PayPal’s Braintree Embraces Bitcoin, One-Touch Payments
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If one is engaged in entirely legal activities - no money laundering, no drugs, no illegal weapons, no tax evasion, no slipping around international monetary controls - why would one want to use Bitcoin?
With the volatility of Bitcoin's price, transfer costs of traditional payment methods (1-3%) are totally dwarfed by the risk of holding Bitcoins for even a short period of time.
Maybe there is some opportunity for arbitrage in currency conversion rates, because of the low daily trading volume? But that doesn't seem like a likely profitable investment when you can lose 4% of your value at 3am because of a cascading margin call on a single exchange.
Other than currency speculation and the ease of evading the law, why would anyone want to exchange a reasonably stable national currency for bitcoin?
It's still hard to just send a fixed amount of money to someone with traditional payment systems, and if both parties have and use BTC, it would be pretty convenient.
That's still tricky with bitcoin, though, no? You can certainly send a fixed amount of BTC, but that value is probably going to get pegged to a national currency when you want to spend it.
In theory though, it is a superior payment transfer method between individuals, compared with the current system. But it has a lot of drawbacks right now, as well.
How about Venmo? That looks pretty easy.
This is why paying with Bitcoin will be common within a year.
Fiat -> Credit Card/ACH -> Bitcoin -> Fiat -> ACH (on supplier).
You are basically adding at least two extra steps in a transaction vs. what exists now. How is this better than what exists now?
The adoption needs to happen more so on the consumer-side than the merchant-side. Merchants can offer the service, but that doesn't mean people will utilize in. I get 1.5% back on all my credit card purchases, so I'm incentivized to put as much of my spending on my credit card as I can. I also get additional consumer and fraud protections on my credit card that are either not as good or completely missing from doing ACH transfers on my bank account.
I think BitCoin needs far more appealing consumer use-cases than it currently has to really hit widespread adoptions.
But that money has to come from somewhere, and that's the 2% credit card fee (can be a bit less, can be a lot more) paid by the merchant. And the merchant needs to make a profit, so he pays these fees by raising his prices 2%. If the cost of the transaction would appear on your bill, it would become obvious that you are not getting any "cash back". The perverse part is that the people not using credit cards are punished because they usually pay the same price.
Vendors in the middle of Africa do not need a bank account and credit card merchant account to sell products online. Plus they can distribute the earnings to their family members working across the country with their mobile phone, without their family needing accounts.
Most Americans seem to be drawn to the decentralized nature but there are opportunities in other countries to escape corrupt or non-existent banks, or use it as an alternative to their countries even more unstable currencies.
If it were that valuable, we'd know by now. BTC is a failed currency, but a successful asset.
Escaping corrupt and non-existent bank to go after an uncontrolled currency is equally risky and way more stupid.
How long do you usually think infrastructure around protocol such as bitcoin takes time to develop? I personally think we're still early in the game.
> Escaping corrupt and non-existent bank to go after an uncontrolled currency is equally risky and way more stupid.
What is your proposal then? I think holding ARS at least is not very wise move, but many still seem to do it. Physical USD cash is widely used in the streets, but bitcoin or something like it could be much more accessible alternative in the long term.
My proposal is to educate people to make better decisions voting-wise. Other than that, you're switching back and forth between systems of controls and BTC is extremely worst compared to what we have today because it is anonymous and decentralize.
What average Joe developer sees as the big strength of the protocol is the biggest weakness of the currency.
[1] http://www.convalesco.org/blog/2014/02/11/on-the-matter-of-b...
>Vendors in the middle of Africa do not need a bank account and credit card merchant account to sell products online. Plus they can distribute the earnings to their family members working across the country with their mobile phone, without their family needing accounts.
The "middle of Africa" is pretty much the quintessential example of a region where bitcoin is completely impractical. Poor internet infrastructure, high rates of computer illiteracy, limited access to capable computers... bitcoin simply isn't the answer (yet).
Consider this guy who went over to Kenya in the name of a bitcoin charity effort, only to be sobered by the reality of the situation on the ground.
http://letstalkbitcoin.com/blog/post/lets-talk-bitcoin-133-t...
I also use bitcoins, mostly because it is very frictionless. I actually have always small amount of unencrypted bitcoins in both my phone and computer for small day-to-day online purchases, tipping and clearing debts between friends.
Also the sovereignity appeals to me. I've never experienced any banking problems myself, but I've heard of many. Just the idea that solely me decides how my money moves appeals to me, and there is very limited possibility for anyone to touch my bitcoins.
What's wrong with speculation and evading government interference?
ps. The argument that we don't have democracy today in the western world, holds true to an extend but it is as close to democracy as we can get.
I think it's a very weak argument to say "this is the closest we can currently get to X, therefore it can be said we have X". What we have now, as I said above, can be said to be closer to other things than it is closer to democracy. We should then pick the thing we're closest to, out of all the things we're close to. And that is not democracy.
BTC could allow an anonymous party to control a currency, given enough % of that currency in circulation. Compare that to the current system. You may not like it, but currently the central banker (who creates policies for the good of his country) is appointed by the governments (ECB/FED).
The later sounds extremely more democratic to me. Now BTC is owned mostly by techies and small, adventurous investors. Once countries and investment bankers step in, hell will break loose. You don't want to seriously depend on something that you don't have a clue who controls.
How, exactly? They can't control the minting so I'm not sure what you mean by "control". The Fed is already an anonymous (because no one is personally responsible) party controlling the US dollar.
> currently the central banker ... creates policies for the good of his country
This is highly debatable. You can't just say that and pretend it is indisputable. I reject that premise; in my eyes the way the Fed handles money only shows their misunderstanding of what is value, how it is created, and so on. So no.
> The later sounds extremely more democratic to me.
