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Why Bitcoin Matters

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Re: Why Bitcoin Matters

#41

Post by aqme28 »

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…

This is interesting and the first I've heard of this. Can you elaborate more?

Re: Why Bitcoin Matters

#42

Post by [deleted] »

eatitraw wrote: post #13
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…

Well, in my comment I simply wanted to distinguish between state-run currencies and bitcoin. > But fiat currencies are simply currencies that aren't backed by collateral I've checked wikipedia, and one of the definitions for the term "fiat money" is "state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.". Bitcoin clearly doesn't fall under th…

[deleted]

Re: Why Bitcoin Matters

#43

Post by vasilipupkin »

sskates wrote: post #35
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.

Wouldn't then all the fraud risks move to those businesses which take consumer credit cards and exchange them for bitcoins. So why would the aggregate fraud cost in the system be any lower ?

Also, I seriously doubt that 2.5% fee is all cost. Visa/Mastercard, etc. are massively profitable - they have plenty of room to cut those fees

Re: Why Bitcoin Matters

#44

Post by presty »

arasmussen wrote: post #34
msvan wrote: post #32

Earlier quoted context omitted.

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...

I'm guessing msvan means that "Coinbase" wouldn't like that (at least in the short term) since they have a 1% transaction fee

Re: Why Bitcoin Matters

#45

Post by chaz »

pmorici wrote: post #33
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 p…

But why would I want Bitcoin as a consumer? I want chargebacks if the merchant screws me over, I get a rebate/miles/points with every purchase, and some cards offer warranties and return protection. AmEx does a pretty good job at flagging fraudulent activity, and I'm off the hook for any related charges. Plus, there's still a risk of losing Bitcoin. The right bug/malware/vulnerability on my laptop or my smartphone can mean my BTC is lost or stolen. We all know that security is hard, and at best inconvenient -- and that people are lazy.

If there are clear advantages to the vendor, it should be reflected in the price to the consumer. A 1% discount may get me interested, considering they'd save more than that on cc transaction fees alone.

Re: Why Bitcoin Matters

#46

Post by pyvpx »

ye wrote: post #36
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…

does bitcoin have an intrinsic value? if so, what?

Re: Why Bitcoin Matters

#47

Post by neals »

pyvpx wrote: post #46
ye wrote: post #36

Earlier quoted context omitted.

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…

does bitcoin have an intrinsic value? if so, what?

Ah yes, this question has not been asked yet. Such economic insight.

Re: Why Bitcoin Matters

#48

Post by benajnim »

pyvpx wrote: post #46
ye wrote: post #36

Earlier quoted context omitted.

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…

does bitcoin have an intrinsic value? if so, what?

The bitcoin network's transaction verification mechanism, and all the hash power behind it (users) does give bitcoin "intrinsic value". Its true value comes from network effect.

Re: Why Bitcoin Matters

#49

Post by Lambdanaut »

pyvpx wrote: post #46
ye wrote: post #36

Earlier quoted context omitted.

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…

does bitcoin have an intrinsic value? if so, what?

Define "value", because I'm pretty sure that 99% of globally used currencies won't have this magical "intrinsic value" that you speak of.

Re: Why Bitcoin Matters

#50

Post by kaonashi »

ye wrote: post #36
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…

> people start getting paid in Bitcoin (already happening) and accept it as payment (also already happening), all these exchange fees go away.

Still have to exchange for taxes.

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