What a fantastic product page. After less that 30 seconds, I knew exactly what Stripe was doing with Bitcoin, how to use the new feature and integrate it.
This is great news for Bitcoin. If all it takes is one extra line of code for online retailers to start accepting the currency, widespread adoption could sky rocket. That's always been Bitcoin's crutch, simple integration. Others like Coinbase and Bitpay have made it much easier to accept Bitcoin, but usually more services are required to accept other forms of payment. This simple catch-all solution is a game-changer. Congratulations Stripe.
I think the crutch now is not that it's hard to acquire bitcoins (thanks to coinbase and friends) or pay with bitcoin (thanks to stripe and friends), no, the only crutch is why should I buy bitcoins with my dollars when I can just pay with my dollars directly?
It can be useful for people who either don't have access to credit cards but have access to bitcoins, people who already have a lot of bitcoins and curious tech people.
Keep in mind that the merchant fee is .5% with Strip/Bitcoin. With regular credit card payment processing, the fee is something like 2.25%. The difference could be shared equally between the merchant and their customers. Life would be 1% cheaper for everyone (kind of).
The problem with this is that, from the buyer's perspective, the price is almost always the same when using a credit card or alternative. And with a credit card, the buyer gets rewards back, typically 1% or so. So, sadly, using a credit card continues to have more protections, costs less, and has deferred payment. I don't think this is a good thing, just saying. I hold some bitcoins, but I never buy anything with them. It costs more.
What you said is 100% correct, which is why companies accepting bitcoin need to give the entire ~2-3% discount to customers. Very few credit cards will match 2-3% rewards, and from the sellers perspective bitcoin is better than credit cards payments.
To name a few benefits:
- There are no chargebacks
- Funds are available immediately (though transferring from BTC to USD may take a day)
- You can accept payment from anyone anywhere in the world (harder with CC atm)
- Fraud detection isn't as important w/out chargebacks. Granted this is a concern for consumers, which is why they need solid security for their wallets. I think of it like cash transactions. You don't have to worry about someone coming into a store and claiming that someone spent their $5 bill with serial code 123-xyz after stealing it.
Bingo. Chargebacks are my way of making sure I have a fallback if the merchant fails to live up to their end of the bargain. I use them as an option of absolute last resort, but the few times I have, I've been very glad that I had the option, and that the credit card companies bent over backwards to shield me from the headaches of the issue.
I also had a lot of headache when a seller charged me twice and tried to send me another product because I had to charge back several transactions while explaining "yes, the FIRST one was legitimate and I got he product, but the later ones are not".
I had to charge back twice because the seller kept on charging me on the same credit card number! At least with Bitcoin you're only in for whatever you pay.
companies who fail to live up to their end of the bargin in a bitcoin world won't survive long. I've been shopping on the internet since the 90's and not once have I had to place a chargeback.. Chargebacks are mostly fraud and people wanting shit for free.. In turn goods become higher priced and that cost is passed onto all the other customers.. Anytime I have been unhappy with an internet purchase the company has always given me a refund. The need for chargebacks is truly minimal. Any company that wants to keep their customers is going to issue a refund. Companies that won't are shady and need to go out of business anyway.
>companies who fail to live up to their end of the bargin in a bitcoin world won't survive long.
Yes, just long enough, like Butterfly Labs. (Credit card purchasers: could do a chargeback. Bitcoin purchasers: SOL.)
Chargebacks and reversibility in general are essential to consumers. If shit goes wrong, it's gotta be fixable.
(This is also why nobody actually wants smart contracts. They know that the plot of Dr Strangelove is literally an irreversible smart contract going wrong. Consumers want fixability, business-to-business wants the option of lawyering out of a bad deal. The only people who want smart contracts are the businesses who currently screw over their customers with mandatory arbitration clauses.)
Which is why a 2-3% discount for Bitcoin purchases is appropriate. With reputable merchants, I would be willing to give up the ability to charge back for an additional 1-2% discount.
No idea why this was down voted. This is a very legitimate comment. When I'm wrongfully charged or sent goods that aren't what's advertised and support doesn't help or reply. A charge back offers the protection a buyer needs.
You increase the number of non-payers by not only having the fraudulent ones but also the lazy ones who delay payment, the forgetful ones who keep forgetting to pay and the ones that don't get your bills. Then you add on the cost of trying to collect from all those people. Cheaper to just charge up front and accept that some tiny percentage will be fraudulent.
That's why the seller has to give the money to the consumer. The seller avoids the customers who scam which is a non-0% amount of the time, so if the seller is trusted this would be a good thing to do. I'm talking Amazon-level trust.
In addition: When you implement 3D Secure (Mastercard's Mastercode or VISA's VBV), you are also not liable for chargeback. In Asia, most payment gateways implement 3D secure.
I mentioned this in another comment, but this is why I would encourage consumers to only take a discount like this from reputable sellers.
eg I would gladly take a 2% discount with Amazon, as it would save me hundreds over time.
On the other hand, if I were trying out a new SaaS product I would start with a credit card and opt to use BTC once I trusted the company and their product, much like I wouldn't buy a 1 year subscription for a 10% discount without first using the product for a month or two.
> Historically Visa has not permitted retailer surcharging, but allowing surcharging was a key provision required by merchants to settle long-standing litigation brought by a class of retailers in 2005.
It's good that governments still have a bigger stick they can use to beat some sense into corporations.
IIRC, it is now. There was a lawsuit about that in I think 2011 where merchants settled with credit card companies and payment processors that they are allowed to charge less for cash transactions. That had previously been prohibited, which was circumvented to a degree by the pervasive "minimum purchase" sign.
I'm pressed for time at the moment, so I can't provide a link.
What rationale is there to have a law specifically about this?
It seems to me like there's three contracts involved: The agreement between merchant/CC, consumer/CC, and consumer/merchant. Since these are all private parties, why does the government even care what contractual arrangements they make among themselves regarding how the form of payment affects how much needs to be paid?
You can say "if you are dressed like a clown today we will give you a 10% discount". Point being that there is nothing to prevent you from giving someone a discount as long as it doesn't break any laws and as long as you are offering it to everyone that falls into the same category (or the discount has been negotiated).
Nothing but your merchant agreement. I worked a register in a small store when I was 16, and in a slow moment I ended up reading some of the stuff VISA sent along with their booklet of invalid credit card numbers. (Yes, this was a while ago.)
In in the fine print it was clear that offering your customers a cash discount was grounds for immediately canceling your ability to take credit cards. If I recall rightly, I noticed because the store I was at did indeed offer a discount. In practice, I'm sure the store was small enough that VISA didn't care. But for larger operations I'm sure it was a serious threat.
I believe they were eventually sued and lost, but since I rarely see discounts like that, I imagine they have some sort of not-quite-illegal trick, like offering merchants advertising credits based on charged card volume.
Ok imagine next time you buy flights or concert tickets, instead of invariably paying some $6 credit card surcharge per booking, you are offered the option of booking with bitcoin for a $2 or even no surcharge. I will definately at that stage start looking at paying with bitcoin.
Then as a significant proportion of the population (say 20%) starts paying with bitcoin, other online shops like amazon will start seeing that they are saving a LOT by not paying 2% interchange fees to cover bullshit credit card reward programs and fees. And then the number of stores charging an additional credit card levy will increase as shops are not automatically building the credit card fee into the price, and then the number of people being pushed into bitcoin will increase.
The only thing that can stop this is credit card companies effectively lobbying that shops cannot charge more for credit card payments. this has happened historically in some juristictions, but is really pretty hard to justify for any sane reason so will be unlikely to stick.
This will either really marginalise credit card companies significantly, or really force them to put the screws on their interchange fees (and greatly reduce their rewards programs).
The other thing that can stop this is a bidding war, where credit card companies restructure their business model and lower their fees to the point where the inherent advantages of credit cards (such as chargebacks and lower inherent overhead due to lack of currency volatility and mining) stop the advancement of Bitcoin.
In either case, Bitcoin isn't going to take over the world, but whoever can figure out a good way to deal with the problem of how regular people could easily obtain Bitcoin in the first place has a chance to skim some profit in the interim.
This might be a US-centric perspective. In France, to my knowledge, there are no such rewards, and no chargebacks. Still, there are transaction fees, so merchants would have everything to gain by proposing Bitcoin payment and sharing the savings with the customer.
Swiss Air charges $11 for a credit card transaction. The annoying thing is their other supported methods of payments don't work for me, even though I live in Switzerland and have a Swiss bank account.
Last time I booked a flight, I did it with Bitcoin via btctrip.com. It worked out a little bit cheaper.
Would you do it for a percentage greater than your CC rewards if you trusted the seller?
For example, Amazon has never screwed me on a single purchase. If I have an issue they fix it, which is a large part of why I often pay 5-10% more for products on Amazon.com instead of XYZ.com. Would you use BTC for a 2% discount with sellers like this?
Purse.io provides 25% discounts to shop on Amazon with bitcoin. Pretty incredible - discount comes from liquidating Amazon gift cards ($15b in circulation).
This is potentially amazing for me. I just started a consulting business in Japan. Credit cards are hard to come by, especially for foreigners. I need to pay for various services: domain name registration, etc, etc. At the moment I'm constrained to using Japanese companies who will accept bank transfer payments. If this becomes popular, I could buy services anywhere. There service fees are very reasonable. This is what I have been waiting for with Bitcoin (and wondering if it would ever emerge).
> I need to pay for various services: domain name registration, etc, etc. At the moment I'm constrained to using Japanese companies who will accept bank transfer payments.
Why not buy a refillable Visa at a convenience store?
Also apply online for the Rakuten card, and try applying for the store card at Marui. Also if you have an account at Shinsei try to get their credit card.
Yep, my friends will definitely accept Bitcoin for everyday transactions (splitting bills, etc) if they know they can spend it on the sites they use often.
Have you tried to get a credit card? It's easier than getting a bank account (some banks will refuse to open an account for you if you have been here for less than 6 months).
In the last 24 hours, Bitcoin has been worth between $232 and $238, so that could be called a 3% fee on top of the 0.5% fee, and that 3% is just from the last 24 hours. If you look at the last week, the fee could be considered even higher (more than double or quad that).
The problem with Bitcoin is that it is extreme volatile. So you may gain or lose money. So while a 2.9% free on dollars is fairly predictable, you really don't know what the final "fee" would be on Bitcoin.
He's probably more referring to the customers side.
Why should I buy bitcoins for let's say $300 and risk them being worth $200 in a few weeks (which would cost me 33%) instead of keeping my money and paying directly (maybe 3% fees for the seller)?
It's a much more nuanced question if you don't hold USD in the first place. Here I have a choice between holding BTC and holding CAD. Both fluctuate compared to the prices of stuff I want to buy from US retailers.
They both fluctuate, but not that much. If you saw that much fluctuation in CAD to USD conversion, no US based company would sell goods in Canada. Just look at what happened due to the ruble value fluctuations last month.
If you are in Canada that isn't really true. It is extremely easy to open a USD denominated bank account and credit card. Couple banks have Euro accounts as well.
Yeah, but if you get paid in CAD, it's still a question of when you want to deal with the volatility—point of sale, or point of forex-exchange-during-account-transfer. You still have to deal with timing it right (possibly waiting months) if you want to avoid losing tens of cents on the dollar.
And if you're already thinking like that, Bitcoin isn't nearly as scary.
Bullshit. And this is not a matter of opinion or speculation. There is data and history. Take a look: http://imgur.com/FmpI0HY
That's the past year. The flat blue line around 0% is CAD vs USD. The crazy red line that's all over the place, swinging by as much as 100% in a matter of weeks, is CAD/BTC.
