7 ms·

"Second, because convert-transmit-unconvert still bypasses many of the painful aspects of other money transfer mechanisms." Using a credit card online or 1-cli

by battani 12y ago

"Second, because convert-transmit-unconvert still bypasses many of the painful aspects of other money transfer mechanisms." Using a credit card online or 1-click checkout isn't painful. "Both buyer and seller only interact with entities they trust (coinbase and their bank)" Pretty sure most people trust the bank that issued their credit card. "no credit cards (and associated fees, chargebacks, and headaches)" No chargebacks may be good for merchants, but not for consumers (no protection). Most of the CC fees are reimbursed to the customer in the form of rewards. In France for example, usual debit card fees are 0.5%, and credit cards with rewards are 2%-4%. In Australia, the government intervened and all card fees are < 0.5%. This was good for merchants but customers now don't get rewards/cashback/points on their card. "the transmission process in the middle uses bitcoin in lieu of ACH or similar (avoiding many potential risks, reversals, and the various Bad Things that can usually happen if you pay directly from a bank account)" Not sure what those "many bad things" are. I recently received subpar merchandise from a merchant; called my bank that morning, the transaction was reversed, almost no questions asked. There was a follow-up "investigation" that was in my favor. The fact that I can reverse transactions gives me peace of mind, otherwise known as consumer protection. It's just seeming more and more to me that companies in the bitcoin merchant space are trying to find infinitesimally small optimizations they want to address in the current credit card system using bitcoin. It seems that they're trying to find (or sometimes create) a problem to fit bitcoin, instead of using bitcoin to solve an already existing problem. I think they'll slowly find out, as Coinbase may be with this new feature, that bitcoin is actually not a good currency to be used directly, but rather as an efficient value transfer mechanism, under the hood. In other words, that the real value is in the blockchain, not in bitcoin itself. But I may be wrong. In any case, I'm sticking to my credit card (and soon, tap-tap mobile wallet). Bitcoin doesn't really solve a problem for consumers in consumer-to-merchant transactions; mainly because, well, there really isn't a problem to solve to begin with.

