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Bitcoin: the Stripe perspective

813 points by gdb 12y ago

k-mcgrady 12y ago
Good piece. If you're reading this expecting something new from Stripe though you'll be disappointed: >> "So what role will Stripe play here? We already provide Bitcoin acceptance, and we're actively investigating other functionality. We'll have other updates on this front before too long."
pat2man 12y ago
Stipe is hitting on a bunch of the key points here. The big one is that bitcoin alone is not going to solve all our money problems, it will be the network of companies that build products on top of bitcoin. Its the reason we are seeing so much money going into these companies instead of investors just buying and holding Bitcoin.
VexXtreme 12y ago
The beautiful thing about bitcoin is that it's an open system, an open currency if you will, that will allow a nice app ecosystem to be built on top of it. That aspect will allow many non-technical people to interact with abstractions that hide away all the complexities (such as Stripe), but it will also allow experts and hackers to still tap into the network directly with their own wallets, nodes, private keys etc. I think that bitcoin is currently in its early infancy when it comes to user adoption and still has a very long way to go before it reaches its potential. It's not completely off base to compare it with the way the internet was back in the early 90s.
nlh 12y ago
This is one of the best posts on the "state of the Bitcoin economy" I've read yet. They nail a few key points that shows they get it in a real-world sense. * Mass-consumer adoption of Bitcoin is a tough sell in developed countries (USA, etc.) * Bitcoin the Network may ultimately be more valuable than BTC the currency * "No chargebacks!" is a pitch to merchants for BTC, not consumers. Consumers like chargebacks & trust. * BTC the currency may end up being a behind-the-scenes player so long as traditional currencies do their job. This says to me that Stripe's position is ultimately to be the Visa of Bitcoin or the SWIFT of Bitcoin. And that's could indeed be a huge opportunity.
- chadkruse 12y ago
  > This says to me that Stripe's position is ultimately to be...the SWIFT of Bitcoin. Agreed. To illustrate how broken the SWIFT system is for those unfamiliar with international wires: Last week I wired AUS$2,500 from an account I control in Australia to an account I control in the US. It touched 4(!) banks in the process, who collectively took ~$45 in fees ($25 of that being a total surprise to me, represented only by a small asterisk footnote in the fee schedule of my initiating Australian bank). I became a huge Bitcoin cheerleader following the experience.
  - afro88 12y ago
    Try Transfer Wise. It's a very useful middle ground between the current method of SWIFT and the potential of Bitcoin as a medium of exchange. It costs much less than a SWEIFT transfer and is much quicker.
  - deleted 12y ago
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  - jarek 12y ago
    That's 1.8%. What are the current spread rates for AUD-BTC and BTC-USD? For comparison I get 0.6 - 1.4% from an online specialized currency service, taking a couple of days. Set-up was a bit involved. How good is connecting BTC to real world bank accounts these days?
    - runeks 12y ago
      Buying BTC for 2500 AUD on https://anxbtc.com/ https://anxbtc.com/ right now would net you 3.875512102 BTC, which can be sold for 2302.054188836 USD on Bitstamp. At current exchange rates that's a 2% loss on the transfer alone, and you'd incur the wire transfer fee anyway, when sending the USD from Bitstamp to your US bank account. I think the bottleneck is currently the BTCAUD market, where the spread is 1.43% (http://bitcoincharts.com/markets/anxhkAUD.html http://bitcoincharts.com/markets/anxhkAUD.html), and also liquidity on US-based exchanges where you can avoid the subsequent international wire transfer.
- 12y ago
jcr 12y ago
> "what might a Bitcoin that's useful for the mainstream look like?" Great article, and the extremely familiar line above made me smile.
nemo1618 12y ago
It worries me to see people describe Bitcoin as the "IP layer of payments." I have serious doubts about Bitcoin's ability to scale to a global audience. Transactions are too slow, the blockchain is too heavy, etc. I see Bitcoin in a very similar light to IPv4 and JavaScript: a good idea that escaped into the wild too quickly. And so we wind up piling hacks upon hacks to make up for the lack of a solid foundation, and it only gets harder to replace the current standard with a better alternative.
- napoleond 12y ago
  Are there counter-examples of enormous, open platforms that escaped into the wild at just the right time? Because sure, IPv4 and JS have their problems, but it is impossible for me to conceive of an alternate universe where they were perfect at launch.
  - nemo1618 12y ago
    fair point. And on the flipside, we have projects like Hurd and DNF that were hidden away for far too long to ever become relevant or successful. I guess what I'd like to see is a breakaway from the notion that there can only be one, universally adopted standard. We should focus on building systems that are heterogeneous, not homogeneous. Ideally, we would have a world where IP packets were routed correctly regardless of version; websites could be programmed in any language; and transactions could be conducted in any cryptocurrency. One way to achieve that is by adopting a very minimal standard, and then creating new models that targeting that standard (see: IPv6->IPv4 gateways, compile-to-JS, sidechains). The problem is that the standard is often not minimal enough, or is minimal in the wrong ways, or is too minimal to be of practical use. So I don't believe that this is the right approach; it's just too difficult to predict how people will use the standard.
  - MichaelGG 12y ago
    Really? Instead of JavaScript, essentially any other language could have been shipped and done a better job.
    - 12y ago
dcc1 12y ago
I am not sure why anyone would want to accept Bitcoin via Stripe Same can be accomplished with Bitpay, who take 0% in fees with a 30$/month package (1% otherwise), they also pay into the bank the next business day unlike Stripe. And they are also alot more open as to the types of businesses they accept. Or hell one could directly accept bitcoin with bitcoind running locally or using the blockchain.info api and then converting bitcoins with Bitstamp (or just using the bitcoins to buy things, every day more and more places accept them!) It is great seeing Stripe actually embracing new technologies but imho their current bitcoin "offering" is not great and they are picky as to who they do business with. edit: ah typical HN fanboyism, vote down anything negative said about Stripe instead of addressing the points raised.
- drivingmenuts 12y ago
  Because Stripe has already established a reputation with people who take payments but aren't familiar with the ins and outs of Bitcoin? A lot of people aren't going to have the time to do research to find out about the ins and outs of taking online payments with Bitcoins, and at any rate, there's enough negative news about bitcoin that some of their research is going to turn up the various shenanigans of bitcoin banks, or the shenanigans done to them, etc. In short, Stripe provides some automatic legitimacy. If I had a need for Bitcoin, I'd probably want to go with someone established in the mainstream of payments, as well. Which means Stripe or Braintree or one of those guys. A large bank would be even better, but that may take a while.
- pbreit 12y ago
  I think the problem with your comment is that it is both poorly reasoned and promotional.
- _puk 12y ago
  Bitpay, bitcoind et al may technically be better offerings, but if you're already using Stripe to take card payments then woohoo, you can now take Bitcoin. If Bitcoin wants to play with the big boys then the likes of Stripe getting on board are nothing but positive. Having to have a separate system to handle Bitcoin vs Visa, MasterCard etc just seems archaic.
- 12y ago
napoleond 12y ago