So let me rephrase it. You barely vote for the US president (since it's indirect) and he/she and their team then appoint some other people to manage the only currency they will let you use in their country. This is what you are saying is "extremely more democratic" than some other thing? I'm not even arguing that Bitcoin is democratic, it only needs to be more fair by allowing choice in order to be better than the Fed's USD. If you like democracy so much you should be fostering competing currencies so we can vote by (literally) putting our money where our mouth is. The old saying applies here, if the Fed's USD is so awesome then why do they need to force us to use it?
> Once countries and investment bankers step in, hell will break loose.
How so?
> You don't want to seriously depend on something that you don't have a clue who controls.
Which is why people are desperate to move away from the US dollar.
> How, exactly? They can't control the minting so I'm not sure what you mean by "control". The Fed is already an anonymous (because no one is personally responsible) party controlling the US dollar.
By buying the largest chunk of bitcoins. Simple as that if you don't understand you clearly don't have a clue about what you're talking about.
You're making rounds without saying anything: The FED is there to ensure stability. You don't agree with their policies for a variety of reasons, I'm all with you. But what you're promoting here has nothing to do with democracy or fairness. It's more of a jungle where the big guy eats the small guy for lunch.
The old saying is stupid because everyone who studied monetary policies knows that currencies are enforced upon population (taxes).
I already explained what a player with big % of BTC can do to manipulate a free-from-regulation market, as BTC is. But it's really elementary, if you know how stock markets work.
Who is desperate and moving away from the USD? You seem to switch from micro-view to macro-view in no time and back. You're talking about average Joe again or Iran/China/Russia for example? Because average Joe and China are not on the same level currency-wise.
Also, you're saying that it would be a really bad thing for a currency (such as Bitcoin) to suddenly become controlled by an anonymous party, yet that is exactly what instating the FED did to the dollar. But then you say the FED ensures stability. So I ask, do you believe the only way to achieve stability is through maintaining the worst possible scenario for a currency?
I don't believe in democracy and so of course I'm not promoting it, and I don't think it is associated to fairness as you imply - I see it more as a tragedy of commons. I do believe what I promote is fair because it is free of coercion and it encourages engagement with others and with one's community, leading by example, and so on.
People are desperate, people that lost their savings because of the government playing money scientist. They might not know that what they want is a money that cannot be manipulated by decree, but they seem to recognize pretty well why is it that their savings are gone.
And your view of economics in this micro/macro false duality is what might be making it hard for you to see what I am talking about. At what point does exchanging value for goods and services need to be divided into two different things? I don't see that.
So now the true colors come out, cute little emoticons notwithstanding.
Do you want to ban Bitcoin?
No, ban bitcoin is a huge mistake IMHO. BTC is a great innovation and has extremely interesting features. I already mentioned transaction speed elsewhere.
I believe that we need to wait and see if volatility stabilizes at some point. Then I'd like to see an easier way of conversion from currency-to-btc and back.
That said I'd never put the faith of a country to BTC, but sure as hell I'd like to have it around and use it as I see fit (either as an asset or an investment). But relying grandma's pension on BTC? That's unethical to me (and stupid).
[1] http://www.convalesco.org/blog/2014/02/11/on-the-matter-of-b...
Who has suggested investing pensions in Bitcoin? I've never heard anyone make a bona fide argument for this.
I can get ~$500 for a bitcoin. Idealistic political concepts are worth nothing on the market.
Say Goldman Sachs decides to enter BTC. What % of BTC in circulation do you think the biggest investment bank can buy? Let's settle for a 5%.
Then Agentina decides to dump the USD and go with BTC. Suddenly GS wants to make the 5% share jump to 6% without spending money, because that's what they do! The broker starts dumping (selling) massive amounts of BTC to the market. Everyone goes crazy and starts selling too, because the price is diving. At the same time and without notice GS starts buying, while everyone else is selling/dumping. Now the Argentian government is way poorer, because they used BTC to buy services when BTC was trading for 450 USD but now they have to sell, and because of GS, BTC is trading to 150 USD.
Having to rely in a foreign currency as the USD/EUR, essentially gives you the ability to get many more short-term loans, because it adds value to your 'products' but gives away control. You can't control your currency anymore so you can't make policy decisions based on your needs. See Greece for example. If Greece didn't had the EUR, it could never have gone in that debt. Additionally if it has the Drachma (old GR currency) it would have been able to devalue and boost exports. Now Greece depends on Brussels and the only thing it can do is cut expenses which leads in vicious cycle of poverty.
What you're describing, though is even worst. Having to rely on a currency that is controlled by whom has the biggest %, in a totally anonymous scope, is madness in the purest form and a recipe for disaster. Worst than anything you've ever seen because it will be instant and without notice.
Imagine what would have happened to the UK in 1992 (Black Wednesday), is the Bank of England wasn't able to exit the ERM. GBP would have ultimately fail in one week time.
And a lot of us have very specific attitudes toward the role of government in peaceful, non-exploitative trade, and see Bitcoin as a possible solution to what we see as constant governmental overreach.
In short, we're idealists. We've been at the forefront of many revolutionary technologies (Internet, 3d printing, etc.).
Name me 10 currencies you'd be comfortable holding. It'll probably be very difficult. Fact is, billions use currencies with high inflation rates and with relatively short lifespans. And it's not just places like Zimbabwe that have many problems besides insane inflation the past decade. It's also relatively developed countries like Argentina that suffer from insane inflation. It's also small stable countries with a nice standard of living ($27k GDP PPP) with an educated population like Cyprus where many lost their savings as bank deposits were frozen or seized.
And that's just protection from governmental malfeasance that hundreds of millions have to be aware of. But it's also the fact that billions are unbanked. We at HN know more than anyone that providing a physical service (like mail delivery) is 1 million times more expensive than a digital service (like e-mail). Same for banking, for vaults, for ATMs, for services like lending, payments, remittance or money transfer. A digital version can be much cheaper, as well as more accessible. (for a bank you often need proof of identity, residence and employment. Good luck when you have no birth certificate, when you live in a slum, when you have an off-the-record job like selling fruit on the corner of the street). Digital banking can bring cheap financial services to hundreds of millions who don't have it, yet have (intermittent) access to networks as simple as SMS or radio, which can plug in to gateways to the bitcoin network.
