This is great news for Bitcoin. If all it takes is one extra line of code for online retailers to start accepting the currency, widespread adoption could sky rocket. That's always been Bitcoin's crutch, simple integration. Others like Coinbase and Bitpay have made it much easier to accept Bitcoin, but usually more services are required to accept other forms of payment. This simple catch-all solution is a game-changer. Congratulations Stripe.
It can be useful for people who either don't have access to credit cards but have access to bitcoins, people who already have a lot of bitcoins and curious tech people.
To name a few benefits:
- There are no chargebacks
- Funds are available immediately (though transferring from BTC to USD may take a day)
- You can accept payment from anyone anywhere in the world (harder with CC atm)
- Fraud detection isn't as important w/out chargebacks. Granted this is a concern for consumers, which is why they need solid security for their wallets. I think of it like cash transactions. You don't have to worry about someone coming into a store and claiming that someone spent their $5 bill with serial code 123-xyz after stealing it.
This is a huge negative for the customer, though
I had to charge back twice because the seller kept on charging me on the same credit card number! At least with Bitcoin you're only in for whatever you pay.
Yes, just long enough, like Butterfly Labs. (Credit card purchasers: could do a chargeback. Bitcoin purchasers: SOL.)
Chargebacks and reversibility in general are essential to consumers. If shit goes wrong, it's gotta be fixable.
(This is also why nobody actually wants smart contracts. They know that the plot of Dr Strangelove is literally an irreversible smart contract going wrong. Consumers want fixability, business-to-business wants the option of lawyering out of a bad deal. The only people who want smart contracts are the businesses who currently screw over their customers with mandatory arbitration clauses.)
eg I would gladly take a 2% discount with Amazon, as it would save me hundreds over time.
On the other hand, if I were trying out a new SaaS product I would start with a credit card and opt to use BTC once I trusted the company and their product, much like I wouldn't buy a 1 year subscription for a 10% discount without first using the product for a month or two.
"Beginning January 27, 2013, merchants in the United States and U.S. Territories will be permitted to impose a surcharge on consumers when they use a credit card." http://usa.visa.com/personal/get-help/checkout-fees.jsp
It's good that governments still have a bigger stick they can use to beat some sense into corporations.
I'm pressed for time at the moment, so I can't provide a link.
It seems to me like there's three contracts involved: The agreement between merchant/CC, consumer/CC, and consumer/merchant. Since these are all private parties, why does the government even care what contractual arrangements they make among themselves regarding how the form of payment affects how much needs to be paid?
You can say "if you are dressed like a clown today we will give you a 10% discount". Point being that there is nothing to prevent you from giving someone a discount as long as it doesn't break any laws and as long as you are offering it to everyone that falls into the same category (or the discount has been negotiated).
In in the fine print it was clear that offering your customers a cash discount was grounds for immediately canceling your ability to take credit cards. If I recall rightly, I noticed because the store I was at did indeed offer a discount. In practice, I'm sure the store was small enough that VISA didn't care. But for larger operations I'm sure it was a serious threat.
I believe they were eventually sued and lost, but since I rarely see discounts like that, I imagine they have some sort of not-quite-illegal trick, like offering merchants advertising credits based on charged card volume.
Then as a significant proportion of the population (say 20%) starts paying with bitcoin, other online shops like amazon will start seeing that they are saving a LOT by not paying 2% interchange fees to cover bullshit credit card reward programs and fees. And then the number of stores charging an additional credit card levy will increase as shops are not automatically building the credit card fee into the price, and then the number of people being pushed into bitcoin will increase.
The only thing that can stop this is credit card companies effectively lobbying that shops cannot charge more for credit card payments. this has happened historically in some juristictions, but is really pretty hard to justify for any sane reason so will be unlikely to stick.
This will either really marginalise credit card companies significantly, or really force them to put the screws on their interchange fees (and greatly reduce their rewards programs).
In either case, Bitcoin isn't going to take over the world, but whoever can figure out a good way to deal with the problem of how regular people could easily obtain Bitcoin in the first place has a chance to skim some profit in the interim.
This might be a US-centric perspective. In France, to my knowledge, there are no such rewards, and no chargebacks. Still, there are transaction fees, so merchants would have everything to gain by proposing Bitcoin payment and sharing the savings with the customer.
Last time I booked a flight, I did it with Bitcoin via btctrip.com. It worked out a little bit cheaper.
I'd rather have the ability to do chargebacks if something goes wrong.
For example, Amazon has never screwed me on a single purchase. If I have an issue they fix it, which is a large part of why I often pay 5-10% more for products on Amazon.com instead of XYZ.com. Would you use BTC for a 2% discount with sellers like this?
I wouldn't get anywhere near that site.
Why not buy a refillable Visa at a convenience store?
SMBC apparently has them, too.
Cheaper fees (0.5% vs 2.9%) can be potentially passed on to consumers.
The problem with Bitcoin is that it is extreme volatile. So you may gain or lose money. So while a 2.9% free on dollars is fairly predictable, you really don't know what the final "fee" would be on Bitcoin.
> Avoid exchange rate hassles—specify amounts in USD and we’ll send you dollars.
Why should I buy bitcoins for let's say $300 and risk them being worth $200 in a few weeks (which would cost me 33%) instead of keeping my money and paying directly (maybe 3% fees for the seller)?
And if you're already thinking like that, Bitcoin isn't nearly as scary.
That's the past year. The flat blue line around 0% is CAD vs USD. The crazy red line that's all over the place, swinging by as much as 100% in a matter of weeks, is CAD/BTC.
If anonymity is important to you, then you can hold BTC, and pay the volatility cost.
Volatility of Bitcoin prices puts stock market rate fluctuations to shame. Think of it from the market price point of view and from the point of view of an end user, like me - who'll buy Bitcoins (yes, one who didn't win the gold rush lottery or couldn't afford the mean machines or wasn't just aware) to buy a pair of jeans which has its price fixed at, let's say, $59.99 since last 7 months. When I bought the Bitcoins it cost me $1200/b.c, but the next day when I went to buy that jeans with my Bitcoins - or maybe I just wanted to convert it back to dollars, it was at $800/b.c or let's just say $1100/b.c if you find the former rate too far fetched.