This is my favourite article about Bitcoin to date, and properly describes one of the main ideas I wish Bitcoin detractors would come around to. Bitcoin has a lot of problems as a unit of account and as a store of value, but that is not primarily what Satoshi was building (https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf). Bitcoin is, and has always been, a medium of exchange first and foremost. It still has some shortcomings in that regard, but it is the closest thing we have to solving the trust issues of peer-to-peer exchange in a purely technical fashion. Comparing Bitcoin addresses to the IP layer of the internet is brilliant. Something that the Bitcoin community has been a bit slow to accept is the idea that "peer-to-peer exchange" may be occurring at the corporate level rather than at the individual level for most people--it's hard to imagine a world where that isn't true due to the points outlined in the "Comparison to the card networks" part of this article. However as long as the corporate implementation is done in such a way that anyone could jump in as an individual if they wanted to bear their own risk, then we are still miles ahead of how the traditional financial system currently works ("net neutrality" for money).
- IgorPartola 12y ago
  Agreed. The more I think about BTC, the more I understand that the exchange protocol is the most useful part of it. Storing value in an encrypted wallet on your computer is inconvenient to say the least. Not that I want local storage of value to go away, but as a consumer I want a very different payment experience than "here, have my CC number" or "let me pay with PayPal".
  - Cyther606 12y ago
    Satoshi wrote in the genesis block: The Times 03/Jan/ 2009 Chancellor on brink of second bailout for banks Bitcoin was released in staunch opposition to the banking system. > Storing value in an encrypted wallet on your computer is inconvenient to say the least It's possible to store Bitcoin on sheets of paper, or entirely in your brain, safely and securely. I get the distinct feeling you've never used Bitcoin before. Please, sign up for an account at Coinbase and buy $1000+ of BTC or otherwise put yourself in the shoes of someone who wants to buy a serious amount of coin before making these sorts of statements. Bitcoin isn't about being a PayPal competitor. It's money outside the State, always has been, always will be. Unless of course it is corrupted from the inside out, probably by whitewashed companies who are too afraid to embrace a great thing in spite of what regulators would like them to do.
mfringel 12y ago
Bitcoin is to payment system as git is to source control system. It's an interesting toolbox that can be used on its own, but gains a ton of power once tools are built on top of it.
- wcummings 12y ago
  I would say 90+% of git's utility is out of the box
driverdan 12y ago
This is a very good article and highlights what I also think is Bitcoin's biggest strength, its use as a medium of exchange. Whenever someone asks me to describe why they should be interested in Bitcoin I always focus on using it to transfer money. I use an example of sending money to someone else easily, cheaply, and quickly without using shitty services like Paypal. This resonates more in the USA than Europe since our banking system is terrible and doesn't have easy, free transfers baked in. It also makes a lot of sense for cross border / currency transfers.
ahtomski 12y ago
This post does a very good job of explaining clearly why Bitcoin could be huge in a way that someone not familiar or excited by the technology could understand. And I think the meta-point here from Stripe is, by the way 'we want to be the next Visa'.
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flavor8 12y ago
It's not quite as simple as that, though. To, for example, send money from the US to Kenya via bitcoin, you need somebody in the US who is willing to sell you their bitcoin in exchange for dollars, and somebody in Kenya who is willing to buy your bitcoin in return for shillings (which are then paid to the destination seller). Creating the technology that makes this relatively transparent is quite doable, but you still need an active bitcoin market in both financial markets. If the general pattern of value transfer is unidirectional (e.g. remittances) then there needs to be a viable flow of bitcoin out of the destination country (i.e. your Kenyan bitcoin purchaser needs to regularly make purchases from foreign markets in bitcoin); that's tricky to establish. On top of this issue, big banks charge only cents to send large amounts of cash internationally (according to somebody I talked to a couple months ago, Citi charges 10c per international ACH transaction assuming you have $250k on deposit) so the volume in the bitcoin market has to be built from small transactions -- there's no real upside to doing large transactions over bitcoin vs international ACH.
- benmanns 12y ago
  If the difference between USD - BTC - KES vs KES - USD gets too large, there will be an opportunity for someone to arbitrage.
- adrianwaj 12y ago
  Not sure if this is a relevant point, but as a global reserve currency, the US dollar could act as a gateway for local bitcoin traders to enter and exit their bitcoin positions. Whereby so long as a USD/BTC market exists and a USD/local market exists (which there is due to the petrodollar), it doesn't matter what local demand is for BTC - the USD can act to buffer any lack of local BTC demand/supply. Shillings > USD > BTC or BTC > USD > Shillings.
- mrb 12y ago
  "big banks charge only cents to send large amounts of cash internationally" This is utterly false. The entire reason the remittance industry exists (Western Union, etc) is because banks don't offer cheap ways of sending money internationally, and/or recipients often don't even have bank accounts. In fact, remittance fees are so high[1] that this is precisely why many analysts see Bitcoin's potential to disrupt this industry[2]. [1] Average remittance cost in the world: 8%. Average to Africa: 12%! Nigeria to Ghana: 22%! Source: http://www.irinnews.org/report/99977/remittance-rip-offs http://www.irinnews.org/report/99977/remittance-rip-offs [2] http://www.businessweek.com/articles/2013-10-08/will-migrant-workers-drive-bitcoins-mundane-future http://www.businessweek.com/articles/2013-10-08/will-migrant...
tomasien 12y ago
One thing I'm glad they didn't focus much on is the fees associated with Bitcoin. Too much is made out of the fee reduction of BTC (I think because it's easy for regular folks to understand) - but that's only a major factor for why you're able to develop on top of it. Bitcoin is SO much more than fees, and really the fees themselves aren't "set in stone" - others will charge on top of BTC anyway, so we have no idea what the fees will be eventually. Coinbase charges 1% for interchange, which seems reasonable, and that's just the start. The card "network" itself wouldn't have to have the fees it has, it's Visa and Mastercard, the banks, and especially Amex that DECIDE to make the fees higher. Another example is ACH, which is essentially free to transact, and in some countries has wide adoption. Fees should NOT be a major driver in BTC adoption for consumers or businesses. If you want low fees, let's work on ACH (and we are). But Bitcoin has a TON of other benefits, and those are phenomenally well documented here.
jarin 12y ago
Taking this a step further, when using it as a pure transport medium, the cryptocurrency itself doesn't matter. It could be Bitcoin, Litecoin, Dogecoin, 2304293f20983uf2089j2f3coin, or whatever, as long as it's liquid enough to convert back and forth. What we really need is a gateway system that will intelligently convert between your local currency -> the cryptocurrency with the best liquidity/exchange rate -> the destination currency. Interestingly, I could see this leading to automatically generated cryptocurrencies, as various popular cryptocurrencies fall below liquidity, transaction time, and/or exchange rate thresholds. Over time, I'd expect to see some interesting competition and arbitrage between cryptocurrencies going on behind the scenes, all computer controlled.
- nawitus 12y ago
  This "gateway system" is the foreign exchange market (or equivalent, if they choose not to adopt bitcoin).
- Taek 12y ago
