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Why I'm Interested in Bitcoin

cdixon.org

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Re: Why I'm Interested in Bitcoin

#11

Post by gizmo686 »

quack wrote: post #2

I used to believe that the reversibility of transactions was a major benefit of using cards, but it turns out that is really just a reversibility of liability. Credit cards are an outdated tool. They pass plain text data about a user to authorize a transaction allowing hackers to pull something off like the Target hack. One of the advantages of bitcoin is the ability to digitally authorize a transaction that cannot b…

There is no reason we cannot have credit card like things that do not pass plain text authorization. I believe some places have already switched to useing smart cards which leverage cryptography to proved identification without revealing the secret. I'm not sure exactly what crypto is used in practice, but as a proof of concept you can imagine this being done with normal public key chryptography.

Re: Why I'm Interested in Bitcoin

#12

Post by cdixon »

minimax wrote: post #8

For all the people out there who are thinking about bitcoin as a payment technology: If you assume that customers get paid in dollars and that vendors will have to use dollars to pay their taxes, pay their employees and buy the raw materials for their products (reasonable assumptions, I think), then a payment consists of one conversion from dollars to bitcoins by the purchaser, and one conversion from bitcoins to dol…

Here's one model that could work. Think of Bitcoin as analogous to physical cash. Cash = small casual payments in offline world. Bitcoin = small casual payments in online world. (btw, the original Bitoin paper says this pretty explicitly). I don't keep my savings in (physical) cash. I keep some spending money there. Similarly you will have your internet spending money. You'll converts to and from USD occasionally but not on every transaction. Maybe some people will store value in Bitcoin but they will be the exceptions.

But ultimately smarter people than me will figure out the right model. That's the beauty of software platforms.

Re: Why I'm Interested in Bitcoin

#13

Post by jv22222 »

minimax wrote: post #8

For all the people out there who are thinking about bitcoin as a payment technology: If you assume that customers get paid in dollars and that vendors will have to use dollars to pay their taxes, pay their employees and buy the raw materials for their products (reasonable assumptions, I think), then a payment consists of one conversion from dollars to bitcoins by the purchaser, and one conversion from bitcoins to dol…

I think the larger point is if there is enough commercial acceptance of bitcoin then there's no need for a conversion, we just use bitcoin.

Re: Why I'm Interested in Bitcoin

#14

Post by BlackDeath3 »

Sambdala wrote: post #10
minimax wrote: post #8

For all the people out there who are thinking about bitcoin as a payment technology: If you assume that customers get paid in dollars and that vendors will have to use dollars to pay their taxes, pay their employees and buy the raw materials for their products (reasonable assumptions, I think), then a payment consists of one conversion from dollars to bitcoins by the purchaser, and one conversion from bitcoins to dol…

...currently. I don't think most people are interested in Bitcoin primarily because of the utility it currently provides and the infrastructure that has so far been built.

And that's unfortunate. It's interesting and somewhat satisfying to see the get-rich-quick people kind of people try to get into Bitcoin, and instead get burned.

There is merit to the system, but a lot of people just don't care.

Re: Why I'm Interested in Bitcoin

#15

Post by mbesto »

> Let’s say you sell electronics online. Profit margins in those businesses are usually under 5%, which means the 2.5% payment fees consume half the margin. That’s money that could be reinvested in the business, passed back to consumers, or taxed by the government. Of all of those choices, handing 2.5% to banks to move bits around the Internet is the worst possible choice.

In other words, better wealth distribution? This is precisely what libertarians are fighting for, no?

Playing the devil's advocate here - couldn't this argument be turned around to say something like "That’s money that could be reinvested in banks which hire the best people to find the best and most efficient use of capital."? (as opposed to consumers or small business owners who can't)

Re: Why I'm Interested in Bitcoin

#16

Post by glesica »

Sambdala wrote: post #9
mcfunley wrote: post #6

Earlier quoted context omitted.

