You attach too much importance to CC chargeback mechanisms. I am a typical American consumer and in 20 years doing about 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 all its advantages if that meant giving up the ability to charge back. Consider this: 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 chargeback mechanisms in 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.
Also, CC chargebacks are far from being perfect. 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 stall shipping (eg. claim delays, issues, ship the wrong thing, etc) for 60 days specifically to exploit this fact and exploit the fact customers don't know about this 60-day chargeback limit. 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 CC fine print, for example: "If your Password or PIN is used in such a transaction, you will be liable for the full debt" from http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...)
Don't forget that despite the lack of chargebacks, you still have all the other usual recourses available to you if you are defrauded after paying in bitcoins: small court claims, send a complaint to the FTC or BBB, etc. But the fact chargeback mechanisms are rarely needed in the first place, and have various limitations (60-day, PIN stolen, etc) indicates that Bitcoin doesn't need them to be reasonably successful as a payment technology.
> For a CC sure I might have to grab the card out of my wallet and punch it in, but my numbers are pretty much memorized by now and it's beyond simple.
"beyond simple", really? A lot of people would disagree with you. The inconvenience of typing in the CC billing info is the number one reason why fewer sales take place on mobile than on desktop.
And it is one of the main reasons why people stick with a store they know have their CC saved (eg. Amazon) as opposed to buying on some random site where they know it is going to be a PITA to type in all the billing info.
Bitcoin solves this payment friction for a first-time shopper at a given shop, and that's a big deal. You should know this. This is why you yourself admit preferring using Paypal over CC because Paypal also solves first-time shopping friction.
I'm not sure you are me are using the same definition of simple.
Typing 16 digits plus four digits on the front and three digits from the back of a card in your pocket is incredibly simple. I just described it in one short declarative sentence.
In addition it is mildly tedious, and slightly inconvenient. But extremely simple it remains.
In contrast, bitcoin requires typing in an extremely long and essentially random sequence of alphanumeric characters.
Except that it doesn't you say? Because an app can automate it? Oh wait.
> I just described it in one short declarative sentence.
Except you forgot: you have to type the expiration date, the cardholder's name, and sometimes the full billing address. I will repeat again: typing the CC billing info is not simple enough and this is the number one reason e-commerce sales conducted on mobile are not as high as sales conducted on the desktop.
> bitcoin requires typing
No. It sounds like you have never made a Bitcoin purchase. Typically the merchant's site launches your local wallet app via a "bitcoin:" URI pre-populated with an address and an amount -> click OK to confirm transaction -> done.
One of the reasons I stick with Amazon is, yes, they have my payment info saved. But they also have other things like Amazon Prime, and their reputation. People don't stick with Amazon just because they have payment info saved. They trust Amazon is going to keep their info secure, and if they're unhappy with the purchase, Amazon is going to make them whole.
I don't have that trust and security using Bitcoin with a site I've never used before. I don't know if the site is on the up and up, or if they'll just take my BTC and run.
Your comment reveals something often overlooked by the crowd shouting "OMG Bitcoin doesn't have chargebacks". Most people shop from merchants they trust, most merchants are honest, most disputes are resolved without chargebacks. Therefore chargebacks aren't really that needed or that important for most transactions.
IOW: you would have no problem paying Amazon in bitcoins, because you trust them.
One thing most people who claim chargebacks are needed overlook is the impact the availability of chargebacks has on reducing the types of actions merchants take which might require one. The existence of the chargeback mechanism itself means merchants are more likely to ensure customer satisfaction to avoid them. That doesn't mean they aren't needed it could also mean they are incredibly effective at limited merchant fraud or laziness in dispute resolution.
Chargebacks are just one of many methods that customers can use to maintain uprightness among merchants: legal actions (eg. small-claims courts), complaints to FTC or BBB, online reviews, etc.
Legal action is far too time consuming and expensive, writing to the FTC or BBB is completely worthless as it will do absolutely nothing, and online reviews are limited in their ability to do anything, and might not have any impact.
A chargeback is simple, easy, and fast. And it puts the onus on the merchant to prove they didn't do anything wrong.
None of those are really comparable in effort, cost, or effectiveness compared to just calling my credit card and having the charge reversed and the threat that I have the option to do that if they don't deal with my orders or issues appropriately.
> None of those are really comparable in effort, cost, or effectiveness
Does it matter? Some defrauded users WILL be persistent and WILL go through the effort of using these recourses, so they do keep merchants in check.
The fraud world is not as simplistic as you think it is ("oh crap customers can issue chargebacks against us, I guess we have to be honest now").
Fraudulent merchants will act fraudulently, regardless if chargebacks exist or not. Honest merchants will act honestly, regardless if chargebacks exist or not.
Yes it matters to me because the fact that some customers will do it won't actually matter in getting me my money back if there is a problem. The occasional customer going through the process of paying to take a merchant to small claims court(and if they are out of state it will be a considerable expense) isn't going to stop fraud or problems like the one below it will just cause the merchants to pay those specific customers off.
The problem isn't just out right fraud. Say you come to my online store and buy something. My warehouse screws up and doesn't ship it but they list in the system they have. You call up in a week and say "Wheres by foo" and I say "We shipped it". With chargebacks I am encouraged to go investigate and solve the problem. Without I am encouraged to trust my system.
