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There are vendors I don't necessarily trust, and have never dealt with before. For these vendors, credit cards (with their protection, and the consequent premium) are perfect.

There are other vendors that I do trust and do repeat business with. For these vendors, I detest paying what is effectively a protection surcharge, when I don't need it. This is particularly the case for high value purchases where there is some percentage difference, rather than a small fixed amount. I appreciate the reason the payment purchaser must charge a fee; I just don't want the (protection) service provided.

In this case, I accept that I would take some additional risk, but I feel well enough protected by my country's legal system, when I am confident in the vendor's identity and that the sale would fall under my country's jurisdiction. This is not dissimilar to paying for something expensive by bank transfer to save on costs. This arrangement isn't quite that unusual in the UK, where UK-to-UK bank transfers for consumers are generally free. But this arrangement carries extra admin for the vendor in trying to match up transactions.

So a credit card is useful for some purchases (in particular, international ones, ones where I am not confident about the vendor's identity, or ones where I am not confident in the vendor's reputation). But for other transactions, I prefer to have the option of going direct. Bitcoin would be perfect for that, if it were more widely accepted.

I would almost always put expensive purchases (holidays, events, furniture, etc.) on credit card because if the vendor gets into financial trouble, etc. you basically have no protection under standard sales legislation (you have to get into line with all the other creditors) but you have significant protection if you purchase with a credit card.

That's fine - there are specific purchases I would always want to pay the protection premium for, including for some of your examples.

But the risk involved varies depending on the situation. In cases where I consider the risk low enough, I would appreciate having the option of not paying the protection premium, and going without.

There is absolutely no reason for a restaurant to pay 2.9% of their revenue for payment processing. Their total profit margin is probably around that much, so reducing the processing fee to 1% could potentially result in a very significant increase in profits for them. There is no necessity for insurance on a transaction like a restaurant bill.

> I have yet to hear why bitcoin reflects a better choice than cards for the consumer.

I think security would be an obvious answer.

Credit cards are like symmetric cryptography: there's only one secret (a number), which you must share with everyone you ever want to send or receive money from. Any malicious actor who gets that number can then use it to extract money from your card. Sure, it's probably FDIC insured, but they still make out with some of your money.

With Bitcoin, you only ever share your public key. It operates entirely on public key crypto. You can safely share your Bitcoin account public key with anyone and everyone to send and receive funds. Plus, anyone can verify any time you send or receive a payment very quickly. That way you can't lie and say you paid when you didn't (no checks in the mail). You also can't do chargebacks or otherwise recall your funds, like you can easily do to scam with credit cards or Paypal.

Any malicious actor who gets that number can then use it to extract money from your card. Sure, it's probably FDIC insured, but they still make out with some of your money.

Actually, you lose none of your money. The credit card company completely refunds you. Someone once stole my card and got some gas with it, and the next day I got the transaction refunded and a new card issued within 10 minutes.

Bitcoin is far less secure than a credit card. The best way to lose thousands of dollars is to invest it into bitcoin and then trust any webservice to hold onto your coins for you. It's what happened to me. If I had experienced credit card fraud instead of bitcoin fraud, I'd still have my money. Now I don't.

What you're describing is security for a merchant. Preventing chargebacks sounds great... for merchants. But security for consumers is obviously more important, because consumer adoption is the single most important factor.

Considering that every restaurant, store or bar you've ever used your card at potentially stashed away your secret, how closely have you been monitoring your card for siphoning of funds?

It is not in the credit card companies best interest to even acknowledge this type of theft, because they have no way except machine learning to protect you from it.

On the other hand, it IS useful for them to acknowledge huge security breaches at corporations, because they can point to them and say: and look at how we protected you! (after their dumb security system endangered you in the first place)

how closely have you been monitoring your card for siphoning of funds?

Closely. In fact, I get an email every time a transaction is made. Any fraud would be detected immediately: an email would arrive saying I've been charged, and I'd call up the credit card company and get it refunded in 10 minutes. So it seems to me that siphoning of funds from my credit card can't happen.

