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Bitcoin: the Stripe perspective

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Re: Bitcoin: the Stripe perspective

#201

Post by pjc50 »

sergiosgc wrote: post #196
pjc50 wrote: post #189

Earlier quoted context omitted.

Classical wire transfers have two things that people object to: high fees and anti-money-laundering legal requirements. The problem with making it "easy" to move money is that fraud becomes easy as well. There was an article on HN the other day about someone who wired $4k to a fraudulent AirBNB host. The credit card system skews towards assuming that the merchants are fraudulent and the customers mostly honest. Bitco…

Bitcoin allows for escrow transactions, where a third party can act as a referee in case there's a dispute in the transaction. It has the important property, absent from current escrow setups, that the escrow party never holds the money: they have the power to accept or reverse a transaction, but nothing else. It limits the trust commitment towards the escrow service.

People keep saying this, but how much is it actually used? How much do you have to pay the escrow service? How good are they at dispute resolution?

Also, the money has to be kept in escrow until the possibility of a dispute is over, which adds a substantial delay.

Re: Bitcoin: the Stripe perspective

#202

Post by sergiosgc »

pjc50 wrote: post #201
sergiosgc wrote: post #196

Earlier quoted context omitted.

Bitcoin allows for escrow transactions, where a third party can act as a referee in case there's a dispute in the transaction. It has the important property, absent from current escrow setups, that the escrow party never holds the money: they have the power to accept or reverse a transaction, but nothing else. It limits the trust commitment towards the escrow service.

People keep saying this, but how much is it actually used? How much do you have to pay the escrow service? How good are they at dispute resolution? Also, the money has to be kept in escrow until the possibility of a dispute is over, which adds a substantial delay.

I imagine escrow being done by the likes of Airbnb, in the case of the service. It won't be error free, but should stop the absolute frauds. In those cases, the escrow service is already paid for: it's the market that facilitated the transaction.

As for the money being kept in escrow, that is the definition of escrow. The alternative is the scenario of credit card payment processors, which keep the money for a period, and retain a fixed percentage of sales turnover, as a guarantee for refunds. From the merchant perspective, the average payment delay should be shorter using bitcoin than it is with credit cards.

Re: Bitcoin: the Stripe perspective

#203

Post by dublinben »

Bakkot wrote: post #107
rsp1984 wrote: post #97

Earlier quoted context omitted.

Let me ask a dumb question: If money exchange is the main problem that Bitcoin solves, then why isn't the problem of money exchange attacked directly instead, i.e. through some other less volatile classical stores of value like gold or stock? Why is money exchange a problem anyway and why couldn't a classical wire transfer solve the problem? The article doesn't say anything about these things and the underlying princ…

The answer to basically all of your questions is that to transfer money, you need to move money . This can be basically a promise of money, as with wire transfers, or physical, as you'd do by transporting bullion or cash. The problem with using a promise to move money is that you have to trust whoever's promising. That works alright if there's a central authority, like a bank, but less well if you don't want to trust…

You might be interested in the Hawala system[0] of money transfer. It has existed for hundreds of years, and allows efficient international money transfers with no central authority.

[0] https://en.wikipedia.org/wiki/Hawala

Re: Bitcoin: the Stripe perspective

#204

Post by dublinben »

Natanael_L wrote: post #194
sanswork wrote: post #135

Earlier quoted context omitted.

It's only easier if you ignore the part where you have to get bitcoin in the first place.

That's no fault of Bitcoin, however. Getting USD isn't magically easy either.

Sure it is. You can sit on a street corner and people will literally hand you physical cash. It doesn't get any easier than that.

Re: Bitcoin: the Stripe perspective

#205

Post by sanderjd »

Cyther606 wrote: post #176
sanderjd wrote: post #148

Earlier quoted context omitted.

I have bought and sold a few hundreds of USD worth of BTC and even used a few tens of USD of it for transactions, and while you're definitely right about the intent and philosophy of BTC, I agree with your parent comment that what is actually exciting about BTC (or something inspired by it) is its potential as the lowest-friction way to buy things digitally. The sooner BTC shakes its crypto-libertarian culture the be…

> the vast majority of people in the world (at least those who've heard of it) know it as this weird, unsavory, and probably criminal thing Yes, and it's the truth. What can bitcoin do that no other currency can? It can operate entirely outside of the existing banking system. That's the X factor of bitcoin, and NY regulators hate it for this reason. The black market actually has _very_ wide appeal. It's worth north o…

We disagree. Bitcoin (or other cryptocurrencies) can be safely transferred across large distances more easily than existing currency. It will be a good thing when governments figure out how to regulate it (and I think they will, eventually).