  I see the future of cryptocurrency as being a bunch of behind-the-scenes transactions where the currency you are using isn't relevant at all, because everything will be hyper-liquid. You pick you favorite currency (or portfolio) as a store-of-value, and then if you need to trade with other people, your client and portfolio negotiates with their client and portfolio to arrange an acceptable exchange. Then you use a decentralized network of exchanges to restore any ratios you want to maintain. This allows people to create their own currency and enforce it's particular use, backing it explicitly. For example, you could crate 'SoylentCoin', which can be cashed in for 1 month of Soylent shipped by a certain date. You sell it for some price that keeps you in business, but then the market is free to trade it at-will and you can hit more efficient price points for your product. Sometimes you might find that your product is worth a lot more than you are selling it for. Or in a decentralized example, you could do proof-of-resource sale that sells coins directly transferable to a type of resource. In example of disk storage, you provide storage to the network in return for disk-coins. To get the storage, you need to buy disk-coins. This isolates the disk-coin price to the supply and demand of disk storage precisely. Anyone can participate, and upon buying or selling the disk-coin, they can immediately convert to or from whatever portfolio of coins they personally maintain.
edpichler 12y ago
Very good article. Great times are coming.
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freedom123 12y ago
Bitcoin, no matter how you word it or rationalize it will always have a root problem and inherent risk...it is backed by nothing. Users today think its usage gives it market value and it can but to a limit. Money (USD) originally (the dollar bill) worked because it was back by gold. A metal that worked because everyone on the planet wants it. That dollar bill was a "check" or agreement stating, this dollar bill represents this much gold thus the value of money. The USA today does not have gold backing its money-- so as you can see we already have a bitcoin and the USA will not allow you to complete with its money - enjoy
- drcode 12y ago
  If gold wasn't used as a store of value its value would be very maybe a hundredth of what it is now: Gold-plated jewelry in our modern era is essentially indistinguishable (even at the level of a physics lab using scales/xrays/etc if need be) from solid gold jewelry. Gold, for all intents and purposes, is also "backed by nothing".
  - freedom123 12y ago
    Aluminum was more expensive than gold until a cheap way to purify it was developed. Now we wrap our food in it. Gold is only valuable until the first metallic asteroid is placed into high Earth orbit. Not tomorrow, but probably sooner than you think. reply << Has nothing to do with Bitcoin being back by nothing. Even if gold did lessen in value other forms of metals/currency can take golds place. Gold is specifically a variable for anything however it is "some thing". (the root point). If gold wasn't used as a store of value its value would be very maybe a hundredth of what it is now: Gold-plated jewelry in our modern era is essentially indistinguishable (even at the level of a physics lab using scales/xrays/etc if need be) from solid gold jewelry. Gold, for all intents and purposes, is also "backed by nothing". << again has almost nothing to do with Bitcoin being back by nothing. Gold is the item of value it doesn't need to be backed, it is the back'er.
    - jp555 12y ago
      Exactly. My point was that "the things people want" is true wealth, gold is just another measuring stick for converting billable hours of work into diapers (or whatever). If Bitcoin is perceived as a superior measuring stick it will be preferred.
Symmetry 12y ago
They copied my blog post! [1] Ok, that's actually extraordinarily unlikely, and I'm glad that other people think we need to look at Bitcoin through the medium of exchange/unit of account/store of value trichotomy and I'm glad that they seem to be going forward with using bitcoin as the basis for an electronic money system without denominating anything in bitcoins. [1] http://hopefullyintersting.blogspot.com/2014/07/thoughts-on-bitcoin.html http://hopefullyintersting.blogspot.com/2014/07/thoughts-on-...
webmaven 12y ago
Money isn't the only relevant unit of account. Even in stable economies, stocks, bonds, and the like are very high friction, and there is a lot of room for disruption and innovation.
flatline 12y ago
Great article. The only problem I had with it was an IP address being analogous to a bitcoin public address. Stripe.com is vouchsafed by a certificate authority, so when you go to the address either by typing or by a link, you have some reasonable, if sometimes tenuous, assurance that you are dealing with the real stripe.com and not some typo-squatting fraud or MITM. Using friendly addresses for payment removes the statistical uniqueness of public keys from the equation. As long as the friendly identifier is not the primary one, there is no issue, but I see nothing wrong with establishing identity through copy/pasting a bitcoin address from a known trusted source or scanning a QR code.
doctorpangloss 12y ago
> First, the resulting ecosystem is technologically open. Open ecosystems have a way of getting better much faster than their closed counterpart. Unless you are specifically in the business of making financial institutions, it would seem that Stripe (and for that matter, nearly every payment provider that a computer can interact with) is open in all the ways that matter to a normal person. > There are a number of cryptocurrencies which already have gateways baked in at a protocol level (such as Open Transactions and Ripple). However, there are huge network effects in any financial system, and to date these other systems have failed to win the necessary user support. So you agree with the above—that as far as history is concerned, just being open doesn't get you adopted. :) Bitcoin's crazy volatility and speculation drives "user support." It's ironic, because (1) the volatility is what makes Bitcoin unsuitable as a currency from the perspective of everything that matters economically (like your example, value storage) but (2) the volatility makes Bitcoin phenomenally successful as a currency from the perspective of user acquisition. I don't know why it's so hard to promote transaction systems. Maybe there's some rule out there that no one competes on the basis of transaction fees, and those who do are shut out of the cabal. That's not a conspiracy that I subscribe to. Maybe the minimum transaction fee to make things economically viable is 2.9% of every transaction. So people do make platforms with lower transaction fees, but then they can't afford to tell you about it, or they don't manage to enrich themselves enough to make it worthwhile. But Bitcoin, it managed to lie and tell us, "the lowest possible transaction fees;" while technically true, you just pay for the economic cost of promoting the platform and enriching its owners through its volatility. In that sense, Bitcoin has been a terrific failure as a payment system. It's much worse to buy Bitcoin at the wrong time than to pay 2.9% on every transaction. But as a payment platform, as far as venture capitalists are concerned, it's fabulously successful. The early buyers of Bitcoin did enjoy a fabulous return. User acquisition with negative cost to the platform's owners? Brilliant.
- Cyther606 12y ago
  First, Bitcoin resembles MLM / network marketing more than any one traditional financial instrument. Second, that the State would want to allow a free market currency of fixed supply to compete with their own digital currency that can be whimsically inflated and used to fund endless warfare and welfare just doesn't fit the historical record. Never, in the past hundred some odd years, has any competing currency been adopted by the banking system because of innovative features. Bitcoin is innovative because it gives people control over a form of globally accepted currency which cannot be debased or manipulated. Bitcoin can be sent and received by any person in the world, in any amount, at any time, for any reason. That's why Bitcoin is important. Bitcoin is _not_ important if it just compliments the existing banking system's functions, or makes it cheaper. It's important because it frees humanity from the arbitrary clutches of the State. It gives power back to the individual at least in matters of money and finance, and everything else can follow from that.
mcs 12y ago
What about a voting system? With little keychains given out with only the voting system having the public key for, and any third party can validate the votes. "Coins", or voting credits can be distributed back to voters without transaction fees.
- mcs 12y ago