aianus 12y ago
Using a credit card online isn't painful but it's more painful than using Bitcoin. For one, I don't need to memorize an arbitrary 16 digits + CVV2 + Expiry Date. Nor do I have to enter my billing address for virtual goods or deal with chargebacks and replacing my card if the merchant loses my card information. One time my bank just canceled my card without giving me any reason besides 'security' and mailed me a new one. What would I have done if I were traveling at the time or needed to buy something in the meantime? Besides that, if you've ever tried doing anything online besides the straight purchase of a good or service (think forex trading, gambling, remittances) you'd agree Bitcoin is light-years ahead of the prevailing payment methods.
- battani 12y ago
  Yeah I mean those are some problems but they're 1) not huge and 2) I don't think creating and adopting a volatile virtual currency is necessarily the best solution to those problems. "I don't need to memorize an arbitrary 16 digits + CVV2 + Expiry Date" Most times, you enter that information once (1-time mental cost) and the platform saves that info for you. Think Uber, Amazon, Venmo, and others. Also soon with your mobile wallet, the experience will only get more streamlined. Also, if you think about it, how do you pay using bitcoin today? First you set up a wallet (with Coinbase, Bitpay, or someone else). Then you get verified. Then you purchase bitcoin, hoping to get it at a good price. Then you browse the web hoping your merchant integrates with Coinbase/Bitpay. If not, they'll display a bitcoin address, that you'll then have to paste into your wallet, enter the correct amount, etc. Even if we do argue that this will only get better, it's not gonna get much better than tapping "Buy" on your mobile wallet, that's already connected to your bank account/card. User experience is not an area where bitcoin adds value. "deal with chargebacks and replacing my card if the merchant loses my card information" Chargebacks are a form of consumer protection. Eliminating them benefits the merchant, at the expense of the consumer. "One time my bank just canceled my card without giving me any reason besides 'security' and mailed me a new one. What would I have done if I were traveling at the time or needed to buy something in the meantime?" Yes, that sucks. But how often does that happen? How big is this problem? And is adopting bitcoin (already a huge cost: mental adjustment, buying bitcoin, etc.) really a good solution to this problem? Or is it just switching to a bank with better customer service? Simple, BOA (in my experience), etc. "Besides that, if you've ever tried doing anything online besides the straight purchase of a good or service (think forex trading, gambling, remittances) you'd agree Bitcoin is light-years ahead of the prevailing payment methods." Yes, forex trading and gambling are absolutely fantastic to do with bitcoin. But this reinforces the argument that bitcoin is a speculative financial asset, rather than a currency used in day-to-day activities. The remittance market is ripe for disruption, but a gateway model such as the one offered by Ripple would better fit this problem, in my opinion.
  - aianus 12y ago
    > Chargebacks are a form of consumer protection. Eliminating them benefits the merchant, at the expense of the consumer. I wouldn't have to do any chargebacks or get my card replaced if I'd made my purchase with Bitcoin instead of sending my credit card details to a merchant which subsequently gets hacked. Also, competitive merchants would have to pass on the cost savings. > Yes, that sucks. But how often does that happen? Seems to happen pretty often. Target, Sony, etc all pretty recent. > Yes, forex trading and gambling are absolutely fantastic to do with bitcoin. But this reinforces the argument that bitcoin is a speculative financial asset, rather than a currency used in day-to-day activities. I don't mean trading or holding bitcoin. There are many people who trade forex (like oanda.com) and gamble on sports or poker (like betfair.com) every day. The current payment methods make it difficult and expensive to deposit and withdraw on those types of sites because of VISA and MasterCard's rules and duopoly.
untilHellbanned 12y ago
Bitcoin solves the microtransaction problem with credit cards. Due to high fees, one can't buy things on the internet for less than $0.50 using a credit card.
- battani 12y ago
  True. But a lot of merchants are moving away from this model anyway because it turns out consumers hate micropayments online. http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.html http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.ht... Many are moving to a subscription model per month (simple and predictable pricing) — think Spotify, Wall St Journal, etc. But curious, what kind of things would you like to buy at 50cents or less online and that you really can't right now (either as part of a larger bundle or a subscription)? Also, the blockchain is not particularly good at managing micro-payments. First because of miner fees and second because micro-payments without fees open the door to blockchain spam. Most of the bitcoin micro-transactions done today are centralized off-the-blockchain transactions.
