It can be useful for people who either don't have access to credit cards but have access to bitcoins, people who already have a lot of bitcoins and curious tech people.
To name a few benefits:
- There are no chargebacks
- Funds are available immediately (though transferring from BTC to USD may take a day)
- You can accept payment from anyone anywhere in the world (harder with CC atm)
- Fraud detection isn't as important w/out chargebacks. Granted this is a concern for consumers, which is why they need solid security for their wallets. I think of it like cash transactions. You don't have to worry about someone coming into a store and claiming that someone spent their $5 bill with serial code 123-xyz after stealing it.
http://www.ncsl.org/research/financial-services-and-commerce...
I'm pressed for time at the moment, so I can't provide a link.
You can say "if you are dressed like a clown today we will give you a 10% discount". Point being that there is nothing to prevent you from giving someone a discount as long as it doesn't break any laws and as long as you are offering it to everyone that falls into the same category (or the discount has been negotiated).
In in the fine print it was clear that offering your customers a cash discount was grounds for immediately canceling your ability to take credit cards. If I recall rightly, I noticed because the store I was at did indeed offer a discount. In practice, I'm sure the store was small enough that VISA didn't care. But for larger operations I'm sure it was a serious threat.
I believe they were eventually sued and lost, but since I rarely see discounts like that, I imagine they have some sort of not-quite-illegal trick, like offering merchants advertising credits based on charged card volume.
"Beginning January 27, 2013, merchants in the United States and U.S. Territories will be permitted to impose a surcharge on consumers when they use a credit card." http://usa.visa.com/personal/get-help/checkout-fees.jsp
It's good that governments still have a bigger stick they can use to beat some sense into corporations.
It seems to me like there's three contracts involved: The agreement between merchant/CC, consumer/CC, and consumer/merchant. Since these are all private parties, why does the government even care what contractual arrangements they make among themselves regarding how the form of payment affects how much needs to be paid?
This is a huge negative for the customer, though
I had to charge back twice because the seller kept on charging me on the same credit card number! At least with Bitcoin you're only in for whatever you pay.
Yes, just long enough, like Butterfly Labs. (Credit card purchasers: could do a chargeback. Bitcoin purchasers: SOL.)
Chargebacks and reversibility in general are essential to consumers. If shit goes wrong, it's gotta be fixable.
(This is also why nobody actually wants smart contracts. They know that the plot of Dr Strangelove is literally an irreversible smart contract going wrong. Consumers want fixability, business-to-business wants the option of lawyering out of a bad deal. The only people who want smart contracts are the businesses who currently screw over their customers with mandatory arbitration clauses.)
eg I would gladly take a 2% discount with Amazon, as it would save me hundreds over time.
On the other hand, if I were trying out a new SaaS product I would start with a credit card and opt to use BTC once I trusted the company and their product, much like I wouldn't buy a 1 year subscription for a 10% discount without first using the product for a month or two.
Then as a significant proportion of the population (say 20%) starts paying with bitcoin, other online shops like amazon will start seeing that they are saving a LOT by not paying 2% interchange fees to cover bullshit credit card reward programs and fees. And then the number of stores charging an additional credit card levy will increase as shops are not automatically building the credit card fee into the price, and then the number of people being pushed into bitcoin will increase.
The only thing that can stop this is credit card companies effectively lobbying that shops cannot charge more for credit card payments. this has happened historically in some juristictions, but is really pretty hard to justify for any sane reason so will be unlikely to stick.
This will either really marginalise credit card companies significantly, or really force them to put the screws on their interchange fees (and greatly reduce their rewards programs).
In either case, Bitcoin isn't going to take over the world, but whoever can figure out a good way to deal with the problem of how regular people could easily obtain Bitcoin in the first place has a chance to skim some profit in the interim.
This might be a US-centric perspective. In France, to my knowledge, there are no such rewards, and no chargebacks. Still, there are transaction fees, so merchants would have everything to gain by proposing Bitcoin payment and sharing the savings with the customer.
Last time I booked a flight, I did it with Bitcoin via btctrip.com. It worked out a little bit cheaper.
I'd rather have the ability to do chargebacks if something goes wrong.
For example, Amazon has never screwed me on a single purchase. If I have an issue they fix it, which is a large part of why I often pay 5-10% more for products on Amazon.com instead of XYZ.com. Would you use BTC for a 2% discount with sellers like this?
I wouldn't get anywhere near that site.
Why not buy a refillable Visa at a convenience store?
http://www.smbc-card.com/prepaid/brand/guide/index.html
SMBC apparently has them, too.
Cheaper fees (0.5% vs 2.9%) can be potentially passed on to consumers.
And anonymity.
