Someday, you may use bitcoin without knowing it | Hacker News Reader

Someday, you may use bitcoin without knowing it

qz.com

41 pointsgamechangr46 comments

" dreams of reinventing the financial system based around a currency not issued by governments and not subject to the whims of central banks."

Lets ask Greece how not having control over its currency is going...

Bitcoin is a primitive financial system wrapped up in a high tech envelope.

Someone else having control of your currency is a lot different than no one having control over it.

It might be different, but it doesn't seem to matter much in practice. But fine, instead of comparing it to Greece, you could compare it to the gold standard. That didn't work so well either.

Somehow civilizations and empires flourished before modern financial instruments.

They actually didn't. Banks have been around for centuries and where instrumental in any economic growth beyond medieval farming methods...

But "banks" aren't a currency. They may have issued their own currencies during the gold standard, but then again nothing prevents banks from issuing their own currency in an (absolutely hypothetical) bitcoin standard.

The gold standard had to be abandoned because it didn't work. For that matter, a new "Dollar Standard" is popping up, with all sorts of countries using the dollar as legal or quasi-legal tender...

"Had to be abandoned"? Threat of 10 years in prison in 1933 does not sound like "people decided gold sucks". I guess, government had to take gold by force precisely because people trusted gold more than paper.

http://en.wikipedia.org/wiki/File:Executive_Order_6102.jpg

Isn't that exactly an argument why it had to be abandoned? The government couldn't increase the money supply, because dollars had to be backed by gold.

Well, some people disagree with the idea that the inability of the government to increase the money supply means the system doesn't work.

Fair enough, but I think most economists agree on the problems with a gold standard [1]. This is moving off-topic, but it's interesting that this seems to be one of many topics where there's a rare consensus between economists, but the general public holds a different opinion [2].

1. http://www.igmchicago.org/igm-economic-experts-panel/poll-re... 2. http://www.economist.com/news/finance-and-economics/21569378...

I posted this article. This is a little off topic, but I like the links. Karma point to u.

What i'm suggesting is that one solution to some of Greece's issues could have been solved through inflation. Arguably it would have been better received than the measures actually took. However without the control, their options have been pretty limited.

It's a simple solution. But it didn't work in the majority of cases. This solution would also require Greece to go back to the economics of a developing country because they can't afford most imports, especially medicine or electronics.

It's not just about inflating away debt, it's also about being more competitive vs. other European nations, like Germany. A reasonable devaluing of the Greek currency would have allowed more jobs and opportunities to shift towards Greece, reducing unemployment and probably growing per capita GDP.

Greece has other structural problems, but the inability to adjust their currency has definitely hurt them.

there is not a "one size fits all" economic plan.

Of course there isn't. No one is saying there is.

You'd have to have a reasonable expectation that the additional competitiveness is worth the cost in living standards. There is no strong evidence that their own currency would help them enough to offset the problems they face after exiting the Euro.

Actually the greek populace is overwhelmingly in favor of keeping the Euro and they don't really buy into "Make your own currency, devaluate it like crazy and maybe in a decade or to you will have the same wealth as now".

In Argentina this didn't work that well either.

Switching currencies and devaluing causes a lot of pain and hardship, especially since capital quickly flees the country to avoid the devaluation. This usually necessitates capital controls, and leads to a lot of short term chaos.

Greece would likely prefer to avoid this pain, stay in the Euro, and escape the crisis through fiscal stimulus paid for by the EU, similar to how the US Federal Government provides fiscal stimulus and transfer payments to State Governments.

“Bitcoin is basically based on mistrust rather than trust”

In some ways, but when we're talking about the reversability of transactions we're really just putting trust in different places. I trust the bank waaaaaaay more than I trust any online vendor. Particularly one with whom I don't have an existing relationship, but even then. For the folks that love BTC at the moment that seems to be reversed.

--edit-- I'm also not sure how doing two trades on an international currency transfer is supposed to be cheaper than one....

Totally agree with you on that. But let's compare your trust of your bank vs your trust of your mattress or your safe or your brain password that no one but you can produce.

vs mattress - bank wins

vs home safe - bank wins

and I'm always forgetting passwords!

These are places to store stuff though, not transaction systems, which is what I was driving at. Bitcoin as a transaction system requires me to place trust in a vendor (or potentially an escrow service). I trust my bank's payment systems and chargeback facility more than either of those things.