Next up is us, the wealthy who enjoy relatively nice financial services. Bitcoin can save 1-3% in fees on any transaction. Imagine that there's a 1-3% tax on everything, not value added, everything, every transaction, whether B2C or B2B, and you have a way to remove that. That's very significant. Entire industries run on margins of 1-5%. Amazon's 2013 margin was 0.35%, imagine they could shave off even 0.5%.
Now that doesn't mean we all should actually buy and hold bitcoin. As you say, the volatility dwarfs this percentage. But volatility can be exclusive to investors. For example, Bitreserve (founded by the founder of CNET) lets you lock in the price. That means you can buy $100 of bitcoin, and see $100 on your account, as if it was Paypal. And then you can spend that $100 anytime you want, and it'll always be worth that much. On the backend the service then lets investors create a market to lock in that price, where various investors make short or long bets, a derivatives market can take out the volatility for the customer, thereby allowing people to use bitcoin, save costs, yet be shielded from volatility. That means business to business payments, too.
Besides that there's lots of other things. Like the fact it can be much more secure. Creditcard fraud is rampant as your password is essentially on the card and you have to share it everytime you pay, it's crazy. Chargeback fraud is an issue. Identity theft is therefore an issue. And you can envision crazy things like a Google driverless car paying, on the fly, to another driverless car infront of it, to move away, so that it can take that lane and go faster, because the one in the back is willing to pay extra for speed, and the one in front is okay with arriving a little later. Those kinds of thing can almost only be built on a global, permissionless protocol layer. So indeed none of us may use bitcoin, it may just be a machine to machine currency, it's too early to tell, it can have an impact in many different ways.
- Getting rid of charge back fraud also gets rid of charge backs - an important consumer protection.
- I don't need 10 currencies I'd be comfortable holding, but any of these - http://fxtrade.oanda.com/analysis/currency-volatility have far lower volatility than BTC.
- Bankless people need banks, not cryptocurrencies. There's no difference to a bankless person between a mobile app to an online bank and a bitcoin gateway.
- My credit card pays me back a chunk of that "1-3% tax on everything," my bitcoin wallet doesn't. Until bitcoin gains market share and the tax goes away, I'm just paying more to use bitcoin.
- My credit card company provides fraud protection for when my card is stolen, my BTC wallet does not.
Looking to the future doesn't make me want to transact in BTC right now.
Whenever you pay with a credit card, you have to trust the merchant to (1) charge the right amount, (2) only do it once, and (3) themselves take your privacy seriously enough to not have your information stolen by another party, who, if they did get hold of your card info, could abuse it at will and then share with more 3rd parties or have it stolen from them!
Credit cards are broken fundamentally. If the only kinds of payments were push payments, where consumers choose when to pay and the merchant has no ability to pull at will, the entire issue of credit card thefts - think Target, Home Depot, or the Russian hackers - would simply not exist.
So chargebacks due to fraud simply wouldn't be there. Sure, there are other use cases for chargebacks, like you felt you didn't get what you paid for or something, but that switches to a customer service issue which increases competition among merchants.
- Who cares about volatility? You don't need to own bitcoin to use it. When you want to send it, buy it at the time, then send it. Big whoop.
Also what is volatility on $100? Are you that concerned about losing or gaining $5, $10, $20 in a day, with a total maximum limit of losing at most $100 if it goes to zero, which seems extremely unlikely? Nobody said you have to invest your life savings. Participating in the technology is as expensive or as cheap as you would like.
- "Bankless people need banks, not cryptocurrencies." - Why? You didn't actually say.
"There's no difference to a bankless person between a mobile app to an online bank and a bitcoin gateway." - Which is great, because since "people need banks" (your words), bitcoin can finally provide it to them.
- "My credit card pays me back a chunk of that "1-3% tax on everything," my bitcoin wallet doesn't." - This is short-term thinking. Wouldn't you want something that can provide lower fees to gain market share in the long term, so that discount is not just available to the exclusive group of people who qualify for nice credit cards, but to every person, regardless of qualifications or payment methods?
- Last point is covered by my first point.
That is far from the only reason there is credit card fraud. Actually most credit card fraud is linked to identity fraud (a hacker stealing someone's financial credentials or posing as them on an online/offline store).
Most of the credit card information stolen from Target and Home Depot is not used but sold as quickly as possible on underground forums to "the greater fool" who is willing to take a risk to use it (if it still works).
Because of the chargeback system, those millions of credit cards stolen are not a huge issue for consumers because they can immediately lock down their card. Cards are replaceable keys. If you believe that you've been compromised, chargeback for whatever amount was stolen from you and change cards. It's a pretty incredible system for consumers when you think about it.
Contrast that to bitcoin. Your third-party bitcoin storage service gets hacked, your bitcoin are gone forever. You choose to store your bitcoin locally and you're exposed to physical theft (like keeping cash under your mattress).
Bitcoin does not solve the fraud/theft problem. I facepalm every time I hear that argument. Chargebacks are omnipresent today because they protect consumers because theft has always been and will always be part of any financial/payments system — simply because thieves don't target "how" you pay (push vs pull doesn't matter) but target where you store your wealth.
I wasn't arguing against this. Your credit card is where your wealth is stored, if it can be used to purchase things. And your wealth is stored with Target if they have your CC info. So places like that seem a likely target for attacks.
> Contrast that to bitcoin. Your third-party bitcoin storage service gets hacked, your bitcoin are gone forever.
M-of-N key schemes will prevent this in the future. Also not the only option.
> You choose to store your bitcoin locally and you're exposed to physical theft (like keeping cash under your mattress).