Unless you're planning on holding the currency, those graphs are irrelevant - what would matter would be short term changes (1-2 days, perhaps). And while USD might still come out better, your graph grossly distorts how this would affect someone wanting to use USD or BTC primarily purchases while holding their assets in CAD.
Cheaper fees are moot points in the context of what costs the end user will incur at the end of the day. Anonymity? Are we still keeping our talk limited to "BC payments for VPNs" and "BC payment for those seedboxes in the DMCA agnostic parts of the EU" (not that it's not a valid use case)? I guess not, at least that's not the popular argument around.
Volatility of Bitcoin prices puts stock market rate fluctuations to shame. Think of it from the market price point of view and from the point of view of an end user, like me - who'll buy Bitcoins (yes, one who didn't win the gold rush lottery or couldn't afford the mean machines or wasn't just aware) to buy a pair of jeans which has its price fixed at, let's say, $59.99 since last 7 months. When I bought the Bitcoins it cost me $1200/b.c, but the next day when I went to buy that jeans with my Bitcoins - or maybe I just wanted to convert it back to dollars, it was at $800/b.c or let's just say $1100/b.c if you find the former rate too far fetched.
Trust me, it just doesn't make any practical financial sense to me and no, I am not in the minority, I am part of the majority. If you say that "Bitcoins were never meant for the majority in the first place" then it's a different story altogether.
Also, if I would have had the 1000s or even 10s or maybe 100s of Bitcoins from the initial gold rush (given I was able to afford an able and mean mining rig) it would have been a different story - I mean my "different" point of view then.
And just to be clear I value my privacy just like I know my affordability and financial limits too.
bitcoin's not really that anonymous. Sure, the ledger doesn't contain identities, but it's not extremely difficult for the mapping between addresses and identities to "leak" and once they do, it's anything but anonymous.
The currency itself is not anonymous. In fact it's a huge mistake to suggest such a thing. That would be like saying keeping a ledger at a currency trade makes the currency 'anonymous'.
Since there are more avenues of trade available than say, with cash, laundering and other clever tactics can be used as tools to cover your tracks.
As always, the only way to keep yourself safe is through GOOD OPSEC. Bitcoin is an evolution of the currency concept, a tool for moving and representing wealth; nothing more.
there is no mapping to leak, there is no join between your identity and the bitcoin ledger, there may be some sites such as coinbase that can say "well coins were sent from this address controlled by Mr. Bob, to a new address". Mr. Bob says he sent it to a gambling website, exchange, merchant, localbitcoin sale, in person trade etc. After that he has no idea where it has gone or no way to link the identity of the current owner of those bitcoins, add in 3 or 4 more steps and it doesnt become difficult to obfuscate the trail enough that there is no conclusive link.
that says nothing for coins mined directly, wjere there is no link to any real world identity held anywhere, just a bitcoin payment address.
When I spend money with a vendor I often reveal my identity to them intentionally (so that they can ship me goods!). There's the join right there. You can argue that I shouldn't have sent money to this vendor but I think that eliminates an enormous existing use case for cryptocoins.
There are benefits to anonymity, which arguably outweigh disadvantages.
I was just pointing out that bitcoin is anonymous when used by someone with a brain. (I.e not Ross Ulbricht, who apparently sent money to an assassin from his personal wallet, without using a mixer.)
I understand that there are benefits to anonymity, but I don't think anonymous transactions are really a priority at this time, except for people doing illegal business. I certainly don't want politicians to be able to receive anonymous funding.
It's different with something like speech, where we have a rational principle that says "people can speak as a general proxy for hypothetical positions." But you can't make hypothetical purchases, and you can't represent a general population with anonymous purchases. So anonymous purchases don't have a social basis for the same protections.
People need free speech to speak freely. Your Wikileaks example is cherry-picking: it is not illegal to donate to Wikileaks. It might be illegal to donate to a drug cartel, or somebody like ISIS. Or to that police officer who wanted to give you a ticket. Or that government agent deciding who to give a big contract to.
I think think of far more cases where anonymous transactions are harmful than I can where they are beneficial.
No, I don't think all free speech should be with identity. I would anticipate that it is hard to have free speech under such conditions.
I wouldn't care if my spending history were public, but that's obviously not relevant. I don't believe spending should be anonymous. I don't believe people should be allowed to make any purchase they desire without penalty. I do believe people should be able to speak without penalty, as people are better able to ignore bad words than they are bad money. Money corrupts people far more effectively and quickly than speech.
>It's not illegal per se to donate to wikileaks, but you may be put on a list somewhere.
So? You're already on a list somewhere. Are you arguing that you have a right not to be on lists, and that this has anything to do with currency?
>In most of your examples, you can easily pay with cash, which is anonymous.
No, not "easily." You have to go to a bank and sit in front of their cameras while they hand you money. That's not the same as anonymous internet transactions. And the person you are giving money to will see you hand it to them, unless you jump through some hoops. And jumping through hoops is shady when you're doing something illegal. And someone cannot steal your cash without being physically present, and thus requiring knowledge of your location and opportunity to leave a trail of evidence.
I mean, if it were so easy to pay cash, what value does bitcoin even bring to the table? Why are all these bitcoin advocates not just using cash, if they are so similar?
What if it gets sent through a mixer, then sent to an exchange, traded for an alt-coin, that's sent through its own mixer, then sent to a different exchange and traded back, then sent to another mixer? All you need is one link on the chain to not keep logs (which many mixers claim not to anyway), and you've hit a dead end.
Look at Tor. It's never been broken by tracing back each relay, even though there are usually only 3. All the hacks were vulnerabilities in other things, like browsers or websites.
Mixing large amounts is pretty damn hard, there's not enough volume to hide large transactions. Trading massive amounts of BTC to an altcoin would be even harder, concealing the movements of that altcoin would be pretty much impossible.
In the end the process of money laundering ends up being significantly more complicated than with "real money".
Don't go and compare Tor to BTC, just don't. They share nothing from a technical PoV.
I'm not so sure about what you say about large mixing. https://bitmixer.io/faqs.html claims to have 2000 btc available, around $500,000. I argued that exchanges function as a mixer of sorts, and they're going to have a lot more btc lying around.
The comparison of Tor to BTC was mainly comparing mixers to relays. Just like you need every relay to store logs if you're going to go after all of them to break the chain, the same holds true by mixers.
2000BTC isn't very much at all, especially since the mixer having 2000BTC doesn't mean they can securely mix 2000BTC.
Exchanges will most definitely be storing logs, so that won't help much.
Comparing mixers to relays isn't valid either, with BTC the attacker will have access to the blockchain, which is basically the worst possible attack scenario for Tor.
And in any case, there isn't enough BTC transaction volume to reliably hide large amounts of BTC.
is it that different from buying bitcoins by meeting physically with someone and paying cash? or do you buy bitcoins from your personal computer? I guess no way will be truly anonymous
The seller has your mailing address. Mining is probably the most anonymous way to do it, and by far the least cost-effective. There are, however, ways to launder your bitcoins if you really want them to be anonymous, regardless of how you acquired them.
You can mine another cryptocurrency with your GPU and use that to convert to BTC. That's actually mildly profitable if you choose the right currency and your electricity costs are not too high.
I mean, imagine you go in with a baseball cap, and you go to a store that's nowhere near where you live. Is anyone really gonna be able to pull that up and ID you in 6 months? A year?
I don't want to give my CC details and/or my personal information to every merchant. This usually means I either buy from fewer merchants, or pay with bitcoin if allowed. Obviously, if the merchant is going to require my info anyway then it's pointless, so it depends.
That's one of the main points about bitcoin for me. As a tool for privacy. On the surface it may seem trivial, and corporations living off mining your information will always try to pretend it's not even an issue by simply avoiding mentioning it. While at the same time push for their payment solutions as either compulsory or cheaper ("soft pressure"). But make no mistake, this is one of the most effective tools for mining your data reliably and the likes of Google, Facebook, Amazon, etc are just not going to give up on it easily. Authorities also won't give up on "follow the money" as a tool, or even snooping and hacking into your communications legally or not, inside of their jurisdiction or not. It's basically no rules for some, all the rules for you.
> "I don't want to give my CC details and/or my personal information to every merchant. This usually means I either buy from fewer merchants, or pay with bitcoin if allowed. Obviously, if the merchant is going to require my info anyway then it's pointless, so it depends."
This is the entire value of bitcoin in my opinion for the average CC holder in the US. I simply don't trust people with my details. It seems like I get a new CC every few months because of some data breach, which entails me having to change any subscription services etc. Anon transactions may be a big point for some, but you are entirely correct when I will more than likely be providing my address to people who I pay with bitcoin. However, they won't have my CC details. I think it will be a better "payment buffer" than paypal. Hopefully cheaper also.
The point is that even if you're credit card number is stolen, you are not responsible and get a new card. Compare that to the data hacks of bitcoin exchanges...
Bitcoin and bitcoin exchanges are a completely different thing.
When my CC data is stolen, criminals everywhere have access to my current personal information, often even address, phone, picture. I cannot possibly undo that damage. Losing a regular payment for me is NOTHING compared to that. Just having Google have all that next to other data mined about me from people using gmail accounts to mail me etc, it's massive. I just do not trust corporations to deal with my personal data so I take at least a modicum of measures against these dangers. By simply paying through CC you are giving everything away in one swoop.
How does your picture get stolen along with credit card data? And isn't your phone quasi public information anyway? Nowadays, unless you have a very common name, it's not that hard to find someone's details (picture, phone, ...)
I've had my credit card "scammed" several times and I just fill in a piece of paper and the bank refunds me the money and each time it's cost me exactly zero euros.
I've used Bitcoin a few times and love how it works, but my lack of understanding of the security precautions required to handle hot & cold wallets + the volatility of it makes me just averse to it. I prefer my credit card getting scammed anytime to the uncertainty of what will happen if I convert a large amount of euro to btc.
I don't think you need to buy them (unless you want to gamble on their value going up) - just be willing to accept them as payment in the future. As more people see they can easily spend bitcoin, they become more willing to accept it as payment, and the userbase grows (bringing more price stability, hopefully)
I don't think userbase has much of a correlation to price stability. Even commodities like gold or oil have exhibited periods of high volatility even with a large "userbase"
Also, while we're talking about price, people sometimes conflate bitcoin transaction volume with bitcoin price, forgetting that for every buyer there is a seller. As a means of transacting, bitcoin is great, especially for small amount or across borders. It makes no difference what the price of bitcoin is as long as the buyer and seller are immediately converting out of bitcoin and into their local currencies - and that has no long term impact on price.
Unless of course many people notice rising transaction volume, confuse the trend, and then invest in bitcoin, which then becomes a self-fulfilling prophecy.
"bitcoin transaction volume" is worthless. Anyone could easily make a new record in btc txs for a thousand dollars. If I send money to myself, it counts as a tx.
The real concern with bitcoin is that it can only support 3 transactions a second with the current codebase. Gavin wants to fork it to get rid of the block size limit, but there's been opposition.
It may not be that appealing for a dollar/euro economies, but for emerging markets where their currency is not that stable and average inflation is around 3-5% it could have great potential.
If I were to work in Argentina I would rather get paid in BTC than ARS, due to liquidity constrains. I would probably convert most of the money to USD, EUR o CHF, but I would keep some bitcoin if I had where to spend them.
BTC is not an investment for stability [1]. And the OP is still asking a valid question, why pay BTC when that's several extra steps rather than pay debt or credit?
