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Makes it just as easy as paying in local currency! At this point I don't understand the need for bitcoin. The buyer is effectively paying in local currency by

by eterm 12y ago

Makes it just as easy as paying in local currency! At this point I don't understand the need for bitcoin. The buyer is effectively paying in local currency by buying back, the vendor is effectively receiving local currency by having it convert on purchase. Why include coinbase in that transaction? Where is the need for bitcoin to be involved at all?

JoshTriplett 12y ago
First, because both of those steps are optional: the seller can choose whether to keep bitcoin or local currency, and the buyer can choose whether to keep bitcoin in stock or buy it as needed. Second, because convert-transmit-unconvert still bypasses many of the painful aspects of other money transfer mechanisms. Both buyer and seller only interact with entities they trust (coinbase and their bank), no credit cards (and associated fees, chargebacks, and headaches) get involved, and the transmission process in the middle uses bitcoin in lieu of ACH or similar (avoiding many potential risks, reversals, and the various Bad Things that can usually happen if you pay directly from a bank account).
- battani 12y ago
  "Second, because convert-transmit-unconvert still bypasses many of the painful aspects of other money transfer mechanisms." Using a credit card online or 1-click checkout isn't painful. "Both buyer and seller only interact with entities they trust (coinbase and their bank)" Pretty sure most people trust the bank that issued their credit card. "no credit cards (and associated fees, chargebacks, and headaches)" No chargebacks may be good for merchants, but not for consumers (no protection). Most of the CC fees are reimbursed to the customer in the form of rewards. In France for example, usual debit card fees are 0.5%, and credit cards with rewards are 2%-4%. In Australia, the government intervened and all card fees are < 0.5%. This was good for merchants but customers now don't get rewards/cashback/points on their card. "the transmission process in the middle uses bitcoin in lieu of ACH or similar (avoiding many potential risks, reversals, and the various Bad Things that can usually happen if you pay directly from a bank account)" Not sure what those "many bad things" are. I recently received subpar merchandise from a merchant; called my bank that morning, the transaction was reversed, almost no questions asked. There was a follow-up "investigation" that was in my favor. The fact that I can reverse transactions gives me peace of mind, otherwise known as consumer protection. It's just seeming more and more to me that companies in the bitcoin merchant space are trying to find infinitesimally small optimizations they want to address in the current credit card system using bitcoin. It seems that they're trying to find (or sometimes create) a problem to fit bitcoin, instead of using bitcoin to solve an already existing problem. I think they'll slowly find out, as Coinbase may be with this new feature, that bitcoin is actually not a good currency to be used directly, but rather as an efficient value transfer mechanism, under the hood. In other words, that the real value is in the blockchain, not in bitcoin itself. But I may be wrong. In any case, I'm sticking to my credit card (and soon, tap-tap mobile wallet). Bitcoin doesn't really solve a problem for consumers in consumer-to-merchant transactions; mainly because, well, there really isn't a problem to solve to begin with.
  - aianus 12y ago
    Using a credit card online isn't painful but it's more painful than using Bitcoin. For one, I don't need to memorize an arbitrary 16 digits + CVV2 + Expiry Date. Nor do I have to enter my billing address for virtual goods or deal with chargebacks and replacing my card if the merchant loses my card information. One time my bank just canceled my card without giving me any reason besides 'security' and mailed me a new one. What would I have done if I were traveling at the time or needed to buy something in the meantime? Besides that, if you've ever tried doing anything online besides the straight purchase of a good or service (think forex trading, gambling, remittances) you'd agree Bitcoin is light-years ahead of the prevailing payment methods.
    - battani 12y ago