  Bitcoin as a store of value is only when people are holding other commodities or speculative fiat. Large caches of early bitcoin holders will likely not crash a market that creates them wealth, so if there are actual commodities that align with bitcoin, and illegal drugs are not that commodity for a multitude of reasons and even just fluctuated with the usd, so bitcoin either needs significant natural resource or "hard assets" backings of bitcoin or it'll ebb and flow with the USD because shops that accept bitcoin still have to pay to do USD conversion and the rate moves dynamically just like there is a broadcasting network for the gas prices for gas stations when the gas price per gallon fluctuates quickly based on futures markets.
- marcosdumay 12y ago
  It has the same problem of every cryptographic (and not cryptographic - see paper) voting system. It's impossible to create a system that assures both a correct result and voter anonymity. Paper assures none, but has quite strong guarantees on both. I'd settle on some system that assures the result, and has good guarantees of anonymity, what one can create with pseudonyms, but at that point it's a political debate, not a technical one.
  - mcs 12y ago
    People don't have to share their name to their public key in the blockchain. So the anonymity is about the same as a social security number, and but confirming the identity is much stronger and doesn't need to reveal private information or their private voter's token keychain. Transparency is giving out tokens to known voters, since there is already registration at least in united states elections. What it does give is a strict list of keys that should correlate with registered population.
berdario 12y ago
> There are a few walled gardens with great payment experiences (the App Store, Amazon) I'm of a different opinion: Amazon is much stricter than other online merchants, and they don't give you meaningful errors when something goes wrong with your billing. When I was back in europe, I had to rely on a relative's credit card to make a payment, since my debit card was being refused. Now that I'm travelling in the US, the situation is even worse: they locked my account 2 times already, and they request information that (due to the privacy laws in my home country) can't be easily accessed and returned by my bank. Apparently there're differences with credit cards, debit cards and atm cards... but as long as you have enough money/credit on your account, I cannot see how the payment process should be different, and no one has been able to explain it to me yet (an interesting blog post about how things can go wrong when paying in person with a card is this one btw: https://blog.flameeyes.eu/2014/04/my-time-abroad-chip-n-pin https://blog.flameeyes.eu/2014/04/my-time-abroad-chip-n-pin it deals with "Cardholder Verification Method" which I never even heard of before reading it) Trying to pay for an order on Lenovo is even worse: they don't accept non-US issued cards (unless it's an american express) and my bank doesn't let me do a wire transfer to the US online (you have to phisically go to their desks and ask for the wire transfer to be sent) It's mind boggling the amount of manual work and custom e-mails sent back & forth needed for payments. It's almost like being stuck in the early 20th century. OTOH, the few times that I used bitcoin to pay for something online, the process has been flawless, and due to its utter simplicity I can vaguely understand the whole process of sending money on bitcoin... unlike with systems like banks, paypal and amazon, which are mostly huge black boxes of which I cannot even audit their source code.
aeturnum 12y ago
>However, Bitcoin has huge potential as a way to transport value. It’s surprisingly difficult to move money today, and the experience of paying for something online is just about the only part of the internet that hasn’t changed dramatically in the past twenty years. Based on my very limited understanding, the difficulty in moving money has nothing to do with technical limitations of money (it's not like we lack the technology to transfer dollars electronically) and everything to do with regulation. Does bitcoin only offer a "reset" button for regulation? The restrictions on money transfers exist because stakeholders in the finance system want them there - why wouldn't they implement the same restrictions for *coin? I suppose you could try to exploit the semi-anonymity of bitcoin to avoid regulation, but that doesn't seem attractive to most businesses.
- badbaguette 12y ago
  The appeal of bitcoin in this respect is that it disrupts the idea of money "being" in a certain place and thus having to "move" across borders. As a worldwide distributed ledger, it's unclear that sending someone bitcoins amounts to a value transfer across borders. I don't see this as a loophole so much as radical redefinition of what a store of value means. It's clear that whatever future regulations look like, they can't mirror the status quo.
  - kaonashi 12y ago
    Not really a ledger, bitcoin is only an asset, never a liability.
    - badbaguette 12y ago
      Point taken, but I think that a long list of all accounts and their balances is essentially a ledger even if those balances are constrained to be positive. A ledger is almost certainly a better model for thinking about the blockchain than, say, a bunch of people with cash under their mattress.
    - tim333 12y ago
      You could argue MtGox have a liability of quite a few bitcoins.
ChuckMcM 12y ago
If you had a large enough transaction base where you could simultaneously convert in and out of bitcoin chunks such that the transaction didn't suffer f/x creep (or if it did, it was tolerable via transaction costs) that would be a pretty interesting thing indeed.
aburan28 12y ago
There is too much venture capital money behind bitcoin for it to fail. EDIT: Don't underestimate the stubbornness of investors.
abalone 12y ago
The last section on trust & protection cuts to the heart of what it will take for general consumer adoption. But it leaves unstated the fundamental tension: the very nature of bitcoin is that of anonymity and finality. Whereas card and even ACH transfers can be reversed, bitcoin cannot. The essay hints that it will take a central trust provider to regulate and police transactions to control for fraudulent activity. That's true. The key question is whether they'll be able to sustain the promised cost efficiencies of bitcoin by the time they build in this capability. If the technical differences melt away and it just becomes another competitor to Visa/Mastercard, minus the billions of dollars of marketing and POS infrastructure over decades that have gone into cementing that network, then we really have to scrutinize whether "openness" and "unbundling" present a serious enough benefit to warrant the cost of a consumer global payments network rollout. And couldn't a central trust provider work against this openness and unbundling? That's the whole point of a central entity, right?
GmeSalazar 12y ago
Unrelated question: are there any formalization of the Bitcoin protocol out there?
throwaway2274 12y ago
One problem with the current system that the article did not mention is that having a central party handle all the global financial transfers creates a big handle for nation states to put leverage on. We saw this very clearly when the US government put pressure on VISA and mastercard to reject donations going to WikiLeaks. I remember watching that whole episode in disgust. With bitcoin, this is pretty much impossible.
- wcummings 12y ago
  This is a great example, since iirc Wikileaks started accepting BTC donations shortly thereafter...
jtanner 12y ago
This article is genius, Greg Brockman has figured this out. Does NameCoin have all the needed features to make this happen right now?
jheriko 12y ago
What if banks compete and start providing a reasonable quality of service? It wouldn't be hard.. they just don't bother because there is no return for the investment right now. Bitcoin scares the crap out of me. It looks too much like a criminals dream for me to have any trust in it and the network yet...
billyarzt 12y ago
Potentially dumb question: if there are 21 million bitcoins (and therefore 21 million bitcoin addresses), would that limit bitcoin's efficiency as a medium of exchange? Ie wouldnt there be potentially billions of transaction moving through a financial system powered by bitcoin daily? (Apologies in advance for any flawed assumptions).
- nathan7 12y ago
  The flawed assumption is "and therefore 21 million Bitcoin addresses". Generate an RSA keypair, and give out the hash of the public key (encoded in a Bitcoin-specific way). Anyone can send you Bitcoins there now.

