6 ms·

It's interesting all the "how is this useful" examples she gives are for international commerce: money transfers, doing business with international customers, c

by abalone 13y ago

It's interesting all the "how is this useful" examples she gives are for international commerce: money transfers, doing business with international customers, countries where cards are harder to accept. I'm still waiting to hear concrete examples of how Bitcoin would compete with credit cards in a First World market. There's a lot of talk about how "expensive" and "inefficient" the credit card system is (it's almost a mandatory part of any intro to Bitcoin). But so far I've heard nothing concrete. Anyone have a good link I should read?

atmosx 13y ago
No you can't read what doesn't exist. Firstly, there's a debate on whether BTC is closer to FIAT or to an asset (e.g. Gold). Let's say we skip that part. Until a world-wide bank like say UBS or a country decides to implement an infrastructure for bitcoin, it won't cut it. Why a country would want to do that, is beyond me - and probably beyond anyone with a basic understanding of macro-economics - and so we're left with other possible implementations of the protocol. Until we find a way for average Joe to switch from USD/EUR to BTC and back easily and without fear of money loss, I don't think we'll see any widespread adoption as a payment system. ps. The argument about using bitcoin in societies where finance is not well evolved, is as ridiculous as it is dangerous. Imagine bitcoin-driven banks in Addis Ababa handing out loans (in bitcoin or the local ETB currency?!) and financial products based on bitcoin. Then imagine that an unknown, early adopter, from the other side of the world decides to withdraw 100.000 bitcoins at once: There you go, you got Ethiopians playing wall-street pranks!
- jamesrom 13y ago
  Why do you think it needs to be a bank that allows USD/EUR <> BTC?
  - atmosx 13y ago
    Because otherwise ordinary people will not have access to BTC and you can't achieve adoption without them. A Bank has an infrastructure that could make BTC virtually omni-present in the physical world. Any other non-gov institution, would have a hard time setting up an infrastructure in large scale. A bank has also the knowledge to protect herself from bitcoin itself, because (supposedly) understands the financial (and social) ramifications of every choice made AND should be held accountable if things get out of hand. If UBS (as in the example above) starts accepting BTC transactions, it means that thousands of hundreds of average Joes get instant access to the system. Otherwise, it's just you me and a couple of bleeding edge technophiles.
doctorfoo 13y ago
Some weeks ago I tried to buy a mobile top-up online - my bank card was repeatedly rejected for some unknown reason (after having to re-enter my entire address and card numbers multiple times). More recently, I decided to try Bitcoin for this, and was able to buy a top up voucher code with no problems. This may be a rare example, but it highlights something key: The merchant is getting cash. They have no need to perform fraud checks. They have no worries, and can make the customer's life easier as a result. I've struggled with traditional card payments many times in the past. Using Bitcoin is pure bliss in comparison. I see a future where Bitcoin wallets are browser add-ons, and payments really can be one-click on any website. Kids who may not have bank cards yet is also a hugely overlooked area imo.
- abalone 13y ago
  Of course merchants would prefer cash. It doesn't have the consumer protections cards have. But that's not a reason for consumers to adopt it. Just the opposite. I agree with you that your example is probably a rare one. Which is why I'm still searching for an answer as to how this is all supposed to supplant the card system.
  - xur17 13y ago
    I've always wondered this too. Everything else being equal, a credit card seems like the better choice - cashback, the option to perform a chargeback if the transaction goes south, and sometimes an extra long warranty. It costs the store an extra ~3%, but I'm not paying that, they are, so unless they directly pass the savings onto me, there isn't really any benefit currently.
  - FatalLogic 13y ago
    It's not simply a question of what the consumer wants. Look at it from the other side. The merchant may be very strongly incentivized to use Bitcoin because it cuts payment fraud to zero. This saves the merchant the direct cost of payment fraud, which averages 1-2% of revenue in the US (therefore up to 50% of profit margin in some industries). Note that 1-2% is an average -- some industries have higher rates of payment fraud, and they will therefore have greater savings. As Bitcoin payments require no fraud prevention, they also save the merchant the cost of lost business from customers deterred by cumbersome fraud prevention methods, and losses due to legitimate customers who are rejected when fraud prevention gives a false positive. Therefore, merchants will have the option of reducing prices for items purchased with Bitcoin. This leads to a simple question: do there exist any industries where the merchant's savings could be big enough that they could reduce prices sufficiently to encourage a significant number of customers to pay with Bitcoin, while still earning a higher margin than they would from other payment methods? I think there probably are, but we're a long way from seeing this question answered by the market. Relatively few merchants accept Bitcoin, and many of them offer no special discounts. Relevant news: http://gigaom.com/2014/04/02/paystand-takes-on-paypal-with-a-new-e-commerce-service-that-accepts-bitcoin/ http://gigaom.com/2014/04/02/paystand-takes-on-paypal-with-a...
kylebrown 13y ago
Both Stripe and Square "marketplace" now accept bitcoin right alongside credit cards, since only about two weeks ago.
- abalone 13y ago
  Haven't heard a compelling, broadly-applicable reason to pay with Bitcoin instead of a card. Cards have consumer protections and reward programs.
  - dagw 13y ago
    The big one is micro transaction. Card fees make it inefficient to work with a high number of small (say $0.25 or less) transactions, Bitcoin solves that.
    - abalone 13y ago
      I totally agree. Consumers won't miss their protections and rewards there either. But at the same time, it's a relatively small niche. So if that's "the big one" then it's hard to see Bitcoin competing with cards more broadly.
celticninja 13y ago
Some of the first world benefits are not necessarily related to the immediate use for customers. However in a situation, such as the Target breach, that released peoples credit card and personal data to thieves, if you used bitcoin you would not even have to go to any effort to see if you were affected. If you used Traget and paid by CC then you need to check if your email was one of the compromised ones, check statements for unusual purchases, deal with reclaiming that if necessary and also fixing your credit report (potentially). If you paid by bitcoin all they have is the address you paid from and your delivery address (which they have if they get your personal info anyway).
- abalone 13y ago
  Tough sell. You wouldn't get the rewards and consumer protections that cards offer. Those include pretty good protection from fraud like that. Plus, Bitcoin has its own security nightmare scenarios, like customer wallets getting hacked. And unlike cards, there's no recourse for recovering your bitcoins stolen by fraud.
reshmakh 13y ago
There are a couple cases of underserved merchants based in the US where Bitcoin would compete with CC in a first world market. The first is marijuana merchants in CO and WA. Marijuana is legal at the state level but not federally. These merchants have a hard time using the banking and credit card systems and transacting in BTC would help them do e-commerce. The second is very low denomination transactions (like 10c). It may become profitable for compensate people at scale for doing some very small amount of work. Like giving someone who finds a typo some small amount of compensation. Credit cards are very poor for this. As for replacing CC, that is a tall order. They are expensive and inefficient, but accepting credit cards does increase top line revenue if a merchant accepts them. If a payment method is going to get adoption it needs to grow revenue (vs. reduce cost) for a merchant if the merchant accepts it.
jafaku 13y ago
Read about multi-signature transactions. That's something you can't do with fiat, and libertarians (or any other conscious person) will gladly use that.