      Yeah I mean those are some problems but they're 1) not huge and 2) I don't think creating and adopting a volatile virtual currency is necessarily the best solution to those problems. "I don't need to memorize an arbitrary 16 digits + CVV2 + Expiry Date" Most times, you enter that information once (1-time mental cost) and the platform saves that info for you. Think Uber, Amazon, Venmo, and others. Also soon with your mobile wallet, the experience will only get more streamlined. Also, if you think about it, how do you pay using bitcoin today? First you set up a wallet (with Coinbase, Bitpay, or someone else). Then you get verified. Then you purchase bitcoin, hoping to get it at a good price. Then you browse the web hoping your merchant integrates with Coinbase/Bitpay. If not, they'll display a bitcoin address, that you'll then have to paste into your wallet, enter the correct amount, etc. Even if we do argue that this will only get better, it's not gonna get much better than tapping "Buy" on your mobile wallet, that's already connected to your bank account/card. User experience is not an area where bitcoin adds value. "deal with chargebacks and replacing my card if the merchant loses my card information" Chargebacks are a form of consumer protection. Eliminating them benefits the merchant, at the expense of the consumer. "One time my bank just canceled my card without giving me any reason besides 'security' and mailed me a new one. What would I have done if I were traveling at the time or needed to buy something in the meantime?" Yes, that sucks. But how often does that happen? How big is this problem? And is adopting bitcoin (already a huge cost: mental adjustment, buying bitcoin, etc.) really a good solution to this problem? Or is it just switching to a bank with better customer service? Simple, BOA (in my experience), etc. "Besides that, if you've ever tried doing anything online besides the straight purchase of a good or service (think forex trading, gambling, remittances) you'd agree Bitcoin is light-years ahead of the prevailing payment methods." Yes, forex trading and gambling are absolutely fantastic to do with bitcoin. But this reinforces the argument that bitcoin is a speculative financial asset, rather than a currency used in day-to-day activities. The remittance market is ripe for disruption, but a gateway model such as the one offered by Ripple would better fit this problem, in my opinion.
- vtlynch 12y ago
  Can anyone please explain the OBSESSION that bitcoin supporters have with the idea of getting rid of credit card fees and having that savings passed to the consumer? I don't work in the finance department at my company, but from what I have heard, transaction fees for credit cards cost us about 4% of revenue (lets ignore the fact that they also ENABLE 100% of our revenue). If all of a sudden that went from 4% to 0%, what would actually happen? Lets say we decide to pass ALL that savings to the customer. Wow... now a $100 product costs $96. Profit margins in many business are in the double digits; for high tech firms (SaaS) its higher than 50%. There is a lot of markup happening in all businesses, its inherent to our capitalist model; and trust me, credit card transaction costs are not the main source.
  - aianus 12y ago
    If I spend $20,000 a year on my credit card and I get back 4% that's $600. That's a lot of money being wasted. I could get a new flagship Android phone every, what, eight months?
    - vtlynch 12y ago
      First of all, thats from the consumer point of view, I am specifically talking about from the business point of view. (With a credit card btw, you DO get money back - its called cashback. I get 2% back on my Discover card. Bitcoin does not give me any money back.)
  - jmathai 12y ago
    I think bitcoin is a fascinating product. I'm not sure what the real world value may be though. Lots of thoughts on what parts of bitcoin might make life better for the masses but we haven't seen it yet. I think we will but for the moment we have to conjure up these things in ways that are immediately made possible by bitcoin. I think 1) eliminating fees of all sorts (credit card, foreign currency exchange, etc.) 2) anonymity of purchases are just a few examples. I don't think anything I've heard to date really strikes me as what will make bitcoin (in whole or in part) as successful as I believe it will be. But this is what startups do. Figure that part out. Bitcoin isn't any different from other disruptive ideas. We will get it wrong many times before we get it right. I guess what I'm saying is that this is the process of innovation and it often seems boring and wasteful. But have faith in the process!
alexbosworth 12y ago
I see it as competition to PayPal, I like PayPal vs a credit card b/c of convenience and privacy The tricky part here is that Coinbase is taking their 1% fee on the buyback (Maybe they should give a special rate here) - but they also recently introduced an interesting feature that allows merchants to pass on PayPal merchant charge savings on to the consumer. This is early adopter territory, using Bitcoin for this isn't a clear win yet, but Coinbase is doing some smart things to bring mainstream appeal
aianus 12y ago
Merchants can pass on all or part of the credit card savings to people using this method. (see gyft.com)
- sanswork 12y ago
  There are sellers of gift cards that use credit cards that give you the same % off as gyft. Just google discount gift card for many examples.
  - aianus 12y ago
    Can you give me a specific example? I've looked at cardpool.com, giftcardgranny.com, giftcardzen.com, and giftcardrescue.com and none of them have Amazon.com gift cards at more than 1.8% discount (I know I'm moving the goalposts a little but that's the only one I buy). Quick edit: and they only sell the $500 gift card at that discount!