I needed protection from bitcoin fraud, not credit card fraud. The best thing for the bitcoin ecosystem would be to learn from credit card companies rather than villify them.

Also, people go to prison for many years for credit card fraud, whereas the legal system is still adjusting to bitcoin. I haven't heard of any bitcoin-related prosecutions yet. So bitcoin fraud is far less risky.

There's only 30 or so charges on my CC bill for the whole month. It's an online PDF I have to access in order to see how much I owe, so skimming it is both easy and convenient.

Given that a restaurant would face serious problems if they did this, it seems both low risk and not too hard to monitor.

"Machine learning" and other techniques have actually been pretty effective at reducing card fraud in recent years -- an overall loss of just 0.07%.

And this is all done with a system that is very convenient for consumers to use correctly for everyday use, without significant risk of a total loss due to getting hacked or having their password or other security factors compromised.

Source: http://en.wikipedia.org/wiki/Credit_card_fraud

>an overall loss of just 0.07%.

No, that's only the direct loss for credit card issuers.

It's not surprising that the companies that control the system limit their own losses as much as they can, by passing on the costs to others. The losses to merchants, etc are far greater.

In fact that figure understates even the card issuers' total losses, because it doesn't include billions of dollars in "fraud solutions expense, IT, staffing, outsourcing, and outside data/investigation expenses"

The report from which 0.07% was taken indicates immediate losses that are about 15x higher. In other words, around 1%

The report makes it extremely clear that the 0.07% figure is a severe underestimate of the real costs. In fact, that is really the main topic of the report. It's unfortunate that all that research has been ignored and the almost meaningless number has been cherry picked for Wikipedia.

Link to the report (PDF) which is the source of the 0.07% figure: http://web.archive.org/web/20091229101826/http://www.sas.com...

When I say "they make out with some fo your money" I meant the bank's money.

No way is that an obvious answer. The average consumer is massively more at risk of fraud & theft from their hosted bitcoin wallet than via their charge account.

All cards offer protection against theft and fraud including a means of disputing and getting refunds (chargebacks). Definitely not the case for bitcoin wallets.

Here's why. Cards may have weaker authentication but they have an intermediary party involved in governing the transaction. Bitcoin has no intermediary party, which places a heavier burden on authentication, and no recourse in case anything goes wrong.

So, the only way for bitcoin to increase protection against fraud is to ratchet up the level of security around authentication. Two factor, cold storage, all that. All things that are significant inconveniences for consumers. You can point to them and say "it's safer than card numbers" but that's missing the other tier of protection. Overall it's less safe, because if fraud does happen there's no recourse, and the more you inconvenience the consumer the less likely they are to secure things properly not to mention use the thing in the first place.

For everyday commerce, the two-tier level of protection that cards offer is much more amenable: a "decent" level of security at the time of the transaction that's still very convenient for the consumer, and the safety net of chargebacks.

By the way, you mentioned the lack of chargebacks as a security benefit.. but you're confusing merchant benefits (they don't like chargebacks) and consumer benefits (definitely benefit from the ability to dispute fraudulent charges and defective goods).

> Most consumers would be better off paying with a card: same cost (none)

Correction here: There IS a credit card cost, but it is billed to the merchant and passed along to the consumer by being built into product prices. The fact that you think it is "none" when it is merely "hidden" speaks volumes.

Most people understand that, and also understand that it's irrelevant so long as there is no discount for using a different payment method. If you're going to pay for the protection of credit whether you use it or not, you might as well use it.

In that case, a merchant would have to offer a discount in order to make Bitcoin worth pursuing.

Don't the credit card companies require that you charge the same price for cash or credit?

I believe it's ok to offer a discount for cash as long as you don't have to pay more than the posted price when you use credit.

Some gas stations allow you to pay for Diesel with cash at a discount. As a side note, Flash Foods has a card you can get that uses ACH with your debit account (I'm probably not saying that right). You get a flat $0.05 off of gas. They claim it's because of credit card charges (and because ACH doesn't cost them anything).

Neither cash discounts nor credit surcharges are prohibited now thanks to new legislation and a court settlement in the past few years.

