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Comment by kolev | Hacker News Reader

I got tired arguing with people with vested interest in Bitcoin that Bitcoin is not cheaper. You see a lot of people on Reddit getting super excited buying junk at Overstock and saying: "The banks got nothing!" without realizing that: 1) Coinbase sold their bitcoins at Bitstamp. 2) When more people sell than buy, Coinbase needs to wire money from Bitstamp to their European bank account and then to their US one; 3) Overstock gets an ACH daily from Coinbase; 4) If you got your bitcoins from Coinbase, an ACH was made for the purchase and if Coinbase gets more buys than sells, it needs to daily wire money from their US bank account to their European one, and then from it to Bitstamp. In other words, this over complicated process involves a lot more banking activity than credit cards! I get 1.5% cash back without any limits from my PayPal Debit Card and Coinbase charges me 1% + $0.15 to buy bitcoins.

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  > In other words, this over complicated process involves a lot
  > more banking activity than credit cards!

No, it's still FAR less banking activity than credit cards. You have no idea what happens behind the scenes when you swipe!

Go watch this 11-minute Khan Academy video to see how much banking activity goes on behind the scenes when you swipe your card: https://www.youtube.com/watch?v=IPxQQNyCxas

Bitcoin isn't free, but it's far, far, cheaper than credit cards, and gives far less money to banks.

No, it's not far cheaper - it just has a different way to compensate its processing costs. In fact, without even considering Coinbase fees, it's still more than credit cards: https://blockchain.info/charts/cost-per-transaction-percent

That's misleading: A lot of those transactions are microtransactions (not possible at all with credit cards) so of course the % will look elevated.

Dwolla has free micropayments (up to $10). Amazon offers special pricing for micropayments (5% + $.05) and so does PayPal (although it requires a separate account). If BTC price goes too high, the dollar costs of Bitcoin transaction fees will get pretty high as well. Anyway, here's an interesting article to read: http://www.bloomberg.com/news/2014-01-02/bitcoin-is-an-expen...

Like others, you seem to be assuming that bitcoin is static and not being improved and that transaction fees won't be lower with continued technological improvements.

Can you explain that graph? I have no idea what I'm looking at. Where are these fees going?

Bitcoin miners.

Simplistically: Each transaction can optionally include a fee as an incentive for Bitcoin miners to include the transaction in the block they're calculating. Right now, blocks can produce new "mined" Bitcoins, so the reference implementation doesn't frequently add a fee as the incentive to calculate a block is still quite high. As the "mining" (new Bitcoin creation) rate declines to zero, fees will become more important as an incentive to continue calculating new blocks.

https://en.bitcoin.it/wiki/Transaction_fees has a complete explanation of the current reference implementation of fees.

> Bitcoin isn't free, but it's far, far, cheaper than credit cards, and gives far less money to banks.

You're not listening: BitCoin is WAY more EXPENSIVE than a credit card TODAY.

* People know how credit cards work * Everybody accepts credit cards

You are comparing a payment medium with an asset/currency/payment-method/protocol. It's not a fair comparison (for BTC) because it's a really awesome technology which could evolve in many different things.

BUT saying that BTC is cheaper/easier than using a credit card TODAY is a simply not TRUE.

Kids can't use credit cards online, but they can use Bitcoins.

Third world folks with cellphones can't use credit cards (and likely don't have banks)... but they can use Bitcoins.

The uncredited can't use credit cards... you know the drill.

In some countries you can get prepaid credit cards to cover #1 and #3, though the additional fees probably make it costlier than by using Bitcoin.

I run a bitcoin ecommerce site without converting to fiat. Just because Overstock wants to pay additional overhead doesn't mean everyone else has to.

If you were paying taxes or employees like overstock does you'd have to convert to fiat, wouldnt you?

Sure, you'd either have to convert part of it to fiat for taxes, or carry a currency risk and pay the taxes separately (as I do.)

In the future, you'll probably be able to pay your expenses in bitcoin and then the issue becomes moot (you use your bitcoin earnings for expenses and your fiat earnings for taxes.)

Your points are fair when you look at national payments (with the current adoption), but the math changes when looking at international money transfer.

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