4 ms·

Right now all other electronic payment networks require the extension of credit somewhere in the system. Credit card companies offload the risk of managing this

Right now all other electronic payment networks require the extension of credit somewhere in the system. Credit card companies offload the risk of managing this to payment gateways, but it is still there. This leads to expensive things like PCI-compliance requirements and chargebacks-for-profit. By eliminating the need for credit, bitcoin eliminates an entire horizontal layer in the payments industry. The first uses are thus obviously biased towards high-risk transactions, but it will be surprising if a lot of high-cost merchants like airlines aren't accepting bitcoin in 2-3 years, if only because 2-3% of a 3000 USD ticket is a lot of cash to pay a middleman if the consumer trusts you enough to handle the transaction directly.

notahacker 12y ago
Credit is a feature rather than a bug in the existing system And Bitcoin actually adds a horizontal layer: the average person needs to go to an exchange to get BTC[1]. Assuming they don't want to wait for the funds to clear, they're relying on credit to obtain the BTC (otherwise they're speculating on the price of an extremely volatile asset whilst they wait, which is hardly an improvement). They then pay the BTC to an entity that almost certainly converts them instantly back to USD via Coinbase/BitPay which again involves the extension of credit and acceptance of counterparty risk. The transaction may well involve more intermediaries than doing it in dollars. Sure, converting between regular currency and BTC currently involves lower spreads/fees than mainstream payment processors. But that's not the magic of the blockchain revolution; that's the exchanges' having an altogether different approach to risk management, regulation and near-term profitability than the mainstream processors [1]Or they could buy ASICs, I suppose, or go work for a funky startup that pays bonuses in BTC. But for everyone else, there's MasterCard
- trevelyan 12y ago
  It is a bug having to ask for permission to collect money electronically. And assuming you get permission, it is a bug to get charged more than a penny or two for having your transaction processed. It's a bug not being able to receive/send cash anonymously, or to be censored because... because... what crime did Wikileaks commit? Credit is a bug if you're an offshore company that can't find a payment processor or has your payments held for three months before release because the War on Terror means offshore companies are now suspect. It's a bug when your business sounds high-risk or illegal but actually isn't. It's a bug because the people who get employed managing this risk don't do a good job themselves and are often complicit in gaming the system. And it is a bug when you're in an industry where credit card fraud is rampant, because now the inability of the industry to handle data security means you pay twice, once when you're ripped-off by the customer and then a second-time when you get ripped-off by your bank with the chargeback. The need for credit is a huge bug in the way it forces companies to be PCI-compliant (why should we be devoting massive economic resources to this?). And it is a bug in that it requires people to have credit cards, which requires them to have credit records, which brings up another set of problems.... Your complaint seems to be mostly that you don't have bitcoin and it would take you a single extra transaction to get it (something already easier than applying for a credit card, and/or paying your bills and frankly getting easier). But if you think bitcoin is more difficult than the alternatives, think as a conceptual exercise of programming a machine to buy and sell things with a credit card and pay its bills automatically. And once the tech is in place, apply for a credit account for the machine....

notahacker 12y ago

Credit is a feature rather than a bug in the existing system And Bitcoin actually adds a horizontal layer: the average person needs to go to an exchange to get BTC[1]. Assuming they don't want to wait for the funds to clear, they're relying on credit to obtain the BTC (otherwise they're speculating on the price of an extremely volatile asset whilst they wait, which is hardly an improvement). They then pay the BTC to an entity that almost certainly converts them instantly back to USD via Coinbase/BitPay which again involves the extension of credit and acceptance of counterparty risk. The transaction may well involve more intermediaries than doing it in dollars. Sure, converting between regular currency and BTC currently involves lower spreads/fees than mainstream payment processors. But that's not the magic of the blockchain revolution; that's the exchanges' having an altogether different approach to risk management, regulation and near-term profitability than the mainstream processors [1]Or they could buy ASICs, I suppose, or go work for a funky startup that pays bonuses in BTC. But for everyone else, there's MasterCard

trevelyan 12y ago
It is a bug having to ask for permission to collect money electronically. And assuming you get permission, it is a bug to get charged more than a penny or two for having your transaction processed. It's a bug not being able to receive/send cash anonymously, or to be censored because... because... what crime did Wikileaks commit? Credit is a bug if you're an offshore company that can't find a payment processor or has your payments held for three months before release because the War on Terror means offshore companies are now suspect. It's a bug when your business sounds high-risk or illegal but actually isn't. It's a bug because the people who get employed managing this risk don't do a good job themselves and are often complicit in gaming the system. And it is a bug when you're in an industry where credit card fraud is rampant, because now the inability of the industry to handle data security means you pay twice, once when you're ripped-off by the customer and then a second-time when you get ripped-off by your bank with the chargeback. The need for credit is a huge bug in the way it forces companies to be PCI-compliant (why should we be devoting massive economic resources to this?). And it is a bug in that it requires people to have credit cards, which requires them to have credit records, which brings up another set of problems.... Your complaint seems to be mostly that you don't have bitcoin and it would take you a single extra transaction to get it (something already easier than applying for a credit card, and/or paying your bills and frankly getting easier). But if you think bitcoin is more difficult than the alternatives, think as a conceptual exercise of programming a machine to buy and sell things with a credit card and pay its bills automatically. And once the tech is in place, apply for a credit account for the machine....