I don't see how. If your stuff is encrypted or your devices locked, then they would not be susceptible to theft from your mattress. They'd have to be stolen from your hand while unencrypted or device unlocked.
Not sure that I buy that most CCs are somehow gotten through a means other than 3rd parties who have them.
Another point is that if you get your info stolen, why should the merchant take the loss? They've already given out the product. It's your money to be responsible for, if the merchant doesn't hold the means to charge it, which they wouldn't with bitcoin. This realization will lead to more secure systems, since consumers would not be able to charge back willy-nilly.
Your credit card is just a means of payment (a key). Your wealth is stored at your bank.
All these merchants may have your bank keys, but they can't use it to charge you illegally because they will incur costs (a chargeback fee and then some). It a great system in which both the consumer and the merchant are incentivized to behave correctly...
Historically, it's difficult to trust many organizations. The US federal reserve and the US dollar have the best record/reputation in modern history. Top competitors have taken devaluations in WWII and even recently (British pound in 1992, Russian ruble in 1998). That's part of why many people use the dollar. Even now, after 2008, when everyone thought the currency was screwed because money was being printed fast, we didn't see inflation. But the dollar isn't perfect. As recently as the 1970s and 1980s the US dollar experienced double digit inflation.
Bitcoin is an alternative currency with less trust in a central authority. It's got a bunch of other features like you've both been talking about but it's real value add is the lack of central authority (both in terms of volume of currency issued and in terms of your ability to hold your own currency without a 3rd party).
Now, maybe you don't want to use Bitcoin now because you believe a problem with the US dollar or any other local currency is a 'low probability event'. That's totally reasonable. But it's also worth remembering that humans are known to be bad at estimating risk/reward from low probability events. Historically speaking, there will be a currency crisis in the next 50 years. I can't think of any fiat currency has ever gone 50 years without some sort of currency crisis (at least of the ones we have a good historical record of). Bitcoin aims to be the first one to do that. We'll see if it ever does.
And that's fine. Contrary to popular belief, most core Bitcoiners are not particularly interested in "converting" non-Bitcoin users. There was a big group that bought Bitcoin as a (risky) investment in fall of last year who try to pump it up, but they don't even share many of the core values of the Bitcoin community.
I do want people to be educated about their rejection of Bitcoin (i.e., "because tulips" is just annoying). But it sounds like you are making an education call.
So that's fine. I don't think traditional fiat is at any risk of becoming obsolete in the foreseeable future. We can co-exist side-by-side.
I hope you can afford us the same respect.
PS: I do strongly disagree with "bankless people need banks". Bankless people need to not be exploited, and the kinds of banks that accept people poor/no credit are usually not ethical/moral organizations.
Simply because a financial institution that provides those services transacts in bitcoin doesn't make it any more ethical/moral than a traditional bank. While it's true that bitcoin doesn't have a central monetary authority, you still need a gateway to exchange currency for BTC (currency exchange), some way to safely store your private keys (savings accounts), and lenders.
For most bankless people, a trusted third party is going to be involved somewhere along the way, BTC or not.
That's exactly who I'm talking about. And I think this will be the group who adopts Bitcoin, because there's a lot of friction in that market. Bitcoin is being seeing major adoption by markets with significant friction (silk road -> gambling sites -> ?).
>While it's true that bitcoin doesn't have a central monetary authority, you still need a gateway to exchange currency for BTC (currency exchange), some way to safely store your private keys (savings accounts), and lenders.
I agree that there will be a transition period.
No comment on my call for mutual respect?
I had no intention of doing anything other than striking up a conversation with people with a different viewpoint and more information than me.
Chargebacks actually suck. In the Netherlands the majority of online payments are made with Ideal, all banks are linked to it and it doesn't have chargebacks. It's awesome, cheap, fast, every bank participates and virtually everyone uses it. It's not just theory, the chargeback thing isn't even a problem, it's not a consumer protection that's needed or asked for.
Why is this so? Because of the nature of business. A business, like Amazon, has a brand. It's in business for decades, makes billions of dollars doing legitimate work. The moment Amazon takes $400 for a new phone and doesn't send it, then lies about it, and does this quite a few times, that's the moment the billion-dollar brand and business collapses. The chance that Amazon will scam you and you needing to resort to a chargeback is 0.
What about the other way around? What's the chance that I, with one of the 100 creditcards I can get, make an account, for every creditcard I have, and send $400 for a phone, receive the phone, then do a fraudulent chargeback? It's small, but it happens. Despite this also being rare, it happens orders of magnitude more often than the other way around. Now Amazon is out of a product and out of $400. It costs them too much to prosecute me (their 0.35% profit margin on that sale won't cover 10 seconds of their lawyers). All they do is blacklist the creditcard.
As you can see, this system invites fraud. It rewards criminals in a way that's pretty easy to get away with half of the time. Amazon now loses money, which means it (and every other business in the world) increase their prices a little bit, charging honest customers. We collectively pay for this consumer protection that is often used for fraud.
Guess what, bitcoin can have chargebacks TOO. IF a consumer really wants it, let him go to a third-party business and say look, I don't trust Amazon, I will pay 1% extra for you to insure the delivery. If I don't get the product, you pay me back the full amount and deal with Amazon yourself if you want. That market will arise if there is demand for it. Difference? In this market ONLY the people who don't trust the merchant they pay for the risk. (very rarely do I buy from a business I don't know, can't locate on a map, or that doesn't have a business registration, and as such I have never in the past decades of my life done a chargeback). All the other people now don't have to pay for the chargeback fraud.
Not only is this cheaper for all but it's also more equitable. Chargebacks ARE useful in one circumstance, which is when e.g. you bought 1 month at the gym, and they keep charging you for 12 months. But bitcoin doesn't have this problem because it has PUSH payments. YOU decide when to pay (excuse the arrogant capital letters lol, I know). Credit has pull payments, of course in a system where anyone can take money from your account is it useful to charge that back. But that protection has no need in a push-system.