Trust me, it just doesn't make any practical financial sense to me and no, I am not in the minority, I am part of the majority. If you say that "Bitcoins were never meant for the majority in the first place" then it's a different story altogether.
Also, if I would have had the 1000s or even 10s or maybe 100s of Bitcoins from the initial gold rush (given I was able to afford an able and mean mining rig) it would have been a different story - I mean my "different" point of view then.
And just to be clear I value my privacy just like I know my affordability and financial limits too.
Since there are more avenues of trade available than say, with cash, laundering and other clever tactics can be used as tools to cover your tracks.
As always, the only way to keep yourself safe is through GOOD OPSEC. Bitcoin is an evolution of the currency concept, a tool for moving and representing wealth; nothing more.
that says nothing for coins mined directly, wjere there is no link to any real world identity held anywhere, just a bitcoin payment address.
Just look at the addresses the stolen bitcoins were sent to.
I was just pointing out that bitcoin is anonymous when used by someone with a brain. (I.e not Ross Ulbricht, who apparently sent money to an assassin from his personal wallet, without using a mixer.)
It's different with something like speech, where we have a rational principle that says "people can speak as a general proxy for hypothetical positions." But you can't make hypothetical purchases, and you can't represent a general population with anonymous purchases. So anonymous purchases don't have a social basis for the same protections.
People need money to speak freely (especially when they are persecuted for it), and those donations should be anonymous.
I think think of far more cases where anonymous transactions are harmful than I can where they are beneficial.
Do you think all free speech should be only with identified speakers? How would you feel if your entire spending history was in the public domain?
In most of your examples, you can easily pay with cash, which is anonymous.
I wouldn't care if my spending history were public, but that's obviously not relevant. I don't believe spending should be anonymous. I don't believe people should be allowed to make any purchase they desire without penalty. I do believe people should be able to speak without penalty, as people are better able to ignore bad words than they are bad money. Money corrupts people far more effectively and quickly than speech.
>It's not illegal per se to donate to wikileaks, but you may be put on a list somewhere.
So? You're already on a list somewhere. Are you arguing that you have a right not to be on lists, and that this has anything to do with currency?
>In most of your examples, you can easily pay with cash, which is anonymous.
No, not "easily." You have to go to a bank and sit in front of their cameras while they hand you money. That's not the same as anonymous internet transactions. And the person you are giving money to will see you hand it to them, unless you jump through some hoops. And jumping through hoops is shady when you're doing something illegal. And someone cannot steal your cash without being physically present, and thus requiring knowledge of your location and opportunity to leave a trail of evidence.
I mean, if it were so easy to pay cash, what value does bitcoin even bring to the table? Why are all these bitcoin advocates not just using cash, if they are so similar?
Look at Tor. It's never been broken by tracing back each relay, even though there are usually only 3. All the hacks were vulnerabilities in other things, like browsers or websites.
In the end the process of money laundering ends up being significantly more complicated than with "real money".
Don't go and compare Tor to BTC, just don't. They share nothing from a technical PoV.
The comparison of Tor to BTC was mainly comparing mixers to relays. Just like you need every relay to store logs if you're going to go after all of them to break the chain, the same holds true by mixers.
Exchanges will most definitely be storing logs, so that won't help much.
Comparing mixers to relays isn't valid either, with BTC the attacker will have access to the blockchain, which is basically the worst possible attack scenario for Tor.
And in any case, there isn't enough BTC transaction volume to reliably hide large amounts of BTC.
Sometimes, just a cell-phone camera.
Most e-commerce stores have access to a printer.
That's one of the main points about bitcoin for me. As a tool for privacy. On the surface it may seem trivial, and corporations living off mining your information will always try to pretend it's not even an issue by simply avoiding mentioning it. While at the same time push for their payment solutions as either compulsory or cheaper ("soft pressure"). But make no mistake, this is one of the most effective tools for mining your data reliably and the likes of Google, Facebook, Amazon, etc are just not going to give up on it easily. Authorities also won't give up on "follow the money" as a tool, or even snooping and hacking into your communications legally or not, inside of their jurisdiction or not. It's basically no rules for some, all the rules for you.
This is the entire value of bitcoin in my opinion for the average CC holder in the US. I simply don't trust people with my details. It seems like I get a new CC every few months because of some data breach, which entails me having to change any subscription services etc. Anon transactions may be a big point for some, but you are entirely correct when I will more than likely be providing my address to people who I pay with bitcoin. However, they won't have my CC details. I think it will be a better "payment buffer" than paypal. Hopefully cheaper also.
When my CC data is stolen, criminals everywhere have access to my current personal information, often even address, phone, picture. I cannot possibly undo that damage. Losing a regular payment for me is NOTHING compared to that. Just having Google have all that next to other data mined about me from people using gmail accounts to mail me etc, it's massive. I just do not trust corporations to deal with my personal data so I take at least a modicum of measures against these dangers. By simply paying through CC you are giving everything away in one swoop.
I've had my credit card "scammed" several times and I just fill in a piece of paper and the bank refunds me the money and each time it's cost me exactly zero euros.
I've used Bitcoin a few times and love how it works, but my lack of understanding of the security precautions required to handle hot & cold wallets + the volatility of it makes me just averse to it. I prefer my credit card getting scammed anytime to the uncertainty of what will happen if I convert a large amount of euro to btc.
Also, while we're talking about price, people sometimes conflate bitcoin transaction volume with bitcoin price, forgetting that for every buyer there is a seller. As a means of transacting, bitcoin is great, especially for small amount or across borders. It makes no difference what the price of bitcoin is as long as the buyer and seller are immediately converting out of bitcoin and into their local currencies - and that has no long term impact on price.
Unless of course many people notice rising transaction volume, confuse the trend, and then invest in bitcoin, which then becomes a self-fulfilling prophecy.
"bitcoin transaction volume" is worthless. Anyone could easily make a new record in btc txs for a thousand dollars. If I send money to myself, it counts as a tx.