> In an online marketplace it's far far easier to accept bitcoins than credit cards because you have no fraud risk, which is a HUGE problem in online retail. I currently work for a large online marketplace. A very typical fraud scenario (maybe the most common) is someone collecting payment for an item that they don't actually possess. This would only be harder to deal with and correct if the payment were disbursed to…

Such an online marketplace should have an escrow included then if they wish to use Bitcoin as a payment method. I believe the Silk Road(s) have used such systems.

So now the online marketplace has to run an escrow service as well. If they're going to do that, why not run an escrow service for credit card transactions? You pay the marketplace, the seller ships the goods, you confirm that you got them (or the seller proves that the shipment took place), and then the marketplace pays the seller. I don't see how Bitcoin really provides any innovation that isn't already available in this particular situation.

Re: Why I'm Interested in Bitcoin

#17

Post by kordless »

cdixon wrote: post #12
minimax wrote: post #8

For all the people out there who are thinking about bitcoin as a payment technology: If you assume that customers get paid in dollars and that vendors will have to use dollars to pay their taxes, pay their employees and buy the raw materials for their products (reasonable assumptions, I think), then a payment consists of one conversion from dollars to bitcoins by the purchaser, and one conversion from bitcoins to dol…

Here's one model that could work. Think of Bitcoin as analogous to physical cash. Cash = small casual payments in offline world. Bitcoin = small casual payments in online world. (btw, the original Bitoin paper says this pretty explicitly). I don't keep my savings in (physical) cash. I keep some spending money there. Similarly you will have your internet spending money. You'll converts to and from USD occasionally but…

I like this analogy Chris. We're already seeing an uptick in interest by developers around the platform: http://blog.bitcoinpulse.com/bitcoin-big-hit-with-developers.... The most likely immediate use of your "Internet Spending Money" would be online services including apps, games, online advertising, storage, hosting and more.

Re: Why I'm Interested in Bitcoin

#18

Post by sliverstorm »

mbesto wrote: post #15

> Let’s say you sell electronics online. Profit margins in those businesses are usually under 5%, which means the 2.5% payment fees consume half the margin. That’s money that could be reinvested in the business, passed back to consumers, or taxed by the government. Of all of those choices, handing 2.5% to banks to move bits around the Internet is the worst possible choice. In other words, better wealth distribution?…

Payment fees typically go to Visa or MasterCard, I thought. And considering the financials of those companies, operating the existing payment networks must be costly- both companies are growing & profitable, but not nearly as much as you might expect if the payment networks were zero-cost to operate.

Re: Why I'm Interested in Bitcoin

#19

Post by sliverstorm »

quack wrote: post #2

I used to believe that the reversibility of transactions was a major benefit of using cards, but it turns out that is really just a reversibility of liability. Credit cards are an outdated tool. They pass plain text data about a user to authorize a transaction allowing hackers to pull something off like the Target hack. One of the advantages of bitcoin is the ability to digitally authorize a transaction that cannot b…

Magnetic stripes are outdated, but smartcards fix that problem.

Reversable transactions moves the onus of security to the people who can really do something about it. A consumer can only chose "purchase or do not purchase", whereas a merchant can elect to use (for example) more secure payment methods and stronger identity verification.

Re: Why I'm Interested in Bitcoin

#20

Post by cdixon »

kordless wrote: post #17
cdixon wrote: post #12

Earlier quoted context omitted.

Here's one model that could work. Think of Bitcoin as analogous to physical cash. Cash = small casual payments in offline world. Bitcoin = small casual payments in online world. (btw, the original Bitoin paper says this pretty explicitly). I don't keep my savings in (physical) cash. I keep some spending money there. Similarly you will have your internet spending money. You'll converts to and from USD occasionally but…

I like this analogy Chris. We're already seeing an uptick in interest by developers around the platform: http://blog.bitcoinpulse.com/bitcoin-big-hit-with-developers... . The most likely immediate use of your "Internet Spending Money" would be online services including apps, games, online advertising, storage, hosting and more.

I also think this issue is going to become more urgent as native mobile apps that do have a "global" (OS-wide) payment system become more dominant. Open web needs something analogous to compete.
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