by eterm 12y ago

JoshTriplett 12y ago

First, because both of those steps are optional: the seller can choose whether to keep bitcoin or local currency, and the buyer can choose whether to keep bitcoin in stock or buy it as needed. Second, because convert-transmit-unconvert still bypasses many of the painful aspects of other money transfer mechanisms. Both buyer and seller only interact with entities they trust (coinbase and their bank), no credit cards (and associated fees, chargebacks, and headaches) get involved, and the transmission process in the middle uses bitcoin in lieu of ACH or similar (avoiding many potential risks, reversals, and the various Bad Things that can usually happen if you pay directly from a bank account).

battani 12y ago
"Second, because convert-transmit-unconvert still bypasses many of the painful aspects of other money transfer mechanisms." Using a credit card online or 1-click checkout isn't painful. "Both buyer and seller only interact with entities they trust (coinbase and their bank)" Pretty sure most people trust the bank that issued their credit card. "no credit cards (and associated fees, chargebacks, and headaches)" No chargebacks may be good for merchants, but not for consumers (no protection). Most of the CC fees are reimbursed to the customer in the form of rewards. In France for example, usual debit card fees are 0.5%, and credit cards with rewards are 2%-4%. In Australia, the government intervened and all card fees are < 0.5%. This was good for merchants but customers now don't get rewards/cashback/points on their card. "the transmission process in the middle uses bitcoin in lieu of ACH or similar (avoiding many potential risks, reversals, and the various Bad Things that can usually happen if you pay directly from a bank account)" Not sure what those "many bad things" are. I recently received subpar merchandise from a merchant; called my bank that morning, the transaction was reversed, almost no questions asked. There was a follow-up "investigation" that was in my favor. The fact that I can reverse transactions gives me peace of mind, otherwise known as consumer protection. It's just seeming more and more to me that companies in the bitcoin merchant space are trying to find infinitesimally small optimizations they want to address in the current credit card system using bitcoin. It seems that they're trying to find (or sometimes create) a problem to fit bitcoin, instead of using bitcoin to solve an already existing problem. I think they'll slowly find out, as Coinbase may be with this new feature, that bitcoin is actually not a good currency to be used directly, but rather as an efficient value transfer mechanism, under the hood. In other words, that the real value is in the blockchain, not in bitcoin itself. But I may be wrong. In any case, I'm sticking to my credit card (and soon, tap-tap mobile wallet). Bitcoin doesn't really solve a problem for consumers in consumer-to-merchant transactions; mainly because, well, there really isn't a problem to solve to begin with.
- aianus 12y ago
  Using a credit card online isn't painful but it's more painful than using Bitcoin. For one, I don't need to memorize an arbitrary 16 digits + CVV2 + Expiry Date. Nor do I have to enter my billing address for virtual goods or deal with chargebacks and replacing my card if the merchant loses my card information. One time my bank just canceled my card without giving me any reason besides 'security' and mailed me a new one. What would I have done if I were traveling at the time or needed to buy something in the meantime? Besides that, if you've ever tried doing anything online besides the straight purchase of a good or service (think forex trading, gambling, remittances) you'd agree Bitcoin is light-years ahead of the prevailing payment methods.
  - battani 12y ago
    Yeah I mean those are some problems but they're 1) not huge and 2) I don't think creating and adopting a volatile virtual currency is necessarily the best solution to those problems. "I don't need to memorize an arbitrary 16 digits + CVV2 + Expiry Date" Most times, you enter that information once (1-time mental cost) and the platform saves that info for you. Think Uber, Amazon, Venmo, and others. Also soon with your mobile wallet, the experience will only get more streamlined. Also, if you think about it, how do you pay using bitcoin today? First you set up a wallet (with Coinbase, Bitpay, or someone else). Then you get verified. Then you purchase bitcoin, hoping to get it at a good price. Then you browse the web hoping your merchant integrates with Coinbase/Bitpay. If not, they'll display a bitcoin address, that you'll then have to paste into your wallet, enter the correct amount, etc. Even if we do argue that this will only get better, it's not gonna get much better than tapping "Buy" on