The real concern with bitcoin is that it can only support 3 transactions a second with the current codebase. Gavin wants to fork it to get rid of the block size limit, but there's been opposition.
* Today's bitcoin / USD High/Low trading price shows a swing of a bit more than 3%
* Today's Argentine Peso (ARS) / USD High/Low trading price shows a swing of 0.1% (Argentina being a country with high inflation problems)
If I were to work in Argentina I would rather get paid in BTC than ARS, due to liquidity constrains. I would probably convert most of the money to USD, EUR o CHF, but I would keep some bitcoin if I had where to spend them.
I believe you are looking at the official rate.
Having said that, even if I was Argentinian I wouldn't hold any significant wealth in Bitcoin.
Do you mean like a currency that was worth $650 against the US dollar a year ago, and today is worth $250 against the US dollar? That kind of stability?
Look at the Argentinian Peso, it has lost almost 90% of its value against the USD since 2001. http://finance.yahoo.com/echarts?s=USDARS%3DX+Interactive#%7...
Even the most mismanaged government manages its currency. No one is managing bitcoin, it's price reflects the volatile market whims of a cryptocurrency backed by nothing but computation and beset by fraud. The volatility is not going away.
Lets say you work from Argentina for a company abroad. You have three options to get paid:
1. Wire transfer, the compay send you dollars or euro and you get pesos at the oficial rate.
2. There is always people trying to pay things outside, you can give him your dollars outside in exchange of dollars inside arg por pesos at the blue rate.
3. Buy bitcoins outside sell inside.
1. You lost 30% exchange rate, you will not be able, to buy dollars back at the oficial rate.
2. Is 3%
3. Is 10%
Since 2 and 3, are not 100% legal, you will have problems buying things since you cant justify your income.
>Even the most mismanaged government manages its currency.
Governments don't manage currencies.
>No one is managing bitcoin,
No one managed gold when all currencies were gold backed and it did not see bitcoin's price volatility.
>it's price reflects the volatile market whims of a cryptocurrency backed by nothing but computation and beset by fraud.
No, its price reflects the low volume.
>The volatility is not going away.
Nobody can predict the future.
You might want to read up on Central Banks. 
>As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.
> However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve's activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as "independent within the government" rather than "independent of government."
The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation's central banking system, are organized similarly to private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
There was a case where a money transfer was seized between two european countries over Cuban cigars because at the time, the US had a trade embargo against Cuba.
Why shouldn't you invest in Bitcoin for savings? Look at a one month chart. Or look at a three month chart. Or look at a one year chart. Or look at a chart from the beginning of bitcoin and ask yourself: "is this what I want the value of every dollar in my savings to be worth?
(By dollars directly, I assume you mean by credit card or paypal.)
Credit cards and paypal come with the ability to do chargebacks which are useful if you don't fully trust whoever you're paying, but credit card companies and paypal are middlemen who must be trusted too. If I trust the company I'm giving money to more than I trust paypal to not fuck up or delay the transaction, then I'll immediately choose to use Bitcoin.
Also Stripe is now the middleman. I'm not giving BTC to a merchant, I'm giving it to stripe to give to the merchant. That's good also, because I trust stripe more than merchant XYZ.
Credit card transactions take something like 180 days to confirm. Within those 180 days one can issue a chargeback.
Bitcoin transactions take ~10-60 minutes (depending on the required number of confirmations) and cannot be clawed back.
I still don't understand what I'm missing out on by spending read USD directly.
I legitimately wanted to use my Canadian credit card to buy something in the US and have it shipped to me in Vietnam but the merchant naturally was unwilling to take on the chargeback risk and I was unable to complete the purchase.
Western Union is also expensive and inconvenient (although somewhat less so than the bank).
Where do you live?
This seems to be the norm in most of Europe. AFAIK the big US banks let you do wire transfers online too.
Additionally, those with the least access to modern banking facilities probably don't have the best access to facilities for efficiently making use of bitcoins, either.
You mean it isn't a fiat currency. All that means is that Bitcoin's value isn't backed by a government, but is instead derived purely from the ability for someone to spend it.
> If it was a currency, if $1 USD was paid for a Bitcoin, that USD would be destroyed, not pocketed.
What? Since when? If you spend USD to buy EUR, the person on the other side of the transaction is giving you EUR and pocketing the USD. No value is destroyed.
Re: USD for EUR - As you mentioned above those are at set rates between fiat currencies, and therefore there is practical reasons for the currency having a value. Bitcoin's value is mostly dependant on demand, which is being pumped up and perpetuated by investors and those with vested interest in the ecosystem including those who own Bitcoin and larger amounts of Bitcoin - who all want the value to go up 10x - 100x.
> Bitcoin's value is mostly dependant on demand, which is being pumped up and perpetuated by investors and those with vested interest in the ecosystem including those who own Bitcoin and larger amounts of Bitcoin - who all want the value to go up 10x - 100x.
You're absolutely right: since Bitcoins aren't backed by anything real, their value is purely based on demand. But I disagree with the notion that speculation is the only reason they have any demand. Plenty of people are using Bitcoin in the real world, e.g. to make purchases anonymously or to easily send money overseas.
The special Bitcoin usage of "fiat" stems from goldbug pamphlets from a century ago. But it is a misuse of the word.
People with the mindset of "USD government printing money => value of USD goes down" have been predicting QE-based inflation for years, and they were wrong. When you drop this incorrect mindset and adopt the correct one (supply and demand!) it's easy to see why: QE did not make people richer, so it did not lead to the kind of significant increase of demand that would be required to trigger a rise in inflation.
so the first thing you say, about the US government printing money and the existing money becoming worth less, this is known as inflation.
Yes mining bitcoin is similar to printing money, however you cannot 'print' bitcoin infinitely as you can with US dollars. This is why bitcoin is known as a deflationary currency and many people think this is a negative aspect to its adoption, but if there was no artificial scarcity i.e you could make as many bitcoins as you wanted when you wanted then there would be no value to them whatsoever.
>currency gets destroyed buy (sic) governments
Do you mean by inflation or do you mean they are putting it all in a furnace somewhere?