  - untilHellbanned 12y ago
    Your article is from 2000. Consumer behavior and internet technology have changed massively since then. Subscriptions can be ok but many don't want to pay $10/month for something they don't use $10 of (true of pretty much all services besides Netflix and spotify). All digital content can make use of Bitcoin micropayments. Off-chain works too as there are still essentially no fees (again compared with the prohibitive $0.30 + 3% fee with credit cards). Why watch an ad for 30sec when you can pay a fraction of a penny in Bitcoin and watch instantly? Onarbor, https://onarbor.com https://onarbor.com proposes exactly this.
    - battani 12y ago
      There are many more recent articles on the same topic — internet technology may have changed a lot, but consumer behavior hasn't. Consumers still want simple and predictable pricing. When's the last time you paid at a paywall? It's just that the mental cost of calculating how much I'm spending when I'm spending loads of fractions of pennies everywhere is pretty big. To cancel your ads, just pay the monthly $10. It's simple, predictable, and covers you for all ads all the time.
pmorici 12y ago
"Using a credit card online or 1-click checkout isn't painful." I've heard this from a number of people as an argument for why Bitcoin isn't needed. It only holds true for a very limited world view though. That being people who are well off and have a credit card. Consider that something like 30% of _Americans_ don't have a credit card. How do you suppose they buy things on Amazon in 1-click? What happens if you live in a area known for high rates of credit card fraud so merchant's refuse to send credit card orders to your address? There are an infinite number of scenarios where credit cards don't work for people Bitcoin solves a lot of them. Bitcoin is like the long tail of financial products.
- battani 12y ago
  Yes I agree that bitcoin could be useful to the unbanked or in high inflation countries. I don't have enough knowledge of those markets to elaborate. I was answering the author who was advocating bitcoin's ease of use as compared to credit cards. Credit card use is not a limited world view though. Credit card networks are pervasive all over the world. And in the areas they aren't, I don't think a volatile digital asset is at the forefront of people's minds when it comes to payments. A lot of innovation is being put in place to eliminate card use and opt instead for the mobile phone/wallet, connected directly to a bank account in fiat, government-regulated currency. It would be useful to know why those 30% of Americans don't have a debit/credit card. Is it an infrastructure problem? Is going online and buying things part of their day-to-day activities? And for those areas of high credit card fraud, what do merchants do now? Accept checks, cash, ACH? And what do consumers do if they receive subpar merchandise? Etc.
  - pmorici 12y ago
    "And for those areas of high credit card fraud, what do merchants do now?" Nothing, they lose out on the sale. "It would be useful to know why those 30% of Americans don't have a debit/credit card." Typically because of past financial difficulties. If you've got a bad credit record, or have a history of over drafting your bank account banks will refuse to work with you. As an aside if you subscribe to the idea that Bitcoins transaction mechanism is the valuable aspect of it then the value of a Bitcoin is going to have to rise enough to handle the value of the transactions that pass through it. It can't be worth zero and still work.
abc123xyz 12y ago
We made close to €20,000 EUR last month via bitpay The cost .... $30 USD! Then our bank charged about €24 to receive those 25 or so transactions, Bitpay pay the next business day to the bank account, its really really nice!! Fraud rate? 0% Chargeback rate? 0% Not having to worry about all sorts of middlemen and fraudsters trying to rip me off and waste my time PRICELESS! Now if only my suppliers accepted bitcoin then wouldn't even have to withdraw some of the bitcoin back to fiat!
- polshaw 12y ago
  But the point is that there isn't a bit coin economy-- your suppliers don't accept it. So you have to pay fees to convert it into local currency, which you have ignored. (And the customer also has to pay to convert from local currency)
  - Atroxide 12y ago
    Or he could promote the use of bitcoin in hope that one day his suppliers do actually accept it.
- sanswork 12y ago
  What is your business? At €20K per month you must be close to or in the top 5 bitcoin merchants in the world. >The cost .... $30 USD! All you've done is move the fees to the customer side through their cost of acquisition and the spread bitpay adds to your charges. >Fraud rate? 0% >Chargeback rate? 0% This doesn't matter until you stop accepting credit cards completely. Also no denying bitcoin has benefits for merchants. The problem is the complete lack of benefits for customers.
  - rowyaboat 12y ago
    > The problem is the complete lack of benefits for customers. Costs of acquisition and spread will decrease as bitcoin adoption rises as it is a competitive market. And then low margin merchants will actively encourage bitcoin usage with discounts.

