[abc123xyz]

Erm near zero transaction costs and irreversibility are a HUGE appeal, anyone who sells online and had to deal with Paypal and Credit cards would tell you plenty of nightmares about frozen accounts, chargebacks and chargeback fees and rampant fraud.

[gamblor956]

near zero transaction costs

Ignoring the sizable 3% or greater costs incurred in acquiring the currency, plus the transaction costs associated with prioritizing a transaction for processing.

irreversibility

For merchants. It's a definite killjoy for customers, and customer uptake is far more important than merchant uptake for a new currency.

anyone who sells online and had to deal with Paypal and Credit cards would tell you plenty of nightmares about frozen accounts, chargebacks and chargeback fees and rampant fraud.

Nope. The only nightmares I've heard are from people who did things wrong. Paypal and merchant services make their rules pretty clear, and they even offer assistance to merchants to figure out what they need to do. If you're having problems with Paypal or your merchant service provider, it's because you messed up.

[natrius]

It costs about 1% to acquire Bitcoin using USD. If the merchant wants to receive USD instantly without exchange risk, that's another 1%. Not 3%, which is the typical cost of doing business with credit and debit cards. The last taxi driver I talked to said he pays 5% because he couldn't get approved for Square.

Chargebacks are important for credit and debit cards because you hand over your payment credentials many times each day. You never hand over your Bitcoin payment credentials. No one complains that cash doesn't have chargebacks because it just isn't a problem.

It'll be fun to speculate on both sides of this issue throughout 2014, but there are tens of millions of dollars floating around to convince merchants that accepting Bitcoin is a good idea. If it's cheaper and usable, it's going to work out. Let's see what the world looks like in July.

[wyager]

The fact that buyers can't do chargebacks is a good thing. It matches the real-world model (established sellers who can be assigned a reputation, unestablished buyers who can't) much better than credit cards. For eBay-like situations, m- of-n transactions allow for reversibility.

[Casseres]

I avoid eBay and use Craigslist for selling stuff because I don't want to risk a PayPal nightmare (due to scams which I always hear about). I'd rather have cash in my hand that I can verify is not counterfeit.

[GFK_of_xmaspast]

There's a huge cost to doing business on Craigslist, to wit, you have to deal with people who do business on Craigslist. (there's good, but dang there's a whole lot of flakes and wackos on CL)

[GFK_of_xmaspast]

In fairness, you do tend to hear horror stories about charity drives and such getting shut down by Paypal (and it would be nice if there were actual non-shady competition in that space).

[threeseed]

When I was holidaying overseas my credit card was left in a taxi. The taxi driver then proceeded to spend over $5000 in 3 days. I spoke to my bank and within a week the money was refunded to me. Those merchants should have had better processes to handle locals using foreign credit cards. And likewise they have the ability to work with local authorities to recoup the lost money.

These processes work every day to protect consumers. People using Bitcoin may use it once but the first time they are burned they will never use it again.

[politician]

I wish your taxi driver good luck spending stolen Bitcoins without the owner's private key. The fact that your credit card worked for 3 days for $5000 in unauthorized transactions is a bug, not a feature.

[vertex-four]

What if you left your phone or laptop in the taxi? You could say that at least for the laptop, your wallet should be encrypted with a password... but you're depending on everyday people picking good passwords then, which we all know they don't do.

[atweiden]

Storing your coins in a multisig address will mitigate this threat. Look for multisig service providers to offer MFA address security this year. I expect several will tie into major wallets and be very easy to use.

If you're keeping serious amounts of cash in a physical wallet, it's on you to remain vigilant about not leaving it out in the open. Same principle with Bitcoin, although I'd say losing your phone with a Bitcoin or two in it won't be quite as devastating since the digital wallet can exist in multiple locations simultaneously. If someone steals your phone, you can restore a backup of the wallet and transfer out the coins just to be sure.

[vertex-four]

> Storing your coins in a multisig address will mitigate this threat.

Assuming you mean a 2-of-3 address, where one key is on the laptop, one is a password-derived key, and one is... stored at home or with a friend, I suppose, in case the laptop is lost?

We must assume that (a) your laptop is never stolen while the wallet is decrypted, which implies making absolutely certain that end-users never leave their laptop unlocked, and (b) that nobody ever threatens violence in order to get the password, aka the rubber hose attack.