They destroy old used notes yes, but that doesnt take it out of circulation. if they burn $100million then they have $100million in fresh notes to go back out into circulation. That money comes from banks, those banks are holding it as deposits for customers. If the government 'destroyed' it then those people would not have any money in their bank accounts.
Far from destroying money or removing it from circulation many governments have been printing money like nobodys business over the last half a decade. Google Quantitive Easing to see the offical description of it and what they hope to achieve as a result.
The problems with Bitcoin are almost entirely on the acquiring -side and not spending side. Getting a Bitcoin is a PITA and I don't think the demand from most consumers is there to overcome the pain.
The game-changer for Bitcoin will be when someone answers the question: "Why should I switch from paying with my credit card to Bitcoin?" with something compelling.
The main thing holding Bitcoin from being adopted more broadly today is that many consumers who are aware of it don't think it will be adopted more broadly!
Even in the HN community (which has a high concentration of early adopters of new technology), there are a lot of folks who don't think it will be adopted more broadly, as evidenced by the comments on this thread.
There are a large number of people living in China who would like to get around the nation's currency controls. There are a large number of people living in Russia that want to move money without being tracked. There are a large number of people living in Latin America who want to avoid taxes in their own countries. This is what drives the use of Bitcoin. The only large scale need for Bitcoin is criminal activity, in China, Russia, Latin America and elsewhere.
Currency regulated by the government is a classic "good enough" product. It might lack some features that would be nice, but 99% of the public doesn't seem to care. Rather, they want more money, but they don't want to change money. If they had real doubts about the currency, they would dump it in exchange for real goods. But instead, most people work hard to acquire more money, and they show no real concern with the standard proxies for currency (credit cards, checks, etc).
Example #1: some merchants are hit really hard with fraud, such as intangible goods paid by international credit card transactions. So hard that they decided to stop selling internationally. These merchants discover that Bitcoin re-enables them to sell internationally because Bitcoin completely solves the fraud problem for them (since transactions are irreversible). In that case, as an international customer of such a merchant, paying in Bitcoin is your only option.
Example #2: some merchants offer discounts when paying in Bitcoin (because they don't incur credit card fees). So it is in your interest to pay in Bitcoin: you don't have to pay the fees from exchanging coins for fiat, and you don't have to pay the indirect credit card fees that the merchant would make you cover (via the absence of a discount).
Example #3: as Bicoin's adoption grows, more and more people end up having bitcoins in their hands, like your nephew giving you $50 worth of coins for Christmas. What's the easiest for you to use them? Setting up an account at an exchange (and incurring the associated hassles and fees when selling), or just spending them directly? Of course in this case you would want to spend them directly.
Example #4: say you are travelling out of town and paying for a meal in a restaurant that you suspect might be skimming credit cards... do you pay using a credit card or bitcoins? Using Bitcoin here would be much safer. It has all the advantages of credit cards (and more) without the inconvenience and danger of handling cash (losing it, getting robbed, no ability to "back up" cash, etc). Hardware bitcoin wallets have especially an insane opportunity to innovate in this space (wrt. security and ease of use).
For example 1, it's a double edged sword. As a seller, no international chargebacks sounds like a wet dream! As a buyer, why would I use bitcoin internationally when I can't reverse my transaction if they don't deliver?
Example 2 seems legit for now. If and when bitcoin becomes more mainstream, you'll see an increased transactional cost from overhead and risk mitigation, so the transactional savings will probably not always be there.
Since we don't gift each other bitcoins, Example 3 isn't a problem.
Example 4 is laughable because in the last week, four Bitcoin exchanges were hacked (or robbed by the owners - still TBD) and people who had their coins in those exchanges lost it all.
Skimming CC numbers is for sure an issue for credit cards, but as someone who has had their credit card skimmed, my issuer locked my account within 2 hours of fraudulent activity, called me, and eventually gave me my money back. How many Mt. Gox users got their money back?
these are not the same situation and I think it is disingenous to act like it is.
A comparable situation is that when you had your card skimmed and locked up you had to go say 3 days without access to your funds until a new card turned up, and again lets be charitable and say your bank refunded you within 2 weeks. so you were inconvenienced for 3 days and out of pocket for 14 days. if you paid with bitcoin you would not be locked out of your wallet or at risk of further loss, or need to call your bank. now when you scale that up to something like the recent hack at target that resulted in 1000's of stolen CC details along with personal info resulting in a lot of potential for identity theft and CC fraud. If those buyer had all paid in BTC there would be no theft or fraud possible, no need to try and attack the organisation as list of BTC addresses and customer names and addresses are of no use. they may seek to steal the companies bitcoins but securing properly one small area of your network is much easier than securing a huge sprawling network that covers a whole host of functions, where sensitive data is liberally spread around, making for a lot of vectors of attack.
Now Mt Gox is comparable to the Bernie Madoff Ponzi scheme, do you know how many of those investors got their money back?
Also, the term ponzi scheme get's used a lot in discussion about bitcoin, but many people do not know that it is a very specific type of scam. There have even been actual ponzi schemes involving bitcoins (not Mt. Gox). The people scammed in those were not insured because it was an investment, just as the people involved in the Maddoff scam were not insured. That is why it's disingenuous.
Insolvency wasn't the question.
However, comparing them as a whole is disingenuous. MtGox had a legitimate business plan, but screwed up by letting their Bitcoins get stolen. Madoff planned to defraud his investors from the start.
Sometimes reversibility just doesn't matter. The merchant might be 100% trustworthy (like Amazon). Or as another example I once rented a VPS for a month from Russia. I paid in bitcoins because it was $3 or $4 so I simply didn't care if the VPS provider didn't deliver (submitting a chargeback request for such a low amount is not worth my time), but at the same time I didn't fully trust the merchant with my credit card info (how securely do they protect/encrypt it? could they be hacked? etc).
> Since we don't gift each other bitcoins, Example 3 isn't a problem.
You completely avoided the main point of my example #3. And that's very stupid for you to say this. I gave some to my family, I could say this proves you wrong. Even Coinbase set up a page to give bitcoins last Christmas because it's common for enthusiasts to give some to friends & family: http://blog.coinbase.com/post/105032873402/give-the-gift-of-...