Sometimes, just a cell-phone camera.
Most e-commerce stores have access to a printer.
The problem with Bitcoin is that it is extreme volatile. So you may gain or lose money. So while a 2.9% free on dollars is fairly predictable, you really don't know what the final "fee" would be on Bitcoin.
> Fluctuation-resistant
> Avoid exchange rate hassles—specify amounts in USD and we’ll send you dollars.
Why should I buy bitcoins for let's say $300 and risk them being worth $200 in a few weeks (which would cost me 33%) instead of keeping my money and paying directly (maybe 3% fees for the seller)?
And if you're already thinking like that, Bitcoin isn't nearly as scary.
That's the past year. The flat blue line around 0% is CAD vs USD. The crazy red line that's all over the place, swinging by as much as 100% in a matter of weeks, is CAD/BTC.
If anonymity is important to you, then you can hold BTC, and pay the volatility cost.
Just look at the addresses the stolen bitcoins were sent to.
I was just pointing out that bitcoin is anonymous when used by someone with a brain. (I.e not Ross Ulbricht, who apparently sent money to an assassin from his personal wallet, without using a mixer.)
It's different with something like speech, where we have a rational principle that says "people can speak as a general proxy for hypothetical positions." But you can't make hypothetical purchases, and you can't represent a general population with anonymous purchases. So anonymous purchases don't have a social basis for the same protections.
People need money to speak freely (especially when they are persecuted for it), and those donations should be anonymous.
I think think of far more cases where anonymous transactions are harmful than I can where they are beneficial.
Do you think all free speech should be only with identified speakers? How would you feel if your entire spending history was in the public domain?
In most of your examples, you can easily pay with cash, which is anonymous.
I wouldn't care if my spending history were public, but that's obviously not relevant. I don't believe spending should be anonymous. I don't believe people should be allowed to make any purchase they desire without penalty. I do believe people should be able to speak without penalty, as people are better able to ignore bad words than they are bad money. Money corrupts people far more effectively and quickly than speech.
>It's not illegal per se to donate to wikileaks, but you may be put on a list somewhere.
So? You're already on a list somewhere. Are you arguing that you have a right not to be on lists, and that this has anything to do with currency?
>In most of your examples, you can easily pay with cash, which is anonymous.
No, not "easily." You have to go to a bank and sit in front of their cameras while they hand you money. That's not the same as anonymous internet transactions. And the person you are giving money to will see you hand it to them, unless you jump through some hoops. And jumping through hoops is shady when you're doing something illegal. And someone cannot steal your cash without being physically present, and thus requiring knowledge of your location and opportunity to leave a trail of evidence.
I mean, if it were so easy to pay cash, what value does bitcoin even bring to the table? Why are all these bitcoin advocates not just using cash, if they are so similar?
Look at Tor. It's never been broken by tracing back each relay, even though there are usually only 3. All the hacks were vulnerabilities in other things, like browsers or websites.
In the end the process of money laundering ends up being significantly more complicated than with "real money".
Don't go and compare Tor to BTC, just don't. They share nothing from a technical PoV.
The comparison of Tor to BTC was mainly comparing mixers to relays. Just like you need every relay to store logs if you're going to go after all of them to break the chain, the same holds true by mixers.
Exchanges will most definitely be storing logs, so that won't help much.
Comparing mixers to relays isn't valid either, with BTC the attacker will have access to the blockchain, which is basically the worst possible attack scenario for Tor.
And in any case, there isn't enough BTC transaction volume to reliably hide large amounts of BTC.
that says nothing for coins mined directly, wjere there is no link to any real world identity held anywhere, just a bitcoin payment address.
Since there are more avenues of trade available than say, with cash, laundering and other clever tactics can be used as tools to cover your tracks.
As always, the only way to keep yourself safe is through GOOD OPSEC. Bitcoin is an evolution of the currency concept, a tool for moving and representing wealth; nothing more.
Volatility of Bitcoin prices puts stock market rate fluctuations to shame. Think of it from the market price point of view and from the point of view of an end user, like me - who'll buy Bitcoins (yes, one who didn't win the gold rush lottery or couldn't afford the mean machines or wasn't just aware) to buy a pair of jeans which has its price fixed at, let's say, $59.99 since last 7 months. When I bought the Bitcoins it cost me $1200/b.c, but the next day when I went to buy that jeans with my Bitcoins - or maybe I just wanted to convert it back to dollars, it was at $800/b.c or let's just say $1100/b.c if you find the former rate too far fetched.
Trust me, it just doesn't make any practical financial sense to me and no, I am not in the minority, I am part of the majority. If you say that "Bitcoins were never meant for the majority in the first place" then it's a different story altogether.