The only way to prevent this from happening in an irreversible payment system is to ensure that the end-user does not have access to all their money at one time, especially while on holiday. This is an absolute downside in comparison to credit cards.

[tzs]

You've missed the point by concentrating too much on the detail that it was a lost credit card. Just change it to "I bought $5000 worth of equipment online and the seller shopped cheap junk instead and then disappeared".

Bitcoin: too bad for you.

Credit Card: chargeback. Either you get the $5000 back from the seller, or from his merchant account provider if their risk assessment folks didn't set a high enough amount to hold back in reserve in his account. (Or rather, you get it back from your card's issuing bank, and they get it back from the seller or his merchant account provider).

[maxerickson]

You're right, people looking to steal bitcoin invariably target the private keys.

(Less antagonistically, different things are different and considering a few of the differences usually isn't super useful)

[TomGullen]

Credit cards are exactly that, credit. Bitcoin is not a credit system.

If you had had a debit card and money was fraudulently spent, good luck getting that back from your bank. Debit cards are used to make hundreds of billions $ worth of purchases online each year.

> Those merchants should have had better processes to handle locals using foreign credit cards.

Isn't this victim blame?

[jusben1369]

Yes to be clear, at least in the US, most debit cards have this protection. Although it's not quite as simple as a chargeback.

[wmf]

My debit card has similar protections as credit cards. And I'm not sure why the lack of credit in Bitcoin is a feature.

[this_user]

Fraud and theft is much more rampant in the BTC universe. By now there have been dozens of large-scale thefts when services were compromised. And unlike with established payment solutions it is next to impossible to get your money back if it happens.

As a consumer it is also impossible to pay with BTC ad hoc unless you already own some and thus expose yourself to its volatility. Of course I could see something that I want to buy, then log onto a BTC exchange (which requires me to already have an account) and buy enough BTC to then pay with those BTC. But why would I subject myself to that additional effort for no practical benefits for myself?

[GFK_of_xmaspast]

Why on earth would I as a purchaser want to buy something with bitcoins (which offer me no protection) instead of using a credit card (which offers me extensive protections).

[abc123xyz]

Cheaper prices would be one.

As a merchant when a customer chooses to pay with bitcoin I pass on the savings (that would instead go to middlemen like paypal and credit card companies) onto the customers, and they love it judging by feedback received.

Credit card companies and paypal etc are parasites who siphon billions from global commerce, their business models are based on old money transmission methods.

There used to be a time when people would ask as to why they would use credit card over cash, yet people moved on and accepted new concepts and technology

[waps]

That's illegal according to the contracts you have to agree to in order to accept credit cards or paypal. That's why almost nobody is doing that.

[natrius]

This isn't true anymore.

http://www.cardfellow.com/blog/charging-customers-a-credit-c...

[weavejester]

Perhaps you don't want the purchase to be connected to your credit card, or perhaps the purchase is small enough for it not to matter. I've bought a few indie games with Bitcoin, admittedly mostly for the novelty, but it also turned out it was actually easier than typing in my credit card information. It also requires me to place less trust in the website; sure credit cards have much more protection, but it's still a pain if your credit card number winds up stolen.

However, when it comes to physical goods costing more than a trivial amount of money, I'd certainly want to use a credit card.

[GFK_of_xmaspast]

"it was actually easier than typing in my credit card information"

What about if you amortize over the time it takes to set up your bitcoin wallet, etcetcetc. (and to be fair, it takes time to set up a credit card, but there's also a much larger set of purchases to amortize over).

[weavejester]

I setup my bitcoin wallet in the early days when there was much less infrastructure, and back then it took a while! However, a few months ago I tried a peer-to-peer bitcoin website and I was surprised at how quick it was. I think went from sign-up to bitcoins in my account within about 15 minutes (+ confirmation time).

There's still a significant learning cost, of course, but I'm encouraged by how much better the infrastructure around Bitcoin is compared to just a few years ago. The infrastructure looks pretty professional now, and the security practices are noticeably better (though that isn't exactly hard, considering how insecure the earliest services were!)

[21echoes]

4-5% transaction cost (http://blockchain.info/charts/cost-per-transaction-percent) is certainly not "near zero", and in many cases is higher than credit card transaction costs.

just because the current transaction costs are paid with freshly printed money does not mean they dont exist, and as the rate of minting goes down as we near 2080, those transaction costs are going to start coming more and more from the users instead of the mines.