> Example 4 is laughable because in the last week, four Bitcoin exchanges were hacked (or robbed by the owners - still TBD) and people who had their coins in those exchanges lost it all.
This is completely irrelevant to example #4. My point was that a Bitcoin transaction cryptographically authorizes only the transfer of a specific amount to a specific address, and nothing else. In contrast a CC transaction lets a fraudulent merchant place any charge for any amount at any time. This is a substantial undeniable security advantage that Bitcoin has over credit cards.
> Skimming CC numbers is for sure an issue for credit cards, but as someone who has had their credit card skimmed, my issuer locked my account within 2 hours of fraudulent activity, called me, and eventually gave me my money back.
You were lucky. But your cute story doesn't mean credit card fraud is a solved problem. In many cases the customer has NO RECOURSE for fraud. For example you cannot chargeback a transaction made more than 60 days ago. Some fraudulent merchants pretend to act legitimately but stall shipping (eg. claim delays, issues, etc) for 60 days specifically to exploit this fact and exploit the fact customers don't know about this condition. Or if your PIN code is stolen and a fraudulent transaction is made with the PIN code, you will typically be held liable (check your credit card issuer's fine print, for example: http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...)
> How many Mt. Gox users got their money back?
Give your money to a fraudster and he will run away with it, no matter if its bitcoins or dollars. How much money was permanently lost to the Bernard Madoff ponzi scheme?
The point for #3 is that "How can I use these bitcoins I've been gifted?" is not a real problem for the majority of people. It's a solution to a problem that many don't have.
I'm glad you found my story cute, but fail to see how pointing out imperfections in credit card insurance policies is supporting bitcoin, because bitcoin doesn't fill those imperfections. In fact, even with imperfections, using credit cards are still better than getting my account hacked on a bitcoin exchange.
Bitcoin transactions are also not immediate as you say they are. The entire world's supply of bitcoin is limited to 2.7 transactions a second, meaning if 10 million people used bitcoin, they would only be able to do 1 transaction every 43 days .
I'm not even going to go into why you would compare Mt. Gox to Madoff. Madoff is an uninsured investor and in prison, Mt. Gox is an exchange and the thieves are where?
> Spinning a lack of reversible transactions as being a "Benefit" is disingenuous
I argue, through my examples, that reversibility is often not as important as you may think. Another data point: I am a typical American consumer and in 20 years doing probably 5,000+ credit card transactions I have never had to issue a single chargeback at all. So I know for a fact that I would be willing to use Bitcoin for its advantages. Hell, credit card fees which are passed to customers by inflating prices by ~2% probably indirectly cost me north of $20,000 over my 20 years of use. I could have saved $20,000 and I would have been totally fine with the lack of reversibility of Bitcoin. Even if I end up being scammed one day by a non-reversible $1000 Bitcoin transaction, I would still be $19,000 financially ahead with Bitcoin.
> I'm glad you found my story cute, but fail to see how pointing out imperfections in credit card insurance policies is supporting bitcoin, because bitcoin doesn't fill those imperfections
I point out imperfections to show you that even an imperfect system such as credit cards manage to be reasonably successful. So Bitcoin is not perfect either but, similarly, this should not prevent it from being reasonably successful.
> getting my account hacked on a bitcoin exchange
Bitcoin hardware wallets have a huge potential to significantly increase security for consumers.
> The entire world's supply of bitcoin is limited to 2.7 transactions a second
Why do you present this as being a sort of fatal flaw? It's not. A block size increase will solve this. It was not done yet because it's not a problem yet: the average block size is currently still far below the 1MB limit.
> I'm not even going to go into why you would compare Mt. Gox to Madoff. Madoff is an uninsured investor and in prison, Mt. Gox is an exchange and the thieves are where?
I compare the two because both cases are a result of fraud and both cases were/are being investigated by authorities. (MtGox was not robbed, Mark Karpeles committed fraud -- see the willy report -- as a result Karpeles is currently under investigation by the Japanese authorities). You seem to be under the impression the government and authorities are ignoring Bitcoin fraud. They are not. In the US for example the S.E.C. recently prosecuted a Bitcoin ponzi scheme operator: http://www.sec.gov/News/PressRelease/Detail/PressRelease/137...
Pointing out imperfections in credit card insurance doesn't mean bitcoin will work. I'm sorry but even you have to realize this is not even a logical point you're making.
Again, you completely missed the purpose of insurance. If your bitcoin hardware wallet is stolen, does it have insurance? Was any of the 4 exchanges hacked last week or Mt. Gox insured as your bank and payment processors are? Mt. Gox was not a ponzi scheme because it is not an investor - stop comparing it to one.
>Why do you present 2.7 transactions a second as being a sort of fatal flaw?
Because it is?
Block size can't be increased because bitcoin is decentralized. Each miner, merchant, etc. are rational actors looking out for their own profit, and can't come to the required consensus on any changes (hence how centralized agnostic monetary controls work). It's one of the reasons other cryptocurrencies, with higher xfer rates, have a competitive edge on bitcoin.
Bitcoin can not support more than a couple million users. Is this really news to you? Full disclaimer please: How much have you invested into bitcoin?
There is nothing inherent to Bitcoin that prevents an exchange from being operated responsibly and covered/insured just as well as traditional financial institutions.
> Block size can't be increased because bitcoin is decentralized.
It is not trivial, but it can be increased. What you don't understand is that all the merchants all the institutions all the individuals utilizing Bitcoins rely on its proper operation to benefit from it. If they more or less all agree that raising the block size is the obvious way to scale up, then they will agree to raise it.
> Bitcoin can not support more than a couple million users.
False. If the block size is increased, it can scale: https://en.bitcoin.it/wiki/Scalability
I invested $0 in Bitcoin. But a coworker gave me 500 BTC for free in 2010 (I never sold any).
Because it's decentralized, Bitcoin suffers from Tragedy of the Commons. The miners, merchants, etc. are all rational actors looking to profit for themselves, even at each other's expense, which is why bitcoin can't get a census to upgrade. You may wish that they will come together under the banner of bitcoin benevolence, but they can't because they're too busy trying to make money off of each other and have competitive alternatives available.