by abalone 13y ago

atmosx 13y ago

No you can't read what doesn't exist. Firstly, there's a debate on whether BTC is closer to FIAT or to an asset (e.g. Gold). Let's say we skip that part. Until a world-wide bank like say UBS or a country decides to implement an infrastructure for bitcoin, it won't cut it. Why a country would want to do that, is beyond me - and probably beyond anyone with a basic understanding of macro-economics - and so we're left with other possible implementations of the protocol. Until we find a way for average Joe to switch from USD/EUR to BTC and back easily and without fear of money loss, I don't think we'll see any widespread adoption as a payment system. ps. The argument about using bitcoin in societies where finance is not well evolved, is as ridiculous as it is dangerous. Imagine bitcoin-driven banks in Addis Ababa handing out loans (in bitcoin or the local ETB currency?!) and financial products based on bitcoin. Then imagine that an unknown, early adopter, from the other side of the world decides to withdraw 100.000 bitcoins at once: There you go, you got Ethiopians playing wall-street pranks!

jamesrom 13y ago
Why do you think it needs to be a bank that allows USD/EUR <> BTC?
- atmosx 13y ago
  Because otherwise ordinary people will not have access to BTC and you can't achieve adoption without them. A Bank has an infrastructure that could make BTC virtually omni-present in the physical world. Any other non-gov institution, would have a hard time setting up an infrastructure in large scale. A bank has also the knowledge to protect herself from bitcoin itself, because (supposedly) understands the financial (and social) ramifications of every choice made AND should be held accountable if things get out of hand. If UBS (as in the example above) starts accepting BTC transactions, it means that thousands of hundreds of average Joes get instant access to the system. Otherwise, it's just you me and a couple of bleeding edge technophiles.

