[runeks]

A centralized payment system will never be able to provide the best service for users. With a single entity in control -- as opposed to an open system where newcomers can enter and compete with incumbents -- there are no competitors, and competitors are responsible for pushing down fees and adding innovation, thus forcing incumbents to follow along or fade away. That's why the web is so successful: competition is built in through an open protocol, so competitors can replace incumbents by providing a better service/price.

With the iPod and iTunes, and the iPhone and the App Store, Apple created something that didn't exist before, and captured most of the newly created market. Replicating VISA's business model doesn't do the same, but simply adds a couple of features to an otherwise closed system where users will not benefit from competition.

An actual alternative to VISA needs to be open, allowing for competitors to easily enter and compete with existing actors. Such a system is the Stroem protocol on top of Bitcoin, which is a thin clearing protocol designed for competition, constantly forcing issuers to follow along on price or be left behind. This is what merchants want, and what's needed to revolutionize payments.

[samfisher83]

This is probably not a popular opinion. Visa and Mastercards were all owned by the banks that back your credit card. These are highly regulated organizations. I rather not have startups that have sometimes have pretty dubious reputations for skirting the law trying to get into this space. What if someone steals your bitcoin what do you do? Or if you purchase something and you don't get it.

[runeks]

> I rather not have startups that have sometimes have pretty dubious reputations for skirting the law trying to get into this space.

Why not? The Stroem protocol, combined with Bitcoin payment channels, is completely trustless from the consumer's perspective. The coins are stored on your phone (or whatever device you want to use for it).

Only merchants need to trust issuers, in exactly the same way that merchants need to trust VISA/Mastercard etc. now. The primary difference is that the system is designed for competition between issuers, instead of a centrally-defined issuer (e.g. VISA or Mastercard).

> What if someone steals your bitcoin what do you do?

If someone steals your bitcoins they're gone. But if you don't trust yourself to keep your bitcoins safe, you're free to deposit them with someone you trust. That's the benefit of Bitcoin: if you feel confident guarding a private key you can store them yourself and, if you don't, you can use an external wallet service -- the best of both worlds.

> Or if you purchase something and you don't get it.

If you find a merchant appears suspicious you should use an escrow service. With the Stroem protocol, adding a layer on top that enables chargebacks via an escrow service is really simple, and completely decentralized. Pick any escrow service you like, who all compete on service/features/price -- no need to always use PayPal/VISA.

Again, the advantage is that you're not forced to pay for something you don't need (chargeback insurance) unless you deem it necessary.

[samfisher83]

The stuff you describe pretty much sounds like a bank. Instead of a regulated FDIC backed institution you want to store your money at some wallet service which may or may not get hacked in which case you lose your money.

[runeks]

It's very different from a bank, primarily because consumers/payers don't deposit anything, they keep their bitcoins on their device.

Only merchants, who want to receive extremely cheap Bitcoin payments -- the fees are set by the market, but a thousandth of a cent is completely reasonable -- can choose to trust one or more issuers. They may redeem/"cash in" the payments they've received at any time; the more often they do this the less the risk but the higher the fees, but they choose their own risk profile. And if the worst comes to the worst, merchants lose a week/month of income (if they choose to redeem every week/month), the issuers dies, and the merchants will probably survive (assuming the lost income is not fatal to their business). So the bad issuers are flushed very quickly, and merchants can adjust their risk/fee ratio as they desire.

[saurik]

> But if you don't trust yourself to keep your bitcoins safe, you're free to deposit them with someone you trust.

^ This is you, saying that people would deposit things if they fall into the same category of "most people" that don't consider the idea of trying their damndest to just be extremely careful with their cash (which, once stolen, is simply gone, and which can even be misplaced) to be a sane choice in comparison to using... a bank.

[needusername]

And they have a chargeback process that works and protects the cardholder. And they won't be gone in five years.

[lostlogin]

You won't use Uber Bank?

[aianus]

It's cheaper to lose 100% of your purchase 2% of the time than 3% of your purchase 100% of the time.

Insurance is for health and houses not my $8 lunch or $500 wallet contents.

[saurik]

As both a consumer and a merchant I really like this world where even small transactions are insured as it means that everyone--including me--can just mostly trust everyone and not have to have some complex passcode or multi-factor security setup to access and spend money. I like that I just have a card in my wallet that I can nigh unto flash at people and be handed a hotdog, and yet if someone steals my wallet or tries to hold me at gunpoint there is never any reason to not just hand them my card.

[aianus]

You like it because the costs are hidden from you. I bet you'd think twice about using your card to pay for your hotdog (or even something like a MacBook) if they explicitly passed the fees onto you and you could opt out with cash.

There's room for both systems for different kinds of transactions with different kinds of merchants.

[diogenescynic]

As a merchant, they would pay those fees--so no, the costs are not hidden for them. Did you miss that part?

[samfisher83]

You don't think some startup will not take fees? Who is paying for infrastructure and salaries?

[aianus]

The fees can be a lot lower when you don't have to maintain rewards programs, liability for fraud, or dispute mechanisms.

Bitcoin is ridiculously inefficient compared to what a centralized entity could be and it's already cheaper than wire transfers or even credit card transactions over a certain size.

[runeks]

There will definitely be fees, but they will be set through competition, as opposed to defined by VISA/Mastercard at will.

[zepto]

This seems like an idealistic restatement of the 'open always wins' mantra, with no real logic supported by facts.

The web that you mention is a strong counter example. It is dominated by a few giant corporations, and in many places, increasingly subject to government restrictions.

The web isn't successful because of ideological openness and resistance to control by powerful actors. It's successful because it is extraordinarily useful.

Merchants may see a few percentage points of fee reduction as a potential margin increase for themselves, so 'want' whatever cuts their costs.

Consumers on the other hand want an easy solution that they don't need to worry about.

Apple Pay delivers on the consumer end of this.

A competing solution would need to deliver both to stand a chance.