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Why I'm Interested in Bitcoin

cdixon.org

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Re: Why I'm Interested in Bitcoin

#91

Post by salient »

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…

It seems the more transactions are on exchanges, the lower they make the rate. Some like Bitpay I think offer flat rates per month, too, for businesses (starting at something like $30 a month, no extra commissions).

So while Bitcoin's transaction fees may not be zero, it does seem like it's trending towards zero, much like the price of everything else on the web trends towards zero.

Re: Why I'm Interested in Bitcoin

#92

Post by jafaku »

jusben1369 wrote: post #43

I too am fascinated by Bitcoin and still in learning mode. I think there's one important distinction to add here though. Credit cards can charge 2.5% because they're awesome Some guy in Arizona can set himself up online, sign up for Stripe, have no set fees, and accept a payment from someone in Germany (or NY or Australia) that afternoon. That's amazingly empowering and 2.5% doesn't seem to bad for the people running…

> Some guy in Arizona can set himself up online, sign up for Stripe

I'm not from Arizona, so Stripe isn't an option. But then there is Bitcoin. Countries: All. Requirements: Internet.

Re: Why I'm Interested in Bitcoin

#93

Post by schrodinger »

drcode wrote: post #67
jusben1369 wrote: post #43

I too am fascinated by Bitcoin and still in learning mode. I think there's one important distinction to add here though. Credit cards can charge 2.5% because they're awesome Some guy in Arizona can set himself up online, sign up for Stripe, have no set fees, and accept a payment from someone in Germany (or NY or Australia) that afternoon. That's amazingly empowering and 2.5% doesn't seem to bad for the people running…

> Credit cards can charge 2.5% because they're awesome Some guy in Arizona can set himself up online, sign up for Stripe, have no set fees, and accept a payment from someone in Germany (or NY or Australia) that afternoon. Last I checked, it takes at least a month to apply for and receive a credit card, so this is obviously wrong. Guess what, I could set you up with a bitcoin account and some bitcoins in less than a m…

It doesn't handle fraud in the form of not receiving what you paid for... as a consumer, you can issue a chargeback right now. That doesn't exist for bitcoin, so until we factor in another layer that provides that protection, you can't compare the 2.5% credit card fee to the bitcoin fee.

Re: Why I'm Interested in Bitcoin

#94

Post by glesica »

Sambdala wrote: post #30
glesica wrote: post #16

Earlier quoted context omitted.

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 i…

If it's not a core competency (although for certain marketplaces, it may be), you can use a 3rd party escrow. You're already effectively using an escrow service when you provide a Credit Card payment option; you just don't get to choose who provides the service, you can't unbundle it from a larger product offering, you have very little control over it, it doesn't work well for certain types of goods & services, and i…

I agree that un-bundling the escrow from the rest of the stack would be a good thing. However, I think it is important to keep in mind that replacing credit cards with something less effective (for whatever definition of "effective" matters) than credit cards isn't a true replacement.

The way I am thinking about it is sort of like those threads on HN where someone says "You can create a Dropbox clone in N lines of X and an external hard drive". That's NOT a Dropbox "clone", but rather something that could be used to replace Dropbox for some people some of the time. It would take much, much more to replace Dropbox, and maybe someone will get it right someday. Same goes for Bitcoin, it's fine to think of alternative financial networks (awesome, in fact, I hate banks!) but it's important not to get ahead of ourselves.

Re: Why I'm Interested in Bitcoin

#95

Post by foley »

wsxcde wrote: post #59
bluedino wrote: post #56

Earlier quoted context omitted.

>> I don't keep my savings in cash, but I can withdraw as much cash as I could reasonably want at zero cost from my bank. And once you are over a certain amount, the government finds out.

Maybe this is an issue for you, but I don't see this as compelling advantage.

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 myself. I can do that, but it takes time and effort to maintain secure systems. The real kicker is if something goes wrong, its my problem. If someone hacks my netbanking details the bank will cover my losses.

So what does Bitcoin offer? it opens up transactions that would have otherwise been too risky. Irreversible electronic transactions are Bitcoins niche. However that fact makes it very difficult to acquire Bitcoins with reversible payment methods. This slows down the process of entering and exiting the Bitcoin market leaving you vulnerable to the volatile exchange rate.

I really want Bitcoin to succeed but at this stage there is no way I would use Bitcoin for a transaction unless it was the only option.

Re: Why I'm Interested in Bitcoin

#96

Post by PureApeshit »

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…

Bitcoin being deflationary, storing value in it is very good idea, apart being a bit risky. I also do not see why it should be limited to small payments, bitcoin is full currency not a toy.

Re: Why I'm Interested in Bitcoin

#97

Post by [deleted] »

porter wrote: post #82
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…

The reason why you carry cash is because you sometimes find yourself in situations where a credit card won't work - tipping the valet, vending machines, car washes, etc. In what cases will bitcoin be better for small transactions online than a credit card? I'm at a loss for examples.

[deleted]

Re: Why I'm Interested in Bitcoin

#98

Post by maxerickson »

saalweachter wrote: post #73
modeless wrote: post #63

Earlier quoted context omitted.

You're assuming that mining revenue must never decrease, but there's no reason for that to be true. A more likely scenario is that as block rewards go away, instead of transaction fees going up, overall mining revenue goes down. Some miners will exit, but as long as there's money to be made there will still be miners. Bitcoin users and miners will adjust fees until they reach a compromise that's mutually acceptable.

The problem with shedding hardware from the Bitcoin network is that it undermines the core of Bitcoin's security. Let's imagine that 2025, and we hit the fourth mining-rewards-halving. It's now unprofitable to mine given the existing numbers of miners, and users refuse to accept higher transaction fees, so 50% of miners exit, leaving half the profits to half the miners. This means that 50% of the Bitcoin hardware is…

I think the practicality of the attack will still depend more on the price of bitcoin at that point in time than it will on the sudden availability of all the least efficient mining hardware.

At some point obsolete ASIC rigs should be coming on the market for cheap (but right now the reward isn't anywhere near 'full' in terms of the amount of electricity apparently being used to chase it).

(FWIW, I expect a crisis of confidence long before 2025. Let's see how many miners are left after that happens.)

Re: Why I'm Interested in Bitcoin

#99

Post by bmm6o »

PureApeshit wrote: post #96
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…

Bitcoin being deflationary, storing value in it is very good idea, apart being a bit risky. I also do not see why it should be limited to small payments, bitcoin is full currency not a toy.

That's true in the long run, when its value has settled to something far less volatile than it is currently. Today, storing value in it is investing/speculating/gambling.

Re: Why I'm Interested in Bitcoin

#100

Post by hyp0 »

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…

Some US dollars were paid to my paypal account; I won't convert them to local currency, but wait til I buy something in USD - and so avoid the exchange costs you mention. Meanwhile, my local currency works fine. Of course, the bigger the ecosystem for bitcoin, the better this works.

Credit cards are an incredible business for VISA etc. I agree with the article that circumventing it in some way, esp for micro-transactions, would be great. They probably should stop gouging, to deflate interest in alternatives.

It's a pity the press for bitcoin all bubble and crime. OTOH it is press, and niche adoption works.

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