by battani 12y ago

aianus 12y ago

Using a credit card online isn't painful but it's more painful than using Bitcoin. For one, I don't need to memorize an arbitrary 16 digits + CVV2 + Expiry Date. Nor do I have to enter my billing address for virtual goods or deal with chargebacks and replacing my card if the merchant loses my card information. One time my bank just canceled my card without giving me any reason besides 'security' and mailed me a new one. What would I have done if I were traveling at the time or needed to buy something in the meantime? Besides that, if you've ever tried doing anything online besides the straight purchase of a good or service (think forex trading, gambling, remittances) you'd agree Bitcoin is light-years ahead of the prevailing payment methods.

battani 12y ago
Yeah I mean those are some problems but they're 1) not huge and 2) I don't think creating and adopting a volatile virtual currency is necessarily the best solution to those problems. "I don't need to memorize an arbitrary 16 digits + CVV2 + Expiry Date" Most times, you enter that information once (1-time mental cost) and the platform saves that info for you. Think Uber, Amazon, Venmo, and others. Also soon with your mobile wallet, the experience will only get more streamlined. Also, if you think about it, how do you pay using bitcoin today? First you set up a wallet (with Coinbase, Bitpay, or someone else). Then you get verified. Then you purchase bitcoin, hoping to get it at a good price. Then you browse the web hoping your merchant integrates with Coinbase/Bitpay. If not, they'll display a bitcoin address, that you'll then have to paste into your wallet, enter the correct amount, etc. Even if we do argue that this will only get better, it's not gonna get much better than tapping "Buy" on your mobile wallet, that's already connected to your bank account/card. User experience is not an area where bitcoin adds value. "deal with chargebacks and replacing my card if the merchant loses my card information" Chargebacks are a form of consumer protection. Eliminating them benefits the merchant, at the expense of the consumer. "One time my bank just canceled my card without giving me any reason besides 'security' and mailed me a new one. What would I have done if I were traveling at the time or needed to buy something in the meantime?" Yes, that sucks. But how often does that happen? How big is this problem? And is adopting bitcoin (already a huge cost: mental adjustment, buying bitcoin, etc.) really a good solution to this problem? Or is it just switching to a bank with better customer service? Simple, BOA (in my experience), etc. "Besides that, if you've ever tried doing anything online besides the straight purchase of a good or service (think forex trading, gambling, remittances) you'd agree Bitcoin is light-years ahead of the prevailing payment methods." Yes, forex trading and gambling are absolutely fantastic to do with bitcoin. But this reinforces the argument that bitcoin is a speculative financial asset, rather than a currency used in day-to-day activities. The remittance market is ripe for disruption, but a gateway model such as the one offered by Ripple would better fit this problem, in my opinion.
- aianus 12y ago
  > Chargebacks are a form of consumer protection. Eliminating them benefits the merchant, at the expense of the consumer. I wouldn't have to do any chargebacks or get my card replaced if I'd made my purchase with Bitcoin instead of sending my credit card details to a merchant which subsequently gets hacked. Also, competitive merchants would have to pass on the cost savings. > Yes, that sucks. But how often does that happen? Seems to happen pretty often. Target, Sony, etc all pretty recent. > Yes, forex trading and gambling are absolutely fantastic to do with bitcoin. But this reinforces the argument that bitcoin is a speculative financial asset, rather than a currency used in day-to-day activities. I don't mean trading or holding bitcoin. There are many people who trade forex (like oanda.com) and gamble on sports or poker (like betfair.com) every day. The current payment methods make it difficult and expensive to deposit and withdraw on those types of sites because of VISA and MasterCard's rules and duopoly.

untilHellbanned 12y ago

Bitcoin solves the microtransaction problem with credit cards. Due to high fees, one can't buy things on the internet for less than $0.50 using a credit card.

battani 12y ago
True. But a lot of merchants are moving away from this model anyway because it turns out consumers hate micropayments online. http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.html http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.ht... Many are moving to a subscription model per month (simple and predictable pricing) — think Spotify, Wall St Journal, etc. But curious, what kind of things would you like to buy at 50cents or less online and that you really can't right now (either as part of a larger bundle or a subscription)? Also, the blockchain is not particularly good at managing micro-payments. First because of miner fees and second because micro-payments without fees open the door to blockchain spam. Most of the bitcoin micro-transactions done today are centralized off-the-blockchain transactions.
- untilHellbanned 12y ago
  Your article is from 2000. Consumer behavior and internet technology have changed massively since then. Subscriptions can be ok but many don't want to pay $10/month for something they don't use $10 of (true of pretty much all services besides Netflix and spotify). All digital content can make use of Bitcoin micropayments. Off-chain works too as there are still essentially no fees (again compared with the prohibitive $0.30 + 3% fee with credit cards). Why watch an ad for 30sec when you can pay a fraction of a penny in Bitcoin and watch instantly? Onarbor, https://onarbor.com https://onarbor.com proposes exactly this.
  - battani 12y ago
    There are many more recent articles on the same topic — internet technology may have changed a lot, but consumer behavior hasn't. Consumers still want simple and predictable pricing. When's the last time you paid at a paywall? It's just that the mental cost of calculating how much I'm spending when I'm spending loads of fractions of pennies everywhere is pretty big. To cancel your ads, just pay the monthly $10. It's simple, predictable, and covers you for all ads all the time.

