Comment by lmm | Hacker News Reader

Comment by lmm | Hacker News Reader

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> Or as another example I once rented a VPS for a month from Russia. I paid in bitcoins because it was $3 or $4 so I simply didn't care if the VPS provider didn't deliver (submitting a chargeback request for such a low amount is not worth my time)

If this is a real use case (and frankly how often do you want to pay for something that you don't care whether you'll actually get?) you can buy a prepaid credit card (over the internet, from a reputable provider, using your normal credit card) and use that. No reason that couldn't be smoothly automated (indeed I believe some bank accounts will already let you generate an additional card number with a limited amount of funds). I suspect there's just very little demand for it.

> I didn't fully trust the merchant with my credit card info (how securely do they protect/encrypt it? could they be hacked? etc).

Your bank covers you if they are though.

> You completely avoided the main point of my example #3.

If people use bitcoin then people will use bitcoin sure. But that applies to any tradeable object. If enough people start giving each other baseball cards at christmas then people will start paying with baseball cards. What's the specific advantage that would make people want to give bitcoin?

> your cute story doesn't mean credit card fraud is a solved problem. In many cases the customer has NO RECOURSE for fraud. For example you cannot chargeback a transaction made more than 60 days ago. Some fraudulent merchants pretend to act legitimately but stall shipping (eg. claim delays, issues, etc) for 60 days specifically to exploit this fact

Most reputable card issuers will cover you for longer than the contract says. And even if not, 60 days of cover is still much better than the 0 days you get with bitcoin.

> Or if your PIN code is stolen and a fraudulent transaction is made with the PIN code, you will typically be held liable

Again, you're contractually liable but in practice reputable banks cover you at least the first time. Whereas if your bitcoin private keys are stolen, the money is gone and you'll never get it back.

> Give your money to a fraudster and he will run away with it, no matter if its bitcoins or dollars.

What's the non-fraudster option with bitcoin? Who's offering FDIC-protected bitcoin accounts?

> how often do you want to pay for something that you don't care whether you'll actually get?

It is not that I don't care, but I estimate the probability the merchant is fraudulent is low enough that I don't feel the need to absolutely have the protection of the chargeback mechanism. I think this is true for the majority of the cases: MOST merchants are honest, MOST disputes can be resolved without chargebacks.

> Your bank covers you if they are though.

But it can be a real pain in the butt. I had to have a credit card replaced because the number and billing info of the previous one was stolen. I had to wait days to receive the new credit card. I had to re-set up all the bills I had set up to be automatically paid with the previous card to now be paid by the new card, etc.

> What's the specific advantage that would make people want to give bitcoin?

Bitcoin enthusiasts like to spread the technology, so they give bitcoins away to friends and family. But that's not my main point. My main point is that as Bitcoin is used more and more, it ends up in the hands of more and more people. This gives it organic growth: it gets more accepted, it is more transacted, it gains more value, etc.

> Most reputable card issuers will cover you for longer than the contract says. And even if not, 60 days of cover is still much better than the 0 days you get with bitcoin.

Still, some fraud scenarios are completely eliminated with Bitcoin. I pay a fraudulent restaurant with a CC that gets skimmed, I get to deal with the hassles of having to have the card replaced, potentially having my credit score damaged, etc. I pay a fraudulent restaurant with bitcoins, I know the restaurant can do nothing to steal the bitcoins remaining in my wallet.

Or I pay Dell with bitcoins instead of a credit card, and I don't have to care if their systems get hacked and my CC number stolen.

> Again, you're contractually liable but in practice reputable banks cover you at least the first time. Whereas if your bitcoin private keys are stolen, the money is gone and you'll never get it back.

Private keys can be very well protected and almost impossible to steal if you use a hardware wallet. And Bitcoin completely eliminates other fraud risks (see my examples above). So overall the tradeoffs of Bitcoin are worthwhile.

> Who's offering FDIC-protected bitcoin accounts?

Every day, millions of Americans use financial instruments that are not FDIC insured, yet that doesn't prevent the success of such instruments:

https://www.fdic.gov/deposit/covered/notinsured.html

> I had to wait days to receive the new credit card

That may be a problem with the current implementation, but it doesn't have to be. There's no reason your credit card couldn't be e.g. loaded onto your phone, using NFC to talk to a reader, and then it could be updated instantly if need be.