813 points by gdb 12y ago

Good piece. If you're reading this expecting something new from Stripe though you'll be disappointed: >> "So what role will Stripe play here? We already provide Bitcoin acceptance, and we're actively investigating other functionality. We'll have other updates on this front before too long."

pat2man 12y ago

Stipe is hitting on a bunch of the key points here. The big one is that bitcoin alone is not going to solve all our money problems, it will be the network of companies that build products on top of bitcoin. Its the reason we are seeing so much money going into these companies instead of investors just buying and holding Bitcoin.

VexXtreme 12y ago

The beautiful thing about bitcoin is that it's an open system, an open currency if you will, that will allow a nice app ecosystem to be built on top of it. That aspect will allow many non-technical people to interact with abstractions that hide away all the complexities (such as Stripe), but it will also allow experts and hackers to still tap into the network directly with their own wallets, nodes, private keys etc. I think that bitcoin is currently in its early infancy when it comes to user adoption and still has a very long way to go before it reaches its potential. It's not completely off base to compare it with the way the internet was back in the early 90s.

nlh 12y ago

This is one of the best posts on the "state of the Bitcoin economy" I've read yet. They nail a few key points that shows they get it in a real-world sense. * Mass-consumer adoption of Bitcoin is a tough sell in developed countries (USA, etc.) * Bitcoin the Network may ultimately be more valuable than BTC the currency * "No chargebacks!" is a pitch to merchants for BTC, not consumers. Consumers like chargebacks & trust. * BTC the currency may end up being a behind-the-scenes player so long as traditional currencies do their job. This says to me that Stripe's position is ultimately to be the Visa of Bitcoin or the SWIFT of Bitcoin. And that's could indeed be a huge opportunity.

chadkruse 12y ago
> This says to me that Stripe's position is ultimately to be...the SWIFT of Bitcoin. Agreed. To illustrate how broken the SWIFT system is for those unfamiliar with international wires: Last week I wired AUS$2,500 from an account I control in Australia to an account I control in the US. It touched 4(!) banks in the process, who collectively took ~$45 in fees ($25 of that being a total surprise to me, represented only by a small asterisk footnote in the fee schedule of my initiating Australian bank). I became a huge Bitcoin cheerleader following the experience.
- afro88 12y ago
  Try Transfer Wise. It's a very useful middle ground between the current method of SWIFT and the potential of Bitcoin as a medium of exchange. It costs much less than a SWEIFT transfer and is much quicker.
- deleted 12y ago
  [deleted]
- jarek 12y ago
  That's 1.8%. What are the current spread rates for AUD-BTC and BTC-USD? For comparison I get 0.6 - 1.4% from an online specialized currency service, taking a couple of days. Set-up was a bit involved. How good is connecting BTC to real world bank accounts these days?
  - runeks 12y ago
    Buying BTC for 2500 AUD on https://anxbtc.com/ https://anxbtc.com/ right now would net you 3.875512102 BTC, which can be sold for 2302.054188836 USD on Bitstamp. At current exchange rates that's a 2% loss on the transfer alone, and you'd incur the wire transfer fee anyway, when sending the USD from Bitstamp to your US bank account. I think the bottleneck is currently the BTCAUD market, where the spread is 1.43% (http://bitcoincharts.com/markets/anxhkAUD.html http://bitcoincharts.com/markets/anxhkAUD.html), and also liquidity on US-based exchanges where you can avoid the subsequent international wire transfer.
12y ago

jcr 12y ago

> "what might a Bitcoin that's useful for the mainstream look like?" Great article, and the extremely familiar line above made me smile.

nemo1618 12y ago

It worries me to see people describe Bitcoin as the "IP layer of payments." I have serious doubts about Bitcoin's ability to scale to a global audience. Transactions are too slow, the blockchain is too heavy, etc. I see Bitcoin in a very similar light to IPv4 and JavaScript: a good idea that escaped into the wild too quickly. And so we wind up piling hacks upon hacks to make up for the lack of a solid foundation, and it only gets harder to replace the current standard with a better alternative.

napoleond 12y ago
Are there counter-examples of enormous, open platforms that escaped into the wild at just the right time? Because sure, IPv4 and JS have their problems, but it is impossible for me to conceive of an alternate universe where they were perfect at launch.
- nemo1618 12y ago
  fair point. And on the flipside, we have projects like Hurd and DNF that were hidden away for far too long to ever become relevant or successful. I guess what I'd like to see is a breakaway from the notion that there can only be one, universally adopted standard. We should focus on building systems that are heterogeneous, not homogeneous. Ideally, we would have a world where IP packets were routed correctly regardless of version; websites could be programmed in any language; and transactions could be conducted in any cryptocurrency. One way to achieve that is by adopting a very minimal standard, and then creating new models that targeting that standard (see: IPv6->IPv4 gateways, compile-to-JS, sidechains). The problem is that the standard is often not minimal enough, or is minimal in the wrong ways, or is too minimal to be of practical use. So I don't believe that this is the right approach; it's just too difficult to predict how people will use the standard.
- MichaelGG 12y ago
  Really? Instead of JavaScript, essentially any other language could have been shipped and done a better job.
  - 12y ago

dcc1 12y ago

I am not sure why anyone would want to accept Bitcoin via Stripe Same can be accomplished with Bitpay, who take 0% in fees with a 30$/month package (1% otherwise), they also pay into the bank the next business day unlike Stripe. And they are also alot more open as to the types of businesses they accept. Or hell one could directly accept bitcoin with bitcoind running locally or using the blockchain.info api and then converting bitcoins with Bitstamp (or just using the bitcoins to buy things, every day more and more places accept them!) It is great seeing Stripe actually embracing new technologies but imho their current bitcoin "offering" is not great and they are picky as to who they do business with. edit: ah typical HN fanboyism, vote down anything negative said about Stripe instead of addressing the points raised.

drivingmenuts 12y ago
Because Stripe has already established a reputation with people who take payments but aren't familiar with the ins and outs of Bitcoin? A lot of people aren't going to have the time to do research to find out about the ins and outs of taking online payments with Bitcoins, and at any rate, there's enough negative news about bitcoin that some of their research is going to turn up the various shenanigans of bitcoin banks, or the shenanigans done to them, etc. In short, Stripe provides some automatic legitimacy. If I had a need for Bitcoin, I'd probably want to go with someone established in the mainstream of payments, as well. Which means Stripe or Braintree or one of those guys. A large bank would be even better, but that may take a while.
pbreit 12y ago
I think the problem with your comment is that it is both poorly reasoned and promotional.
_puk 12y ago
Bitpay, bitcoind et al may technically be better offerings, but if you're already using Stripe to take card payments then woohoo, you can now take Bitcoin. If Bitcoin wants to play with the big boys then the likes of Stripe getting on board are nothing but positive. Having to have a separate system to handle Bitcoin vs Visa, MasterCard etc just seems archaic.
12y ago

napoleond 12y ago

This is my favourite article about Bitcoin to date, and properly describes one of the main ideas I wish Bitcoin detractors would come around to. Bitcoin has a lot of problems as a unit of account and as a store of value, but that is not primarily what Satoshi was building (https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf). Bitcoin is, and has always been, a medium of exchange first and foremost. It still has some shortcomings in that regard, but it is the closest thing we have to solving the trust issues of peer-to-peer exchange in a purely technical fashion. Comparing Bitcoin addresses to the IP layer of the internet is brilliant. Something that the Bitcoin community has been a bit slow to accept is the idea that "peer-to-peer exchange" may be occurring at the corporate level rather than at the individual level for most people--it's hard to imagine a world where that isn't true due to the points outlined in the "Comparison to the card networks" part of this article. However as long as the corporate implementation is done in such a way that anyone could jump in as an individual if they wanted to bear their own risk, then we are still miles ahead of how the traditional financial system currently works ("net neutrality" for money).

