to the consumer by being built into product prices. The fact that you think it is "none" when it is merely "hidden" speaks volumes.
- dangrossman 13y ago
  Most people understand that, and also understand that it's irrelevant so long as there is no discount for using a different payment method. If you're going to pay for the protection of credit whether you use it or not, you might as well use it.
- omegaham 13y ago
  In that case, a merchant would have to offer a discount in order to make Bitcoin worth pursuing.
  - schrodinger 13y ago
    Don't the credit card companies require that you charge the same price for cash or credit?
    - aianus 13y ago
      I believe it's ok to offer a discount for cash as long as you don't have to pay more than the posted price when you use credit.
      - InXorWeTrust 13y ago
        Some gas stations allow you to pay for Diesel with cash at a discount. As a side note, Flash Foods has a card you can get that uses ACH with your debit account (I'm probably not saying that right). You get a flat $0.05 off of gas. They claim it's because of credit card charges (and because ACH doesn't cost them anything).
    - 13y ago
awt 13y ago
There are many cases where credit cards don't work so well. Traveling abroad for instance. Every had your card denied because of a false positive for fraud? Ever lost your card on a trip? They won't send it to you where you're at. They'll only send it to your home address. You'd be much better off using something like the blockchain.info wallet while traveling. As long as you have web access, you have access to your wallet.
- abalone 13y ago
  If you can lose your card you can lose your phone too. You're proposing accessing your blockchain.info wallet via someone else's web browser? Sounds like a great way to get your entire wallet stolen. As for the inconvenience of getting a false positive fraud flag.. that's extremely rare, usually resolvable with a phone call, and probably an overall vastly more convenient way of protecting you than more inconvenient up-front authentication steps for each transaction.
  - awt 13y ago
    Yeah don't access your blockchain.info wallet on a shared computer at an internet cafe, if you can find one of those anywhere still, sure. But maybe try your laptop, unless you lost that at the same time you lost your phone. Maybe try your friend's laptop? And then change your password after you buy a new phone? It's workable. Obviously have a few different wallets, some with more money, some with less, so you can use different ones depending on the risk of the situation. Or maybe create a new wallet and have your wife send you the coins instantly. Lots of possibilities. And as rare as you claim false positives to be, it happened to me on my last trip. Happens to me every time I buy something on a foreign website.
bluemoon12 13y ago
Relevant: https://news.ycombinator.com/item?id=7499308 https://news.ycombinator.com/item?id=7499308
DrStalker 13y ago
>Where bitcoin makes more sense to me is in replacing cash. How does that work in a practical sense? "Thank you for ordering, please take a seat a and we'll give you your purchases as soon as your transaction is confirmed."
- DrewAllyn 13y ago
  For small transactions, it is safe to give the purchases after 0 confirmations. In order to pull off a double spend with 0 confirmations, you need to ensure that the store (or whoever processes payments for them) receives the "wrong" spend first, which requires a large enough fraction of the hash power of the network that just mining the usual way is more profitable.
allavia88 13y ago
"Anonymity maybe?" The Blockchain is definitely NOT anonymous. There was a misconception in the early days that Bitcoin was a anonymous given there is no certificate authority that ties you to particular addresses. However, this may or may not hold as various entities pop up (e.g. Coinbase, Bitstamp) who may be subpoena'd Mixing also doesn't work because you can apply taint analysis. Further, do you really want to mix your address with other dirty addresses? Who knows what they've been up to!
- psycr 13y ago
  What taint analysis are you referring to? From my understanding, once a part of a Bitcoin has been tumbled, there's no way to verify which "part" that Bitcoin has in further transactions from that wallet.
Fuxy 13y ago
Customer yes however sellers have quite an incentive to ask for bitcoin if they can since their the one paying the high fees to the credit card companies and there's no risk of fraudulent charge back which most businesses just have to accept and factor into the price of the product. And in a way the customers too since the seller has to factor in the card fees when selling a product however they may be able to give you a better price if you pay with bitcoin. Your assumption that any fees the seller pays do not affect the price of the product are flawed. It's simple business you need to pay more fees you need to sell your product at a higher price to make a profit.
rlpb 13y ago
There are vendors I don't necessarily trust, and have never dealt with before. For these vendors, credit cards (with their protection, and the consequent premium) are perfect. There are other vendors that I do trust and do repeat business with. For these vendors, I detest paying what is effectively a protection surcharge, when I don't need it. This is particularly the case for high value purchases where there is some percentage difference, rather than a small fixed amount. I appreciate the reason the payment purchaser must charge a fee; I just don't want the (protection) service provided. In this case, I accept that I would take some additional risk, but I feel well enough protected by my country's legal system, when I am confident in the vendor's identity and that the sale would fall under my country's jurisdiction. This is not dissimilar to paying for something expensive by bank transfer to save on costs. This arrangement isn't quite that unusual in the UK, where UK-to-UK bank transfers for consumers are generally free. But this arrangement carries extra admin for the vendor in trying to match up transactions. So a credit card is useful for some purchases (in particular, international ones, ones where I am not confident about the vendor's identity, or ones where I am not confident in the vendor's reputation). But for other transactions, I prefer to have the option of going direct. Bitcoin would be perfect for that, if it were more widely accepted.
- ig1 13y ago
  I would almost always put expensive purchases (holidays, events, furniture, etc.) on credit card because if the vendor gets into financial trouble, etc. you basically have no protection under standard sales legislation (you have to get into line with all the other creditors) but you have significant protection if you purchase with a credit card.
  - rlpb 13y ago
    That's fine - there are specific purchases I would always want to pay the protection premium for, including for some of your examples. But the risk involved varies depending on the situation. In cases where I consider the risk low enough, I would appreciate having the option of not paying the protection premium, and going without.
canvia 13y ago
I am really excited for the application of bitcoin to micro transaction and tipping/donation services. Typically with Paypal you pay a 2.9% + $.30 fee for every transaction. With donations and other transactions in the $2 range that equates to a $.35 or 17% overhead. With bitcoin you can pay 1%, or even a flat monthly fee if you do a large volume. The cost savings enable a variety of occupations that would otherwise be uneconomical. This is better for the consumer because they have an increased variety of entertainment options that they can have the satisfaction of supporting, and it's better for the person receiving the bitcoin because of lower fees.

