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I strongly disagree. Bitcoin is an improvement for 2 reasons. 1. Fraud come most often from customers (who have nothing to lose), not from merchants (who need
by venaoy 12y ago
I strongly disagree. Bitcoin is an improvement for 2 reasons.
1. Fraud come most often from customers (who have nothing to lose), not from merchants (who need to maintain their reputation). As a matter of fact, fraudulent chargebacks cost more than $11 billion a year: http://www.dailyfinance.com/2014/03/20/friendly-fraud-costs-retailers-billions/ http://www.dailyfinance.com/2014/03/20/friendly-fraud-costs-... This is why merchant love Bitcoin's irreversible transactions. This fact alone cuts down most of the fraud that currently occurs with traditional payment systems.
2. In the extreme minority of cases where a merchant is malicious, credit cards are actually terrible. Handing over all your identity details (CC number, expiration date, CVS number, billing address, etc) allows the merchant to steal your identity and make fraudulent charges. Identity theft costs $25 billion a year: http://www.businessinsider.com/bureau-of-justice-statistics-identity-theft-report-2013-12 http://www.businessinsider.com/bureau-of-justice-statistics-... It is possible but a PITA (and still costly!) to recover from a serious identity theft accident... That's why Bitcoin is an improvement because a transaction authorizes merely a transfer of coins and nothing else, so the malicious merchant cannot cause further damages. On top of that, Bitcoin also allows you to completely get rid of this possibility of even losing coins, via cryptographic escrow systems: two-party trustless escrow (http://blackhalo.info/wp-content/uploads/2014/06/whitepaper_twosided.pdf http://blackhalo.info/wp-content/uploads/2014/06/whitepaper_...), or 3-party escrow but where the escrow does not even has access to the funds (https://bitescrow.org/ https://bitescrow.org/)! All this is completely infeasible with traditional payment systems. Surely, the practicality of such escrow systems will increase overtime. Don't judge Bitcoin based on its current imperfections, but envision what is possible.
- eridius 12y ago> Fraud come most often from customers [...] not from merchants That only works if you're talking about a customer buying something from an established merchant. It doesn't help at all if the merchant is unknown (and therefore has no reputation to protect), or is in fact another person and this is a person-to-person transaction. This problem is why Bitcoin needs escrow services (which most fiat currency transactions don't need), which of course add extra work and fees on top of what should be a straightforward transaction. > Handing over all your identity details [...] allows the merchant to steal your identity and make fraudulent charges. Charges that the credit card company pays, not you.
- venaoy 12y ago> That only works if you're talking about a customer buying something from an established merchant. True. However my point stands: Bitcoin reduces fraud overall, because most transactions happen with reputable merchants. > Charges that the credit card company pays, not you. That's incorrect. In the end it comes from the customer's pocket. Because credit card companies have to have higher CC processing fees to cover higher fraud levels, which indirectly causes merchants to raise their prices. Sometimes it is not obvious (eg. all prices are 1-2% higher in an industry, eg. supermarkets), but sometimes it is more obvious. There is a perfect example from a few weeks ago demonstrating my point: AirBaltic charges a 5.99 EUR fee when processing a CC payment, but not when processing a Bitcoin payment: http://www.coindesk.com/airbaltic-waives-controversial-bitcoin-transaction-fee/ http://www.coindesk.com/airbaltic-waives-controversial-bitco...
- eridius 12y agoThis only works in the utopian world where customers never have a need to issue a chargeback. It's not like chargebacks are some inevitable consequence of the credit card system; they're a feature that the credit card system offers as last resort for payers who cannot resolve their issue with the merchant any other way.