IgorPartola 12y ago
Agreed. The more I think about BTC, the more I understand that the exchange protocol is the most useful part of it. Storing value in an encrypted wallet on your computer is inconvenient to say the least. Not that I want local storage of value to go away, but as a consumer I want a very different payment experience than "here, have my CC number" or "let me pay with PayPal".
- Cyther606 12y ago
  Satoshi wrote in the genesis block: The Times 03/Jan/ 2009 Chancellor on brink of second bailout for banks Bitcoin was released in staunch opposition to the banking system. > Storing value in an encrypted wallet on your computer is inconvenient to say the least It's possible to store Bitcoin on sheets of paper, or entirely in your brain, safely and securely. I get the distinct feeling you've never used Bitcoin before. Please, sign up for an account at Coinbase and buy $1000+ of BTC or otherwise put yourself in the shoes of someone who wants to buy a serious amount of coin before making these sorts of statements. Bitcoin isn't about being a PayPal competitor. It's money outside the State, always has been, always will be. Unless of course it is corrupted from the inside out, probably by whitewashed companies who are too afraid to embrace a great thing in spite of what regulators would like them to do.

mfringel 12y ago

Bitcoin is to payment system as git is to source control system. It's an interesting toolbox that can be used on its own, but gains a ton of power once tools are built on top of it.

wcummings 12y ago
I would say 90+% of git's utility is out of the box

driverdan 12y ago

This is a very good article and highlights what I also think is Bitcoin's biggest strength, its use as a medium of exchange. Whenever someone asks me to describe why they should be interested in Bitcoin I always focus on using it to transfer money. I use an example of sending money to someone else easily, cheaply, and quickly without using shitty services like Paypal. This resonates more in the USA than Europe since our banking system is terrible and doesn't have easy, free transfers baked in. It also makes a lot of sense for cross border / currency transfers.

ahtomski 12y ago

This post does a very good job of explaining clearly why Bitcoin could be huge in a way that someone not familiar or excited by the technology could understand. And I think the meta-point here from Stripe is, by the way 'we want to be the next Visa'.

deleted 12y ago

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flavor8 12y ago

It's not quite as simple as that, though. To, for example, send money from the US to Kenya via bitcoin, you need somebody in the US who is willing to sell you their bitcoin in exchange for dollars, and somebody in Kenya who is willing to buy your bitcoin in return for shillings (which are then paid to the destination seller). Creating the technology that makes this relatively transparent is quite doable, but you still need an active bitcoin market in both financial markets. If the general pattern of value transfer is unidirectional (e.g. remittances) then there needs to be a viable flow of bitcoin out of the destination country (i.e. your Kenyan bitcoin purchaser needs to regularly make purchases from foreign markets in bitcoin); that's tricky to establish. On top of this issue, big banks charge only cents to send large amounts of cash internationally (according to somebody I talked to a couple months ago, Citi charges 10c per international ACH transaction assuming you have $250k on deposit) so the volume in the bitcoin market has to be built from small transactions -- there's no real upside to doing large transactions over bitcoin vs international ACH.

benmanns 12y ago
If the difference between USD - BTC - KES vs KES - USD gets too large, there will be an opportunity for someone to arbitrage.
adrianwaj 12y ago
Not sure if this is a relevant point, but as a global reserve currency, the US dollar could act as a gateway for local bitcoin traders to enter and exit their bitcoin positions. Whereby so long as a USD/BTC market exists and a USD/local market exists (which there is due to the petrodollar), it doesn't matter what local demand is for BTC - the USD can act to buffer any lack of local BTC demand/supply. Shillings > USD > BTC or BTC > USD > Shillings.
mrb 12y ago
"big banks charge only cents to send large amounts of cash internationally" This is utterly false. The entire reason the remittance industry exists (Western Union, etc) is because banks don't offer cheap ways of sending money internationally, and/or recipients often don't even have bank accounts. In fact, remittance fees are so high[1] that this is precisely why many analysts see Bitcoin's potential to disrupt this industry[2]. [1] Average remittance cost in the world: 8%. Average to Africa: 12%! Nigeria to Ghana: 22%! Source: http://www.irinnews.org/report/99977/remittance-rip-offs http://www.irinnews.org/report/99977/remittance-rip-offs [2] http://www.businessweek.com/articles/2013-10-08/will-migrant-workers-drive-bitcoins-mundane-future http://www.businessweek.com/articles/2013-10-08/will-migrant...

tomasien 12y ago

One thing I'm glad they didn't focus much on is the fees associated with Bitcoin. Too much is made out of the fee reduction of BTC (I think because it's easy for regular folks to understand) - but that's only a major factor for why you're able to develop on top of it. Bitcoin is SO much more than fees, and really the fees themselves aren't "set in stone" - others will charge on top of BTC anyway, so we have no idea what the fees will be eventually. Coinbase charges 1% for interchange, which seems reasonable, and that's just the start. The card "network" itself wouldn't have to have the fees it has, it's Visa and Mastercard, the banks, and especially Amex that DECIDE to make the fees higher. Another example is ACH, which is essentially free to transact, and in some countries has wide adoption. Fees should NOT be a major driver in BTC adoption for consumers or businesses. If you want low fees, let's work on ACH (and we are). But Bitcoin has a TON of other benefits, and those are phenomenally well documented here.

jarin 12y ago

Taking this a step further, when using it as a pure transport medium, the cryptocurrency itself doesn't matter. It could be Bitcoin, Litecoin, Dogecoin, 2304293f20983uf2089j2f3coin, or whatever, as long as it's liquid enough to convert back and forth. What we really need is a gateway system that will intelligently convert between your local currency -> the cryptocurrency with the best liquidity/exchange rate -> the destination currency. Interestingly, I could see this leading to automatically generated cryptocurrencies, as various popular cryptocurrencies fall below liquidity, transaction time, and/or exchange rate thresholds. Over time, I'd expect to see some interesting competition and arbitrage between cryptocurrencies going on behind the scenes, all computer controlled.