Mass adoption of bitcoin would certainly lower volatility, however bitcoin won't be massively accepted until volatility gets lower. It's a catch 22 game. So you are right, bitcoin doesn't seem such a good option for now, I was thinking a little bit down the road.
Do you mean like a currency that was worth $650 against the US dollar a year ago, and today is worth $250 against the US dollar? That kind of stability?
Right, the Argentina straw man. Worst inflation example you can find is the Argentina peso, and it's lost 10% in a year where the bitcoin dropped 63%, and bitcoin's volatility over the same time period has been much, much higher.
Even the most mismanaged government manages its currency. No one is managing bitcoin, it's price reflects the volatile market whims of a cryptocurrency backed by nothing but computation and beset by fraud. The volatility is not going away.
I don't ser bitcoin right now as a tool for savings, maybe for transactions.
Lets say you work from Argentina for a company abroad. You have three options to get paid:
1. Wire transfer, the compay send you dollars or euro and you get pesos at the oficial rate.
2. There is always people trying to pay things outside, you can give him your dollars outside in exchange of dollars inside arg por pesos at the blue rate.
3. Buy bitcoins outside sell inside.
1. You lost 30% exchange rate, you will not be able, to buy dollars back at the oficial rate.
2. Is 3%
3. Is 10%
Since 2 and 3, are not 100% legal, you will have problems buying things since you cant justify your income.
Argentina, Venzuela, Russia, Ukraine, Sudan, Belarus... I haven't done the math, but we are probably talking about a couple of hundred million. If they all adopted bitcoin, it would probably become the 5th or 6th currency by people using it in the world.
>Even the most mismanaged government manages its currency.
Governments don't manage currencies.
>No one is managing bitcoin,
No one managed gold when all currencies were gold backed and it did not see bitcoin's price volatility.
>it's price reflects the volatile market whims of a cryptocurrency backed by nothing but computation and beset by fraud.
I know what a Central Bank is and how they are supposed to work. Check this out: Who owns the Federal Reserve? [1]
>As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.
If you include the very next paragraph, it is clear that the US federal government manages the Federal Reserve.
> However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve's activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as "independent within the government" rather than "independent of government."
The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation's central banking system, are organized similarly to private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
Well, then we both know what we are talking about. Do governments manage currency? Yes and no. On paper they don't, in reality they have a lot to say about a country's monetary policy. However, if you look at the world's second strongest currency, the Euro, it's apparent that the European government doesn't have that much control.
I wouldn't be saving in US Dollars, they conder all US dollars their proterty so if they ever had the chance to intercept your money and did take it, they would feel justified keeping it because it was theirs to begin with.
There was a case where a money transfer was seized between two european countries over Cuban cigars because at the time, the US had a trade embargo against Cuba.
Why shouldn't you invest in Bitcoin for savings? Look at a one month chart. Or look at a three month chart. Or look at a one year chart. Or look at a chart from the beginning of bitcoin and ask yourself: "is this what I want the value of every dollar in my savings to be worth?
>no, the only crutch is why should I buy bitcoins with my dollars when I can just pay with my dollars directly?
(By dollars directly, I assume you mean by credit card or paypal.)
Credit cards and paypal come with the ability to do chargebacks which are useful if you don't fully trust whoever you're paying, but credit card companies and paypal are middlemen who must be trusted too. If I trust the company I'm giving money to more than I trust paypal to not fuck up or delay the transaction, then I'll immediately choose to use Bitcoin.
PayPal and Visa are additional layers of trust. It's not them or the merchant, it's them and the merchant. Meaning that if something goes wrong, you can ask the merchant to make it right. If the response is unsatisfactory, you can then go to PayPal or Visa to essentially overrule the merchant. The additional layers of trust are a good thing for consumers to take up unless merchants apply surcharging based on payment methods.
I guess that's the rub. As a customer (not a merchant) I will always trust paypal or visa over the person I am paying. If something doesn't get delivered, I get my money back.
Also Stripe is now the middleman. I'm not giving BTC to a merchant, I'm giving it to stripe to give to the merchant. That's good also, because I trust stripe more than merchant XYZ.
I'll note that Stripe will likely not refund you if the merchant refuses to. They do do some minor checking that the entity you're paying actually exists, though.
Worse are the tax implications of using large amounts of Bitcoin, since it's treated as property and not a currency. Good luck keeping track of your cost averaging over the year.
Which only really happens if the customer files a dispute, the dispute is valid, which in turn means the customer is aggrieved. Why would I want to forfeit that ability again?
I legitimately wanted to use my Canadian credit card to buy something in the US and have it shipped to me in Vietnam but the merchant naturally was unwilling to take on the chargeback risk and I was unable to complete the purchase.
A SWIFT wire transfer costs $40 a pop and requires me to visit a branch (which is especially hard to do when I'm 10,000 km away from home). It's also much more annoying for the merchant to accept vs. changing one line of code in their Stripe checkout.
Western Union is also expensive and inconvenient (although somewhat less so than the bank).
I think all of them here in Canada (unless you have some special merchant account). The banks all claim that you won't be held responsible for any fraudulent use of your account online. They wouldn't be able to claim that if you could do irreversible wire transfers.
I live in Finland, and the whole concept of not being able to send wire transfers from your online banking (or even a phone app) sounds utterly ridiculous.
This seems to be the norm in most of Europe. AFAIK the big US banks let you do wire transfers online too.
There are 7 billion people in the world, so your numbers suggest that about half the people in the world neither have nor do not have access to modern banking facilities.
Additionally, those with the least access to modern banking facilities probably don't have the best access to facilities for efficiently making use of bitcoins, either.
so that you don't have to give your CC info to companies who don't protect it and then have it stolen, so that some jack off in Texas can go buy 200 rolls of TP from wal-mart. That's enough reason. Push payments > Pull Payments
or people living in a country different than the US (one problem with that is that banks/credit card companies take a MAJOR hit on the exchange rate that's very hard to overcome without having bank accounts in different jurisdictions).
The problem with Bitcoin though is it isn't a currency. If it was a currency, if $1 USD was paid for a Bitcoin, that USD would be destroyed, not pocketed. The only people promoting Bitcoin are those who have something massive to gain, e.g. they own a lot of Bitcoin or they have vested interest in the ecosystem. Stripe facilitating this would allow them to start gathering Bitcoin, at a rate of .5% per transaction, and if perhaps will have the impact of increasing Bitcoin's value - further increasing the value of Bitcoin they own.
> The problem with Bitcoin though is it isn't a currency.
You mean it isn't a fiat currency. All that means is that Bitcoin's value isn't backed by a government, but is instead derived purely from the ability for someone to spend it.
> If it was a currency, if $1 USD was paid for a Bitcoin, that USD would be destroyed, not pocketed.
What? Since when? If you spend USD to buy EUR, the person on the other side of the transaction is giving you EUR and pocketing the USD. No value is destroyed.
Bitcoin still doesn't fit the definition of currency on its own. The fact that Bitcoin has a value is more because of speculation. People early on mined it and therefore own larger amounts for relatively little effort or cost. Now it's worth more and they have reason to perpetuate its growth. Investors now have joined gamble and speculating by putting in $100s of millions of real cash in hopes they can help stabilize it and make their current Bitcoin worth 10x to 100x more just by getting more people to adopt it. There are some people who accept Bitcoin in exchange for services, and more accepting it for goods, however it's those base Bitcoins that were mined that are the problem.
Re: USD for EUR - As you mentioned above those are at set rates between fiat currencies, and therefore there is practical reasons for the currency having a value. Bitcoin's value is mostly dependant on demand, which is being pumped up and perpetuated by investors and those with vested interest in the ecosystem including those who own Bitcoin and larger amounts of Bitcoin - who all want the value to go up 10x - 100x.
Lots of places take Bitcoin as a method of payment--therefore, it's a currency. Sure, its exchange rate is volatile due to speculation, and its future is relatively unknown right now, but that doesn't mean it's not a currency at all. Bitcoin has real value as a form of digital cash, and lots of people are using it that way.
> Bitcoin's value is mostly dependant on demand, which is being pumped up and perpetuated by investors and those with vested interest in the ecosystem including those who own Bitcoin and larger amounts of Bitcoin - who all want the value to go up 10x - 100x.
You're absolutely right: since Bitcoins aren't backed by anything real, their value is purely based on demand. But I disagree with the notion that speculation is the only reason they have any demand. Plenty of people are using Bitcoin in the real world, e.g. to make purchases anonymously or to easily send money overseas.
In real economics, the word "fiat" simply means "not backed". So Bitcoin is "fiat", and to a considerably greater degree than governments (who can declare a currency legal tender in a given geographical area).
The special Bitcoin usage of "fiat" stems from goldbug pamphlets from a century ago. But it is a misuse of the word.
There is no such direct causality. The value of a currency (in the sense of exchange rates and prices of goods) is determined by supply and demand, and nothing else.
People with the mindset of "USD government printing money => value of USD goes down" have been predicting QE-based inflation for years, and they were wrong. When you drop this incorrect mindset and adopt the correct one (supply and demand!) it's easy to see why: QE did not make people richer, so it did not lead to the kind of significant increase of demand that would be required to trigger a rise in inflation.
A better or more accurate example I realize would be pointing out that if the US government prints money then the overall value per unit of the of the currency goes down. Bitcoin is mined which is akin to printing money. I'm not sure I am using the correct terminology, though trying to better articulate. Currency gets destroyed buy governments. They say take $1 million of cash and burn it/remove it from circulation.
i think you dont understand bitcoin or money at all. that is not meant to be dismissive, i think a lot of people dont understand how money creation actually works, just that it does. for some reason people think bitcoin is so strange that they could not use it but if they stopped to think about how fiat currencies work they would be equally confused.
so the first thing you say, about the US government printing money and the existing money becoming worth less, this is known as inflation.
Yes mining bitcoin is similar to printing money, however you cannot 'print' bitcoin infinitely as you can with US dollars. This is why bitcoin is known as a deflationary currency and many people think this is a negative aspect to its adoption, but if there was no artificial scarcity i.e you could make as many bitcoins as you wanted when you wanted then there would be no value to them whatsoever.
>currency gets destroyed buy (sic) governments
Do you mean by inflation or do you mean they are putting it all in a furnace somewhere?
They destroy old used notes yes, but that doesnt take it out of circulation. if they burn $100million then they have $100million in fresh notes to go back out into circulation. That money comes from banks, those banks are holding it as deposits for customers. If the government 'destroyed' it then those people would not have any money in their bank accounts.
Far from destroying money or removing it from circulation many governments have been printing money like nobodys business over the last half a decade. Google Quantitive Easing to see the offical description of it and what they hope to achieve as a result.
Governments certainly do take more money (or money-like instruments) out of circulation than they're putting in under some circumstances, for equal and opposite reasons to quantitative easing. It's rare, because normally the economy is growing (at what you assume is a sustainable rate) and so you want the currency base to grow as well. But I believe the US took at least a little out of circulation in an effort to damp the "irrational exuberance" of 2001.
While this may be helpful, I can't see it being a game-changer at all. Have retailers like NewEgg or Overstock seen any sort of drastic revenue increases or activity from accepting Bitcoin?
The problems with Bitcoin are almost entirely on the acquiring -side and not spending side. Getting a Bitcoin is a PITA and I don't think the demand from most consumers is there to overcome the pain.
The game-changer for Bitcoin will be when someone answers the question: "Why should I switch from paying with my credit card to Bitcoin?" with something compelling.