doctorfoo 13y ago

Some weeks ago I tried to buy a mobile top-up online - my bank card was repeatedly rejected for some unknown reason (after having to re-enter my entire address and card numbers multiple times). More recently, I decided to try Bitcoin for this, and was able to buy a top up voucher code with no problems. This may be a rare example, but it highlights something key: The merchant is getting cash. They have no need to perform fraud checks. They have no worries, and can make the customer's life easier as a result. I've struggled with traditional card payments many times in the past. Using Bitcoin is pure bliss in comparison. I see a future where Bitcoin wallets are browser add-ons, and payments really can be one-click on any website. Kids who may not have bank cards yet is also a hugely overlooked area imo.

abalone 13y ago
Of course merchants would prefer cash. It doesn't have the consumer protections cards have. But that's not a reason for consumers to adopt it. Just the opposite. I agree with you that your example is probably a rare one. Which is why I'm still searching for an answer as to how this is all supposed to supplant the card system.
- xur17 13y ago
  I've always wondered this too. Everything else being equal, a credit card seems like the better choice - cashback, the option to perform a chargeback if the transaction goes south, and sometimes an extra long warranty. It costs the store an extra ~3%, but I'm not paying that, they are, so unless they directly pass the savings onto me, there isn't really any benefit currently.
- FatalLogic 13y ago
  It's not simply a question of what the consumer wants. Look at it from the other side. The merchant may be very strongly incentivized to use Bitcoin because it cuts payment fraud to zero. This saves the merchant the direct cost of payment fraud, which averages 1-2% of revenue in the US (therefore up to 50% of profit margin in some industries). Note that 1-2% is an average -- some industries have higher rates of payment fraud, and they will therefore have greater savings. As Bitcoin payments require no fraud prevention, they also save the merchant the cost of lost business from customers deterred by cumbersome fraud prevention methods, and losses due to legitimate customers who are rejected when fraud prevention gives a false positive. Therefore, merchants will have the option of reducing prices for items purchased with Bitcoin. This leads to a simple question: do there exist any industries where the merchant's savings could be big enough that they could reduce prices sufficiently to encourage a significant number of customers to pay with Bitcoin, while still earning a higher margin than they would from other payment methods? I think there probably are, but we're a long way from seeing this question answered by the market. Relatively few merchants accept Bitcoin, and many of them offer no special discounts. Relevant news: http://gigaom.com/2014/04/02/paystand-takes-on-paypal-with-a-new-e-commerce-service-that-accepts-bitcoin/ http://gigaom.com/2014/04/02/paystand-takes-on-paypal-with-a...

kylebrown 13y ago

Both Stripe and Square "marketplace" now accept bitcoin right alongside credit cards, since only about two weeks ago.

abalone 13y ago
Haven't heard a compelling, broadly-applicable reason to pay with Bitcoin instead of a card. Cards have consumer protections and reward programs.
- dagw 13y ago
  The big one is micro transaction. Card fees make it inefficient to work with a high number of small (say $0.25 or less) transactions, Bitcoin solves that.
  - abalone 13y ago
    I totally agree. Consumers won't miss their protections and rewards there either. But at the same time, it's a relatively small niche. So if that's "the big one" then it's hard to see Bitcoin competing with cards more broadly.

celticninja 13y ago

Some of the first world benefits are not necessarily related to the immediate use for customers. However in a situation, such as the Target breach, that released peoples credit card and personal data to thieves, if you used bitcoin you would not even have to go to any effort to see if you were affected. If you used Traget and paid by CC then you need to check if your email was one of the compromised ones, check statements for unusual purchases, deal with reclaiming that if necessary and also fixing your credit report (potentially). If you paid by bitcoin all they have is the address you paid from and your delivery address (which they have if they get your personal info anyway).

abalone 13y ago
Tough sell. You wouldn't get the rewards and consumer protections that cards offer. Those include pretty good protection from fraud like that. Plus, Bitcoin has its own security nightmare scenarios, like customer wallets getting hacked. And unlike cards, there's no recourse for recovering your bitcoins stolen by fraud.

reshmakh 13y ago

There are a couple cases of underserved merchants based in the US where Bitcoin would compete with CC in a first world market. The first is marijuana merchants in CO and WA. Marijuana is legal at the state level but not federally. These merchants have a hard time using the banking and credit card systems and transacting in BTC would help them do e-commerce. The second is very low denomination transactions (like 10c). It may become profitable for compensate people at scale for doing some very small amount of work. Like giving someone who finds a typo some small amount of compensation. Credit cards are very poor for this. As for replacing CC, that is a tall order. They are expensive and inefficient, but accepting credit cards does increase top line revenue if a merchant accepts them. If a payment method is going to get adoption it needs to grow revenue (vs. reduce cost) for a merchant if the merchant accepts it.

jafaku 13y ago

Read about multi-signature transactions. That's something you can't do with fiat, and libertarians (or any other conscious person) will gladly use that.