nawitus 12y ago
This "gateway system" is the foreign exchange market (or equivalent, if they choose not to adopt bitcoin).
Taek 12y ago
I see the future of cryptocurrency as being a bunch of behind-the-scenes transactions where the currency you are using isn't relevant at all, because everything will be hyper-liquid. You pick you favorite currency (or portfolio) as a store-of-value, and then if you need to trade with other people, your client and portfolio negotiates with their client and portfolio to arrange an acceptable exchange. Then you use a decentralized network of exchanges to restore any ratios you want to maintain. This allows people to create their own currency and enforce it's particular use, backing it explicitly. For example, you could crate 'SoylentCoin', which can be cashed in for 1 month of Soylent shipped by a certain date. You sell it for some price that keeps you in business, but then the market is free to trade it at-will and you can hit more efficient price points for your product. Sometimes you might find that your product is worth a lot more than you are selling it for. Or in a decentralized example, you could do proof-of-resource sale that sells coins directly transferable to a type of resource. In example of disk storage, you provide storage to the network in return for disk-coins. To get the storage, you need to buy disk-coins. This isolates the disk-coin price to the supply and demand of disk storage precisely. Anyone can participate, and upon buying or selling the disk-coin, they can immediately convert to or from whatever portfolio of coins they personally maintain.

edpichler 12y ago

Very good article. Great times are coming.

deleted 12y ago

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freedom123 12y ago

Bitcoin, no matter how you word it or rationalize it will always have a root problem and inherent risk...it is backed by nothing. Users today think its usage gives it market value and it can but to a limit. Money (USD) originally (the dollar bill) worked because it was back by gold. A metal that worked because everyone on the planet wants it. That dollar bill was a "check" or agreement stating, this dollar bill represents this much gold thus the value of money. The USA today does not have gold backing its money-- so as you can see we already have a bitcoin and the USA will not allow you to complete with its money - enjoy

drcode 12y ago
If gold wasn't used as a store of value its value would be very maybe a hundredth of what it is now: Gold-plated jewelry in our modern era is essentially indistinguishable (even at the level of a physics lab using scales/xrays/etc if need be) from solid gold jewelry. Gold, for all intents and purposes, is also "backed by nothing".
- freedom123 12y ago
  Aluminum was more expensive than gold until a cheap way to purify it was developed. Now we wrap our food in it. Gold is only valuable until the first metallic asteroid is placed into high Earth orbit. Not tomorrow, but probably sooner than you think. reply << Has nothing to do with Bitcoin being back by nothing. Even if gold did lessen in value other forms of metals/currency can take golds place. Gold is specifically a variable for anything however it is "some thing". (the root point). If gold wasn't used as a store of value its value would be very maybe a hundredth of what it is now: Gold-plated jewelry in our modern era is essentially indistinguishable (even at the level of a physics lab using scales/xrays/etc if need be) from solid gold jewelry. Gold, for all intents and purposes, is also "backed by nothing". << again has almost nothing to do with Bitcoin being back by nothing. Gold is the item of value it doesn't need to be backed, it is the back'er.
  - jp555 12y ago
    Exactly. My point was that "the things people want" is true wealth, gold is just another measuring stick for converting billable hours of work into diapers (or whatever). If Bitcoin is perceived as a superior measuring stick it will be preferred.

Symmetry 12y ago

They copied my blog post! [1] Ok, that's actually extraordinarily unlikely, and I'm glad that other people think we need to look at Bitcoin through the medium of exchange/unit of account/store of value trichotomy and I'm glad that they seem to be going forward with using bitcoin as the basis for an electronic money system without denominating anything in bitcoins. [1] http://hopefullyintersting.blogspot.com/2014/07/thoughts-on-bitcoin.html http://hopefullyintersting.blogspot.com/2014/07/thoughts-on-...

webmaven 12y ago

Money isn't the only relevant unit of account. Even in stable economies, stocks, bonds, and the like are very high friction, and there is a lot of room for disruption and innovation.

flatline 12y ago

Great article. The only problem I had with it was an IP address being analogous to a bitcoin public address. Stripe.com is vouchsafed by a certificate authority, so when you go to the address either by typing or by a link, you have some reasonable, if sometimes tenuous, assurance that you are dealing with the real stripe.com and not some typo-squatting fraud or MITM. Using friendly addresses for payment removes the statistical uniqueness of public keys from the equation. As long as the friendly identifier is not the primary one, there is no issue, but I see nothing wrong with establishing identity through copy/pasting a bitcoin address from a known trusted source or scanning a QR code.

doctorpangloss 12y ago

> First, the resulting ecosystem is technologically open. Open ecosystems have a way of getting better much faster than their closed counterpart. Unless you are specifically in the business of making financial institutions, it would seem that Stripe (and for that matter, nearly every payment provider that a computer can interact with) is open in all the ways that matter to a normal person. > There are a number of cryptocurrencies which already have gateways baked in at a protocol level (such as Open Transactions and Ripple). However, there are huge network effects in any financial system, and to date these other systems have failed to win the necessary user support. So you agree with the above—that as far as history is concerned, just being open doesn't get you adopted. :) Bitcoin's crazy volatility and speculation drives "user support." It's ironic, because (1) the volatility is what makes Bitcoin unsuitable as a currency from the perspective of everything that matters economically (like your example, value storage) but (2) the volatility makes Bitcoin phenomenally successful as a currency from the perspective of user acquisition. I don't know why it's so hard to promote transaction systems. Maybe there's some rule out there that no one competes on the basis of transaction fees, and those who do are shut out of the cabal. That's not a conspiracy that I subscribe to. Maybe the minimum transaction fee to make things economically viable is 2.9% of every transaction. So people do make platforms with lower transaction fees, but then they can't afford to tell you about it, or they don't manage to enrich themselves enough to make it worthwhile. But Bitcoin, it managed to lie and tell us, "the lowest possible transaction fees;" while technically true, you just pay for the economic cost of promoting the platform and enriching its owners through its volatility. In that sense, Bitcoin has been a terrific failure as a payment system. It's much worse to buy Bitcoin at the wrong time than to pay 2.9% on every transaction. But as a payment platform, as far as venture capitalists are concerned, it's fabulously successful. The early buyers of Bitcoin did enjoy a fabulous return. User acquisition with negative cost to the platform's owners? Brilliant.