I think Bitcoin is the Linux of payments. Everyone always talked about the potential to completely change the desktop (consumer use) but the real impact was the network/backend (Sun/NT machines) So Bitcoin is exciting to me but not as a payment method. But as a backbone it gets really interesting.
Less bitcoin itself, but the blockchain technology that backs the currency has a number of novel uses. The idea of a public, cryptographically secure and verifiable ledger could be used in everything from voting to domain name registration.
Difficulty of integration is not the main thing holding back Bitcoin adoption.
The main thing holding Bitcoin from being adopted more broadly today is that many consumers who are aware of it don't think it will be adopted more broadly!
Even in the HN community (which has a high concentration of early adopters of new technology), there are a lot of folks who don't think it will be adopted more broadly, as evidenced by the comments on this thread.
I agree. If you insist on having it be animated make it a video. I'd actually just prefer a few screenshots showing the key things that I can go back and forth between so I don't have to sit and watch something that could be summed up in 3 or 4 slides that are digested in a few seconds.
Ditto. Too fast. For me this isn't an exemplar of effective communication. It's a complete failure to deliver whatever that animation was trying to communicate because I only got 1 second each to absorb the text and the slide. Maybe I'm just slow, but a few stacked section tags with the same information presented statically would've been so much more effective.
Javascript for it's own sake, hampering effective communication; it's the Flash splash page all over again.
The Bitcoin community might want to take a deep breath and recognize where Bitcoin has the most real-world use. The idea that my mom will someday use Bitcoin to buy books online is about as realistic as the belief that, any minute now, youngsters will realize that the daily newspaper is better read in paper form, because of the texture and experience and the anonymity of paper. For that matter, I am a computer programmer, and I love to play with new technologies, and I'm utterly unable to imagine why I'd ever want to pay with anything with Bitcoin.
There are a large number of people living in China who would like to get around the nation's currency controls. There are a large number of people living in Russia that want to move money without being tracked. There are a large number of people living in Latin America who want to avoid taxes in their own countries. This is what drives the use of Bitcoin. The only large scale need for Bitcoin is criminal activity, in China, Russia, Latin America and elsewhere.
Currency regulated by the government is a classic "good enough" product. It might lack some features that would be nice, but 99% of the public doesn't seem to care. Rather, they want more money, but they don't want to change money. If they had real doubts about the currency, they would dump it in exchange for real goods. But instead, most people work hard to acquire more money, and they show no real concern with the standard proxies for currency (credit cards, checks, etc).
The world's simplest reasons why you might pay something using bitcoins is simply when this is the only way, or cheapest way, or safest way to make a transaction.
Example #1: some merchants are hit really hard with fraud, such as intangible goods paid by international credit card transactions. So hard that they decided to stop selling internationally. These merchants discover that Bitcoin re-enables them to sell internationally because Bitcoin completely solves the fraud problem for them (since transactions are irreversible). In that case, as an international customer of such a merchant, paying in Bitcoin is your only option.
Example #2: some merchants offer discounts when paying in Bitcoin (because they don't incur credit card fees). So it is in your interest to pay in Bitcoin: you don't have to pay the fees from exchanging coins for fiat, and you don't have to pay the indirect credit card fees that the merchant would make you cover (via the absence of a discount).
Example #3: as Bicoin's adoption grows, more and more people end up having bitcoins in their hands, like your nephew giving you $50 worth of coins for Christmas. What's the easiest for you to use them? Setting up an account at an exchange (and incurring the associated hassles and fees when selling), or just spending them directly? Of course in this case you would want to spend them directly.
Example #4: say you are travelling out of town and paying for a meal in a restaurant that you suspect might be skimming credit cards... do you pay using a credit card or bitcoins? Using Bitcoin here would be much safer. It has all the advantages of credit cards (and more) without the inconvenience and danger of handling cash (losing it, getting robbed, no ability to "back up" cash, etc). Hardware bitcoin wallets have especially an insane opportunity to innovate in this space (wrt. security and ease of use).
Hmmm, some of these hypotheticals are wishful thinking.
For example 1, it's a double edged sword. As a seller, no international chargebacks sounds like a wet dream! As a buyer, why would I use bitcoin internationally when I can't reverse my transaction if they don't deliver?
Example 2 seems legit for now. If and when bitcoin becomes more mainstream, you'll see an increased transactional cost from overhead and risk mitigation, so the transactional savings will probably not always be there.
Since we don't gift each other bitcoins, Example 3 isn't a problem.
Example 4 is laughable because in the last week, four Bitcoin exchanges were hacked (or robbed by the owners - still TBD) and people who had their coins in those exchanges lost it all.
Skimming CC numbers is for sure an issue for credit cards, but as someone who has had their credit card skimmed, my issuer locked my account within 2 hours of fraudulent activity, called me, and eventually gave me my money back. How many Mt. Gox users got their money back?
>...and eventually gave me my money back. How many Mt. Gox users got their money back?
these are not the same situation and I think it is disingenous to act like it is.
A comparable situation is that when you had your card skimmed and locked up you had to go say 3 days without access to your funds until a new card turned up, and again lets be charitable and say your bank refunded you within 2 weeks. so you were inconvenienced for 3 days and out of pocket for 14 days. if you paid with bitcoin you would not be locked out of your wallet or at risk of further loss, or need to call your bank. now when you scale that up to something like the recent hack at target that resulted in 1000's of stolen CC details along with personal info resulting in a lot of potential for identity theft and CC fraud. If those buyer had all paid in BTC there would be no theft or fraud possible, no need to try and attack the organisation as list of BTC addresses and customer names and addresses are of no use. they may seek to steal the companies bitcoins but securing properly one small area of your network is much easier than securing a huge sprawling network that covers a whole host of functions, where sensitive data is liberally spread around, making for a lot of vectors of attack.
Now Mt Gox is comparable to the Bernie Madoff Ponzi scheme, do you know how many of those investors got their money back?
Both involve theft, except one is insured. You don't insure money that you give to an investor (Madoff), which is why it's disingenuous to compare Mt. Gox to an investment scam.
why is it disingenous to compare mtgox to madoff? both were run as ponzi schemes in the end which led to losses for investors,whether that was investing in bitcoin or madoffs funds.mtgox money was not insured either.
Mt. Gox was not a ponzi scheme. It was a legitimate exchange business that became insolvent, and it was the users (not just investors) who got screwed.
Also, the term ponzi scheme get's used a lot in discussion about bitcoin, but many people do not know that it is a very specific type of scam. There have even been actual ponzi schemes involving bitcoins (not Mt. Gox). The people scammed in those were not insured because it was an investment, just as the people involved in the Maddoff scam were not insured. That is why it's disingenuous.
It was not a ponzi, but MtGox became insolvent through fraud: Mark Karpeles simulated fake transactions with fake coins and fake dollars using his willy bot.
If we're talking about MtGox's decision to keep operating after they'd become insolvent, then it's not disingenuous to compare it to Madoff.
However, comparing them as a whole is disingenuous. MtGox had a legitimate business plan, but screwed up by letting their Bitcoins get stolen. Madoff planned to defraud his investors from the start.
A ponzi scheme actually pays out some interest, at least initially. The only reason that kind of fraud is possible is that investments generally make money. An exchange like mtgox never does that. If you're doing the thing you did at mtgox - just storing your money, not trying to make money through investing - then you put your money in an FDIC-protected account and you're immune to madoff-like frauds.
> As a buyer, why would I use bitcoin internationally when I can't reverse my transaction if they don't deliver?
Sometimes reversibility just doesn't matter. The merchant might be 100% trustworthy (like Amazon). Or as another example I once rented a VPS for a month from Russia. I paid in bitcoins because it was $3 or $4 so I simply didn't care if the VPS provider didn't deliver (submitting a chargeback request for such a low amount is not worth my time), but at the same time I didn't fully trust the merchant with my credit card info (how securely do they protect/encrypt it? could they be hacked? etc).
> Since we don't gift each other bitcoins, Example 3 isn't a problem.
You completely avoided the main point of my example #3. And that's very stupid for you to say this. I gave some to my family, I could say this proves you wrong. Even Coinbase set up a page to give bitcoins last Christmas because it's common for enthusiasts to give some to friends & family: http://blog.coinbase.com/post/105032873402/give-the-gift-of-...
> Example 4 is laughable because in the last week, four Bitcoin exchanges were hacked (or robbed by the owners - still TBD) and people who had their coins in those exchanges lost it all.
This is completely irrelevant to example #4. My point was that a Bitcoin transaction cryptographically authorizes only the transfer of a specific amount to a specific address, and nothing else. In contrast a CC transaction lets a fraudulent merchant place any charge for any amount at any time. This is a substantial undeniable security advantage that Bitcoin has over credit cards.
> Skimming CC numbers is for sure an issue for credit cards, but as someone who has had their credit card skimmed, my issuer locked my account within 2 hours of fraudulent activity, called me, and eventually gave me my money back.
You were lucky. But your cute story doesn't mean credit card fraud is a solved problem. In many cases the customer has NO RECOURSE for fraud. For example you cannot chargeback a transaction made more than 60 days ago. Some fraudulent merchants pretend to act legitimately but stall shipping (eg. claim delays, issues, etc) for 60 days specifically to exploit this fact and exploit the fact customers don't know about this condition. Or if your PIN code is stolen and a fraudulent transaction is made with the PIN code, you will typically be held liable (check your credit card issuer's fine print, for example: http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...)
> How many Mt. Gox users got their money back?
Give your money to a fraudster and he will run away with it, no matter if its bitcoins or dollars. How much money was permanently lost to the Bernard Madoff ponzi scheme?
Spinning a lack of reversible transactions as being a "Benefit" is disingenuous because there is real demand for them. You're can't always do business with trusted merchants like Amazon, especially internationally.
The point for #3 is that "How can I use these bitcoins I've been gifted?" is not a real problem for the majority of people. It's a solution to a problem that many don't have.
I'm glad you found my story cute, but fail to see how pointing out imperfections in credit card insurance policies is supporting bitcoin, because bitcoin doesn't fill those imperfections. In fact, even with imperfections, using credit cards are still better than getting my account hacked on a bitcoin exchange.
Bitcoin transactions are also not immediate as you say they are. The entire world's supply of bitcoin is limited to 2.7 transactions a second, meaning if 10 million people used bitcoin, they would only be able to do 1 transaction every 43 days [1].
I'm not even going to go into why you would compare Mt. Gox to Madoff. Madoff is an uninsured investor and in prison, Mt. Gox is an exchange and the thieves are where?
(I can't log into my venaoy HN account at the moment)
> Spinning a lack of reversible transactions as being a "Benefit" is disingenuous
I argue, through my examples, that reversibility is often not as important as you may think. Another data point: I am a typical American consumer and in 20 years doing probably 5,000+ credit card transactions I have never had to issue a single chargeback at all. So I know for a fact that I would be willing to use Bitcoin for its advantages. Hell, credit card fees which are passed to customers by inflating prices by ~2% probably indirectly cost me north of $20,000 over my 20 years of use. I could have saved $20,000 and I would have been totally fine with the lack of reversibility of Bitcoin. Even if I end up being scammed one day by a non-reversible $1000 Bitcoin transaction, I would still be $19,000 financially ahead with Bitcoin.
> I'm glad you found my story cute, but fail to see how pointing out imperfections in credit card insurance policies is supporting bitcoin, because bitcoin doesn't fill those imperfections
I point out imperfections to show you that even an imperfect system such as credit cards manage to be reasonably successful. So Bitcoin is not perfect either but, similarly, this should not prevent it from being reasonably successful.
> getting my account hacked on a bitcoin exchange
Bitcoin hardware wallets have a huge potential to significantly increase security for consumers.
