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Comment by IvyMike | Hacker News Reader

> Anecdotally, I hear from merchants who start taking bitcoin that after an initial spike they see almost no volume.

To me, this is one of the biggest problems with adoption--bitcoin doesn't offer much benefit to the typical consumer for mundane transactions.

I'm about to buy a coffee machine on Overstock.com. There's no practical reason that bitcoins are better than what I'm going to do which is put it on my mastercard. And there's a lot of reasons that getting my money into bitcoin in the first place is a giant pain in the ass.

Yeah, there are some potential situations that could change this, and if I lived in a country with massive inflation I might feel differently, but as it stands, I don't see any compelling reason to use bitcoin to make purchases.

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It doesn't benefit consumers for any transaction. Unless you consider the deed itself to be a benefit, outweighing all the negative. I don't.

As a consumer, I don't like getting fucked by the spread on exchange rates on the buy AND sell sides when I try to pay in bitcoin. Want to buy some bitcoin? Unless you're doing it face-to-face you're going to get jacked a few percent. Want to spend them? Unless it's at a bitcoin-only merchant, jacked again.

Add in the fact that I'm not getting whatever points my credit card would have given me, that I've got absolutely no recourse against the merchant, and that I have to worry about hackers stealing my money... there's no reason for me to use it.

Two words: money transfers. Bitcoin works very well for low friction P2P transfers. This may be considered a solved problem in Europe where bank transfers are easy and the norm but in the US and other parts of the world it's unsolved and a pain in the ass.

There is no easy way for me to transfer money to a friend other than handing them cash. You might suggest an awful centralized service like PayPal but there are plenty of problems with them too. What if I want to send money to a friend who lives in another country? Even harder. Bitcoin solves this problem.

You can mail him a check - zero transaction fee and works every single time. No easy way to do it electronically though. Also you could not really do it with random strangers - risk of fraud is fairly high.

I think it could (or maybe "should") be totally great for tiny payments. Less like 0.5BTC for a coffee machine, more like 0.001BTC for a single API request. It seems uniquely suited for tiny, frequent, low-risk payments. That doesn't seem like a very widespread business model, but maybe that's because it's been tough to do without something like bitcoin.

It's also worth pointing out that you are probably incurring significant fees when converting from your native currency into bitcoin.

In addition, if you are holding bitcoins with the expectation that they will actually appreciate (i.e. the currency will deflate rather than inflate) you are effectively losing money by spending it, further discouraging you from engaging in the transaction.

Krugman has enjoyed making this point a few times:

http://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil/

http://krugman.blogs.nytimes.com/2011/09/07/golden-cyberfett...

Keeping your credit card number out of their database where it can't be hacked is a practical reason to use bitcoin. It reduces your risk of merchant's getting hacked, which happens all the time.

Yeah but my credit card company protects me from that sort of fraud so it really isn't a practical concern.

Only if you notice and report it, people get skimmed all the time and never notice.

> people get skimmed all the time and never notice.

Insert Mt.Gox joke here.

There's an app for that: https://www.billguard.com/

Ha, why of course there is, I should have figured.

So, a merchant gets hacked and your credit card info is stolen. You notice fraudulent charges, call your credit card company and they reverse the charges and send you a new card.

If someone gets access to your bitcoin wallet or whatever storage mechanism you are using fails, then that money is gone forever with no way to recover it.

If you are a regular user with no need to make a political statement with the use of a non-traditional currency, what exactly about the second scenario sounds safer?

Only if you notice and report are you protected, many don't.

You're arguing against cash, cash doesn't need defending.

> If someone gets access to your bitcoin wallet or whatever storage mechanism you are using fails, then that money is gone forever with no way to recover it.

Keep in mind that you're comparing two different markets in terms of maturity. One day, there may be a number I can call too when my bitcoin goes missing.

I'm sure people made similar arguments before e-commerce. Surely it had to seem easier to just buy a product in a physical store, with cash, with absolutely no risk of stolen credit card information on this new thing known as Internet. No issues with shipping and you can actually see the product in store. Things have changed and people are no longer as reluctant to shop online.

As interest in new areas grow, so do opportunities for business. You may not be an early adopter of Bitcoin in the way many weren't with e-commerce in the early days, but it doesn't mean it can't happen because one is easier today.

> One day, there may be a number I can call to when my bitcoin goes missing.

Genuinely curious--how would this work?

I'm not 100% sure. I'm sure some people are working on this problem right now.

It would probably be insurance, so you'd have to pay for it and they could deny your claim if you didn't use a Trezor.

There may also be bounty hunters who try to recover stolen BTC on contingency, but that doesn't sound like a good business.

"N of M" transactions might entail this. The idea is that 3 parties have the key and 2 are required to transact. So if you lose yours, you call up one other party.

> One day, there may be a number I can call to when my bitcoin goes missing.

Why would I even need such infrastructure if I can already do that today with my bank?

When you say "the typical consumer", I think you are really saying "the typical, relatively wealthy consumer living in the first world". For the some billions of people on the Earth who don't have a stable currency, credit/debit cards, mortgages and other financial products Bitcoin has more benefits. Think of the WhatsApp demographic without a smart-phone.

Honestly I think it would be the opposite; Bitcoin would be yet another way that the developed world has screwed over the developing world, once malicious actors realize that perfectly good wallet.dats exist on the cellphones of people who think that having sex with virgins cures AIDS.

Odd because one of the benefits of Bit Coin is lower transaction fees that what credit card companies charge.

One would think businesses would really like this and promote it.

The huge variations in price mean that a company could very easily lose more than the few, entirely predictable, percent the credit card companies charge.

And adding the cost of insurance to account for the risk of having your hot wallet wiped out could ruin the transaction fee advantage all by itself.

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