Cyther606 12y ago
First, Bitcoin resembles MLM / network marketing more than any one traditional financial instrument. Second, that the State would want to allow a free market currency of fixed supply to compete with their own digital currency that can be whimsically inflated and used to fund endless warfare and welfare just doesn't fit the historical record. Never, in the past hundred some odd years, has any competing currency been adopted by the banking system because of innovative features. Bitcoin is innovative because it gives people control over a form of globally accepted currency which cannot be debased or manipulated. Bitcoin can be sent and received by any person in the world, in any amount, at any time, for any reason. That's why Bitcoin is important. Bitcoin is _not_ important if it just compliments the existing banking system's functions, or makes it cheaper. It's important because it frees humanity from the arbitrary clutches of the State. It gives power back to the individual at least in matters of money and finance, and everything else can follow from that.

mcs 12y ago

What about a voting system? With little keychains given out with only the voting system having the public key for, and any third party can validate the votes. "Coins", or voting credits can be distributed back to voters without transaction fees.

mcs 12y ago
Bitcoin as a store of value is only when people are holding other commodities or speculative fiat. Large caches of early bitcoin holders will likely not crash a market that creates them wealth, so if there are actual commodities that align with bitcoin, and illegal drugs are not that commodity for a multitude of reasons and even just fluctuated with the usd, so bitcoin either needs significant natural resource or "hard assets" backings of bitcoin or it'll ebb and flow with the USD because shops that accept bitcoin still have to pay to do USD conversion and the rate moves dynamically just like there is a broadcasting network for the gas prices for gas stations when the gas price per gallon fluctuates quickly based on futures markets.
marcosdumay 12y ago
It has the same problem of every cryptographic (and not cryptographic - see paper) voting system. It's impossible to create a system that assures both a correct result and voter anonymity. Paper assures none, but has quite strong guarantees on both. I'd settle on some system that assures the result, and has good guarantees of anonymity, what one can create with pseudonyms, but at that point it's a political debate, not a technical one.
- mcs 12y ago
  People don't have to share their name to their public key in the blockchain. So the anonymity is about the same as a social security number, and but confirming the identity is much stronger and doesn't need to reveal private information or their private voter's token keychain. Transparency is giving out tokens to known voters, since there is already registration at least in united states elections. What it does give is a strict list of keys that should correlate with registered population.

berdario 12y ago

> There are a few walled gardens with great payment experiences (the App Store, Amazon) I'm of a different opinion: Amazon is much stricter than other online merchants, and they don't give you meaningful errors when something goes wrong with your billing. When I was back in europe, I had to rely on a relative's credit card to make a payment, since my debit card was being refused. Now that I'm travelling in the US, the situation is even worse: they locked my account 2 times already, and they request information that (due to the privacy laws in my home country) can't be easily accessed and returned by my bank. Apparently there're differences with credit cards, debit cards and atm cards... but as long as you have enough money/credit on your account, I cannot see how the payment process should be different, and no one has been able to explain it to me yet (an interesting blog post about how things can go wrong when paying in person with a card is this one btw: https://blog.flameeyes.eu/2014/04/my-time-abroad-chip-n-pin https://blog.flameeyes.eu/2014/04/my-time-abroad-chip-n-pin it deals with "Cardholder Verification Method" which I never even heard of before reading it) Trying to pay for an order on Lenovo is even worse: they don't accept non-US issued cards (unless it's an american express) and my bank doesn't let me do a wire transfer to the US online (you have to phisically go to their desks and ask for the wire transfer to be sent) It's mind boggling the amount of manual work and custom e-mails sent back & forth needed for payments. It's almost like being stuck in the early 20th century. OTOH, the few times that I used bitcoin to pay for something online, the process has been flawless, and due to its utter simplicity I can vaguely understand the whole process of sending money on bitcoin... unlike with systems like banks, paypal and amazon, which are mostly huge black boxes of which I cannot even audit their source code.

aeturnum 12y ago

>However, Bitcoin has huge potential as a way to transport value. It’s surprisingly difficult to move money today, and the experience of paying for something online is just about the only part of the internet that hasn’t changed dramatically in the past twenty years. Based on my very limited understanding, the difficulty in moving money has nothing to do with technical limitations of money (it's not like we lack the technology to transfer dollars electronically) and everything to do with regulation. Does bitcoin only offer a "reset" button for regulation? The restrictions on money transfers exist because stakeholders in the finance system want them there - why wouldn't they implement the same restrictions for *coin? I suppose you could try to exploit the semi-anonymity of bitcoin to avoid regulation, but that doesn't seem attractive to most businesses.

badbaguette 12y ago
The appeal of bitcoin in this respect is that it disrupts the idea of money "being" in a certain place and thus having to "move" across borders. As a worldwide distributed ledger, it's unclear that sending someone bitcoins amounts to a value transfer across borders. I don't see this as a loophole so much as radical redefinition of what a store of value means. It's clear that whatever future regulations look like, they can't mirror the status quo.
- kaonashi 12y ago
  Not really a ledger, bitcoin is only an asset, never a liability.
  - badbaguette 12y ago
    Point taken, but I think that a long list of all accounts and their balances is essentially a ledger even if those balances are constrained to be positive. A ledger is almost certainly a better model for thinking about the blockchain than, say, a bunch of people with cash under their mattress.
  - tim333 12y ago
    You could argue MtGox have a liability of quite a few bitcoins.

ChuckMcM 12y ago

If you had a large enough transaction base where you could simultaneously convert in and out of bitcoin chunks such that the transaction didn't suffer f/x creep (or if it did, it was tolerable via transaction costs) that would be a pretty interesting thing indeed.

aburan28 12y ago

There is too much venture capital money behind bitcoin for it to fail. EDIT: Don't underestimate the stubbornness of investors.

abalone 12y ago

The last section on trust & protection cuts to the heart of what it will take for general consumer adoption. But it leaves unstated the fundamental tension: the very nature of bitcoin is that of anonymity and finality. Whereas card and even ACH transfers can be reversed, bitcoin cannot. The essay hints that it will take a central trust provider to regulate and police transactions to control for fraudulent activity. That's true. The key question is whether they'll be able to sustain the promised cost efficiencies of bitcoin by the time they build in this capability. If the technical differences melt away and it just becomes another competitor to Visa/Mastercard, minus the billions of dollars of marketing and POS infrastructure over decades that have gone into cementing that network, then we really have to scrutinize whether "openness" and "unbundling" present a serious enough benefit to warrant the cost of a consumer global payments network rollout. And couldn't a central trust provider work against this openness and unbundling? That's the whole point of a central entity, right?

GmeSalazar 12y ago

Unrelated question: are there any formalization of the Bitcoin protocol out there?

throwaway2274 12y ago

One problem with the current system that the article did not mention is that having a central party handle all the global financial transfers creates a big handle for nation states to put leverage on. We saw this very clearly when the US government put pressure on VISA and mastercard to reject donations going to WikiLeaks. I remember watching that whole episode in disgust. With bitcoin, this is pretty much impossible.

wcummings 12y ago
This is a great example, since iirc Wikileaks started accepting BTC donations shortly thereafter...

jtanner 12y ago

This article is genius, Greg Brockman has figured this out. Does NameCoin have all the needed features to make this happen right now?

jheriko 12y ago

What if banks compete and start providing a reasonable quality of service? It wouldn't be hard.. they just don't bother because there is no return for the investment right now. Bitcoin scares the crap out of me. It looks too much like a criminals dream for me to have any trust in it and the network yet...

billyarzt 12y ago

Potentially dumb question: if there are 21 million bitcoins (and therefore 21 million bitcoin addresses), would that limit bitcoin's efficiency as a medium of exchange? Ie wouldnt there be potentially billions of transaction moving through a financial system powered by bitcoin daily? (Apologies in advance for any flawed assumptions).

nathan7 12y ago
The flawed assumption is "and therefore 21 million Bitcoin addresses". Generate an RSA keypair, and give out the hash of the public key (encoded in a Bitcoin-specific way). Anyone can send you Bitcoins there now.