You can't hand wave and say at some point in the far future someone will solve these very real problems for bitcoin, because some very basic economic principles are stopping it right now. Considering you haven't even made a single bitcoin transaction, and didn't even know about the limits until today, you're not really qualified to comment on it.
It's not a technical problem, but a problem with the design and the users - which was exactly what OP's point was to begin with.
> why bitcoin can't get a census to upgrade
You say it can't be done but it has been done. Multiple times. You should read and learn from Bitcoin history. Bugs and limitations have caused the block chain to fork multiple times. Yet every single time the Bitcoin users have been able to reach a consensus about which software upgrade / software fix to follow: March 2013 fork due to BDB vs LevelDB, August 2010 due to an integer overflow, etc. It is very clear that when everybody will see their transactions never confirming because all blocks top out at the 1MB limit that everybody will want to upgrade the limit. People won't be stupid, sit there and do nothing, and watch Bitcoin die.
> Considering you haven't even made a single bitcoin transaction, and didn't even know about the limits until today, you're not really qualified to comment on it.
Huh? I never sold coins but I have made a few dozens transactions, since 2010. And I know very well the 1MB block limit.
Anyway when you start using personal attacks (accusing my competence) instead of using technical arguments, it is clear you are running out of logical arguments in this debate...
The only major fork that was adopted was because it was a critical bug that split half the network, and the entire network was shutdown in early 2013. This caused even more volatility as people sold. Honest question: Are they shutting down the network to force every enhancement, every change to policy? That's not a feature for a cryptocurrency, or even a currency.
This is just one of the real technical limitations, and even so, bitcoin is more than just a technology. As a decentralized network, the decision making power is distributed across it's many parts, which includes the users who employ it. Your insistence that we only discuss the technical limitations of bitcoin belies textbook confirmation bias.
Your credibility comes into question with your stubbornness in ignoring how currencies and payment processors work, and your No-True-Scotsman fallacy approach to twisting hypotheticals support bitcoin.
It's clear you have confirmation bias even now, and yes, ad hominem is appropriate when you yourself have demonstrated that you are fallacious.
This statement is correct. But do we need insurance on negligence? No. The cash you carry in your pocket is not covered by insurance yet it doesn't prevent it from being reasonably useful/successful. I make the comparison to let you understand Bitcoin doesn't need insurance against negligence to be reasonably useful/successful.
> the entire network was shutdown in early 2013.
No it was not. The correct forked path of the block chain never stopped running during this incident. That's how a fork is always resolved: one path dies, the other continues to live undisturbed.
> Are they shutting down the network to force every enhancement,
No. There is a process to introduce changes without disrupting the network at all: https://en.bitcoin.it/wiki/Softfork This is how P2SH was added with zero disruption to the network.
> Your insistence that we only discuss the technical
You misunderstood me. It is of course OK to discuss other aspects: social, financial, etc. I was merely pointing out you should drop the personal attacks, as they make you look childish and as they degrade the quality of your comments.
> your stubbornness in ignoring how currencies and payment processors work...
Once again I don't want to ignore this. So far I have replied to all your arguments with logical counter-arguments. Let's keep the discussion civil.
If this is a real use case (and frankly how often do you want to pay for something that you don't care whether you'll actually get?) you can buy a prepaid credit card (over the internet, from a reputable provider, using your normal credit card) and use that. No reason that couldn't be smoothly automated (indeed I believe some bank accounts will already let you generate an additional card number with a limited amount of funds). I suspect there's just very little demand for it.
> I didn't fully trust the merchant with my credit card info (how securely do they protect/encrypt it? could they be hacked? etc).
Your bank covers you if they are though.
> You completely avoided the main point of my example #3.
If people use bitcoin then people will use bitcoin sure. But that applies to any tradeable object. If enough people start giving each other baseball cards at christmas then people will start paying with baseball cards. What's the specific advantage that would make people want to give bitcoin?
> your cute story doesn't mean credit card fraud is a solved problem. In many cases the customer has NO RECOURSE for fraud. For example you cannot chargeback a transaction made more than 60 days ago. Some fraudulent merchants pretend to act legitimately but stall shipping (eg. claim delays, issues, etc) for 60 days specifically to exploit this fact
Most reputable card issuers will cover you for longer than the contract says. And even if not, 60 days of cover is still much better than the 0 days you get with bitcoin.
> Or if your PIN code is stolen and a fraudulent transaction is made with the PIN code, you will typically be held liable
Again, you're contractually liable but in practice reputable banks cover you at least the first time. Whereas if your bitcoin private keys are stolen, the money is gone and you'll never get it back.
> Give your money to a fraudster and he will run away with it, no matter if its bitcoins or dollars.
What's the non-fraudster option with bitcoin? Who's offering FDIC-protected bitcoin accounts?
It is not that I don't care, but I estimate the probability the merchant is fraudulent is low enough that I don't feel the need to absolutely have the protection of the chargeback mechanism. I think this is true for the majority of the cases: MOST merchants are honest, MOST disputes can be resolved without chargebacks.
> Your bank covers you if they are though.
But it can be a real pain in the butt. I had to have a credit card replaced because the number and billing info of the previous one was stolen. I had to wait days to receive the new credit card. I had to re-set up all the bills I had set up to be automatically paid with the previous card to now be paid by the new card, etc.
> What's the specific advantage that would make people want to give bitcoin?
Bitcoin enthusiasts like to spread the technology, so they give bitcoins away to friends and family. But that's not my main point. My main point is that as Bitcoin is used more and more, it ends up in the hands of more and more people. This gives it organic growth: it gets more accepted, it is more transacted, it gains more value, etc.
> Most reputable card issuers will cover you for longer than the contract says. And even if not, 60 days of cover is still much better than the 0 days you get with bitcoin.
Still, some fraud scenarios are completely eliminated with Bitcoin. I pay a fraudulent restaurant with a CC that gets skimmed, I get to deal with the hassles of having to have the card replaced, potentially having my credit score damaged, etc. I pay a fraudulent restaurant with bitcoins, I know the restaurant can do nothing to steal the bitcoins remaining in my wallet.
