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Why I'm Interested in Bitcoin

cdixon.org

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Re: Why I'm Interested in Bitcoin

#141

Post by saalweachter »

johmas wrote: post #125
minimax wrote: post #111

Earlier quoted context omitted.

That is certainly an interesting datapoint, though paying your employees in bitcoin... I'm not sure how I feel about that in ethical terms. What would you as an employer do if you paid someone on Friday and on Monday that paycheck only bought half as much bread as it did on Friday? Also doesn't it make income/FICA tax kind of a pain?

That's a good question. We don't exactly view it as an ethical issue. Anyone on the team can opt-in to whatever percentage of their compensation they'd like to be paid in bitcoin. Currently no one is taking 100%. We do educate how the currency functions and the risks there may be.

Do you let them specify any of their contracts in Bitcoin? Eg, a salary of $X + Y Bitcoins?

Re: Why I'm Interested in Bitcoin

#142

Post by chaseadam17 »

I think Bitcoin is an indication of a larger trend, similar to search in the early 90's and social networks in the early 2000's.

Will Bitcoin emerge as the predominant online currency of the 21st century? Who knows? But it'll solve a lot of hard problems, and as a result, something will.

Re: Why I'm Interested in Bitcoin

#143

Post by rictic »

abalone wrote: post #126

This is the same naive analysis everyone makes when they first look at the payments system. "Look at all that money. 2-3% on every transaction. A $500B tax. LOOK AT ALL THAT MONEY." The reality is this: Most of that money gets passed back to consumers via rewards, benefits and consumer protections. It's not a tax so much as an incentive for consumers to keep using their cards. And so it is considerably harder to come…

Aren't rewards also subsidized by interest rates charged on those cardholders who carry a balance at the end of the month? My understanding was that that's a very significant income stream, and that's missing from your comparison of ~1% rewards to the 1.5-1.65% interchange.

Re: Why I'm Interested in Bitcoin

#144

Post by foley »

quack wrote: post #116
foley wrote: post #95

Earlier quoted context omitted.

I've been working on a Bitcoin card over the past twelve months so I have had a lot of time to think about the benefits and drawbacks of using Bitcoins for everyday transactions and I completely agree with you, no compelling advantage. Besides the obvious problem of the volatile exchange rate there is just no trust in any of the Bitcoin institutions, if I can't trust anyone else to manage my Bitcoins I need to do it…

If someone hacks your netbanking details and sends the money before you realize it the bank most certainly not cover your losses. Debit card fraud transactions have a very short window to report. It's a good thing that you have a 4 digit pin because 4 digits is secure Bitcoin allows a merchant to recognizing a transaction without considering fraud/KYC. I've sold items on a forum with an escrow moderator and paid 0% i…

The debit card is definitely the weak link, I should get into a habit of minimising its balance. The internet banking is a lot better, they do guarantee it and have two factor authentication.

Good to hear you using Bitcoins for something other than dark markets, we should try to brainstorm other niches where Bitcoin has an edge. I think taxi drivers might warm to it, they definitely hate credit cards.

Re: Why I'm Interested in Bitcoin

#145

Post by saalweachter »

jval wrote: post #133
abalone wrote: post #126

This is the same naive analysis everyone makes when they first look at the payments system. "Look at all that money. 2-3% on every transaction. A $500B tax. LOOK AT ALL THAT MONEY." The reality is this: Most of that money gets passed back to consumers via rewards, benefits and consumer protections. It's not a tax so much as an incentive for consumers to keep using their cards. And so it is considerably harder to come…

If card companies are paying it all back to consumers, then what are their shareholders ending up with? I agree with you that not all the $500Bn is going directly into the pockets of shareholders, but the reality is that there is a huge transaction cost in taking a clip and then passing part of it back to a consumer. However much is lost in the process, it might not be $500Bn but it is definitely a lot of money, and…

Actually, where are all of these numbers coming from in the first place? I know I've heard a lot about the "credit card tax", but I can't seem to pull the numbers off the public data on these companies.

Visa has $10.4 billion in revenue off of processing $4.4 trillion in transactions; that seems to make the credit card tax a mere 0.2%, which is off by an order of magnitude from the conventional-wisdom "credit card tax". Where does this mis-match come from? Is the revenue hidden, and Visa is taking in a few hundred billion in revenue? Or is the revenue potential just much smaller than conventional wisdom says? (eg, the 2-3% and $X trillion come from different classes of transactions, and shouldn't be combined.)

Re: Why I'm Interested in Bitcoin

#146

Post by stuhood »

possibilistic wrote: post #121

Kind of off topic, but I have some questions related to transaction fees. 1) Is there a "reference value" in terms of how much transaction fee you have to pay to make a payment from one bitcoin/altcoin address to another? 2) Is there a "message" payload that would allow us to include JSON or transaction details? I've read that it costs a larger fee for more bytes in a transaction, so I'm assuming you can add whatever…

1) Yes and no... the QT client has default/"suggested" transaction fees, but unless a block is completely full you're not likely to see any difference in processing time if you exclude a fee entirely [a]

2) As of recently [b], yes... you can add a small amount of junk data

3) When you send a transaction using input address(es) that don't add up to exactly the desired amount, there will be some "change", which needs to go to a new address. Thus, some of your change comes back to you at a new address.