> The entire world's supply of bitcoin is limited to 2.7 transactions a second
Why do you present this as being a sort of fatal flaw? It's not. A block size increase will solve this. It was not done yet because it's not a problem yet: the average block size is currently still far below the 1MB limit.
> I'm not even going to go into why you would compare Mt. Gox to Madoff. Madoff is an uninsured investor and in prison, Mt. Gox is an exchange and the thieves are where?
I compare the two because both cases are a result of fraud and both cases were/are being investigated by authorities. (MtGox was not robbed, Mark Karpeles committed fraud -- see the willy report -- as a result Karpeles is currently under investigation by the Japanese authorities). You seem to be under the impression the government and authorities are ignoring Bitcoin fraud. They are not. In the US for example the S.E.C. recently prosecuted a Bitcoin ponzi scheme operator: http://www.sec.gov/News/PressRelease/Detail/PressRelease/137...
Those aren't examples, they're hypothetical stories created purposefully to support bitcoin, and border on No-True-Scotsman (A "true" payment system doesn't need dispute handling, so bitcoin is a true payment system).
Pointing out imperfections in credit card insurance doesn't mean bitcoin will work. I'm sorry but even you have to realize this is not even a logical point you're making.
Again, you completely missed the purpose of insurance. If your bitcoin hardware wallet is stolen, does it have insurance? Was any of the 4 exchanges hacked last week or Mt. Gox insured as your bank and payment processors are? Mt. Gox was not a ponzi scheme because it is not an investor - stop comparing it to one.
>Why do you present 2.7 transactions a second as being a sort of fatal flaw?
Because it is?
Block size can't be increased because bitcoin is decentralized. Each miner, merchant, etc. are rational actors looking out for their own profit, and can't come to the required consensus on any changes (hence how centralized agnostic monetary controls work). It's one of the reasons other cryptocurrencies, with higher xfer rates, have a competitive edge on bitcoin.
Bitcoin can not support more than a couple million users. Is this really news to you? Full disclaimer please: How much have you invested into bitcoin?
Coinbase's bitcoins are insured. And Coinbase's dollars are FDIC-insured.
There is nothing inherent to Bitcoin that prevents an exchange from being operated responsibly and covered/insured just as well as traditional financial institutions.
> Block size can't be increased because bitcoin is decentralized.
It is not trivial, but it can be increased. What you don't understand is that all the merchants all the institutions all the individuals utilizing Bitcoins rely on its proper operation to benefit from it. If they more or less all agree that raising the block size is the obvious way to scale up, then they will agree to raise it.
> Bitcoin can not support more than a couple million users.
Coinbase is insured by Aon for only if their entire site is hacked, and is not insured for individual accounts as the FDIC does, because it's too expensive (there's you're explanation on why).
Because it's decentralized, Bitcoin suffers from Tragedy of the Commons. The miners, merchants, etc. are all rational actors looking to profit for themselves, even at each other's expense, which is why bitcoin can't get a census to upgrade. You may wish that they will come together under the banner of bitcoin benevolence, but they can't because they're too busy trying to make money off of each other and have competitive alternatives available.
You can't hand wave and say at some point in the far future someone will solve these very real problems for bitcoin, because some very basic economic principles are stopping it right now. Considering you haven't even made a single bitcoin transaction, and didn't even know about the limits until today, you're not really qualified to comment on it.
It's not a technical problem, but a problem with the design and the users - which was exactly what OP's point was to begin with.
No, Coinbase is insured even if only a "fraction" of their site is hacked. I am not sure why you would claim the insurance only covers a hack of the "entire site", but not a "fraction". See, my point is that there is nothing inherent to Bitcoin that prevents it from being insured. Insurance companies do insure dangerous businesses all the time. It's their job. I am certainly not going to claim that the level of insurance is equal to the average financial company. It will take years. But it's getting there. It's improving over time.
> why bitcoin can't get a census to upgrade
You say it can't be done but it has been done. Multiple times. You should read and learn from Bitcoin history. Bugs and limitations have caused the block chain to fork multiple times. Yet every single time the Bitcoin users have been able to reach a consensus about which software upgrade / software fix to follow: March 2013 fork due to BDB vs LevelDB, August 2010 due to an integer overflow, etc. It is very clear that when everybody will see their transactions never confirming because all blocks top out at the 1MB limit that everybody will want to upgrade the limit. People won't be stupid, sit there and do nothing, and watch Bitcoin die.
> Considering you haven't even made a single bitcoin transaction, and didn't even know about the limits until today, you're not really qualified to comment on it.
Huh? I never sold coins but I have made a few dozens transactions, since 2010. And I know very well the 1MB block limit.
Anyway when you start using personal attacks (accusing my competence) instead of using technical arguments, it is clear you are running out of logical arguments in this debate...
"The insurance covers losses due to breaches in physical or cyber security, accidental loss, and employee theft. It doesn’t cover bitcoin lost or stolen as a result of an individual user’s negligence to maintain secure control over their login credentials."
The only major fork that was adopted was because it was a critical bug that split half the network, and the entire network was shutdown in early 2013. This caused even more volatility as people sold. Honest question: Are they shutting down the network to force every enhancement, every change to policy? That's not a feature for a cryptocurrency, or even a currency.
This is just one of the real technical limitations, and even so, bitcoin is more than just a technology. As a decentralized network, the decision making power is distributed across it's many parts, which includes the users who employ it. Your insistence that we only discuss the technical limitations of bitcoin belies textbook confirmation bias.
Your credibility comes into question with your stubbornness in ignoring how currencies and payment processors work, and your No-True-Scotsman fallacy approach to twisting hypotheticals support bitcoin.
It's clear you have confirmation bias even now, and yes, ad hominem is appropriate when you yourself have demonstrated that you are fallacious.
This statement is correct. But do we need insurance on negligence? No. The cash you carry in your pocket is not covered by insurance yet it doesn't prevent it from being reasonably useful/successful. I make the comparison to let you understand Bitcoin doesn't need insurance against negligence to be reasonably useful/successful.
> the entire network was shutdown in early 2013.
No it was not. The correct forked path of the block chain never stopped running during this incident. That's how a fork is always resolved: one path dies, the other continues to live undisturbed.
> Are they shutting down the network to force every enhancement,
No. There is a process to introduce changes without disrupting the network at all: https://en.bitcoin.it/wiki/Softfork This is how P2SH was added with zero disruption to the network.
> Your insistence that we only discuss the technical
You misunderstood me. It is of course OK to discuss other aspects: social, financial, etc. I was merely pointing out you should drop the personal attacks, as they make you look childish and as they degrade the quality of your comments.
> your stubbornness in ignoring how currencies and payment processors work...
Once again I don't want to ignore this. So far I have replied to all your arguments with logical counter-arguments. Let's keep the discussion civil.
> Or as another example I once rented a VPS for a month from Russia. I paid in bitcoins because it was $3 or $4 so I simply didn't care if the VPS provider didn't deliver (submitting a chargeback request for such a low amount is not worth my time)
If this is a real use case (and frankly how often do you want to pay for something that you don't care whether you'll actually get?) you can buy a prepaid credit card (over the internet, from a reputable provider, using your normal credit card) and use that. No reason that couldn't be smoothly automated (indeed I believe some bank accounts will already let you generate an additional card number with a limited amount of funds). I suspect there's just very little demand for it.
> I didn't fully trust the merchant with my credit card info (how securely do they protect/encrypt it? could they be hacked? etc).
Your bank covers you if they are though.
> You completely avoided the main point of my example #3.
If people use bitcoin then people will use bitcoin sure. But that applies to any tradeable object. If enough people start giving each other baseball cards at christmas then people will start paying with baseball cards. What's the specific advantage that would make people want to give bitcoin?
> your cute story doesn't mean credit card fraud is a solved problem. In many cases the customer has NO RECOURSE for fraud. For example you cannot chargeback a transaction made more than 60 days ago. Some fraudulent merchants pretend to act legitimately but stall shipping (eg. claim delays, issues, etc) for 60 days specifically to exploit this fact
Most reputable card issuers will cover you for longer than the contract says. And even if not, 60 days of cover is still much better than the 0 days you get with bitcoin.
> Or if your PIN code is stolen and a fraudulent transaction is made with the PIN code, you will typically be held liable
Again, you're contractually liable but in practice reputable banks cover you at least the first time. Whereas if your bitcoin private keys are stolen, the money is gone and you'll never get it back.
> Give your money to a fraudster and he will run away with it, no matter if its bitcoins or dollars.
What's the non-fraudster option with bitcoin? Who's offering FDIC-protected bitcoin accounts?
> how often do you want to pay for something that you don't care whether you'll actually get?
It is not that I don't care, but I estimate the probability the merchant is fraudulent is low enough that I don't feel the need to absolutely have the protection of the chargeback mechanism. I think this is true for the majority of the cases: MOST merchants are honest, MOST disputes can be resolved without chargebacks.
> Your bank covers you if they are though.
But it can be a real pain in the butt. I had to have a credit card replaced because the number and billing info of the previous one was stolen. I had to wait days to receive the new credit card. I had to re-set up all the bills I had set up to be automatically paid with the previous card to now be paid by the new card, etc.
> What's the specific advantage that would make people want to give bitcoin?
Bitcoin enthusiasts like to spread the technology, so they give bitcoins away to friends and family. But that's not my main point. My main point is that as Bitcoin is used more and more, it ends up in the hands of more and more people. This gives it organic growth: it gets more accepted, it is more transacted, it gains more value, etc.
> Most reputable card issuers will cover you for longer than the contract says. And even if not, 60 days of cover is still much better than the 0 days you get with bitcoin.
Still, some fraud scenarios are completely eliminated with Bitcoin. I pay a fraudulent restaurant with a CC that gets skimmed, I get to deal with the hassles of having to have the card replaced, potentially having my credit score damaged, etc. I pay a fraudulent restaurant with bitcoins, I know the restaurant can do nothing to steal the bitcoins remaining in my wallet.
Or I pay Dell with bitcoins instead of a credit card, and I don't have to care if their systems get hacked and my CC number stolen.
> Again, you're contractually liable but in practice reputable banks cover you at least the first time. Whereas if your bitcoin private keys are stolen, the money is gone and you'll never get it back.
Private keys can be very well protected and almost impossible to steal if you use a hardware wallet. And Bitcoin completely eliminates other fraud risks (see my examples above). So overall the tradeoffs of Bitcoin are worthwhile.
> Who's offering FDIC-protected bitcoin accounts?
Every day, millions of Americans use financial instruments that are not FDIC insured, yet that doesn't prevent the success of such instruments:
> I had to wait days to receive the new credit card
That may be a problem with the current implementation, but it doesn't have to be. There's no reason your credit card couldn't be e.g. loaded onto your phone, using NFC to talk to a reader, and then it could be updated instantly if need be.
> I had to re-set up all the bills I had set up to be automatically paid with the previous card to now be paid by the new card, etc.
The only reason this isn't a problem for Bitcoin is that you can't set up bill payments in Bitcoin at all.
> Still, some fraud scenarios are completely eliminated with Bitcoin. I pay a fraudulent restaurant with a CC that gets skimmed, I get to deal with the hassles of having to have the card replaced, potentially having my credit score damaged, etc. I pay a fraudulent restaurant with bitcoins, I know the restaurant can do nothing to steal the bitcoins remaining in my wallet.
It works for a restaurant but that's a very special case - you pay after you already know that what you got was right. More often you're buying something where you won't realise if it's broken until you get it home, in which case much more serious fraud is possible with bitcoin than with credit cards. And even the restaurant case is not a compelling advantage for bitcoin - if your credit card gets skimmed the worst case is really not very bad.