- I don't need 10 currencies I'd be comfortable holding
Point is that there are hundreds of currencies, and most are shit. So while I'm comfortable holding my currency (euro), and you probably your dollar (as would I), that luxury doesn't extend to a few billion others for whom bitcoin may be viable. As for your quote of bitcoin volatility, I'm talking long-term here. A currency that goes from 1 to 100 to 1000 to 1m users of course is volatile. But when that settles down, the inherent inflationary properties (generally the root of volatility issues in any economy) have low-volatility.
Besides that, I already mentioned you can lock in the price of bitcoin in a national currency. I'm not saying we should all HAVE bitcoin, but I'm saying we can benefit from using it. That could indeed mean regular joes owning $100 (in bitcoin), pegged to the dollar price built on a back-end derivative market for investors, and using it as if it was paypal. That could happen, too. People are working on that, e.g. the founder of CNET who launched Bitreserve.
- My credit card company provides fraud protection for when my card is stolen, my BTC wallet does not
Circle, Xapo and Coinbase all insure bitcoins already, more insurance services will inevitably follow. The point is, whatever creditcard theft happens that you get reimbursed for, someone has to pay for it, and that someone is you and everyone else, and the amount it costs you and everyone else is the average cost of theft per person. Same with bitcoin. But if bitcoin has more secure properties (and I believe it does, push vs pull, lower chance of fraud, multi-sig, no possibility of getting your wallet stolen), then whatever it costs to insure against bitcoin theft will likely be lower on average than the cost of insuring against creditcard theft, meaning it's a cheaper system. Any of today's financial services can be offered for bitcoin, too, but due to its generally better properties, at a cheaper rate. That's why it's so cool. Bitcoin is a protocol-layer, you can build anything on top if you want.
- Until bitcoin gains market share
Agreed that there are quite a few issues that may not be issues if bitcoin gains market share. A bit like the internet: until internet speed becomes faster, I'm not going to be able to make phonecalls, videochat, download movies, watch live news etc on my computer, or hell even my phone - guy in 1995. That's not a reason to walk away, it's a reason to be excited.
Fraud is as applicable to credit cards as to bitcoin. You store bitcoin with a third party service means you rely on them to keep their servers secure and hope that hackers don't obtain your credentials/identity information to log in and steal your bitcoin. I would argue it's even worse with BTC because their is no fraud protection.
Chargebacks are an issue for merchants, but a huge advantage for consumers. Ultimately the economic demand comes from the consumer and not the merchant, that is why chargebacks are still omnipresent in ecommerce today.
Two areas bitcoin could have addressed are remittances and smart contracts, yet better systems are emerging to solve those problems (Ripple, Stellar, Ether).
Your arguments could be valid in a world where everyone uses bitcoin and doesn't touch fiat. This is not the case. Bitcoin is a great technology in theory but its practical applications are quite limited.
For point 1, obviously wrong. Any sale they make in bitcoin is one they save on their margins. Just because it's not applicable to 100% of sales doesn't mean it has no effect.
On point 2, that's true but is the discount 0? Because BitPay processes bitcoin payments at 0% right now (and has billion-dollar clients like Newegg already), with enterprise options. Point is, whatever discounts CC can make to large clients, bitcoin processors can do, too. Only more, because an average bitcoin order is inherently cheaper.
Fraud is as applicable to credit cards as to bitcoin
Absolutely, but there's obviously different levels of security. e.g. say I tell you 'let's move from checks to creditcards, it's much safer'. It'd be pretty silly to say 'no, creditcards also have fraud'. Yes, but checks are worse. Why? Due to its inherent design.
The inherent design of creditcards (1950s technology, by the way) is writing all the security details (i.e. your money-vault password) on a plastic card. And handing over that information to anyone you're paying, and then they can (and often do) keep that information on file.
Imagine you want to pay with cash at a supermarket and have to hand over your wallet to the company. And when you're done paying and leave, they still have access to your wallet for years.
It's a security nightmare. Bitcoin is different in that you don't send access to your money to a business, you just send money. It's by design more secure.
That's not to say the bitcoin ecosystem is a secure paradise, far from it. But I do truly believe that bitcoin's properties allow an ecosystem with less fraud. Things like multi-sig can create (in fact, already exist) third-party custodians who have no exclusive access to your money and just act as a signing counterparty, for example.
Chargebacks are an interesting topic that I'd be willing to talk about more if you want to know. But it's not a key issue. If it does turn out that chargebacks are wanted by customers, they can be built into the bitcoin ecosystem through third parties like today, keeping all the other benefits of bitcoin. But more importantly, chargebacks as they exist today are pretty shitty, invite fraud, create huge costs, paid for by the customer, and are barely needed. If you want to know the arguments, let me know I'll write them up for you, wall o text already.
yet better systems are emerging to solve those problems (Ripple, Stellar, Ether)
I disagree on the point of remittance, but I'm keeping an eye out for sure! These three are definitely exciting. All three projects by the way see themselves co-existing with bitcoin, check out the bitcoin talks by the CEO of stripe who launched Stellar, but you're probably familiar already.
Cash has no fees and debit has negligible fees (a few cents plus up to 0.05% in the US). Most B2B transactions aren't done with credit cards either.
When you get fiat from anyone, you can not assume the availability of the same currency tomorrow. The state controlling it can arbitrarily create more whenever they please. That is the dominant source of inflation in fiat currencies, whereas in btc and other cryptocurrencies the velocity of funds becomes the influencer in that same regard. That happens in fiat too, but is overwhelmed by the prevalence of unpredictable money printing.
The point is that with a sufficiently entrenched cryptocurrency, that volatility due to money entering or leaving the market (ie, buy some btc as an investment and sit on it) is drastically reduced (and the volatile availability of funds combined with the speculation gives bitcoin its unpredictable exchange rates) you eliminate the most prevalent forms of unpredictability from your money - since with crytocurrencies, the algorithm makes the monetary base very predictable, and if you had a currency at a "good" inflation rate generating a lot of monetary velocity the frequency of funds leaving the system for an extended time (besides lost wallets) would be even more negligible.