by abalone 13y ago

meowface 13y ago

> I have yet to hear why bitcoin reflects a better choice than cards for the consumer. I think security would be an obvious answer. Credit cards are like symmetric cryptography: there's only one secret (a number), which you must share with everyone you ever want to send or receive money from. Any malicious actor who gets that number can then use it to extract money from your card. Sure, it's probably FDIC insured, but they still make out with some of your money. With Bitcoin, you only ever share your public key. It operates entirely on public key crypto. You can safely share your Bitcoin account public key with anyone and everyone to send and receive funds. Plus, anyone can verify any time you send or receive a payment very quickly. That way you can't lie and say you paid when you didn't (no checks in the mail). You also can't do chargebacks or otherwise recall your funds, like you can easily do to scam with credit cards or Paypal.

sillysaurus3 13y ago
Any malicious actor who gets that number can then use it to extract money from your card. Sure, it's probably FDIC insured, but they still make out with some of your money. Actually, you lose none of your money. The credit card company completely refunds you. Someone once stole my card and got some gas with it, and the next day I got the transaction refunded and a new card issued within 10 minutes. Bitcoin is far less secure than a credit card. The best way to lose thousands of dollars is to invest it into bitcoin and then trust any webservice to hold onto your coins for you. It's what happened to me. If I had experienced credit card fraud instead of bitcoin fraud, I'd still have my money. Now I don't. What you're describing is security for a merchant. Preventing chargebacks sounds great... for merchants. But security for consumers is obviously more important, because consumer adoption is the single most important factor.
- stuhood 13y ago
  Considering that every restaurant, store or bar you've ever used your card at potentially stashed away your secret, how closely have you been monitoring your card for siphoning of funds? It is not in the credit card companies best interest to even acknowledge this type of theft, because they have no way except machine learning to protect you from it. On the other hand, it IS useful for them to acknowledge huge security breaches at corporations, because they can point to them and say: and look at how we protected you! (after their dumb security system endangered you in the first place)
  - sillysaurus3 13y ago
    how closely have you been monitoring your card for siphoning of funds? Closely. In fact, I get an email every time a transaction is made. Any fraud would be detected immediately: an email would arrive saying I've been charged, and I'd call up the credit card company and get it refunded in 10 minutes. So it seems to me that siphoning of funds from my credit card can't happen. I needed protection from bitcoin fraud, not credit card fraud. The best thing for the bitcoin ecosystem would be to learn from credit card companies rather than villify them. Also, people go to prison for many years for credit card fraud, whereas the legal system is still adjusting to bitcoin. I haven't heard of any bitcoin-related prosecutions yet. So bitcoin fraud is far less risky.

lectrick 13y ago

> Most consumers would be better off paying with a card: same cost (none) Correction here: There IS a credit card cost, but it is billed to the merchant and passed along to the consumer by being built into product prices. The fact that you think it is "none" when it is merely "hidden" speaks volumes.

dangrossman 13y ago
Most people understand that, and also understand that it's irrelevant so long as there is no discount for using a different payment method. If you're going to pay for the protection of credit whether you use it or not, you might as well use it.
omegaham 13y ago
In that case, a merchant would have to offer a discount in order to make Bitcoin worth pursuing.
- schrodinger 13y ago
  Don't the credit card companies require that you charge the same price for cash or credit?
  - aianus 13y ago
    I believe it's ok to offer a discount for cash as long as you don't have to pay more than the posted price when you use credit.
    - InXorWeTrust 13y ago
      Some gas stations allow you to pay for Diesel with cash at a discount. As a side note, Flash Foods has a card you can get that uses ACH with your debit account (I'm probably not saying that right). You get a flat $0.05 off of gas. They claim it's because of credit card charges (and because ACH doesn't cost them anything).
  - 13y ago

awt 13y ago

There are many cases where credit cards don't work so well. Traveling abroad for instance. Every had your card denied because of a false positive for fraud? Ever lost your card on a trip? They won't send it to you where you're at. They'll only send it to your home address. You'd be much better off using something like the blockchain.info wallet while traveling. As long as you have web access, you have access to your wallet.