Or I pay Dell with bitcoins instead of a credit card, and I don't have to care if their systems get hacked and my CC number stolen.
> Again, you're contractually liable but in practice reputable banks cover you at least the first time. Whereas if your bitcoin private keys are stolen, the money is gone and you'll never get it back.
Private keys can be very well protected and almost impossible to steal if you use a hardware wallet. And Bitcoin completely eliminates other fraud risks (see my examples above). So overall the tradeoffs of Bitcoin are worthwhile.
> Who's offering FDIC-protected bitcoin accounts?
Every day, millions of Americans use financial instruments that are not FDIC insured, yet that doesn't prevent the success of such instruments:
That may be a problem with the current implementation, but it doesn't have to be. There's no reason your credit card couldn't be e.g. loaded onto your phone, using NFC to talk to a reader, and then it could be updated instantly if need be.
> I had to re-set up all the bills I had set up to be automatically paid with the previous card to now be paid by the new card, etc.
The only reason this isn't a problem for Bitcoin is that you can't set up bill payments in Bitcoin at all.
> Still, some fraud scenarios are completely eliminated with Bitcoin. I pay a fraudulent restaurant with a CC that gets skimmed, I get to deal with the hassles of having to have the card replaced, potentially having my credit score damaged, etc. I pay a fraudulent restaurant with bitcoins, I know the restaurant can do nothing to steal the bitcoins remaining in my wallet.
It works for a restaurant but that's a very special case - you pay after you already know that what you got was right. More often you're buying something where you won't realise if it's broken until you get it home, in which case much more serious fraud is possible with bitcoin than with credit cards. And even the restaurant case is not a compelling advantage for bitcoin - if your credit card gets skimmed the worst case is really not very bad.
> Private keys can be very well protected and almost impossible to steal
Sure. But the kind of person who gets their credit card PIN stolen (which is what we were comparing to) isn't going to have a well-protected private key.
> Every day, millions of Americans use financial instruments that are not FDIC insured
Sure. But almost everyone gets an FDIC-insured account as a backstop before getting any of those other instruments. And it's convenient to have all your accounts in the same currency.
> That may be a problem with the current implementation, but it doesn't have to be
I agree. But I highlighted this to show you that credit cards have kinks, as currently implemented, yet are reasonably successful/useful. Therefore for the same reason Bitcoin doesn't have to be perfect to be reasonably successful/useful.
> The only reason this isn't a problem for Bitcoin is that you can't set up bill payments in Bitcoin at all.
Yes it is possible. Some hosted wallets let you set up recurring payments. This is awesome because unlike credit cards, you don't have to give the merchant authorization to debit your money, but you give this authorization only to the wallet hoster. This gives the merchant zero chances to screw you up (eg. continuing to debit your card when you want it to stop, or setting up a recurring payment disclosed in the fine print when you think you are authorizing a one-time payment.)
> It works for a restaurant but that's a very special case
This scenario covers literally ALL in-person transactions. Hardly a "very special case".
> But the kind of person who gets their credit card PIN stolen (which is what we were comparing to) isn't going to have a well-protected private key.
No we were comparing typical users. A security conscious credit card user can STILL get his number stolen and money stolen (eg. a merchant gets hacked). Whereas a security conscious Bitcoin user using a hardware wallet is virtually impervious to being attacked (only highly sophisticated hacks like stealing the hardware wallet and decaping the secure chip to steal the private keys without knowing the PIN).
Some users are so bad with security and detecting scams that they will always get their money stolen (regardless if they use credit cards or bitcoins).
I think there's an at-the-margin effect here. The threat of chargebacks makes actual chargebacks usually unnecessary. Just like having an army can be very valuable even if you only go to war rarely.
> Yes it is possible. Some hosted wallets let you set up recurring payments. This is awesome because unlike credit cards, you don't have to give the merchant authorization to debit your money, but you give this authorization only to the wallet hoster.
With a bank account you can do this as a "standing order". It's safer than most of the bill-payment methods. And surprisingly useless, because most of the time you want to pay a bill that can vary, so you need to give the merchant authorization to tell them how much you need to pay them.
> setting up a recurring payment disclosed in the fine print when you think you are authorizing a one-time payment.
Something you can only stop by making setting up payments less convenient. If bitcoin takes off, it will need a system for seamlessly setting up recurring payments from a website that wants to - and the exact same scams will apply.
> This scenario covers literally ALL in-person transactions. Hardly a "very special case".
No, it only covers cases where you pay after using the thing you bought. If I buy a TV with a credit card, take it home, plug it in and find out it doesn't work, I can if need be make a chargeback; with bitcoin I'm stuffed.
> No we were comparing typical users. A security conscious credit card user can STILL get his number stolen and money stolen (eg. a merchant gets hacked).
If they're security-conscious enough to not get their PIN stolen, then they can't lose any money.
I didn't even think of it until your post, yet I was still involved in this not five hours ago. When you look back, it's surprising the amount of artificial shit we have to sift through with CCs.
Your mom probably didn't push for the adoption of email yet here it is (sorry usps). The advantages of faster cheaper easier don't require much convincing, especially in the case of money/contracts/assets.
The idea that people will adopt antiquated technologies when better alternatives exist is paradoxical, which makes your analogy especially confusing. Government currency is the antiquated technology, not bitcoin.
For those remittance services you point to, they need market depth in order to operate. Sure the underground market can provide some, but merchant adoption sure isn't going to hurt.
cost: bitcoin miners must spend enormous amounts of energy in an inefficient process in order to keep the network running. Right now, most of the mining costs are covered by the bitcoin bounty that is awarded to miners that successfully mine a block but this reward decreases with time and eventually and transaction fees will have to increase to compensate.
The bitcoin can be moved again (spent by the receiver) after 10 minutes. Try that with money you received by a credit card payment.
This really is the fundamental difference of bitcoin- once the money has moved, it's really moved. It takes some time and thinking to appreciate how that opens things up quite a bit.