That inherent overhead of unpredictability in fiat is a natural "fee" that everyone has to subconsciously consider what evaluating transactions using such currencies.
I think the next big economic bubble/cycle in cryptoland could come thanks to advancements in these two projects.
The fact that both teams get along really well is also awesome... http://bitshares.org/wp-content/uploads/2014/06/Dan-Vitalik-...
http://www.reddit.com/r/BitcoinMarkets/comments/2ftfti/bitsh...
Bitshares X only launched a couple of weeks ago, it’s really only at an alpha stage at the moment and it has already hit the number 4 spot for market cap at http://coinmarketcap.com. It has had days in the last week where volume has surpassed that of Litecoin. The on-chain exchange built in to the wallet client cannot be shut down or manipulated/debased (like Mt Gox), I think this is one of the first things that grabs peoples attention. Especially Chinese investors or those burnt by Mt. Gox.
The most interesting thing is that on this distributed on-blockchain exchange you can trade your Bitshares (BTSX) for BitAssets pegged to real world assets such as the $ or BTC or even gold. I think I understand how it all works and if the market pegs work, which it seems to be at the moment for BitUSD, then it’ll provide great utility. It’ll promote the ability to actually hold you wealth securely in crypto in a less volatile way rather than cashing out in to real fiat for its relative security like many crypto traders do. BitShares X is an experimental DAC, like Bitcoin, but if it works then it avoiding the issue of having to cash out to real fiat gives it a significant plus point over Bitcoin in my opinion.
Citi bank recently pointed out that news often touted as being ‘great news’ for Bitcoin (e.g. Dell accepting Bitcoin) actually puts downward pressure on the price if they immediately cash out to $ using a services such as BitPay. Dell use this service to protect themselves from Bitcoin's price volatility, but this is liquidity that leaves the Bitcoin/crypto ecosystem. This is not good. It’s only if these companies such as Dell hold their crypto or at least part of it (i.e. like Overstock does) that the liquidity in the Bitcoin ecosystem grows and so does Bitcoin with it. Read up on the details about what Citi had to say here:
http://www.coindesk.com/citi-miners-merchants-keeping-bitcoi...
If the BitShares derived BitUSD actually tracks the $, and it seems to be doing so, then you, or Dell, would have no reason to move money out of the crypto ecosystem. This is of huge benefit for the crypto currency/equity ecosystem because it means that wealth stays within the system and does not leak back out to fiat. Holders of BitUSD also get paid a yield/interest for holding BitUSD and some have speculated that the amount may be as much as 10%. Add to this that the guys behind Bitshares are actively talking to the guys at Ethereum an the future look really bright I think,
I recommend reading the AMA above and follow some of the links to the FAQs about BitShares. I think they are on to something significant. Please feel free to shoot me down in flames if I’ve missed something or if you have a different view. Like I say I’ve been following the BitShares story for over a year now and it’s great to finally see the vision of the distributed exchange and BitAsset market peg make it from theory to reality.
Disclaimer : Very recently I moved a significant percentage of my BTC holdings (more than 50%) in to the BitShares X ecosystem with the intention of going long. Naturally I personally would like to see more people share my views. But do your own homework on this one and never invest more than you can afford to lose!
No. It's pegged to nothing.
>Once the market has reached a consensus that BitUSD should be valued the same as a real US Dollar no one will be able to trade against that consensus without losing money. Thus the value of BitUSD today is based upon the prediction of what market participants will value BitUSD at in the future. There is only one rational way to speculate, that the consensus will hold, and that creates a self-enforcing market peg.
In other words, basically bitusd is supposed to follow usd because it has 'usd' in its name. It's beyond ridiculous.
http://bitcoinist.net/bitsharesx-i-join-the-grand-experiment...
Which makes it pegged to usd how?
The only way a dollar peg can work is when there exists an entity (it doesn't matter what it is, it can even be an alien civilization) with very big amount of dollars, ideally infinite. When the pegged currency gets too cheap it has to spend dollars to maintain the peg. There's no long-term reason for anyone to spend their dollars to maintain bitusd peg. The short-term reason is a modified pyramid scheme: as long as the cost of maintaining a peg is less than the influx of new money from people buying into btsx because of currently working usd peg (and perhaps others), it will be maintained by major btsx holders.
1. As a consumer, it's fast and cheap. My dad in France can send money, instantly, to me who live in the US. No waiting days for wire transfers. No trip to a local Western Union branch necessary. No exhorbitant fee (worldwide remittance fees average 9%!) I don't even have to bother exchanging the coins with dollars to spend them, because more and more merchants begin to accept Bitcoin.
2. For consumers in countries who do not have a stable currency (Argentina with 30%+ year-over-year inflation!) - Bitcoin helps them protect the value of their savings.
3. As a merchant, Bitcoin reduces fraud to zero from my viewpoint. When my site receives a Bitcoin payment from some first-time customer from a foreign country, I can still ship the goods or services to him without worrying it is a fraudulent purchase that will be charged back, because Bitcoin payments are irreversible unlike credit cards.
4. As a merchant, I make more profits. CC payment processing companies typically charge approximately $2 on the purchase of a $100 item. My industry has thin profit margins: the item might have cost me $95 from my distributor, so I make only $3 profit per sale. However typical Bitcoin payment processors like Coinbase or Bitpay only charge 0-1% in fees. So I make $4-5 dollars of profit per sale. This is 33-66% higher profits per sale!
2. Yes, that might work but it's extremely risky and complicated. When if you need to cash out quickly? What if BTC prices goes back to 150 USD because a large BTC holder (an investment bank) decided to dump the price?
3. Yes, that's true. But you have to do some kind of leverage for your prices automatically adjust btc-to-usd (or eur), otherwise BTC volatility might kill your business. But this is true, it's safer and quicker than credit cards + no other parties involved/documentation/transaction costs.
