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> Micropayments. There is simply no other infrastructure that does this as well as Bitcoin does, because processing fees dominate. You mean aside from currency

> Micropayments. There is simply no other infrastructure that does this as well as Bitcoin does, because processing fees dominate. You mean aside from currency conversion fees, the transaction fees (https://blockchain.info/charts/transaction-fees https://blockchain.info/charts/transaction-fees) and the massive $6,000 to $25,000 block reward? If you do the math, bitcoin is easily the most expensive currency to transact in, and least economically efficient currency relative to legitimate economic activity generated.

bdamm 12y ago
Transaction fees are typically less than the equivalent of a penny. If I want to give 100 people each a nickel, how much would that cost in Bitcoin, and how much would that cost in USD via Visa? Hint: You can't even do it over Visa, because the receiver is liable for the transaction fees, which have minimums much higher than a nickel.
- dragontamer 12y ago
  Which is why the article mentions Dwolla as the micropayment structure. Answer to your question btw, is $0 if you give less than $10 to everyone. You can easily send $5 to 5000 different people in Dwolla, since it takes advantage of the ACH system already in place in the US. I think he has a very strong point about micropayments. Afterall, DOGE outcompeted BTC due to those transaction fees and carved out a niche within the alt-coins explicitly because BTC's fees are a bit high IIRC.
IkmoIkmo 12y ago
The costs of bitcoin you describe are systemic costs, not transaction fees. At 0 or 1 trillion transactions, the block rewards would be the same, which means they're not marginal costs, i.e. fees per transaction. They're unrelated. They pertain to money supply, a necessary force to get a currency out into the world. That causes inflation, which is not a direct price people pay (the transaction fees are a direct price, and those are a few pennies). Inflation is an indirect price. But if you look at bitcoin's history, its price is thousands of percent higher than just a few years ago, meaning that the cost is not actually incurred by those who use and transact or receive bitcoin. In the long-run, this inflation will stop, and part of the fees will be covered by a larger amount of transactions that each cost pennies. If 50 million people used bitcoin in a decade, you can still pay pennies per transaction but cut block rewards without a drop in security. If you do the math, bitcoin is easily the cheapest currency to transact in, which is why companies like Bitpesa exist undercutting remittance, and why Bitpay offers a 0% Saas payment processing fee, and why other merchant processors like Coinbase all undercut any creditcard, or Stripe, or Square, or Paypal, and why Paypal, Stripe and Square all have implemented bitcoin options into their services, and why companies like Microsoft accept bitcoin and keep more profits than they otherwise would if they had accepted the payment through e.g. a CC or Paypal.
- random28345 12y ago
  > Bitpesa exist undercutting remittance Bitpesa takes 3%, significantly more than a credit card transaction, and much more than many established low-risk remittance corridors (e.g. Arabian Peninsula -> India/Pakistan, Europe -> Central America, are all under 1%). True, many remittance flows can be 9% or more, but that's because they have significant levels of fraud, and the overhead of KYC regulation. Ignoring fraud and regulations means you can reduce fees, obviously. > merchant processors like Coinbase all undercut any creditcard Coinbase charges 1% to buy, and another 1% to sell, and users are responsible for all bitcoin transaction fees. This revenue means that it can charge nothing for coinbase -> coinbase transfers; however nearly all financial institutions charge nothing for intra-bank transfers. > companies like Microsoft accept bitcoin and keep more profits About 0% of Microsoft's revenues are in Bitcoin, this increases Microsoft profits by about 0%. Accepting Bitcoin is a marketing expense, not about increasing profits.
  - IkmoIkmo 12y ago
    > Bitpesa takes 3% Here's an example of remitting money to Kenya between various services: http://remittanceprices.worldbank.org/en/corridor/Canada/Kenya http://remittanceprices.worldbank.org/en/corridor/Canada/Ken... Bitpesa is a Kenyan remittance company after all. > Coinbase charges 1% to buy, and another 1% to sell Coinbase costs 1% to process, period. It's cheaper for a merchant than the 3% of a CC, Stripe, Paypal, Square etc. If you want to look at the consumer side, that's a different story. You tend to conflate things in your arguments. It's not required to buy from Coinbase to spend at a Coinbase merchant. I've been paid in bitcoin at 0% fees, and I've bought bitcoin at Circle at 0% fees. > About 0% of Microsoft's revenues are in Bitcoin, this increases Microsoft profits by about 0%. Accepting Bitcoin is a marketing expense, not about increasing profits. Stupid. First of all, quote my entire sentence. Secondly, it's easy to show you a ton of examples that were once small, but became significant. The internet was 0% of revenue for many companies once, where it's now extremely significant. It's not an argument to say something is small, therefore lacking any potential to be or become meaningful. One of its core characteristics is that it's cheaper. If you can cut costs as a merchant by 3% by using Bitpay (0% Saas) versus say Stripe (3% ish), that's massive when you have 3% profit margins like most supermarkets, airlines, a lot of retail etc. You can double profits on any sale. Does that mean bitcoin is a massive game changer today? Of course not, but again to ridicule it is as silly as to say the Internet is shit in 1995 because barely any calls, mail, ecommerce, education etc ran on it. Fact is, any sale Microsoft makes with Bitcoin is more profitable than otherwise, and that's not an insignificant fact despite the small scale of bitcoin sales.