Re: Bitcoin: the Stripe perspective

#206

Post by Cyther606 »

sanderjd wrote: post #205
Cyther606 wrote: post #176

Earlier quoted context omitted.

> the vast majority of people in the world (at least those who've heard of it) know it as this weird, unsavory, and probably criminal thing Yes, and it's the truth. What can bitcoin do that no other currency can? It can operate entirely outside of the existing banking system. That's the X factor of bitcoin, and NY regulators hate it for this reason. The black market actually has _very_ wide appeal. It's worth north o…

We disagree. Bitcoin (or other cryptocurrencies) can be safely transferred across large distances more easily than existing currency. It will be a good thing when governments figure out how to regulate it (and I think they will, eventually).

Except NY already figured that part out. In fact, they recently presented their regulatory framework for public review. It involves shutting down Bitcoin as we know it, and replacing it with something in which

- every single wallet provider, including makers of open source wallets like Bitcoin-QT, in addition to Bitcoin exchanges and banks, are legally considered "Virtual Currency Businesses"

- each customer of a "Virtual Currency Business" must have a verified physical address and government issued photo ID on file in order to use Bitcoin

- each "Virtual Currency Business" must file suspicious activity reports on all transactions valued at over $3000 USD, meaning open source software like Bitcoin-QT must know each of its users at all times

- each "Virtual Currency Business" must retain records for no less than 10 years

- each "Virtual Currency Business" must maintain collateral in the form of USD including collateral for total Bitcoin balances

- each would-be creator of a cryptocurrency must register with the State before releasing 1 SLOC

The reason it's easy to transfer Bitcoin across long distances is that the system works without intermediaries. Regulation, as outlined by NY, involves polluting the Bitcoin protocol with precisely the same intermediaries that make the traditional banking system so awful.

> It will be a good thing when governments figure out how to regulate it

In other words, you believe it's a good idea to castrate Bitcoin and make it no different than PayPal, SWIFT, ACH, etc.

Re: Bitcoin: the Stripe perspective

#207

Post by mrb »

flavor8 wrote: post #24

It's not quite as simple as that, though. To, for example, send money from the US to Kenya via bitcoin, you need somebody in the US who is willing to sell you their bitcoin in exchange for dollars, and somebody in Kenya who is willing to buy your bitcoin in return for shillings (which are then paid to the destination seller). Creating the technology that makes this relatively transparent is quite doable, but you stil…

"big banks charge only cents to send large amounts of cash internationally"

This is utterly false. The entire reason the remittance industry exists (Western Union, etc) is because banks don't offer cheap ways of sending money internationally, and/or recipients often don't even have bank accounts. In fact, remittance fees are so high[1] that this is precisely why many analysts see Bitcoin's potential to disrupt this industry[2].

[1] Average remittance cost in the world: 8%. Average to Africa: 12%! Nigeria to Ghana: 22%! Source: http://www.irinnews.org/report/99977/remittance-rip-offs

[2] http://www.businessweek.com/articles/2013-10-08/will-migrant...

Re: Bitcoin: the Stripe perspective

#208

Post by sanswork »

Natanael_L wrote: post #193
sanswork wrote: post #187

Earlier quoted context omitted.

How does spending 5 minutes on a website get you bitcoin without having already gone to a bank and talked to people?

Localbitcoins.com, buy with cash

I don't see how you think that avoids you needing to go see people in person which was the claim of the person I replied to.

Re: Bitcoin: the Stripe perspective

#209

Post by bdamm »

sanswork wrote: post #96
bdamm wrote: post #95

Earlier quoted context omitted.

Agreed. I'm looking for a LiveCD style paper-waller generator, do you know of one?

I don't use paper wallets myself but any barebones linux bootcd/usb with https://github.com/pointbiz/bitaddress.org and BIP38 selected is the route I see most recommended.

Very convenient!

Re: Bitcoin: the Stripe perspective

#210

Post by rors »

brownbat wrote: post #136
rsp1984 wrote: post #131

Earlier quoted context omitted.

Thanks for your answer. However I still don't fully understand the problem I'm afraid. How is the trust required to move money cross borders different to the trust required to have an account with money at your bank? That acct is just a "promise" of money as well isn't it? Also, according to your response a domestic money transfer would suffer the same problems but these seem to work just fine (at least much better t…

These are good questions. Someone should write a primer on money transfers and cryptocurrencies (someone with better answers than my best guess, included below.) My hunch is that the trust required to move money is very similar to the trust required to have an account with money at your bank, but the main difference is you pay for that trust in different ways. If you write a remittance, you trust it will be remotely…

There is a primer on money transfers and crypto currencies: http://gendal.wordpress.com/2013/11/24/a-simple-explanation-...

tldr: Even transfers within a single country are very complicated. Your bank just hides the complexity from you.

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