Bitcoin as a store of money? Well I still prefer the legal protections afforded me in a regulated bank.

Your last line gets right to the heart of the problem.

" I still prefer the legal protection afforded me in a regulated bank".

What system can provide legal protection without governmental abuse?

Here's something to ponder... Sure once in a while your bank/CC payment system protects you from a shady merchant... saving you what... 100$ (max?). Personally in my entire life I can't remember charging back once due to a shady merchant but let's assume you've saved 1000$ because of chargebacks.

Here's one of the risks you have to bear to enable your chargebacks: http://mashable.com/2011/01/28/identity-theft-infographic/ ... worth it? Think how many insecure databases your name and address and credit card # (and sometimes phone number) are stored in across the net...

And how many shady merchants have I not had to chargeback to because they are deterred?

Also I'm not in the US, I get the impression that I'm much better protected by consumer law here in the UK.

Chargebacks are useful to consumers not because of evil merchants who can steal their money (merchants in general are not evil and care about reputation). The real problem is giving away full access to your credit card. Someone can steal your CC number from any shop you used it before and then make a purchase. Since CC is so fragile, Visa offers you a chargeback capacity putting merchants under huge risk of fraud.

With bitcoin you don't show your whole wallet to anyone. You only make a single transaction to a single address. Merchant cannot possibly leak anything that will give someone ability to spend your money. Instead of spreading your identifying information to 1000s of shops you only keep it in a single place that you control directly (but you should be careful here). So you don't need chargebacks if no one can easily steal your money.

To avoid fraud from merchants, people use "reputation" and escrows. Typically, you will be okay to risk paying 3 bucks almost anyone, but you'd pay 300 dollars only to people you already trust (think Apple Store, WalMart etc.) For very rare cases when you need extra security, go to an intermediate escrow service. (E.g. ebay.)

Umm, no. I exactly want protection from unscrupulous merchants. Stolen CC detail fraud is on the decline thanks to the likes of EMV cards, and I also have legal protection from it via my bank for when that fails.

Reputation and escrows are really no equivalent to legal protection from merchant fraud and instant refunds on dispute. We have centuries of history with shysters and scammers (CAVEAT EMPTOR) to show us why this stuff is useful and it's pretty trivial to fake reputation and to fake escrow.

>> you'd pay 300 dollars only to people you already trust

Nicely cementing the big boys in the market and locking out smaller vendors forever.

I'm sorry people feel so affronted by consumer protections and chargeback, but without them I wouldn't buy stuff off the net at all.

Trust is central to all net purchases. No way around that.

I'd argue that online purchases are so popular precisely because the trust problem has been effectively tackled by Paypal and other processors. If a deal goes bad, you can dispute the payment and probably get your money back.

If you're using Liberty Reserve, Bitcoin, Paypal Gift, or anything else like them, your money is gone and there is nothing you can do.

Even if this isn't a problem for you, I think Bitcoin will have to solve it in some way to get any widespread adoption. Irreversible transactions are not popular.

See a couple of my comments around this thread. I think irreversible transactions is precisely what is Bitcoin major selling factor. Many merchants will be able to give you a nice discount and eliminate their headaches. You as a customer will get more stuff, cheaper and with a friendlier look at you (living in Paris I see how merchants detest credit card payments for risks and losses involved).

Or you as the customer can get ripped off with no recourse, especially as less scrupulous types cotton on to the fact that once they have your money there's nothing much you can do about it.

Think of the various ebay scams that exist right now around these issues. For example, I have friends who purchased a zpad (kid Ipad) and had a "no questions asked return policy" for 90 days. They sent it back week two and the Chinese company claims to not receive it until day 92. At least my friend could file a complaint so that others would not fall into the same trap. What kind of recourse would you have with bitcoin?

The risks with CC payments are much higher due to identity theft. Paying with CC online without chargebacks is really dangerous. But paying with BTC is like handing a couple of bucks in cash. Not a big deal. The smallest shops taking small payments can easily earn good reputation and be transparent about how many transactions they processed. So they start with people around them or willing to risk, and then earn better position. When you've done sales for 50K you don't want to steal next 12 bucks to ruin the rest of your life.

