True there's no advantage to paying with bitcoin currently and most people are just using it for the novelty value. But enough growth and merchants will just have to offer discounts with bitcoin purchases to stay competitive.
Now, Bitcoin also has its own security challenges (eg. how to secure a wallet), but there are solutions (hardware wallets) making it a fundamentally more secure way of transacting online.
If someone steals my credit card and runs up $8000 in charges on it, I'm not out $8000. There is a piece of paper somewhere that says I owe $8000, but that's not being out the money.
One might have a model of "net worth" as "total assets minus total debts," and normally it's a decent model, and this makes net worth go down. But illegitimate debts put a wrinkle in that model.
Never underestimate the advantage of having money versus being owed money. (This is a start-up lesson, too.)
I recognize this is an extreme story, but you cannot claim that CC info theft "does not matter". When it happens, there are many ways in which it can turn in a big pile of hassle for you.
For one, you can very much have the same happen to any bitcoin user, using their personal details online in such sites.
Your argument is like saying "seat belts in cars don't always make drivers safer, for one people may forget to buckle up and not benefit from increased safety".
Sure, but the end result is the same. It's irrelevant whose fault it is.
Or, reversely, nothing prohibits buying with credit cards online to be done differently and be safe from such fraud (e.g one-off credit card numbers with token generators).
But in the real world, credits cards are used the way we know, and merchants accepting bitcoin still ask for those details.
No it is not: with Bitcoin, an attacker knowing your billing info cannot steal your coins. With your CC info, he can make fraudulent purchases (obviously).
Even virtual credit cards are not safe from fraud. Some transactions over the maximum spending limit or expiration date might still go through [1]. This makes none of them truly single-use since multiple charges can go through. Also, they are a PITA to use especially if you want to regenerate a one-off CC number for every transaction (which nobody does - there is no such thing as a "token generator" as you claim). For these reasons banks have been in fact discontinuing virtual CC services over the last few years, eg. see [2].
By contrast, a Bitcoin transaction is truly a one-time payment that is cryptographically authorizing a specific payment amount to a specific address, and nothing more.
[1] http://lifehacker.com/5831160/use-virtual-credit-card-number... [2] http://slickdeals.net/f/6614180-discover-is-discontinuing-th...
This is also the case with ICC/EMV cards, though the USA hasn't caught up to that for some reason.
--edit-- of course this only applies to physical transactions, online transactions are still vulnerable, yes.
The number of "I had all my bitcoins stolen, here is the list of 25 security precautions I've taken, where did I fuck up" articles is terrifying. I'm willing to sacrifice the 1% savings or whatever it is I'd theoretically get from bitcoin for that peace of mind.
Because we've evolved a hell of a lot of ways for people to offload responsibility over the last hundred or so years, particularly where money is involved.
In general I think it's a pretty good thing.
Sure, the bank/CC company will take responsibility for fraudulent charges. In return, they:
1. Randomly cancel your cards and mail you new ones to limit their risk. (No explanation other than 'security')
2. Refuse to let you use your cards to deposit on gambling sites (which are legal in Canada). They also charge extra fees for 'cash-like' transactions on things like forex sites.
3. Reject large purchases that are 'out of the ordinary' making you look like a jackass. This one happened to my dad while he was booking flights.
4. Skim 2-3% or more of each transaction.
5. Maintain onerous requirements for merchants. Square has helped a lot with this in the first world but in the rest of the world they don't even bother taking electronic payments because it's such a hassle to get approved, lease the machines, maintain a security deposit, etc.
Sometimes it makes more sense to just take the risk of getting scammed than deal with all of the above.
See, people are used to, and are already pretty good at securing valuables such as cash (in a safe, at home, or on themselves). A paper backup presents to additional complexity to store securely. And Bitcoin offers extra advantages: losing your paper backup does not affect you ability to use the wallet, and you can have multiple backups, etc. So a hardware wallet is at least better than or equal to cash in terms of security.
And you have to use a hard to obtain (bureucratic nightmare to exchange), volatile, dealing with shady "institutions" with no real history or assurances behind them (MtGox anyone?), and use a novelty currency for that?
There are "one use" recharchable virtual credit cards used all over the world, you can "fill up" one from your online banking and have it handle as much or as little money as you want (e.g just for one transaction).
This can be done wholly online, and takes like 1 minute.
This is why I use PayPal whenever I can
Of course Bitcoin would be more secure (I own some myself). But from a users point of view this additional security doesn't really matter too much. I rather pay with my credit card and get 1% cashback.
Also cheaper still to buy gift cards via raise, cardpool, giftcardgranny, hundreds of other results for "discount gift cards" which are 3%-6% off AND get your 1% cash back.
http://www.justice.gov/atr/public/press_releases/2010/262867...
I believe American Express settled later.