pmorici 12y ago

"Using a credit card online or 1-click checkout isn't painful." I've heard this from a number of people as an argument for why Bitcoin isn't needed. It only holds true for a very limited world view though. That being people who are well off and have a credit card. Consider that something like 30% of _Americans_ don't have a credit card. How do you suppose they buy things on Amazon in 1-click? What happens if you live in a area known for high rates of credit card fraud so merchant's refuse to send credit card orders to your address? There are an infinite number of scenarios where credit cards don't work for people Bitcoin solves a lot of them. Bitcoin is like the long tail of financial products.

battani 12y ago
Yes I agree that bitcoin could be useful to the unbanked or in high inflation countries. I don't have enough knowledge of those markets to elaborate. I was answering the author who was advocating bitcoin's ease of use as compared to credit cards. Credit card use is not a limited world view though. Credit card networks are pervasive all over the world. And in the areas they aren't, I don't think a volatile digital asset is at the forefront of people's minds when it comes to payments. A lot of innovation is being put in place to eliminate card use and opt instead for the mobile phone/wallet, connected directly to a bank account in fiat, government-regulated currency. It would be useful to know why those 30% of Americans don't have a debit/credit card. Is it an infrastructure problem? Is going online and buying things part of their day-to-day activities? And for those areas of high credit card fraud, what do merchants do now? Accept checks, cash, ACH? And what do consumers do if they receive subpar merchandise? Etc.
- pmorici 12y ago
  "And for those areas of high credit card fraud, what do merchants do now?" Nothing, they lose out on the sale. "It would be useful to know why those 30% of Americans don't have a debit/credit card." Typically because of past financial difficulties. If you've got a bad credit record, or have a history of over drafting your bank account banks will refuse to work with you. As an aside if you subscribe to the idea that Bitcoins transaction mechanism is the valuable aspect of it then the value of a Bitcoin is going to have to rise enough to handle the value of the transactions that pass through it. It can't be worth zero and still work.

abc123xyz 12y ago

We made close to €20,000 EUR last month via bitpay The cost .... $30 USD! Then our bank charged about €24 to receive those 25 or so transactions, Bitpay pay the next business day to the bank account, its really really nice!! Fraud rate? 0% Chargeback rate? 0% Not having to worry about all sorts of middlemen and fraudsters trying to rip me off and waste my time PRICELESS! Now if only my suppliers accepted bitcoin then wouldn't even have to withdraw some of the bitcoin back to fiat!

polshaw 12y ago
But the point is that there isn't a bit coin economy-- your suppliers don't accept it. So you have to pay fees to convert it into local currency, which you have ignored. (And the customer also has to pay to convert from local currency)
- Atroxide 12y ago
  Or he could promote the use of bitcoin in hope that one day his suppliers do actually accept it.
sanswork 12y ago
What is your business? At €20K per month you must be close to or in the top 5 bitcoin merchants in the world. >The cost .... $30 USD! All you've done is move the fees to the customer side through their cost of acquisition and the spread bitpay adds to your charges. >Fraud rate? 0% >Chargeback rate? 0% This doesn't matter until you stop accepting credit cards completely. Also no denying bitcoin has benefits for merchants. The problem is the complete lack of benefits for customers.
- rowyaboat 12y ago
  > The problem is the complete lack of benefits for customers. Costs of acquisition and spread will decrease as bitcoin adoption rises as it is a competitive market. And then low margin merchants will actively encourage bitcoin usage with discounts.