[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.