> Private keys can be very well protected and almost impossible to steal
Sure. But the kind of person who gets their credit card PIN stolen (which is what we were comparing to) isn't going to have a well-protected private key.
> Every day, millions of Americans use financial instruments that are not FDIC insured
Sure. But almost everyone gets an FDIC-insured account as a backstop before getting any of those other instruments. And it's convenient to have all your accounts in the same currency.
Are you not replying to my main point (most merchants are honest therefore chargebacks are rarely needed) because you agree with it?
> That may be a problem with the current implementation, but it doesn't have to be
I agree. But I highlighted this to show you that credit cards have kinks, as currently implemented, yet are reasonably successful/useful. Therefore for the same reason Bitcoin doesn't have to be perfect to be reasonably successful/useful.
> The only reason this isn't a problem for Bitcoin is that you can't set up bill payments in Bitcoin at all.
Yes it is possible. Some hosted wallets let you set up recurring payments. This is awesome because unlike credit cards, you don't have to give the merchant authorization to debit your money, but you give this authorization only to the wallet hoster. This gives the merchant zero chances to screw you up (eg. continuing to debit your card when you want it to stop, or setting up a recurring payment disclosed in the fine print when you think you are authorizing a one-time payment.)
> It works for a restaurant but that's a very special case
This scenario covers literally ALL in-person transactions. Hardly a "very special case".
> But the kind of person who gets their credit card PIN stolen (which is what we were comparing to) isn't going to have a well-protected private key.
No we were comparing typical users. A security conscious credit card user can STILL get his number stolen and money stolen (eg. a merchant gets hacked). Whereas a security conscious Bitcoin user using a hardware wallet is virtually impervious to being attacked (only highly sophisticated hacks like stealing the hardware wallet and decaping the secure chip to steal the private keys without knowing the PIN).
Some users are so bad with security and detecting scams that they will always get their money stolen (regardless if they use credit cards or bitcoins).
> Are you not replying to my main point (most merchants are honest therefore chargebacks are rarely needed) because you agree with it?
I think there's an at-the-margin effect here. The threat of chargebacks makes actual chargebacks usually unnecessary. Just like having an army can be very valuable even if you only go to war rarely.
> Yes it is possible. Some hosted wallets let you set up recurring payments. This is awesome because unlike credit cards, you don't have to give the merchant authorization to debit your money, but you give this authorization only to the wallet hoster.
With a bank account you can do this as a "standing order". It's safer than most of the bill-payment methods. And surprisingly useless, because most of the time you want to pay a bill that can vary, so you need to give the merchant authorization to tell them how much you need to pay them.
> setting up a recurring payment disclosed in the fine print when you think you are authorizing a one-time payment.
Something you can only stop by making setting up payments less convenient. If bitcoin takes off, it will need a system for seamlessly setting up recurring payments from a website that wants to - and the exact same scams will apply.
> This scenario covers literally ALL in-person transactions. Hardly a "very special case".
No, it only covers cases where you pay after using the thing you bought. If I buy a TV with a credit card, take it home, plug it in and find out it doesn't work, I can if need be make a chargeback; with bitcoin I'm stuffed.
> No we were comparing typical users. A security conscious credit card user can STILL get his number stolen and money stolen (eg. a merchant gets hacked).
If they're security-conscious enough to not get their PIN stolen, then they can't lose any money.
It took me no less than one hour to pay for a flight the other day, because of various cc-related problems, not the least of which being the train wreck that is Verified by Visa. I so, so wished for a Bitcoin option...
I spent the past three days trying to buy a conference ticket. My card wouldn't get accepted, my bank was being incompetent and unhelpful, claiming they weren't seeing any charges pop up.
I didn't even think of it until your post, yet I was still involved in this not five hours ago. When you look back, it's surprising the amount of artificial shit we have to sift through with CCs.
This. I tried buying a pair of flight tickets from a German airline Condor with a US credit card. What a hassle, in the end I had to call the bank, get redirected and verified 4 times (because they don't pass the verification along when they redirect your call) and I was finally able to pay for the damn tickets when they "pre-authorized" the transaction.
Yep! Booked an international flight last summer and had a hell of a time paying with a credit card. It seems like BTC will really shine on these non-domestic payments.
Extending example #1: Buyer anonymity enables customers to circumvent pesky geolocation restrictions on digital goods. As a personal example I've finally found an online shop that sells audiobooks without DRM, only to realize later that most of their catalog is exclusively available in the US. With bitcoin I could have just used a proxy and be done with it.
Unless I'm buying from my own family or something I'm not forfeiting the right to reverse a transaction if I do not get the goods I paid for just to earn a small discount.
> The idea that my mom will someday use Bitcoin to buy books online is about as realistic as the belief that, any minute now, youngsters will realize that the daily newspaper is better read in paper form
Your mom probably didn't push for the adoption of email yet here it is (sorry usps). The advantages of faster cheaper easier don't require much convincing, especially in the case of money/contracts/assets.
The idea that people will adopt antiquated technologies when better alternatives exist is paradoxical, which makes your analogy especially confusing. Government currency is the antiquated technology, not bitcoin.
For those remittance services you point to, they need market depth in order to operate. Sure the underground market can provide some, but merchant adoption sure isn't going to hurt.
speed: The blockchain is updated only every 10 minutes and you need to wait for even longer if you want to be 100% sure a longer fork won't show up.
cost: bitcoin miners must spend enormous amounts of energy in an inefficient process in order to keep the network running. Right now, most of the mining costs are covered by the bitcoin bounty that is awarded to miners that successfully mine a block but this reward decreases with time and eventually and transaction fees will have to increase to compensate.
Speed- The difference is after that 10 minutes, the transaction is settled. The money has moved. What you have with a credit card in 10 minutes is a promise that the money will move, possibly days or even weeks later.
The bitcoin can be moved again (spent by the receiver) after 10 minutes. Try that with money you received by a credit card payment.
This really is the fundamental difference of bitcoin- once the money has moved, it's really moved. It takes some time and thinking to appreciate how that opens things up quite a bit.
> The difference is after that 10 minutes, the transaction is settled. The money has moved. What you have with a credit card in 10 minutes is a promise that the money will move, possibly days or even weeks later.
In a spherical-cow sense bitcoin is better. In practice, if I'm paying with amex I tap my card on the reader and the waitress hands me the cup of coffee in seconds; if I'm paying with bitcoin I'm standing there for half an hour.
> The bitcoin can be moved again (spent by the receiver) after 10 minutes. Try that with money you received by a credit card payment.
If a friend's sending me money it's by "faster payment"; theoretically it can take up to 2 hours (similar to bitcoin's max times), in practice it's a couple of minutes. My bank's happy for me to "spend it instantly" in terms of not charging me an overdraft fee (in fact I can spend it before I get it, as long as I put the money in by the end of the day), so I have GBP1500 (let's call it $2500) of float.
There are edge cases where this doesn't work - more than $2500, or paying internationally over the internet. But they really are edge cases; the problems bitcoin solves are problems I've never had, and I suspect that's true for the vast majority of "normal people".
> In a spherical-cow sense bitcoin is better. In practice, if I'm paying with amex I tap my card on the reader and the waitress hands me the cup of coffee in seconds; if I'm paying with bitcoin I'm standing there for half an hour.
This is a myth. Once the transaction has propagated through the network, it's pretty difficult to double-spend, even with zero confirmations. So difficult, in fact, that payment processors like Stripe/Coinbase/BitPay will completely absorb that risk for you and consider the order complete within a second or two of seeing the transaction on the network.
Try buying something online with Bitcoin sometime, it really is faster and easier than using a credit card (if you already own some).
Which pizza place? Was this in-person or online? The animation on Stripe's launch page is pretty much what buying things with Bitcoins is like for me: https://stripe.com/bitcoin.
Pembury Tavern. Last time I went there they weren't advertising "pay with bitcoin" any more, only "send us bitcoin tips", which avoids the problem. Maybe the tech's gotten better (this was a year or so ago now), but from here that looks like at least one early adopter who's given up.
Current block size limits bitcoin to ~3 transactions per second. It would take bitcoin 22 days to handle just 1 day of Visa's global transactions.
This is a serious problem because in order to increase the block size, it requires a consensus amongst all miners, merchants, etc.
Bitcoin effectively suffers from Tragedy of the Commons, because it can't scale unless every rational actor stops trying to get their own profit out of it.
The appeal of bitcoin to me, a regular American, is much the same appeal that using a VPN, having encrypted hard drives, and not sharing information about myself all over social media does. There is very little ability to have privacy when paying with USD. You can have cash transactions, in real life, or send money orders through the mail. That's pretty much it.
I want privacy in my spending and in my assets. If I like reading about hacking and buy an eBook about it, I don't want that to be evidence against me when law enforcement comes knocking and tries to trump up charges against (see HN post about this just today). If I buy a VPN service, I don't want to become a target for surveillance. There are tons of legitimate, legal reasons to want privacy in purchasing and assets.
Publishing your entire transaction history for the entire world to see doesn't seem like the best way to have privacy, even if it is under a pseudonym. After all, purchasing history seems like one of the best tools to trace a pseudonym.
We can have as many pseudonyms as we need, and can transfer Bitcoins among them via mixing services. No pseudonym need make more than one purchase. It's the difficulty of anonymous postal delivery that's limiting.
You can do the same thing with USD. It's called money laundering, and was not invented by the Bitcoin community. Granted, for the time being it's a lot easier to do with Bitcoin, but any kind of mass market adoption would surely change this.
All of the things mirmir mentioned are considered money laundering when done with USD, so they either solve that problem for both or for neither. Neither result is an argument in favor of bitcoin, so whether or not they do is immaterial.
Postal delivery of physical goods is problematic, and anonymous payment is pointless. But that's not an issue for software licenses, ebooks, server and VPS rental, VPN subscriptions, consulting services, and so on.
I disagree somwhat- We're slowly moving into a new economy where the distinction between buyers and sellers is blurring: Instead of everyone making their purchases from a few megacorp sellers, the future will be one where any person may have a small shop or sell a small product with a small unit price (maybe even your mom someday.)
In that type of environment, it is helpful to have a payment system that is more "seller-friendly" than what we have now, since the sellers no longer have economies of scale to offset sale-side costs. Cryptocurrencies hold the promise fill the role of these "seller-friendly" currencies, since they allow anyone to accept payments without intermediaries and by merely tacking some minimal logic to their software stack of choice... though I agree they still have a long way to go to achieving this.
How is that creating a blur between buyers and sellers? We've always had small businesses and will continue to have both small businesses and large corporations. I don't understand the small unit price correlation to a small business.
The 1-2% savings in processing fees right now are heavily offset by the instability of the currency. Not being able to plan your cost of goods sold and having predictable formulas for this will kill a business a heck of a lot more than an extra percentage point for processing via convenient electronic payments.
i think it is most likely to be successful not as a consumer level product but at an infrastructure level. businesses will exploit the blockchain and end users will be using it without realising it, so moneygram and western union will use it to send money for you, you wont know, you will be sending euros, dollars, shekels, whatever but you benefit from lower transaction costs, say half of what WU currently charge but for WU they would be making more per transaction as a result of leveraging the blockchain and low cost bitcoin transactions.
Stripe's Terms of Service reveal that they use Coinbase in the backend to transact and exchange the bitcoins: https://stripe.com/bitcoin/terms If you are a small merchant planning to do less than $1-2 million dollars in sales, you might still prefer using Coinbase directly instead of Stripe though, because Coinbase waives all fees until the first $1 million dollars (then it's 1%), but Stripe charges a constant 0.5% fee.