> I had to re-set up all the bills I had set up to be automatically paid with the previous card to now be paid by the new card, etc.

The only reason this isn't a problem for Bitcoin is that you can't set up bill payments in Bitcoin at all.

> Still, some fraud scenarios are completely eliminated with Bitcoin. I pay a fraudulent restaurant with a CC that gets skimmed, I get to deal with the hassles of having to have the card replaced, potentially having my credit score damaged, etc. I pay a fraudulent restaurant with bitcoins, I know the restaurant can do nothing to steal the bitcoins remaining in my wallet.

It works for a restaurant but that's a very special case - you pay after you already know that what you got was right. More often you're buying something where you won't realise if it's broken until you get it home, in which case much more serious fraud is possible with bitcoin than with credit cards. And even the restaurant case is not a compelling advantage for bitcoin - if your credit card gets skimmed the worst case is really not very bad.

> Private keys can be very well protected and almost impossible to steal

Sure. But the kind of person who gets their credit card PIN stolen (which is what we were comparing to) isn't going to have a well-protected private key.

> Every day, millions of Americans use financial instruments that are not FDIC insured

Sure. But almost everyone gets an FDIC-insured account as a backstop before getting any of those other instruments. And it's convenient to have all your accounts in the same currency.

Are you not replying to my main point (most merchants are honest therefore chargebacks are rarely needed) because you agree with it?

> That may be a problem with the current implementation, but it doesn't have to be

I agree. But I highlighted this to show you that credit cards have kinks, as currently implemented, yet are reasonably successful/useful. Therefore for the same reason Bitcoin doesn't have to be perfect to be reasonably successful/useful.

> The only reason this isn't a problem for Bitcoin is that you can't set up bill payments in Bitcoin at all.

Yes it is possible. Some hosted wallets let you set up recurring payments. This is awesome because unlike credit cards, you don't have to give the merchant authorization to debit your money, but you give this authorization only to the wallet hoster. This gives the merchant zero chances to screw you up (eg. continuing to debit your card when you want it to stop, or setting up a recurring payment disclosed in the fine print when you think you are authorizing a one-time payment.)

> It works for a restaurant but that's a very special case

This scenario covers literally ALL in-person transactions. Hardly a "very special case".

> But the kind of person who gets their credit card PIN stolen (which is what we were comparing to) isn't going to have a well-protected private key.

No we were comparing typical users. A security conscious credit card user can STILL get his number stolen and money stolen (eg. a merchant gets hacked). Whereas a security conscious Bitcoin user using a hardware wallet is virtually impervious to being attacked (only highly sophisticated hacks like stealing the hardware wallet and decaping the secure chip to steal the private keys without knowing the PIN).

Some users are so bad with security and detecting scams that they will always get their money stolen (regardless if they use credit cards or bitcoins).

> Are you not replying to my main point (most merchants are honest therefore chargebacks are rarely needed) because you agree with it?

I think there's an at-the-margin effect here. The threat of chargebacks makes actual chargebacks usually unnecessary. Just like having an army can be very valuable even if you only go to war rarely.

> Yes it is possible. Some hosted wallets let you set up recurring payments. This is awesome because unlike credit cards, you don't have to give the merchant authorization to debit your money, but you give this authorization only to the wallet hoster.

With a bank account you can do this as a "standing order". It's safer than most of the bill-payment methods. And surprisingly useless, because most of the time you want to pay a bill that can vary, so you need to give the merchant authorization to tell them how much you need to pay them.

> setting up a recurring payment disclosed in the fine print when you think you are authorizing a one-time payment.

Something you can only stop by making setting up payments less convenient. If bitcoin takes off, it will need a system for seamlessly setting up recurring payments from a website that wants to - and the exact same scams will apply.

> This scenario covers literally ALL in-person transactions. Hardly a "very special case".

No, it only covers cases where you pay after using the thing you bought. If I buy a TV with a credit card, take it home, plug it in and find out it doesn't work, I can if need be make a chargeback; with bitcoin I'm stuffed.

> No we were comparing typical users. A security conscious credit card user can STILL get his number stolen and money stolen (eg. a merchant gets hacked).

If they're security-conscious enough to not get their PIN stolen, then they can't lose any money.

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