bdamm 12y ago

Transaction fees are typically less than the equivalent of a penny. If I want to give 100 people each a nickel, how much would that cost in Bitcoin, and how much would that cost in USD via Visa? Hint: You can't even do it over Visa, because the receiver is liable for the transaction fees, which have minimums much higher than a nickel.

dragontamer 12y ago
Which is why the article mentions Dwolla as the micropayment structure. Answer to your question btw, is $0 if you give less than $10 to everyone. You can easily send $5 to 5000 different people in Dwolla, since it takes advantage of the ACH system already in place in the US. I think he has a very strong point about micropayments. Afterall, DOGE outcompeted BTC due to those transaction fees and carved out a niche within the alt-coins explicitly because BTC's fees are a bit high IIRC.

IkmoIkmo 12y ago

The costs of bitcoin you describe are systemic costs, not transaction fees. At 0 or 1 trillion transactions, the block rewards would be the same, which means they're not marginal costs, i.e. fees per transaction. They're unrelated. They pertain to money supply, a necessary force to get a currency out into the world. That causes inflation, which is not a direct price people pay (the transaction fees are a direct price, and those are a few pennies). Inflation is an indirect price. But if you look at bitcoin's history, its price is thousands of percent higher than just a few years ago, meaning that the cost is not actually incurred by those who use and transact or receive bitcoin. In the long-run, this inflation will stop, and part of the fees will be covered by a larger amount of transactions that each cost pennies. If 50 million people used bitcoin in a decade, you can still pay pennies per transaction but cut block rewards without a drop in security. If you do the math, bitcoin is easily the cheapest currency to transact in, which is why companies like Bitpesa exist undercutting remittance, and why Bitpay offers a 0% Saas payment processing fee, and why other merchant processors like Coinbase all undercut any creditcard, or Stripe, or Square, or Paypal, and why Paypal, Stripe and Square all have implemented bitcoin options into their services, and why companies like Microsoft accept bitcoin and keep more profits than they otherwise would if they had accepted the payment through e.g. a CC or Paypal.

random28345 12y ago
> Bitpesa exist undercutting remittance Bitpesa takes 3%, significantly more than a credit card transaction, and much more than many established low-risk remittance corridors (e.g. Arabian Peninsula -> India/Pakistan, Europe -> Central America, are all under 1%). True, many remittance flows can be 9% or more, but that's because they have significant levels of fraud, and the overhead of KYC regulation. Ignoring fraud and regulations means you can reduce fees, obviously. > merchant processors like Coinbase all undercut any creditcard Coinbase charges 1% to buy, and another 1% to sell, and users are responsible for all bitcoin transaction fees. This revenue means that it can charge nothing for coinbase -> coinbase transfers; however nearly all financial institutions charge nothing for intra-bank transfers. > companies like Microsoft accept bitcoin and keep more profits About 0% of Microsoft's revenues are in Bitcoin, this increases Microsoft profits by about 0%. Accepting Bitcoin is a marketing expense, not about increasing profits.
- IkmoIkmo 12y ago
  > Bitpesa takes 3% Here's an example of remitting money to Kenya between various services: http://remittanceprices.worldbank.org/en/corridor/Canada/Kenya http://remittanceprices.worldbank.org/en/corridor/Canada/Ken... Bitpesa is a Kenyan remittance company after all. > Coinbase charges 1% to buy, and another 1% to sell Coinbase costs 1% to process, period. It's cheaper for a merchant than the 3% of a CC, Stripe, Paypal, Square etc. If you want to look at the consumer side, that's a different story. You tend to conflate things in your arguments. It's not required to buy from Coinbase to spend at a Coinbase merchant. I've been paid in bitcoin at 0% fees, and I've bought bitcoin at Circle at 0% fees. > About 0% of Microsoft's revenues are in Bitcoin, this increases Microsoft profits by about 0%. Accepting Bitcoin is a marketing expense, not about increasing profits. Stupid. First of all, quote my entire sentence. Secondly, it's easy to show you a ton of examples that were once small, but became significant. The internet was 0% of revenue for many companies once, where it's now extremely significant. It's not an argument to say something is small, therefore lacking any potential to be or become meaningful. One of its core characteristics is that it's cheaper. If you can cut costs as a merchant by 3% by using Bitpay (0% Saas) versus say Stripe (3% ish), that's massive when you have 3% profit margins like most supermarkets, airlines, a lot of retail etc. You can double profits on any sale. Does that mean bitcoin is a massive game changer today? Of course not, but again to ridicule it is as silly as to say the Internet is shit in 1995 because barely any calls, mail, ecommerce, education etc ran on it. Fact is, any sale Microsoft makes with Bitcoin is more profitable than otherwise, and that's not an insignificant fact despite the small scale of bitcoin sales.