Edit: @ThrustVectoring: it does not take 5 weeks of a developer's time to integrate with Coinbase, especially for the "small" merchants (<$1-2M in sales) that my comment was written for. But I agree the appeal of simplicity if you already take Stripe is there :)
You can integrate bitcoin support into Stripe Checkout with just a few lines of code - one attribute on the client, and 2-3 lines of extra code to create your Charge object in a different way on the server, at which point you process it in almost exactly the same way as a card payment (potentially minus some UI details in confirmation messages, etc).
Integrating Coinbase involves writing your own "payment" abstraction in place of being able to use Stripe's all the way through your application, then implementing both Stripe and Coinbase on top of that. While this might be good in the long run (so you can switch off of Stripe easily), it's not so good for smaller shops/services which don't need that complexity yet.
Why is the choice to accept bitcoins client-side? If I want to force a payment in bitcoins, I can add the attribute myself.
Some businesses have legal ramifications for accepting bitcoin or not, even if it's through Stripe. Is there a flag in your Stripe merchant account on Stripe's server to refuse bitcoins?
> Why is the choice to accept bitcoins client-side? If I want to force a payment in bitcoins, I can add the attribute myself.
No, that's not the case. The choice to display the UI for accepting bitcoins is client-side. Handling the results of that UI still has to be done specially on the server, through the creation of a Charge in a different way.
Honestly, this may be what it takes to see more mainstream consumer adoption.
A lot of the apps with high levels of penetration in this generalized demographic seem to use Stripe--if it's truly a frictionless integration, it will be really interesting to see the market's response.
Coinbase & exchange API's were the first step. Single-script hosted payment processing with a UI focus (accessible to tech and grassroots e-commerce alike) seems to be the next.
And to the Stripe team--Thank you!
I've used many merchant processors, from 2004 until now. Along with Braintree you paved the way for this future in MP, and overall created a brilliantly engineered system that's a pleasure to work with.
The bigger problem with mainstream consumer adoption is the fact that mainstream consumers don't have any bitcoins to spend.
Then there's the fact that you have to use an exchange to buy the coins in the first place and... let's just say bitcoin exchanges aren't exactly known as secure financial institutions. It seems a large bitcoin exchange is hacked and shuts down just about weekly:
Just hours ago: Cavritex, Canada's largest bitcoin exchange, announced that it was hacked and will shut down
4 days ago: BTER of China was hacked and lost $1.75m
Last week: Exco.in was hacked, apparently lost all customer-held coins, and shut down
Last week: Hong Kong's MyCoin died and was apparently a ponzi scheme that had $387
And that's not even counting the abrupt closures of other exchanges telling users to get their funds out ASAP or lose them.
I think we are & will continue to see mass die-offs of the current generation of exchanges, as many were formed in a time where regulation and security were of less concern--combine that with the fact that they amass enormous amounts of untraceable value under what is essentially a single, private key, they're the ideal target.
The beauty of true P2P is that while a central authority still has the potential to compromise the network, the distributed nature at least distributes the attack surface equally. I imagine banks & security-conscious, established digital financial service providers will step in at some point to assume the role of the exchanges. It may be a step back for privacy and anonymity (sadly) but a major step forward for its legitimacy.
More importantly, the concept of interchangeability is emerging. When you find that BTC and $ transactions can be reconciled seamlessly (ie, agnostically with no logistical concern to source whether credit card, BTC, EBT, etc.) I think that P2P option may start to happen naturally. Providers like Stripe abstracting this is certainly the first step.
[edit] I would love to see what would happen if a company like Venmo that deals primarily in socail micro-transactions were to attempt a UX integration.
No you don't. You can sell stuff on Craigslist for bitcoins. You can mine. You can buy coins in person from a friend/from localbitcoins. You can receive remittance from your oversea family in bitcoins. You can buy them from a Bitcoin ATM. Etc. There are tons of ways to acquire bitcoins without "having" to use an exchange.
Shameless plug, you can also get paid with bitcoins via https://www.incoin.io/. We need more of this. I'd be happy to see another proper payroll company with the option to pay via bitcoin.
Look at http://www.reversecoin.org/
Reversecoin allows transactions to be reversible within a specified period of time. Over time, I expect mechanisms like these to be build into Bitcoin itself.
Disclaimer: I am the lead dev for Reversecoin.
I just want to say that you're one of my favorite designers out there and I enjoy your various posts out there on the web. Thanks so much for sharing your talent for us developers to peek inside!
Seeing the differences between how this performs in chromium vs firefox is a little annoying... it's one thing that chromium still does much better, for the time being I hope.
Can you share a un-minified version of this? I would love to see how you are using the animate lib to do this. Using a beautifier is still to hard to read for me :/
I'm a CS student really interested in web design, and I just started dabbling CSS animation for a month. To be honest, this page, together with Google IO 2015 page, are the best I've seen. I really look forward to reading your post about how this page is built or the source code.
At creation, Stripe guarantees an exchange rate that is usable for 10 minutes. If the customer sends bitcoin to the receiver after the 10 minutes have expired, we’ll still process the transaction but the conversion amount will no longer be guaranteed.
Say I am a merchant, and I want to make $10 on my transaction.
With a 0.5% fee:
- Without BTC, I charge $10.05 to the user, you take 5 cents, and I am left with $10.
- With BTC, I charge $10.05 to stripe, which gets converted to BTC at some exchange rate, and gets charged to the user. Does Stripe guarantee me $10? Or am I subject to the fluctuations of Stripe's exchange rate (say the user takes 20 minutes to finish the transaction)? Is there any way to guarantee that I get paid $10 or the transaction fails?
I don't know the answer to this but given the user is the one who didn't complete the transaction in 10 minutes they are probably held responsible. I would guess if it was underpaid they would have to send more to the address (the same as if they only paid half the bill). If it's overpaid they probably send the overpaid amount back as a refund to the address it was sent from (or keep it).
It would be interesting to see if you could "lock in" a BTC price and then wait 9 minutes to see if BTC goes up or down (meaning you are over/under paying) then decide if you still want to buy. I'd think there would be protections against something like this though.
Any idea how stripe is handling confirmations? (I'm a bitcoin newbie, but I know that consensus took a minute or so the last time I had done anything with BTC.) Has that changed?
(Christian from Stripe here.) We credit USD to our user's account when we see a transaction that we believe will become confirmed. The time-delay between when the customer pushes the transaction and when we notify our users is typically less than 15 seconds and almost always less than 60 seconds.
Has the technology changed/evolved enough that that's credible? I was under the impression that it wasn't "fully confirmed" by the network until a new block was mined, or you could have double spend attacks?
Really the key question is: if a transaction that you believe will become confirmed, turns out to be invalid, who wears that? Stripe, or me? Will Stripe eat that, or will I get hit with the difference?
It's a good question. We want Bitcoin acceptance to be straightforward for our users, so we deal with a failed confirmation on our side. We do not debit the user.
I suspect this is the reason Bitpay is able to waive fees completely: they do not take responsibility for unconfirmed transactions.
> Note: Regardless of the transaction speed settings, a fully paid invoice is credited to your merchant account after the transaction has accrued six confirmations. [1]
The problem isn't detecting whether 99% of transactions will confirm.
The problem is preventing someone from ordering $10,000 worth of gold from a site that uses Stripe with Bitcoin payments enabled. Sending a paying transaction to Stripe, who confirms it within a minute, and simultaneously mining a block with contains a transaction that double spends the bitcoins sent to Stripe.
Stripe is now out $10,000. You receive your gold, sell it to your local bullion dealer for $9,500.
Of course, for Stripe, there are various hackish ways around this problem, like defining a maximum amount of, say, $1000, so that the above attack requires the attacker to mine 10 blocks instead of 1 (ie. repeat the procedure 10 times), in order to earn $10,000.
But they don't really solve the fundamental problem of accepting unconfirmed Bitcoin transactions.
It costs 80 million dollars to buy all the hardware to mine a single block. It will probably costs 800 million dollars to amass enough computing power to mine 10 blocks. It only makes sense to double spend a transaction with a VERY large amount. No transaction going through stripe will qualify.
Yes, but of course the exchange rate matters as well. It's trivial for Bitcoin payment processors hide an extra "fee" in the exchange rate by giving you a worse exchange rate than you'd get at Bitcoin exchanges and pocketing the difference. (I have no idea if Stripe does that or not)
Inherent to Stripe processing BTC is the fact that you are now a foreign exchange broker. Here's a small sample of why you're going to have to do a lot better than "we only charge 0.5%" to convince me that adding FX risk into my payment processing stack is a good idea:
That cost would be borne by the customer, won't it? I guess that's still in some sense a fee from the Stripe vendor's perspective, because the Bitcoin price will be higher for the customer and thus the quantity demanded will be lower than it would be with the vendor's USD sticker price.
Coinbase does this for free, but they'll take their cut if you try to convert that into dollars. And they don't have a card option as well. This makes it dead simple for anyone to offer Bitcoin while automatically complying with the same reporting regulations as card payments.
Last I checked, Stripe worked on top of the Coinbase API. The main benefit to using Stripe is that's it's one api and one account. For merchants, you also get fiat instead of holding bitcoin (I assume this is what the fee is primarily for). If you're already using Stripe checkout, adding bitcoin can be done in less than 5 lines of code.
I find it hilarious how Bitcoin haters (like the ones we have here on HN) say it's never going to work, but then they spend hours every day trying to talk people out of using it.
I find it hilarious how Bitcoin cheerleaders say there aren't any downsides, and then spend hours every day posting "chargebacks aren't important" and "merchants will obviously pass all the savings on to consumers". YMMV.
What do chargebacks have to do with a currency? Chargebacks is something offered by services built on top of the currency, not the currency itself. Else tell me how to chargeback USD bills.
If you think chargebacks are the most important thing mentioning when attacking Bitcoin, then it seems like it does have a bright future.
> What do chargebacks have to do with a currency? Chargebacks is something offered by services built on top of the currency, not the currency itself.
Chargebacks have to do with bitcoin because one of the selling points frequently cited for use of bitcoin, a non-legal-tender currency, is that it is a consumer transaction mechanism that is better than legal-tender currencies and the transaction mechanisms provided on top of them by the financial services industry.
The value of these things is a Keynesian beauty contest. If enough people decide that Bitcoin is a valid currency then it is a valid currency (just like baseball cards).
I think that would be bad for society. Any new value in the bitcoin ecosystem increases the value held by the early adopters - who are mostly drug dealers or other criminals, and the rest are the miners who enabled them. (bitcoin does have some advantages for some legitimate use cases, but the biggest advantages were for the criminal use cases).
This is false. And you have no source to prove it. I know a lot of early adopters through various channels. They are geeks, crypto nerds, cypherpunks. Think guys like Hal Finney, Wei Dai, etc. Nice guys who like to explore new ideas.
Maybe you are just upset that you "missed the boat" on bitcoin or something. But you've got to stop believing every Bitcoin user is a criminal.
The bitcoin community is tremendously ignorant of critical social theory and proud of it, which is a cause of concern. Some people care about more than themselves believe it or not.
"Their chargeback rates are obscenely high". I've always understood that porn companies have difficulty finding a friendly payment processor, but I've never heard that they recieve a high chargeback rate before. Do you know why that is? What do users gain from chargebacking porn websites over chargebacking dropbox, for example?
Their partner sees "XYZ.com" on the bill and goes to look it up. "Why are you buying porn?" "Oh that wasn't me! Someone must have stolen our card" and they submit a chargeback.