4. Yes but a volatile currency that has no central bank behind it, is not gold-backed and has no country who will support it, any economist knows that can go from 1000 to 0 in less then 3 hours. If you're sleeping in the meantime you might end up loosing way more than your pre-calculated predictable CC costs.
"no country who will support it" is a feature. Many users of Bitcoin are deeply mistrustful of the government's ability to manage money, and making it distributed literally puts all the power into the hands of the people.
> Many users of Bitcoin are deeply mistrustful of the government's ability to manage money, and making it distributed literally puts all the power into the hands of the people.
Here: http://www.convalesco.org/blog/2014/02/11/on-the-matter-of-b...
[1] http://moneymorning.com/2013/01/29/why-germany-wants-its-gol...
3 & 4: None of your complaints matter to most merchants who accept Bitcoin, because they do so through processors like BitPay/Coinbase. And processors completely remove the risk of volatility: they deposit the dollar amount the merchant requested directly in their bank account.
Kidding? Many many many immigrants who come to the US come in order to find a job so that they can send money back home and help support their relatives who live in the developing world. It is incredibly common, and Western Union (and only a few other players) have had a monopoly/oligopoly in this space for far too long, making bank.
How exactly would that go? Work -> Get paid in USD -> Convert to BTC -> Send -> your Taiwanese family gets the bitcoins -> Convert them to local currency -> Enjoy!!!
You can't be serious, indeed the % of people who opted for this solution is probably so big that could feel comfortable in a 24m^2 room.
Yes.
"You can't be serious, indeed the % of people who opted for this solution is probably so big that could feel comfortable in a 24m^2 room."
Here's a thread full of people who have tried this very process:
https://bitcointalk.org/index.php?topic=74952.0
It is quite easy, and more inexpensive than other forms of international money transfer, to convert money between fiat and bitcoin at this point, in many countries. On Coinbase for me at this point the BitCoins are available instantly after purchase. You should give it a try sometime :-)
2. Is a volatile virtual currency powered by market speculation the best alternative for inflation-ridden currencies? I facepalm every time I hear this argument.
3. and 4. Agreed. Bitcoin is great for merchants. Unfortunately economic demand comes from consumers. More merchants accepting bitcoin does not imply more consumers adopting it, in particular because those same merchants accept traditional payment methods in parallel (credit cards). That's a big red flag for me.
Bitcoin certainly is volatile (down from $1000+), but on the long term, if you hold it for at LEAST 1 year, it seems to at least keep value, if not gain value.
Umm, no. He can't send you "money", using BTC. All he can send you is bitcoin. There's still this pesky business of converting between bitcoin and fiat currency, on either end. And all the preamble about getting your Uncle to sign onto one of these proxy services (and to accept the general idea of bitcoin), and all that.
Maybe the overhead works out favorably in favor of BTC in the end, or maybe it doesn't. But the tradeoff isn't nearly as simple as you're making it out to be.
Look, bitcoin is money. It may not be as universally accepted as a national currency, it may not have some official country issuing it, but it's still money.
You don't necessarily have to convert it to anything. As he said, he actually used bitcoin to buy computer parts at a billion-dollar company like Newegg, which is just one of multiple billion-dollar computer companlies like Dell and Tigerdirect, just to limit the examples to billion-dollar companies in the computer retail industry.
And I recently signed up with Circle. The process of signing up takes 10 minutes, like opening a gmail account, you can then buy and sell bitcoin instantly and it's completely free, zero fees. It's founded by Jeremy Allaire who built a billion-dollar company now part of Adobe (ColdFusion, used by 75 of the fortune 100). Point is, within a very short timespan of 1-2 years we already see industry veterans like him jump into this market to make it more and more frictionless, they already managed free and instant bitcoin purchase and sale, insured, too, in fact.
Perhaps you missed that part where the grand-parent explained you don't even need to convert bitcoins to dollars as merchants begin to accept them (DELL, Dish Network, etc). This is true at the other end too: you can just sell something for bitcoins - no need to use an exchange service.
For example if I need to send money to China within an hour without prior notice, BTC would be extremely handy.
However, I don't know or can think of any such because turning BTC into local currency is both hard and expensive.
With the benefits being: fast (with traditional currencies, settlement takes two days), easy to integrate, and open source. In particular, the latter point can offer a huge strategic advantage. Linux is successful because companies like IBM do not want to depend on Microsoft. Bitcoin can be successfuly for the same reason - namely because big corporations prefer depending on an open standard over depending on a competitor's payment system.
When other corporations realize what is happening they will dump the currency in no time and the currency will lose value.
The Linux is not controlled by anyone. Any company can build upon it, modify it and do what it needs to do. The comparison between Linux/BTC is extremely flawed!
Thus, your argument does not apply.
An issuer of colored coins would be centralized. It would be a weak spot that needs to be trusted and that can be controlled. The benefits of bitcoin would soon be lost.
It is expensive, time consuming, and generally painful. Consider buying something on Alibaba using bitcoin. I'd suggest that bitcoin adoption which is beholden to no particular country, opens up opportunities as a consumer, and more options for finding the right supplier overseas for business.
I've lived in the U.S., Asia and the Middle East, and to me bitcoin answers, or potentially answers, my needs.
And much as I have mixed feelings about paypal, I use it often for ebay and other vendors for convenience. Assuming their fees are not too high, I would not mind using them as an intermediary into traditional bank accounts.
People get too hung up on the idea of using Bitcoin in exactly the same manner as they do dollars. It may happen at some point, but for now it is used as a means of transferring value. If we consider only this use case, the advantages are abundantly clear. Then, we can start debating and speculating on Bitcoin's merit as a full currency.
- Absolute control of my own money. My bitcoin payments will never be frozen, unlike my debit card + paypal have been.