Keep in mind credit cards offer 1-2% rewards. So in the end it's probably a 1% effective increase. Bitcoin exchange fees are usually about 1%. And that matters unless the merchant is not ever converting his Bitcoin into other currencies, since he would pass on that cost of business to the customer as well.

Oh and of course they'd have to offer a discount to Bitcoin purchasers since they're covering the additional CC fee cost anyways if it's the same price.

Interesting fact: Australia regulated away credit card fees a few years ago. There was no corresponding decrease in consumer prices.

In any case, even if there is an increase, unless merchants offer differentiated pricing by payment type (they generally favor simplicity) then what I'm saying holds: there is no additional cost to using cards.

"Anonymity maybe?"

The Blockchain is definitely NOT anonymous. There was a misconception in the early days that Bitcoin was a anonymous given there is no certificate authority that ties you to particular addresses.

However, this may or may not hold as various entities pop up (e.g. Coinbase, Bitstamp) who may be subpoena'd

Mixing also doesn't work because you can apply taint analysis. Further, do you really want to mix your address with other dirty addresses? Who knows what they've been up to!

What taint analysis are you referring to? From my understanding, once a part of a Bitcoin has been tumbled, there's no way to verify which "part" that Bitcoin has in further transactions from that wallet.

There are many cases where credit cards don't work so well. Traveling abroad for instance. Every had your card denied because of a false positive for fraud? Ever lost your card on a trip? They won't send it to you where you're at. They'll only send it to your home address.

You'd be much better off using something like the blockchain.info wallet while traveling. As long as you have web access, you have access to your wallet.

If you can lose your card you can lose your phone too. You're proposing accessing your blockchain.info wallet via someone else's web browser? Sounds like a great way to get your entire wallet stolen.

As for the inconvenience of getting a false positive fraud flag.. that's extremely rare, usually resolvable with a phone call, and probably an overall vastly more convenient way of protecting you than more inconvenient up-front authentication steps for each transaction.

Yeah don't access your blockchain.info wallet on a shared computer at an internet cafe, if you can find one of those anywhere still, sure. But maybe try your laptop, unless you lost that at the same time you lost your phone. Maybe try your friend's laptop? And then change your password after you buy a new phone? It's workable. Obviously have a few different wallets, some with more money, some with less, so you can use different ones depending on the risk of the situation.

Or maybe create a new wallet and have your wife send you the coins instantly. Lots of possibilities.

And as rare as you claim false positives to be, it happened to me on my last trip. Happens to me every time I buy something on a foreign website.

Customer yes however sellers have quite an incentive to ask for bitcoin if they can since their the one paying the high fees to the credit card companies and there's no risk of fraudulent charge back which most businesses just have to accept and factor into the price of the product.

And in a way the customers too since the seller has to factor in the card fees when selling a product however they may be able to give you a better price if you pay with bitcoin.

Your assumption that any fees the seller pays do not affect the price of the product are flawed.

It's simple business you need to pay more fees you need to sell your product at a higher price to make a profit.

I am really excited for the application of bitcoin to micro transaction and tipping/donation services. Typically with Paypal you pay a 2.9% + $.30 fee for every transaction. With donations and other transactions in the $2 range that equates to a $.35 or 17% overhead. With bitcoin you can pay 1%, or even a flat monthly fee if you do a large volume. The cost savings enable a variety of occupations that would otherwise be uneconomical.

This is better for the consumer because they have an increased variety of entertainment options that they can have the satisfaction of supporting, and it's better for the person receiving the bitcoin because of lower fees.

>Where bitcoin makes more sense to me is in replacing cash.

How does that work in a practical sense? "Thank you for ordering, please take a seat a and we'll give you your purchases as soon as your transaction is confirmed."

For small transactions, it is safe to give the purchases after 0 confirmations. In order to pull off a double spend with 0 confirmations, you need to ensure that the store (or whoever processes payments for them) receives the "wrong" spend first, which requires a large enough fraction of the hash power of the network that just mining the usual way is more profitable.

Relevant: https://news.ycombinator.com/item?id=7499308