I am talking from the perspective of the merchant.
Imagine bogus chargebacks because of buyer's remorse or purchases done with stolen credit cards. None of this happens for a merchant that accepts crypto.
Imagine bogus chargebacks because of buyer's remorse or purchases done with stolen credit cards. None of this happens for a merchant that accepts crypto.
The point is not to have a system of final purchases, but final payments.
The Merchant will discover that the state does in fact have finality on the movement of value.
"But the state can still compel you to pay back". Yes, sure it does. The point is that the cost of doing it now is much higher and it is enough to deter a lot of opportunistic, fraudulent behavior from consumers. This difference in cost can make or break a business.
So you end up with a system that most people won't touch, and only appeals to users who need to make shady transactions.
In which case they may just as well leave out the middle merchant and exchange crypto directly.
It can also appeal to applications where payers and payees have some sort of social capital at stake. Patreon is the perfect example for that. If Patreon could offer the possibility of making payments via crypto with reduced fees, don't you think that people would do it?
It also can appeal for the use cases where the value of the transaction is too low for payers to worry about the "insurance" provided by the credit card networks, but that merchants need to be protected. E.g, selling digital goods online. Imagine you want to sell a book online and charge $2. With crypto would be easy. With a credit card, not so much.
Finally, it also would make sense for transactions where people would rather risk losing the money over their privacy. E.g, if Ashley Madison had a crypto option, how many of its users would use it just to be sure that their names would never end up on a list?
All non-reversible transactions do is put the risk of fraud on the consumer. IE, if you buy anything with crypto and it turns out to be defective, or just not arrive, you have no recourse. You're just out the money.
Crypto credentials are not comparable to bank credentials. Crypto credentials are a public key; you still need the secret key in order to authorize a payment. Credentials are insufficient to make a crypto payment.
Bank credentials are usually just open-source information that anyone can get a hold of, and they are usually sufficient to make a bank payment.
2) It doesn't matter how secure you make it, because if your payment system is impenetrable, I'll just steal your account on some site where you've already enabled payments.
If you buy something with cash and it turns out to be defective or it is never delivered, are you left with no recourse?
"But online shopping could mean someone from some other part of the world!" yeah, then don't buy with crypto.
> All non-reversible transactions do is put the risk of fraud on the consumer.
"And for everything else, there is Mastercard..."
Yes, the risk goes to the customer. But the point here is that crypto can enable a whole lot of other businesses that don't exist today because of merchant risk.
Patreon "exists", but as TFA shows is stupidly expensive. I have a SaaS that I'd like to charge $0,50/per month. I can not do that because Stripe would eat 80% of it in fees. The minimum payment amount is $5, but from that Stripe still gets 9%!
If crypto payments were normalized (and if scaling solutions get more adopted to reduce tx fees), customers would think "well, if fifty-cent service is a scammer, it will be on reddit already. If it is not, then it is only fifty cents and I can get a lot of karma for it"
This doesn't address the primary risk that merchants take on: fraud. Either crypto or credit card, if you end up taking a payment via stolen credentials, you will refund the money.
The risk that the middleman in a two-sided takes on is fraud. The scam is pretty simple: steal credit card/crypto key, set up fake seller account, buy stuff from yourself using stolen credit card/crypto key, cash out. The middleman pays the money out to the scammer, and eventually has to pay back the person that was stolen from, credit card or no.
Micro transactions are a huge merchant risk not because angry customers can chargeback, but because one stolen account can undo 1000/X legitimate transaction (where X is your profit per transaction). If your margin is slim, you've just amplified your fraud risk.
And before you say that it's easier to steal credit cards than crypto keys: 1) wait until crypto becomes common and 2) it doesn't matter. If you secure your keys, then scammer finds some user's account credentials and cleans their account out.
This by itself shows that you are making a fundamental confusion: crypto is not to be compared with credit cards. crypto is meant to be cash.
Anyone that steals crypto will wash it before attempting to spend it. And depending on the network, you can't even know what is the origin. So, it would be the same as being robbed of cash.
But okay, let's move on.
> If your margin is slim, you've just amplified your fraud risk.
What if my margin is infinite? Say I want to sell digital goods, with an effective unit cost of zero. Why would I want to worry about the 1/1000 chance of someone "stealing" a copy, when that cost is nothing compared with credit card processor fees and the only thing I am trying to avoid is being hit with chargeback fees?
> wait until crypto becomes common
Crypto becoming common does not mean that people should be keeping large amounts in their wallets. A wallet is not a bank account.
Even those crazy enough to keep substantial amounts of funds in crypto would have (at least) two separate set of keys. One to use for their "hot wallet" and one for cold storage. This is almost basic practice. In a world where crypto "becomes common", what could happen is that your "bank" would be a service that is responsible (and properly paid) to be a trusted custodian of larger funds.
If crypto truly solved all the problems you claim it solves, I think it’s reasonable for the major online marketplaces and vendors to have already switched over. I’ll note that they haven’t, and the state of the overall crypto market in the past few weeks suggests one good reason why.
> If crypto truly solved all the problems (...) vendors would have already switched over.
Transaction fees are not solved yet.
UX is not solved yet.
Privacy is not solved yet. (Well, it is if you count Monero, but for commerce you need a stabletoken, and you can not easily build a stabletoken on Monero like you can do it in Ethereum. In Ethereum we can have the stabletokens and privacy solutions are being built)
On-ramping is getting solved: it's relatively easy to get fiat-to-crypto today, though I'd say that the current players charging 3% are already at the limit of how they can go, and it's still too high.
There are still plenty of challenges and things to work on to get crypto as a viable alternative for payment networks.
> the state of the overall crypto market
The troubles in the current market have little-to-no relation with the story about crypto for payments. If this crash is going to get us rid of the stupid fools gambling their money in "investment opportunities" and it wipes out the nefarious scumbags who were selling ridiculous promises, all the better.
(And no, not all stabletokens are created the same. Tether is poison and everyone should stay away from it. The "algorithmic" stabletokens are already provably not viable. But DAI has managed to survive even worst market crashes than the current one, and USDC still has some semblance of trustworthiness.)
We said the same thing about Celsius
DAI can only crash "for good" if Ethereum crashes for good. MakerDAO is not over-leveraging itself to mint DAI into the market. MakerDAO does not pay any type of dividends to the people putting their crypto into the system - the opposite, actually.
The idea that crypto solves fraud is laughable, particularly when so much fraud is facilitated by it.