- Ease of use; it is simply easier to pay via bitcoin (once you have the bitcoins) versus credit card. (I can click a link, my bitcoin client pops up preloaded with the amount, I click "pay". Only other thing that comes close is PayPal).
- Anonymity of purchases and donations. I can (and have) donated money to random people on internet forums without them needing to even know my (real name containing) email address (such as would be the case with PayPal). I've gifted online strangers with Pizza!
- Don't have to give vaguely untrusted merchants my card details. The most I'm trusting them with is to deliver the product.
- To support the potential future applications. This is programmable money with an API open to any software developer on the face of the earth.
- It's just freaking cool. It's like science fiction. It's like having a star wars credit chit. Which can be stored on my computer or phone. Paper wallets are cool too. So are brain wallets.
There are of course some downsides to Bitcoin, but I'm sure you can think of those yourself ;)
We generally think about two ways you can integrate with Braintree on the front-end: the drop-in UI and custom. Drop-in [2] means you yield control to us, but you get a dead simple integration which includes one touch paypal and venmo out of the box. If you go the custom[3] route it's obviously more work to integrate, but adding one touch only requires some button that starts the paypal or venmo flow.
Edit: You can also download ParkWhiz (https://itunes.apple.com/us/app/parkwhiz-find-book-parking/i...) and install the PayPal app to see the user experience for yourself!
[1] https://developers.braintreepayments.com/ios/guides/one-touc... [2] https://developers.braintreepayments.com/ios/sdk/client/drop... [3] https://developers.braintreepayments.com/ios/sdk/client/payp...
They are looking for a life raft. Thats what coinbase move is about... appeasing their shareholders. But heres the thing about coinbase.... nobody needs them either.
As in, do you have some empirical basis for that statement -- as in, you know, something related to actual statements made by the creator(s) of the original bitcoin protocol itself? Or is it just something you find nifty to believe in (therefore it must be true)?
Please clarify.
The reality is that as it stands now, Bitcoin is hard to understand and properly use, so even though it can be used as-is if you know well what you are doing and are careful, for Bitcoin to be usable for the vast majority of people a layer on top that makes it more consumer friendly is most likely necessary. Thus Bitcoin itself probably won't replace PayPal on its own, but a service that "consumerizes" it like Coinbase or Circle might, if Bitcoin were to become massive.
You can say it all you want - that doesn't mean it's going to happen. Personally I see cryptocurrencies becoming popular enough that 'normal' people use them from time to time and understand how they work but I don't see the entire global economy switching from current currency forms to cryptocurrency anytime in the near future.
Two years from now, merchants won't be paying 3%.
Merchants just charge everyone a little more, and nobody cares.
I am pro bitcoin but, I am very skeptical of the frequent claim that bitcoin will enter mainstream usage without fees similar to that of credit cards.
Others will pay a small fee for the convenient that a full-service solution provides. Right now, bitpay charges 0% and a small monthly fee for payment processing. To be honest, I see them staying with that business model, perhaps permanently.
If they or other incumbents start jacking up the fees, someone else will take their place. Bitcoin community is swarming with entrepreneurs.
If you run a SaaS company and your Pro service level costs $20/month, would you change your price to $19.40/month if you were able to eliminate credit card transaction fees? What if your service involved a little bit of manual data entry by your employees every month and you found a more efficient way to do that; would you reduce your monthly fee by the effective cost of the few seconds a month of employee time you've just saved? Perhaps drop it from $19.40/month down to $19.37 a month? Of course not. Whoever signs up for your service sees value in paying $20/month and they honestly don't care what your underlying fee structure looks like.
What would be the alternative? CC, ACH, and most other payment systems also have a mechanism for chargebacks.
Seriously, this is precisely the kind of thing common law and the court system is for. Just the same as your recourse with cash. As for international trade, buyer beware.
Edit: My Localbitcoins user is vivab0rg if you'd like to check.
On 98% of the days that you could have purchased Bitcoin you would have realized an increase in purchasing power in a year's time. In those 2% of cases where you could have purchased Bitcoin and seen a loss over one year, you would have still seen an increase in purchasing power in another 300 days. (This is mostly dealing with the June 2011 bubble)
There has never been a time where you could hold Bitcoin for 2 years and lose purchasing power. On the contrary, holding Bitcoin brings on average a 5x per year return in purchasing power.
Past performance, future gains, blah blah. Judgement is about taking into consideration the facts we have now and comparing them against past performance. There are very good reasons why Bitcoin is valued around $6billion now and very good reasons to think it will be valued higher in the future.
You should be placing your life savings in Bitcoin, and only purchasing the USD that you require and holding it for as short of a period as possible. This would have been the best strategy for 98% of 1 year periods over the last five years, and 100% of 2 year periods over the last 5 years.
Debit cards that draw on Bitcoin balances and allow you to use the VISA and Mastercard networks should be the most interesting products -- because they allow you to expose yourself to the dollar's periodic collapse against Bitcoin for the shortest period of time.
I'm sure I'll be downvoted and that people will tell you that Bitcoin is super risky and that you should only invest what you can afford to lose -- but shouldn't that be the case for the dollar and not Bitcoin?
The dollar loses 90% of its purchasing power against Bitcoin on semi-regular schedules, and people keep purchasing more after each collapse. This routine should get old after a while, but that's what happens when you don't use Bitcoin as your unit of account!
Confusing short-term speculation with sustainable added value here.
The fact that my post is even controversial is kind of silly if you think about it. All you're saying is, "Yeah, but!"
over the last five years of its existence The first exchange didn't come online until summer of 2010.
What's the 1 year picture like for everyone who had coins in Mt. Gox?
You're complaining that Bitcoin hasn't been around long enough to make a proper measure of its performance. Then you complain that people who gave control of their coins to Mt Gox didn't get their coins back.
I don't understand what these complaints have to do with the fact that Bitcoin has been a fantastic savings vehicle for five years running. (Or four if you prefer)