Also, if I would have had the 1000s or even 10s or maybe 100s of Bitcoins from the initial gold rush (given I was able to afford an able and mean mining rig) it would have been a different story - I mean my "different" point of view then.
And just to be clear I value my privacy just like I know my affordability and financial limits too.
That's one of the main points about bitcoin for me. As a tool for privacy. On the surface it may seem trivial, and corporations living off mining your information will always try to pretend it's not even an issue by simply avoiding mentioning it. While at the same time push for their payment solutions as either compulsory or cheaper ("soft pressure"). But make no mistake, this is one of the most effective tools for mining your data reliably and the likes of Google, Facebook, Amazon, etc are just not going to give up on it easily. Authorities also won't give up on "follow the money" as a tool, or even snooping and hacking into your communications legally or not, inside of their jurisdiction or not. It's basically no rules for some, all the rules for you.
Why?
When my CC data is stolen, criminals everywhere have access to my current personal information, often even address, phone, picture. I cannot possibly undo that damage. Losing a regular payment for me is NOTHING compared to that. Just having Google have all that next to other data mined about me from people using gmail accounts to mail me etc, it's massive. I just do not trust corporations to deal with my personal data so I take at least a modicum of measures against these dangers. By simply paying through CC you are giving everything away in one swoop.
I've had my credit card "scammed" several times and I just fill in a piece of paper and the bank refunds me the money and each time it's cost me exactly zero euros.
I've used Bitcoin a few times and love how it works, but my lack of understanding of the security precautions required to handle hot & cold wallets + the volatility of it makes me just averse to it. I prefer my credit card getting scammed anytime to the uncertainty of what will happen if I convert a large amount of euro to btc.
This is the entire value of bitcoin in my opinion for the average CC holder in the US. I simply don't trust people with my details. It seems like I get a new CC every few months because of some data breach, which entails me having to change any subscription services etc. Anon transactions may be a big point for some, but you are entirely correct when I will more than likely be providing my address to people who I pay with bitcoin. However, they won't have my CC details. I think it will be a better "payment buffer" than paypal. Hopefully cheaper also.
Also, while we're talking about price, people sometimes conflate bitcoin transaction volume with bitcoin price, forgetting that for every buyer there is a seller. As a means of transacting, bitcoin is great, especially for small amount or across borders. It makes no difference what the price of bitcoin is as long as the buyer and seller are immediately converting out of bitcoin and into their local currencies - and that has no long term impact on price.
Unless of course many people notice rising transaction volume, confuse the trend, and then invest in bitcoin, which then becomes a self-fulfilling prophecy.
"bitcoin transaction volume" is worthless. Anyone could easily make a new record in btc txs for a thousand dollars. If I send money to myself, it counts as a tx.
The real concern with bitcoin is that it can only support 3 transactions a second with the current codebase. Gavin wants to fork it to get rid of the block size limit, but there's been opposition.
Do you mean like a currency that was worth $650 against the US dollar a year ago, and today is worth $250 against the US dollar? That kind of stability?
Look at the Argentinian Peso, it has lost almost 90% of its value against the USD since 2001. http://finance.yahoo.com/echarts?s=USDARS%3DX+Interactive#%7...
Even the most mismanaged government manages its currency. No one is managing bitcoin, it's price reflects the volatile market whims of a cryptocurrency backed by nothing but computation and beset by fraud. The volatility is not going away.
>Even the most mismanaged government manages its currency.
Governments don't manage currencies.
>No one is managing bitcoin,
No one managed gold when all currencies were gold backed and it did not see bitcoin's price volatility.
>it's price reflects the volatile market whims of a cryptocurrency backed by nothing but computation and beset by fraud.
No, its price reflects the low volume.
>The volatility is not going away.
Nobody can predict the future.
You might want to read up on Central Banks. [1]
>As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.
> However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve's activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as "independent within the government" rather than "independent of government."
The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation's central banking system, are organized similarly to private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
Lets say you work from Argentina for a company abroad. You have three options to get paid:
1. Wire transfer, the compay send you dollars or euro and you get pesos at the oficial rate.
2. There is always people trying to pay things outside, you can give him your dollars outside in exchange of dollars inside arg por pesos at the blue rate.
3. Buy bitcoins outside sell inside.
1. You lost 30% exchange rate, you will not be able, to buy dollars back at the oficial rate.
2. Is 3%
3. Is 10%
Since 2 and 3, are not 100% legal, you will have problems buying things since you cant justify your income.
There was a case where a money transfer was seized between two european countries over Cuban cigars because at the time, the US had a trade embargo against Cuba.