I'm sure regret is also a part of it as well. "Why did I spend that money?" And of course, outright theft of services, where they watch/download whatever it is they're interested in and then cancel the charge.
Because the porn site says "free for 3 days" and of course nobody remembers to actually cancel the subscription after 3 days. When they get the bill a month later they say "I never bought a full subscription!" and they cancel.
It's a cat and mouse game. If customers KNEW they couldn't keep getting charged they'd gladly pay $1 to watch for one day. $1 is STILL going to have $0.05 fee, not $0.35 or whatever the CC processor would charge for such a small transaction.
(I work at Stripe.) We love the PaymentProtocol, and we have an integration internally. Because the protocol is fairly new, we want to gauge demand from our users before exposing the extra infrastructure.
Okay, Stripe. Can I accept bitcoins and automatically convert them to USD? I need an instant conversion back to USD after the transaction so I don't lose money due to volatility. Does stripe let merchants auto-convert their Bitcoin payments to USD? This would solve the problem entirely and I'd be happy to pass the extra savings on to customers.
I could probably give about a 6% discount because I wouldn't take profit from the transaction savings.
In fact, given the fee is .05% of the transaction, this could be the first service to ever enable micropayments. Perfect for a lot of internet/new technology services. The key is to convert the customer's USD to bitcoin instantly, pay with bitcoin, and convert the received bitcoin back to USD instantly again.
"Avoid exchange rate hassles—specify amounts in USD and we’ll send you dollars." Looks like another Coinbase reseller. Coinbase has a merchant program. They guarantee their buy price of Bitcoin for a minute or two, to cover the volatility between when the web site accepts the Bitcoins and Coinbase dumps them on an exchange. During periods of high volatility, this service is sometimes suspended.
Many shopping cart programs already accept Bitcoins and convert them through Coinbase. Few merchants accept Bitcoins and accept the conversion risk themselves. This kind of service has been available for the last year. It's used a little, but not much.
(I work for Stripe.) That's correct. Stripe does not currently support recurring or repeated payments with Bitcoin. The receivers can only be used for a single payment.
Since you could now be considered 'big leaders' in the bitcoin world. You really should lobby for a BIP70 specification which allows for wallets to subscribe people to payments. However, then would be the question of how can both the wallet provider and Stripe agree on the exchange rate.
In short, I'd like to see BIP70 become like PayPal's IPN, so it can notify websites of subscriptions, refunds, payment requests, instant payment confirmation from a trusted third party (Coinbase would be considered trusted to tell us a payments been instantly recieved without having to wait for confirmation), etc.
I've have these ideas for a while but I'm not known in the bitcoin space so my comments don't make any impact. Stripe could considering thinking about such specifications, I hope?
I'd never thought I'd read so many comments about people questioning whether using Bitcoins to buy anything is useful or not or even if people would use. Specially in a place like this with so many technology aware people.
Giving more choices for payment is good. Sellers are including more people that can pay for their services/products. If nobody buys anything with bitcoin they lose nothing and business goes as usual. Simple.
Please get out of your bubbles and think a little more if you can't find scenarios where people would use Bitcoins rather than money.
In my case If I start seeing more places accepting Bitcoins it's only more probable that I'll use it and put more money in my wallet for that.
I can remember of two places I could use Bitcoins right now: Humble Bundles and Namecheap. Given the choice and more sellers using it I will use that option more and more.
Some of the credit card scenarios people are talking is again US specific.
If I want to pay for something quick and simple online I have to get really out of my way to do it.
I don't have credit cards and lots and lots of people don't have them and avoid them. I don't want to have one ever.
Currently for me to pay anything online I have to go to MBNet to create a virtual credit card for each purchase I want to do. That card is valid for one purchase only and for a single shop/seller. There's another option where I can create a virtual card valid for one year but I can only use it in the same seller/shop.
Only after that can I use all those payments systems on the internet. If I want to be protected with Paypal I have to add and remove a card each time I need to use it. So lately I just input the virtual credit card info where sellers ask in their forms and don't even care about paypal or amazon or anything else.
Basically I don't really have much of any kind of protection anyway doing all this work above comparing to the simple use case of having bitcoins and just directly giving you the money without caring anymore.
Plus I don't have to keep looking at my credit card looking for any suspicious transaction that the seller could at any time issue to me. I give the money exactly that I want and I can just go with my life without thinking about it anymore.
And this is just my point of view. I can clearly imagine many people with very different reasons simply using Bitcoins if that option is available.
Now the only thing really missing is being able to implement a simple shop using Stripe from this side of the Atlantic :P.
Merchant sets their price in dollars (for example) and the price in Bitcoin is calculated when a transaction is made using the current btc exchange rate.
Stripe (in this case) receives bitcoins and it is exposed to fluctuations. So, if Stripe guarantees the seller a price for the bitcoin, I would think that Stripe has a mechanism to limit or even eliminate the risk from that exposure. I am interested in learning how Stripe does it.
Do you know how Stripe does it?
Perhaps, but they don't say it explicitly. For example, Bitpay says (at https://bitpay.com/)
`
Charge $1, get $1
Instant conversion, no transaction fee, and bank deposits in US Dollars, Euros, GBP, CAD and more. We take the bitcoin exchange rate risk, your customers get the best rate on the market, and you get a payment you can count on, every time.
`
Interesting that Stripe invested in Stellar (https://stripe.com/blog/stellar) which I couldn't help think of as a 'Bitcoin competitor'.
It makes sense that they still increase support for the more established/famous cryptocurrency that is Bitcoin but I thought they would still be interested in somehow relating this to Stellar.
> Fluctuation-resistant - Avoid exchange rate hassles—specify amounts in USD and we’ll send you dollars.
I don't think I fully understand this part. Does the exchange rate remain static for a period of time, or do they just mean to say it's automatically converted for you? If the latter, how is this fluctuation resistant.
Regardless, I'm very happy. Been waiting for this to come out of beta.
This is fantastic. However, I couldn't see any mention of a Bitcoin-specific minimum charge. Is it still 50c as per Stripe's existing documentation[1]?
I'd really like to see this question answered as well.
Also, I'd really like to know: is the credit card fee still ~2.5% if I receive 50 cents USD using credit card via Stripe? Or is there an additional, flat rate fee?
Greg Brockman from Stripe said this is exactly what it would take for BTC to take off commercially a year ago:
(after discussing why regular people probably don't want to store value in BitCoins)
> However, Bitcoin has huge potential as a way to transport value. It’s surprisingly difficult to move money today ...compounding the issue, value transport becomes especially challenging as soon as there’s a regional border involved.
> Cryptocurrencies have given us a real opportunity to solve these problems.
Why couldn't the user buy the bitcoin in dollars moments before, using the same price-stabilizing mechanism? Could an exchange engage in both operations simultaneously somehow as a sort of market-maker?
I work for Stripe. While people anywhere around the world can pay with Bitcoin (and we've seen payments from over 60 countries during our beta), we currently only support merchants who have U.S. bank accounts. (Fun fact: Our first Bitcoin user had a Canadian Stripe account, but also a U.S. bank account.)
And can you clarify if by us bank account you mean 'us dollar denominated', or 'us dollar denominated and a us bank'. USD bank accounts are very common in Canada.
Not that needing a US bank account is necessarily a show-stopper, but it's more work.
Thanks for the clarification. Could a Canadian Stripe user just start using the API and then go open a us bank account after launch, or would the us bank account be needed prior to going live?
Although I can't find it stated explicitly, if you look at "Guide Part 2: Creating a charge"
:currency => "usd", # presently can only make bitcoin charges in USD
So, looks like USD for now. Although I think you could probabaly just implement the conversion yourself on your own wrapper code.
<<Edit>> my apologies. I misread your question, thinking you were referring to currencies. But assuming they only accept USD, i'd have to assume its only for US accounts too? Perhaps someone can chime in and let us know though. Or try it with a canadian account and see what happens.
By enabling BTC payments, does this mean that Stripe will change the list of "prohibited" uses?
That list is in line with what are usually high-risk card transactions, but by removing that risk (almost) entirely, it seems like this could finally enable a wave of new commerce on diverse and neglected categories.
I'm probably assuming a no as they'll want to keep the card AND bitcoin and not do jut BTC, but a man can dream.
"Most Prohibited Business categories are imposed by Card Network rules or the requirements of our banking providers or processors" (https://stripe.com/us/prohibited-businesses).
Bitcoin avoids much of the high-risk card issues so will Stripe update its Bitcoin TOS to allow more high-risk transactions and regulated industries?
Now that is actually an area where bitcoin makes sense.
Use Stripe to put up a payment gateway in front of articles. Just send 50 cents in bitcoin to the address that is displayed, and you can read the article instantly.
Congrats team Stripe! Fantastic feature as always.
In our case, we promise full refund if our users are not happy with our service. Is there a way to refund customers bitcoins as easy as how it is currently with credit cards?
What customer loose when paying with bitcoin - protection. On the other hand when customer pays with credit card, merchant essentially do not have protection. But merchants cover that by increasing price to cover accidental fraud. Therefore merchants should lower price by 2-3% (credit card processing fees) + 5%-25% (not sure about exact amount) to cover lost protection by customer and gained protection for business.
When this happen, I bet there will be some people who will be alright getting better price in exchange for loss of some protections. Otherwise it doesn't make sense now to not use credit card.
I'm deciding between payment processors right now. I plan to have excessively low prices, in the range of 1 dollar per year. PayPal and Amazon offer micro transaction pricing at 5 cents + 5% of each transaction. Care to compete?
For a $1 transaction, Paypal/Amazon would charge 10 cents and Stripe would charge 0.5 cents for a bitcoin transaction. Unless you're talking about credit card transactions.
I am talking about credit card transactions. I plan on accepting bitcoin, but I want to accept normal payments as well. Right now it seems like Amazon + Coinbase will be my choice.
they know exactly who did it and why/how it happened...
what advantage is there to the coins themselves being completely untraceable, transactions completely irreversible?
suppose your net worth is largely a matter of the value of your startup at its last valuation. would you prefer to just have that many hundred thousand dollars in cash in your home? But with the added benefit that it can disappear at a distance without anyone visiting your home?
Bitcoin is great but isn't it about time to put a sane banking layer on top of it?
Note: like all sane people I believe in a mix of government oversight and personal freedom, maybe 90% the latter. But having an untraceable currency doesn't make me any more free. Unlike every tech luminary, Satoshi can't even identify himself.
Because legal oversight and traceability are often bugs, not features. The middlemen required to deal with those two things are often bloated, slow to react, corrupt, expensive, and in some cases, all of the above.
The idea that "I want to send some value to someone else" requires jumping through so many hoops, and having so many bites taken out of it, in 2015, is a bit silly.
How do chargebacks work with cash? Exactly. Yet we still use it.
This honestly smells like the government anti-encryption argument. "You have nothing to hide, so why do so?"
I just don't think this is useful unless you were offering a service that only works with bitcoins. The wide adoption won't change Bitcoin, it's the unpredictable and manipulative market pricing that makes me hesitant to accept it.
With USD you know that if you got 100 it won't turn into $10 in a few weeks but the reality with bitcoin is that the threat exists
This is great news for Bitcoin. If all it takes is one extra line of code for online retailers to start accepting the currency, widespread adoption could sky rocket. That's always been Bitcoin's crutch, simple integration. Others like Coinbase and Bitpay have made it much easier to accept Bitcoin, but usually more services are required to accept other forms of payment. This simple catch-all solution is a game-changer. Congratulations Stripe.