I don't see how BTC is cementing big boys. On contrary, BTC is liberating all sorts of small shops. Today they bear huge risks with chargebacks and have to go through a lengthy and complicated setup to even start accepting credit cards. Not even saying that PayPal easily freezes accounts from time to time. Bitcoin solves all of that and allows much more people to enter the market and offer some new awesome stuff. (Both online and offline.)

It harms small shops because people like me won't buy from them without a reversible payment feature.

>With bitcoin you don't show your whole wallet to anyone. You only make a single transaction to a single address. Merchant cannot possibly leak anything that will give someone ability to spend your money. Instead of spreading your identifying information to 1000s of shops you only keep it in a single place that you control directly (but you should be careful here). So you don't need chargebacks if no one can easily steal your money.

But your wallet is only as secure as the place it's stored at. If it's on an internet connected machine, you need to make sure that you're as protected as possible. If it's on a third party's server, you need to have faith in their security.

Bitcoin wallets are identical to CC numbers in this regard, because if the wallet or CC # is stolen, you can clean out the account.

But with Bitcoin, there is no way to undo the damage once everything was taken. If your system gets compromised and your wallet stolen(or the service you're using to store the wallet gets compromised), you're out of luck.

That's all true. Two more things, though:

1. Many big shops like Wal-Mart that you trade with every day can resolve disputes by themselves: they have enough trust of their customers to lose. So when you pay with CC, you make them bear extra risks and costs that you are ultimately paying for in the end. If they give you a convenient and cheaper way to pay them directly and irreversibly, would you choose that option? Same for smaller guys that you happen to trust. Github is not the biggest place on earth, but if it's cheaper for you to pay $12 with BTC instead of $15 with CC, would you trust them not to steal $12 from you? (They cannot steal more than that.)

2. Now, to solve the problem of lousy wallet and forgotten passwords, you may use something like BitcoinPayPal which you trust and store your wallet with them. How is it different from normal PayPal? BitcoinPayPal does not have to charge your CC, so bears no risk of chargebacks. So they can make fees much lower and provide you with "all sales are final" option (see previous paragraph why it's good) or more efficient dispute resolution without taking money from merchant blindly (if PayPal tries to be more merchant-friendly at disputes, you'd simply call Visa to make a chargeback from PayPal itself). This will allow merchant to make a 3-7% discount for you.

I myself can see how many shops I trust with irreversible transactions, so I'd prefer paying like that and cheaper. And possibly using 3rd party wallet keeper without dispute resolution (with two-factor auth, of course).

Interestingly, I just had a local law enforcement official ask me to "explain bitcoin" to him yesterday. He said that "it came up" in a case they were working on and he had no idea what it was.

This is just evidence that its becoming a lot more mainstream.

>If our experts can't agree on the value of bitcoin, why should consumers?

This is quite possibly the dumbest rhetorical question I've ever heard. On like 3 different levels. Replace 'bitcoin' with, like, anything. Oranges. Trees. Cars. What the eff are you talking about, lady.

Funny. I posted this and didn't catch that. Good eye. Karma point to u

In fairness, I thought it was a quality piece otherwise. It was probably just something her editor threw in.

Every other article describing the nature of Bitcoin, if not all, mention how it is used to sell drugs online (Silk Road), transaction anonymity [as a facilitator of crime] and this one forgot to state how Bitcoin is apparently the preferred currency of dictators, as if oficial currencies are not being used, as i type this, and have been used over the ages to facilitate every crime in the book.

I think this is important because it may be transpiring a very bad image to the less informed, because i see Bitcoin as a tool, which will be used for wrong doing as any other. Wish i had the link to a recent article that bashed Bitcoin into oblivion.

Agreed. I think Bitcoin has amazing potential as a tool. It's hard to create no government control without opening pandora's box.

You know how there are certain words or phrases that make you feel the sands of time wastefully slipping through your fingers? They're hard to notice, because they're coupled with the habit of scanning to the next article, or moving to the next link.

The description of Bitcoin as "untraceable" makes my close-tab reflex trigger like a doctor bumping my knee. Seems like describing a human as invincible because the bodies will forever persist as some configuration of mass and energy.

No kidding. If every coin carries its immutable transaction history with it, Bitcoin is the antithesis of "untraceable."

Well put. I hadn't thought of it in those terms.

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