abalone 13y ago
If you can lose your card you can lose your phone too. You're proposing accessing your blockchain.info wallet via someone else's web browser? Sounds like a great way to get your entire wallet stolen. As for the inconvenience of getting a false positive fraud flag.. that's extremely rare, usually resolvable with a phone call, and probably an overall vastly more convenient way of protecting you than more inconvenient up-front authentication steps for each transaction.
- awt 13y ago
  Yeah don't access your blockchain.info wallet on a shared computer at an internet cafe, if you can find one of those anywhere still, sure. But maybe try your laptop, unless you lost that at the same time you lost your phone. Maybe try your friend's laptop? And then change your password after you buy a new phone? It's workable. Obviously have a few different wallets, some with more money, some with less, so you can use different ones depending on the risk of the situation. Or maybe create a new wallet and have your wife send you the coins instantly. Lots of possibilities. And as rare as you claim false positives to be, it happened to me on my last trip. Happens to me every time I buy something on a foreign website.

bluemoon12 13y ago

Relevant: https://news.ycombinator.com/item?id=7499308 https://news.ycombinator.com/item?id=7499308

DrStalker 13y ago

>Where bitcoin makes more sense to me is in replacing cash. How does that work in a practical sense? "Thank you for ordering, please take a seat a and we'll give you your purchases as soon as your transaction is confirmed."

DrewAllyn 13y ago
For small transactions, it is safe to give the purchases after 0 confirmations. In order to pull off a double spend with 0 confirmations, you need to ensure that the store (or whoever processes payments for them) receives the "wrong" spend first, which requires a large enough fraction of the hash power of the network that just mining the usual way is more profitable.

allavia88 13y ago

"Anonymity maybe?" The Blockchain is definitely NOT anonymous. There was a misconception in the early days that Bitcoin was a anonymous given there is no certificate authority that ties you to particular addresses. However, this may or may not hold as various entities pop up (e.g. Coinbase, Bitstamp) who may be subpoena'd Mixing also doesn't work because you can apply taint analysis. Further, do you really want to mix your address with other dirty addresses? Who knows what they've been up to!

psycr 13y ago
What taint analysis are you referring to? From my understanding, once a part of a Bitcoin has been tumbled, there's no way to verify which "part" that Bitcoin has in further transactions from that wallet.

Fuxy 13y ago

Customer yes however sellers have quite an incentive to ask for bitcoin if they can since their the one paying the high fees to the credit card companies and there's no risk of fraudulent charge back which most businesses just have to accept and factor into the price of the product. And in a way the customers too since the seller has to factor in the card fees when selling a product however they may be able to give you a better price if you pay with bitcoin. Your assumption that any fees the seller pays do not affect the price of the product are flawed. It's simple business you need to pay more fees you need to sell your product at a higher price to make a profit.

rlpb 13y ago

There are vendors I don't necessarily trust, and have never dealt with before. For these vendors, credit cards (with their protection, and the consequent premium) are perfect. There are other vendors that I do trust and do repeat business with. For these vendors, I detest paying what is effectively a protection surcharge, when I don't need it. This is particularly the case for high value purchases where there is some percentage difference, rather than a small fixed amount. I appreciate the reason the payment purchaser must charge a fee; I just don't want the (protection) service provided. In this case, I accept that I would take some additional risk, but I feel well enough protected by my country's legal system, when I am confident in the vendor's identity and that the sale would fall under my country's jurisdiction. This is not dissimilar to paying for something expensive by bank transfer to save on costs. This arrangement isn't quite that unusual in the UK, where UK-to-UK bank transfers for consumers are generally free. But this arrangement carries extra admin for the vendor in trying to match up transactions. So a credit card is useful for some purchases (in particular, international ones, ones where I am not confident about the vendor's identity, or ones where I am not confident in the vendor's reputation). But for other transactions, I prefer to have the option of going direct. Bitcoin would be perfect for that, if it were more widely accepted.

ig1 13y ago
I would almost always put expensive purchases (holidays, events, furniture, etc.) on credit card because if the vendor gets into financial trouble, etc. you basically have no protection under standard sales legislation (you have to get into line with all the other creditors) but you have significant protection if you purchase with a credit card.
- rlpb 13y ago
  That's fine - there are specific purchases I would always want to pay the protection premium for, including for some of your examples. But the risk involved varies depending on the situation. In cases where I consider the risk low enough, I would appreciate having the option of not paying the protection premium, and going without.

canvia 13y ago

I am really excited for the application of bitcoin to micro transaction and tipping/donation services. Typically with Paypal you pay a 2.9% + $.30 fee for every transaction. With donations and other transactions in the $2 range that equates to a $.35 or 17% overhead. With bitcoin you can pay 1%, or even a flat monthly fee if you do a large volume. The cost savings enable a variety of occupations that would otherwise be uneconomical. This is better for the consumer because they have an increased variety of entertainment options that they can have the satisfaction of supporting, and it's better for the person receiving the bitcoin because of lower fees.