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Why Bitcoin Matters

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Re: Why Bitcoin Matters

#31

Post by [deleted] »

thinkcomp wrote: post #27
minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

This is absolutely correct. One other key point: Marc and his portfolio companies (among others) are deliberately evading regulations. Those regulations have real costs, which is why they are worth evading at all. Were companies like Coinbase to actually comply with U.S. law, they'd each have to spend $20 million on money transmission licenses and associated bonds (not including legal fees). These costs are not prese…

[deleted]

Re: Why Bitcoin Matters

#32

Post by msvan »

minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

True, but the alternative vision is that we cut out the USDBTC exchange process entirely. For instance, I could get paid in BTC, then I go to Target and pay for their goods in BTC, whereafter they keep the BTC. But Andreessen Horowitz wouldn't like that, of course.

Re: Why Bitcoin Matters

#33

Post by pmorici »

vasilipupkin wrote: post #15

So, one big reason for merchants to accept bitcoins is the high fees charged by credit card processors? So, suppose they cut the fees? Does that kill bitcoin ?

No, there are other things about Bitcoin that are highly desirable from a merchant's perspective even ignoring fees.

1. There are no unilateral charge backs with Bitcoin and

2. You don't have to worry about keeping sensitive customer information safe. It is impossible for you as a merchant to be responsible for fraud against your customers due to stolen credit card numbers if they are using Bitcoin. It has the same properties of a Cash transaction minus the in person requirement and the potential for easy theft. In fact if you do it right it would be nearly impossible for dishonest employees to steal money from your business.

Taken in isolation it's easy to say well that isn't such a great advantage but when you look at Bitcoin vs anything else on the whole the advantages are clear.

Re: Why Bitcoin Matters

#34

Post by arasmussen »

msvan wrote: post #32
minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

True, but the alternative vision is that we cut out the USD BTC exchange process entirely. For instance, I could get paid in BTC, then I go to Target and pay for their goods in BTC, whereafter they keep the BTC. But Andreessen Horowitz wouldn't like that, of course.

You can already get paid in BTC too [1] so you don't even have to convert USD -> BTC in the first place. Why wouldn't a16z like that? Wouldn't they love that? If BTC becomes that commonplace then all of these companies they're invested in will skyrocket.

[1]: http://www.businesswire.com/news/home/20140113006504/en/BitP...

Re: Why Bitcoin Matters

#35

Post by sskates »

vasilipupkin wrote: post #15

So, one big reason for merchants to accept bitcoins is the high fees charged by credit card processors? So, suppose they cut the fees? Does that kill bitcoin ?

On any payment network the fees are a result of the risks of credit card fraud. Card processors can't cut fees without losing money. It's an efficient market as it is.

Re: Why Bitcoin Matters

#36

Post by ye »

minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

Yeah, you described pretty much the worst case scenario where everything goes through fiat. But once Bitcoin penetration is significant and people start getting paid in Bitcoin (already happening) and accept it as payment (also already happening), all these exchange fees go away.

With fiat you're stuck with the fees forever.

Also your 0.5% assumption is wrong. You can place a buy ad on LocalBitcoins and actually buy at below the market rate. Also, coinsigner.com.

Re: Why Bitcoin Matters

#37

Post by jellicle »

dragonwriter wrote: post #18
tptacek wrote: post #7

Earlier quoted context omitted.

"Fiat money" is as I've seen it used a political message, used most often to assumptively introduce the idea that government-backed currency is suspect. But fiat currencies are simply currencies that aren't backed by collateral. To the extent that you believe it's a currency and not a tradable instrument that happens to have interesting barter and liquidity characteristics (right now), Bitcoin is a fiat currency as w…

> But fiat currencies are simply currencies that aren't backed by collateral. That's the looser definition, the narrower one (from which the name comes) is that that it is currency not backed by collateral but backed by a government's designation of it (by fiat) as legal tender. Given the absence of significant non-representative non-government-issued currencies prior to modern cryptocurrencies, the looser definition…

So what's the term for something shadier than fiat currency, something not backed by collateral NOR by government dictate? It should convey all the scorn directed at "fiat currency", but moreso.

Re: Why Bitcoin Matters

#38

Post by haakon »

npongratz wrote: post #24
tptacek wrote: post #7

Earlier quoted context omitted.

"Fiat money" is as I've seen it used a political message, used most often to assumptively introduce the idea that government-backed currency is suspect. But fiat currencies are simply currencies that aren't backed by collateral. To the extent that you believe it's a currency and not a tradable instrument that happens to have interesting barter and liquidity characteristics (right now), Bitcoin is a fiat currency as w…

> But fiat currencies are simply currencies that aren't backed by collateral. Apparently the definition is open to interpretation, at least if the wikipedia article[0] can be believed: Fiat money has been defined variously as: * any money declared by a government to be legal tender. * state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard. * mo…

Every HN thread on Bitcoin is 30-50% debate over what "fiat money" means. Every single time.

Re: Why Bitcoin Matters

#39

Post by [deleted] »

minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

[deleted]

Re: Why Bitcoin Matters

#40

Post by hooande »

Andressen is making bitcoin out to be a decentralized paypal, when it was more intended to be a form of currency. It makes more sense as a long term investment or speculative bet than it does a way to transfer money from point A to point B.

An analogy would be if person A and person B conducted a transaction by converting their money from dollars to euros or vice versa (assuming A and B are both in the same country). Depending on the current exchange rate, this could be a good or a bad thing for both of them. If the dollar is weak, both parties stand to lose. If the dollar is strong then it won't last because the market will quickly be flooded with people trying to get in on the deal.

There is no way of controlling or predicting the bitcoin exchange rate. If I send money to someone in my country with paypal they are going to whack me with fees, but at least I know what the fees will be in advance. I can plan on it as a business. Having to deal with an unknown and uncontrolled exchange rate just doesn't sound fun. This is assuming that bitcoin stops having wild price swings over time and stabilizes to the level of established global currencies.

It just doesn't make sense to perform a currency conversion when transferring money to someone who uses the same currency as the sender. This article was amazing and pmarca opened my eyes to uses of bitcoin that I never would have imagined. But the only thing I can't imagine is this new currency living up to the utility that is expected of it.

Bitcoin the protocal, however, is freaking awesome. I expect to see a lot of startups taking advantage of some of the non-monetary uses, up to and including micropayments. It could be a very long time before bitcoin paychecks are mainstream. But electronic transactions of all kinds are going to be getting easier soon.

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