your mobile wallet, that's already connected to your bank account/card. User experience is not an area where bitcoin adds value. "deal with chargebacks and replacing my card if the merchant loses my card information" Chargebacks are a form of consumer protection. Eliminating them benefits the merchant, at the expense of the consumer. "One time my bank just canceled my card without giving me any reason besides 'security' and mailed me a new one. What would I have done if I were traveling at the time or needed to buy something in the meantime?" Yes, that sucks. But how often does that happen? How big is this problem? And is adopting bitcoin (already a huge cost: mental adjustment, buying bitcoin, etc.) really a good solution to this problem? Or is it just switching to a bank with better customer service? Simple, BOA (in my experience), etc. "Besides that, if you've ever tried doing anything online besides the straight purchase of a good or service (think forex trading, gambling, remittances) you'd agree Bitcoin is light-years ahead of the prevailing payment methods." Yes, forex trading and gambling are absolutely fantastic to do with bitcoin. But this reinforces the argument that bitcoin is a speculative financial asset, rather than a currency used in day-to-day activities. The remittance market is ripe for disruption, but a gateway model such as the one offered by Ripple would better fit this problem, in my opinion.
vtlynch 12y ago
Can anyone please explain the OBSESSION that bitcoin supporters have with the idea of getting rid of credit card fees and having that savings passed to the consumer? I don't work in the finance department at my company, but from what I have heard, transaction fees for credit cards cost us about 4% of revenue (lets ignore the fact that they also ENABLE 100% of our revenue). If all of a sudden that went from 4% to 0%, what would actually happen? Lets say we decide to pass ALL that savings to the customer. Wow... now a $100 product costs $96. Profit margins in many business are in the double digits; for high tech firms (SaaS) its higher than 50%. There is a lot of markup happening in all businesses, its inherent to our capitalist model; and trust me, credit card transaction costs are not the main source.
- aianus 12y ago
  If I spend $20,000 a year on my credit card and I get back 4% that's $600. That's a lot of money being wasted. I could get a new flagship Android phone every, what, eight months?
  - vtlynch 12y ago
    First of all, thats from the consumer point of view, I am specifically talking about from the business point of view. (With a credit card btw, you DO get money back - its called cashback. I get 2% back on my Discover card. Bitcoin does not give me any money back.)
- jmathai 12y ago
  I think bitcoin is a fascinating product. I'm not sure what the real world value may be though. Lots of thoughts on what parts of bitcoin might make life better for the masses but we haven't seen it yet. I think we will but for the moment we have to conjure up these things in ways that are immediately made possible by bitcoin. I think 1) eliminating fees of all sorts (credit card, foreign currency exchange, etc.) 2) anonymity of purchases are just a few examples. I don't think anything I've heard to date really strikes me as what will make bitcoin (in whole or in part) as successful as I believe it will be. But this is what startups do. Figure that part out. Bitcoin isn't any different from other disruptive ideas. We will get it wrong many times before we get it right. I guess what I'm saying is that this is the process of innovation and it often seems boring and wasteful. But have faith in the process!

alexbosworth 12y ago

I see it as competition to PayPal, I like PayPal vs a credit card b/c of convenience and privacy The tricky part here is that Coinbase is taking their 1% fee on the buyback (Maybe they should give a special rate here) - but they also recently introduced an interesting feature that allows merchants to pass on PayPal merchant charge savings on to the consumer. This is early adopter territory, using Bitcoin for this isn't a clear win yet, but Coinbase is doing some smart things to bring mainstream appeal

aianus 12y ago

Merchants can pass on all or part of the credit card savings to people using this method. (see gyft.com)

sanswork 12y ago
There are sellers of gift cards that use credit cards that give you the same % off as gyft. Just google discount gift card for many examples.
- aianus 12y ago
  Can you give me a specific example? I've looked at cardpool.com, giftcardgranny.com, giftcardzen.com, and giftcardrescue.com and none of them have Amazon.com gift cards at more than 1.8% discount (I know I'm moving the goalposts a little but that's the only one I buy). Quick edit: and they only sell the $500 gift card at that discount!