4) Yes, that's possible. But you probably don't want to do that, since it leaks information [c]

----

[a] subject to some limitations: https://en.bitcoin.it/wiki/Transaction_fees#Sending

[b] https://bitcoinfoundation.org/blog/?p=290

[c] https://medium.com/p/7f95a386692f

Re: Why I'm Interested in Bitcoin

#147

Post by abalone »

jval wrote: post #133
abalone wrote: post #126

This is the same naive analysis everyone makes when they first look at the payments system. "Look at all that money. 2-3% on every transaction. A $500B tax. LOOK AT ALL THAT MONEY." The reality is this: Most of that money gets passed back to consumers via rewards, benefits and consumer protections. It's not a tax so much as an incentive for consumers to keep using their cards. And so it is considerably harder to come…

If card companies are paying it all back to consumers, then what are their shareholders ending up with? I agree with you that not all the $500Bn is going directly into the pockets of shareholders, but the reality is that there is a huge transaction cost in taking a clip and then passing part of it back to a consumer. However much is lost in the process, it might not be $500Bn but it is definitely a lot of money, and…

It's not about whether merchants will adopt bitcoin. They'd be happy to take digital cash, or any method that pays out less to consumers.

The question is whether consumers will adopt it.. for more than the cases where anonymity is paramount. As it stands cards offer much better protections and benefits than cash, which is where most of the high fees go.

Not 100% of it -- networks and banks still do make money on the system. But the opportunity is much smaller than the gross processing fee would suggest. Between one and two orders of magnitude smaller. And when compared with the adoption and rollout costs of a new system, it's far less of a compelling case than cd's essay might suggest.

Re: Why I'm Interested in Bitcoin

#148

Post by foley »

sliverstorm wrote: post #53
waterlesscloud wrote: post #48

Earlier quoted context omitted.

Currently our choice is to pay the fee to the banks for convenience they provide. If it's possible to provide the same convenience without the banks and with much lower fees, is that not an improvement?

Does bitcoin actually provide those lower fees? Hold on, I know you are about to say "yes of course!". But what about the cost of mining? Mining is not analogous to transaction fees, but it is a cost of bitcoin.

Plus indirect fees due to the exchange rate volatility.

Re: Why I'm Interested in Bitcoin

#149

Post by abalone »

cdixon wrote: post #139
abalone wrote: post #126

This is the same naive analysis everyone makes when they first look at the payments system. "Look at all that money. 2-3% on every transaction. A $500B tax. LOOK AT ALL THAT MONEY." The reality is this: Most of that money gets passed back to consumers via rewards, benefits and consumer protections. It's not a tax so much as an incentive for consumers to keep using their cards. And so it is considerably harder to come…

My view is that the whole system was designed for a different era and not for the web. The problems include 1) consumer having to fill out a form at each merchant, 2) consumer having to decide if she trusts the merchant (1 & 2 lead to the strategic asset of "cards on file"), 3) the bank trying to determine with probabilistic algorithms whether it was really me paying, 4) the security of the whole system is very flawe…

I agree with all those points, but the key question is whether the virtual currency community can come up with something significantly better to offset the considerable adoption costs.

Another consideration: whether the entrenched players can simply make minor adjustments to counter that threat. For example, take your first point, filling out forms. It used to be you always had to do it. Then contactless payments took off in Asia. There was all this buzz about NFC and how it was going to disrupt the system and mobile carriers were going to get involved and so forth. So what did Visa/Mastercard do? They just relaxed the rules so that swipes under a certain amount don't require a signature. Poof, there goes the opportunity, because there's no way the cost of an NFC rollout is worth the extremely minor difference between a swipe and a tap. (Go ask Google Wallet.)

And so it goes for most of the technical issues, I think. Trust and security too.. you could make it easier on the merchant, but at the same time harder for consumers to recover funds if they "did something wrong" like installed malware.

Excited about the new frontiers into digital cash though. And also scared too. The biggest use case for bitcoin right now is not payments. It's international money transfers that skirt capital flight controls. And, for us non-libertarians, it ought to be a big concern. It's a profoundly anti-democratic force. It gives the wealthy minorities (esp. in third world countries) a veto power over policy. Don't like some new environmental or safety laws, or higher taxes to fund public education and health? Just transfer capital out of the country and watch it wither.

Re: Why I'm Interested in Bitcoin

#150

Post by radicaldreamer »

Everyone here trades private currencies (often called credit) all the time. Those Visa bucks are not dollars- they are IOUs from Visa to the merchant accepting them. When the monetary system is functioning well, Visa bucks (or Chase dollars, Wells Fargo dollars etc.) trade at par with legal tenders (US gov. backed cash). Only in times of turmoil does the hierarchy of money reassert itself.

In this paradigm, would you rather be holding US cash or bitcoins (or something else) if there was a political or economic crisis?

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