> transactions, once confirmed are not reversible.
Oh wonderful! So if I (as a customer or as a service) make a mistake I'm completely hosed. And since the service isn't insured (yay no regulation), a mistake on one customer's account can harm everyone else.
My point was that this business model exposes everyone to unacceptable risk, and therefore isn't sustainable with or without regulation.
> Instead you can use escrows while paying with Bitcoins.
Escrow is not a competitive advantage.
> Secondly the Bitcoin network is much more efficient in terms of economic resources
Fiat -> BTC -> Fiat adds an unnecessary link to the Fiat -> Fiat transfer. How could this possibly be more efficient?
There are two sets of reasons.
The first are essential -- insurance, regulation, etc.. My claim is that BC's competitive advantage in these settings will evaporate with scale.
The second set is inessential -- banks got lazy and greedy. Again, at scale BC has no advantage over lean cash transfer startups or even just banks cutting the fat when BC becomes anything close to a threat.
For me, the best-case scenario is that BC startups are successful, force banks to reform, and then languish in obscurity since the extra step of indirection isn't necessary for fast/safe/cheap cash transfers.
>> Oh wonderful! So if I (as a customer or as a service) make a mistake I'm completely hosed. And since the service isn't insured (yay no regulation), a mistake on one customer's account can harm everyone else.
There is no reason why the payment processor can't implement some security in case of errors. What is more, with credit cards you are handing out your details every time you do a purchase. Have you ever heard of stolen credit card data? When you transfer BTC your don't need to send all your private details that would permit an unwanted second purchase.
>>Fiat -> BTC -> Fiat adds an unnecessary link to the Fiat -> Fiat transfer. How could this possibly be more efficient?
In a BTC economy there is no need to do the conversion.
> There is no reason why the payment processor can't implement some security in case of errors.
Sure, and banks already do that. A lot of it, in fact.
My point wasn't that these things aren't possible with BTC. Rather, my point was that these problems don't go away just because you're not using a traditional currency. Which means the overhead associated with these problems doesn't go away, either.
It's just that BTC is really small right now, and so the cost + difficulty of addressing these problems at scale isn't yet apparent.
> with credit cards you are handing out your details every time you do a purchase.
(1) No one makes payroll with a credit card; (2) BTC transfers -- especially at scale -- aren't as fast as CC transfers without someone assuming some risk; (3) CC companies basically exist to assume that risk and mitigate; (4) if you're going to design a new payment processing technology appropriate for POS transactions, creating a new currency is absolutely not necessary.
> My point wasn't that these things aren't possible with BTC. Rather, my point was that these problems don't go away just because you're not using a traditional currency. Which means the overhead associated with these problems doesn't go away, either.
I think the advantage is that alternatives to the traditional banking system introduce competition in the banking and financial services industry. Obviously, overhead doesn't magically go away, but I would expect competition to result in an increase in efficiency.
edit/justification: given the length of this thread and other interactions, I think this 'agree' post is a non-trivial recognition of consensus on a point rather than a non-contribution.
Yes. Like everyone else in the US, I have zero fraud liability on my credit card. Stolen credit card data is quite simply not my problem, nor is it any consumer's problem.
It is if it increases the cost for each transaction. Specially now that Visa and MasterCard are being sued for preventing retailers from "steering customers to cheaper payment forms"[1].
You don't even have to defend Bitcoin - in my country, we have a sane push-style payment system (implemented by the banking system) and it's much cheaper, especially since it only has a fixed fee.
The only reason you could not care about this problem is because Visa and MasterCard have been using their size to get other customers to subsidize card-paying ones, but that seems to be ending.
Okay, but if I use Bitcoin I'm still paying a price that has credit card fraud baked into it, while putting myself at unnecessary risk because I can't chargeback. It's giving free money to the retailer.
Do you really think merchants are going to lower their prices? Wouldn't it make more sense to just pocket the difference?
Do you really think merchants are going to lower their prices? Wouldn't it make more sense to just pocket the difference?
They already sued and own for the right of giving lower prices to other customers (or actually, charge more to card users), so there's no reason to think otherwise.
Is it a regional thing? I have never seen any retailer offer a cash discount or a credit card fee. Some businesses are cash-only, but I've never seen anyone actually exercise this right.
And cash is actually free, whereas BTC they're still paying small transaction fees and Coinbase's cut when converting back to USD.
> So if I (as a customer or as a service) make a mistake I'm completely hosed.
In other words, the costs of making mistakes is internalized. I think externalities are a bad thing.
> And since the service isn't insured (yay no regulation),
Insurance and regulations (and by that, I assume you mean government regulations) are not the same thing. There is a lot government regulation unrelated to insurance, and a lot of insurance unrelated to government regulation.
> a mistake on one customer's account can harm everyone else.
How's that?
> Escrow is not a competitive advantage.
What do you mean by that? I think escrow is a great idea, but I don't know what you mean by saying that it's not a competitive advantage.
> In other words, the costs of making mistakes is internalized. I think externalities are a bad thing.
"undo" is a pretty important, nearly mandatory feature for a transfer mechanism. Especially if you're talking about large sums. And we've known how to do it at scale since the 70's.
> Insurance and regulations (and by that, I assume you mean government regulations) are not the same thing.
Both create transaction costs, and those costs become significant at scale. edit that's why I group them together.
> How's that?
Firm holding my BTC or handling my transaction makes a mistake, is hacked, etc. If my money is tied up in their system when this happens, too bad for me.
> What do you mean by that?
Only that escrow is not unique to bitcoin, and you can escrow other currencies (or anything). One of your grandparent comment's argument only makes sense if escrow is unique to bitcoin.
Escrow isn't unique to BTC, and how many Mt. Gox users wished they had FDIC insurance?
Other than extreme early adopters and libertarians, most people aren't going to use bitcoins because of the lack of anti-fraud, which creates overhead that is passed to the users as transactional costs.
Oh wonderful! So if I (as a customer or as a service) make a mistake I'm completely hosed. And since the service isn't insured (yay no regulation), a mistake on one customer's account can harm everyone else.
My point was that this business model exposes everyone to unacceptable risk, and therefore isn't sustainable with or without regulation.
> Instead you can use escrows while paying with Bitcoins.
Escrow is not a competitive advantage.
> Secondly the Bitcoin network is much more efficient in terms of economic resources
Fiat -> BTC -> Fiat adds an unnecessary link to the Fiat -> Fiat transfer. How could this possibly be more efficient?
There are two sets of reasons.
The first are essential -- insurance, regulation, etc.. My claim is that BC's competitive advantage in these settings will evaporate with scale.
The second set is inessential -- banks got lazy and greedy. Again, at scale BC has no advantage over lean cash transfer startups or even just banks cutting the fat when BC becomes anything close to a threat.
For me, the best-case scenario is that BC startups are successful, force banks to reform, and then languish in obscurity since the extra step of indirection isn't necessary for fast/safe/cheap cash transfers.