In a spherical-cow sense bitcoin is better. In practice, if I'm paying with amex I tap my card on the reader and the waitress hands me the cup of coffee in seconds; if I'm paying with bitcoin I'm standing there for half an hour.
> The bitcoin can be moved again (spent by the receiver) after 10 minutes. Try that with money you received by a credit card payment.
If a friend's sending me money it's by "faster payment"; theoretically it can take up to 2 hours (similar to bitcoin's max times), in practice it's a couple of minutes. My bank's happy for me to "spend it instantly" in terms of not charging me an overdraft fee (in fact I can spend it before I get it, as long as I put the money in by the end of the day), so I have GBP1500 (let's call it $2500) of float.
There are edge cases where this doesn't work - more than $2500, or paying internationally over the internet. But they really are edge cases; the problems bitcoin solves are problems I've never had, and I suspect that's true for the vast majority of "normal people".
This is a myth. Once the transaction has propagated through the network, it's pretty difficult to double-spend, even with zero confirmations. So difficult, in fact, that payment processors like Stripe/Coinbase/BitPay will completely absorb that risk for you and consider the order complete within a second or two of seeing the transaction on the network.
Try buying something online with Bitcoin sometime, it really is faster and easier than using a credit card (if you already own some).
Current block size limits bitcoin to ~3 transactions per second. It would take bitcoin 22 days to handle just 1 day of Visa's global transactions.
This is a serious problem because in order to increase the block size, it requires a consensus amongst all miners, merchants, etc.
Bitcoin effectively suffers from Tragedy of the Commons, because it can't scale unless every rational actor stops trying to get their own profit out of it.
I want privacy in my spending and in my assets. If I like reading about hacking and buy an eBook about it, I don't want that to be evidence against me when law enforcement comes knocking and tries to trump up charges against (see HN post about this just today). If I buy a VPN service, I don't want to become a target for surveillance. There are tons of legitimate, legal reasons to want privacy in purchasing and assets.
In that type of environment, it is helpful to have a payment system that is more "seller-friendly" than what we have now, since the sellers no longer have economies of scale to offset sale-side costs. Cryptocurrencies hold the promise fill the role of these "seller-friendly" currencies, since they allow anyone to accept payments without intermediaries and by merely tacking some minimal logic to their software stack of choice... though I agree they still have a long way to go to achieving this.
There is a tad more info from https://twitter.com/stripe :
"Our Bitcoin support is now fully live: https://stripe.com/bitcoin ."
"It's fully-integrated with the rest of Stripe: same APIs, same reporting, same dashboard. (Just like our Alipay support.)"
"While testing our Bitcoin support, we had people from 60 different countries use it to pay. (Howdy, Guatemala, Algeria, Rwanda, Cambodia!)"
"Particular thanks to @Namecheap, @Tarsnap, @HandUp, and @Grooveshark for their feedback as we developed this."
"And as for https://stripe.com/bitcoin itself -- this is our first, but hopefully not last, page to feature an animated Vim."
For the record, Stripe's Bitcoin support has been in beta since March 2014. Tarsnap were the first users: http://www.daemonology.net/blog/2014-03-27-tarsnap-bitcoin.h...
Edit: @ThrustVectoring: it does not take 5 weeks of a developer's time to integrate with Coinbase, especially for the "small" merchants (<$1-2M in sales) that my comment was written for. But I agree the appeal of simplicity if you already take Stripe is there :)
Integrating Coinbase involves writing your own "payment" abstraction in place of being able to use Stripe's all the way through your application, then implementing both Stripe and Coinbase on top of that. While this might be good in the long run (so you can switch off of Stripe easily), it's not so good for smaller shops/services which don't need that complexity yet.
Some businesses have legal ramifications for accepting bitcoin or not, even if it's through Stripe. Is there a flag in your Stripe merchant account on Stripe's server to refuse bitcoins?
No, that's not the case. The choice to display the UI for accepting bitcoins is client-side. Handling the results of that UI still has to be done specially on the server, through the creation of a Charge in a different way.
A lot of the apps with high levels of penetration in this generalized demographic seem to use Stripe--if it's truly a frictionless integration, it will be really interesting to see the market's response.
Coinbase & exchange API's were the first step. Single-script hosted payment processing with a UI focus (accessible to tech and grassroots e-commerce alike) seems to be the next.
And to the Stripe team--Thank you!
I've used many merchant processors, from 2004 until now. Along with Braintree you paved the way for this future in MP, and overall created a brilliantly engineered system that's a pleasure to work with.
Then there's the fact that you have to use an exchange to buy the coins in the first place and... let's just say bitcoin exchanges aren't exactly known as secure financial institutions. It seems a large bitcoin exchange is hacked and shuts down just about weekly:
Just hours ago: Cavritex, Canada's largest bitcoin exchange, announced that it was hacked and will shut down
4 days ago: BTER of China was hacked and lost $1.75m
Last week: Exco.in was hacked, apparently lost all customer-held coins, and shut down
Last week: Hong Kong's MyCoin died and was apparently a ponzi scheme that had $387
And that's not even counting the abrupt closures of other exchanges telling users to get their funds out ASAP or lose them.
The beauty of true P2P is that while a central authority still has the potential to compromise the network, the distributed nature at least distributes the attack surface equally. I imagine banks & security-conscious, established digital financial service providers will step in at some point to assume the role of the exchanges. It may be a step back for privacy and anonymity (sadly) but a major step forward for its legitimacy.
More importantly, the concept of interchangeability is emerging. When you find that BTC and $ transactions can be reconciled seamlessly (ie, agnostically with no logistical concern to source whether credit card, BTC, EBT, etc.) I think that P2P option may start to happen naturally. Providers like Stripe abstracting this is certainly the first step.
 I would love to see what would happen if a company like Venmo that deals primarily in socail micro-transactions were to attempt a UX integration.
No you don't. You can sell stuff on Craigslist for bitcoins. You can mine. You can buy coins in person from a friend/from localbitcoins. You can receive remittance from your oversea family in bitcoins. You can buy them from a Bitcoin ATM. Etc. There are tons of ways to acquire bitcoins without "having" to use an exchange.