Why shouldn't you invest in Bitcoin for savings? Look at a one month chart. Or look at a three month chart. Or look at a one year chart. Or look at a chart from the beginning of bitcoin and ask yourself: "is this what I want the value of every dollar in my savings to be worth?
Yougottabekidding
* Today's bitcoin / USD High/Low trading price shows a swing of a bit more than 3%
* Today's Argentine Peso (ARS) / USD High/Low trading price shows a swing of 0.1% (Argentina being a country with high inflation problems)
If I were to work in Argentina I would rather get paid in BTC than ARS, due to liquidity constrains. I would probably convert most of the money to USD, EUR o CHF, but I would keep some bitcoin if I had where to spend them.
I believe you are looking at the official rate.
Having said that, even if I was Argentinian I wouldn't hold any significant wealth in Bitcoin.
(By dollars directly, I assume you mean by credit card or paypal.)
Credit cards and paypal come with the ability to do chargebacks which are useful if you don't fully trust whoever you're paying, but credit card companies and paypal are middlemen who must be trusted too. If I trust the company I'm giving money to more than I trust paypal to not fuck up or delay the transaction, then I'll immediately choose to use Bitcoin.
Also Stripe is now the middleman. I'm not giving BTC to a merchant, I'm giving it to stripe to give to the merchant. That's good also, because I trust stripe more than merchant XYZ.
Credit card transactions take something like 180 days to confirm. Within those 180 days one can issue a chargeback.
Bitcoin transactions take ~10-60 minutes (depending on the required number of confirmations) and cannot be clawed back.
I legitimately wanted to use my Canadian credit card to buy something in the US and have it shipped to me in Vietnam but the merchant naturally was unwilling to take on the chargeback risk and I was unable to complete the purchase.
Western Union is also expensive and inconvenient (although somewhat less so than the bank).
Where do you live?
This seems to be the norm in most of Europe. AFAIK the big US banks let you do wire transfers online too.
I still don't understand what I'm missing out on by spending read USD directly.
Additionally, those with the least access to modern banking facilities probably don't have the best access to facilities for efficiently making use of bitcoins, either.
People with the mindset of "USD government printing money => value of USD goes down" have been predicting QE-based inflation for years, and they were wrong. When you drop this incorrect mindset and adopt the correct one (supply and demand!) it's easy to see why: QE did not make people richer, so it did not lead to the kind of significant increase of demand that would be required to trigger a rise in inflation.
so the first thing you say, about the US government printing money and the existing money becoming worth less, this is known as inflation.
Yes mining bitcoin is similar to printing money, however you cannot 'print' bitcoin infinitely as you can with US dollars. This is why bitcoin is known as a deflationary currency and many people think this is a negative aspect to its adoption, but if there was no artificial scarcity i.e you could make as many bitcoins as you wanted when you wanted then there would be no value to them whatsoever.
>currency gets destroyed buy (sic) governments Do you mean by inflation or do you mean they are putting it all in a furnace somewhere?
They destroy old used notes yes, but that doesnt take it out of circulation. if they burn $100million then they have $100million in fresh notes to go back out into circulation. That money comes from banks, those banks are holding it as deposits for customers. If the government 'destroyed' it then those people would not have any money in their bank accounts.
Far from destroying money or removing it from circulation many governments have been printing money like nobodys business over the last half a decade. Google Quantitive Easing to see the offical description of it and what they hope to achieve as a result.
You mean it isn't a fiat currency. All that means is that Bitcoin's value isn't backed by a government, but is instead derived purely from the ability for someone to spend it.
> If it was a currency, if $1 USD was paid for a Bitcoin, that USD would be destroyed, not pocketed.
What? Since when? If you spend USD to buy EUR, the person on the other side of the transaction is giving you EUR and pocketing the USD. No value is destroyed.
Re: USD for EUR - As you mentioned above those are at set rates between fiat currencies, and therefore there is practical reasons for the currency having a value. Bitcoin's value is mostly dependant on demand, which is being pumped up and perpetuated by investors and those with vested interest in the ecosystem including those who own Bitcoin and larger amounts of Bitcoin - who all want the value to go up 10x - 100x.
> Bitcoin's value is mostly dependant on demand, which is being pumped up and perpetuated by investors and those with vested interest in the ecosystem including those who own Bitcoin and larger amounts of Bitcoin - who all want the value to go up 10x - 100x.
You're absolutely right: since Bitcoins aren't backed by anything real, their value is purely based on demand. But I disagree with the notion that speculation is the only reason they have any demand. Plenty of people are using Bitcoin in the real world, e.g. to make purchases anonymously or to easily send money overseas.
The special Bitcoin usage of "fiat" stems from goldbug pamphlets from a century ago. But it is a misuse of the word.