Or say I sell you tickets to an event. For whatever reason I go bankrupt before the event can exist. With a credit card I'm still getting my money back. Without chargebacks I'm boned.
So then you say "Well only use trusted merchants like Amazon!" which is great if you want to centralize all commerce on the internet to one provider per vertical but not really ideal.
> it won't actually matter in getting me my money back
You aren't answering my point. Your argument was that we need the threat of chargebacks to make merchants more likely to ensure customer satisfaction. I told you that other threats like legal action are sufficient to keep the pressure on merchants to remain honest. For example a merchant repeatedly taken to court will eventually be shut down, or maybe fined sufficiently that it will eat his profits so he will be enticed to be more honest.
> Without I am encouraged to trust my system
If customers threaten to go to court or report you to the FTC/BBB I can ensure you you will be encouraged to go investigate too.
> So then you say "Well only use trusted merchants like Amazon!"
I am not asking for change. People already do it. They already use trusted merchants (mostly). This was the central point stated at the beginnig of this thread: "most merchants are honest, most disputes are resolved without chargebacks. Therefore chargebacks aren't really that needed or that important for most transactions." So yeah for the 1% of cases where you think the merchant might be fraudulent use Bitcoin with escrow, or a credit card, or cash-on-delivery, or whatever. For the other 99% a standard non-escrowed Bitcoin transaction is acceptable.
But you're ignoring the difficulty and worthlessness of these actions. If the company isn't local going to small claims becomes expensive so despite threats almost no one will do it. FTC/BBB does nothing unless there is obvious widespread fraud and how long will a resolution take for you?
>If customers threaten to go to court or report you to the FTC/BBB I can ensure you you will be encouraged to go investigate too.
No you're encouraged to wait until they actually go through the process of taking action then if its cheaper resolve it.
You keep saying most merchants are honest which I agree with but honesty isn't the only reason for charge backs as I mentioned.
Filing a complaint to the FTC or BBB is no more difficult than filing a credit card dispute. In both cases you merely supply evidence of the fraud.
But I am not claiming a legal action is as likely as a chargeback to make the customer whole. I am claiming a legal action works just as well as a chargeback to put pressure on merchants to keep them honest.
> honesty isn't the only reason for charge backs
What other reasons? Illegal charges after theft of credit card billing information? I would say this is an argument for Bitcoin since using Bitcoin makes impossible for the merchant to steal or lose your billing information :) So what other reasons for a chargeback are you thinking about?
I repeat again: I agree the customer is less likely to get his money back with an FTC complaint than a chargeback. But FTC complaints still work as an incentive to keep merchants honest because what the FTC does eventually is one or more of the following: initiate lawsuit, shut down the business, seize the merchant's assets (offices, products, money, everything), etc.
> What evidence do I have of fraud if its just a shipping dispute and their word against mine?
The same evidence you would supply to your credit card issuer for a dispute: shipment info, package tracking numbers, pictures of items delivered, customer/merchant email exchanges, etc.
> Mistakes, and disruptions in the continuance of the company
As I said, most merchants are trying to please customers, so most mistakes are resolved without a chargeback. I don't think you will disagree here. I have never had to issue a chargeback, yet I had a few mistakes happen on me and the merchant always resolved them in my favor.
As to "disruptions in the continuance of the company" this is an extremely rare event, even rarer than outright fraud. So I will agree this is a nice case to have chargebacks available, but again as I said for 99.9...% of other purchases Bitcoin's lack of chargebacks is totally acceptable. I don't think you will disagree here either.
So your solution to the problem is one that likely won't result in the customer getting their money back and involves a lot more work on their part? It also requires that the company screw up repeatedly with many customers(to get the FTC to investigate), and is still operating?
If you are still honestly convinced that is an acceptable replacement for charge backs we will never find agreement here.
>I have never had to issue a chargeback, yet I had a few mistakes happen on me and the merchant always resolved them in my favor.
You dismiss completely the possibility that this is because of the existence of chargebacks? The fact that you have the ability to reverse the charge, cost the company a charge back fee and potentially raise their payment processing rates if they don't help you out satisfactorily? You don't think that has anything to do with the way they act?
Google tiger direct bitcoin refund for some examples of how a company handles these things without that threat. People spending days trying to resolve the issues bouncing between multiple companies. The alternative is calling their credit card company and having the funds available again in a few minutes.
Or look at all the people waiting >1 year past their expected delivery date for miner shipments and in some cases having the company go out of business before they arrive or send them used equipment.
> likely won't result in the customer getting their money back
Likewise, a good fraction of credit card disputes end up being resolved in favor of the merchant, not the customer.
> involves a lot more work on their part
I already told you submitting an FTC or BBB complaint is no more work than submitting a credit card chargeback.
> It also requires that the company screw up repeatedly
True if you go to the FTC. Not true if you go to small-claims court: it will be investigated even if only 1 screw-up occur. Yes going to small-claims court is more work than filing a credit card dispute, but then if it is not worth your time given the transaction amount, it kind of proves that being refunded isn't THAT important to you. In this case you would complain to the FTC, and write off the small amount lost.
> You dismiss completely the possibility that this is because of the existence of chargebacks?
I acknowledge chargebacks incentivize merchants to act honestly. But I will repeat for the third time: this is not the only thing that incentivize merchants. FTC, BBB, legal actions, etc.
> Google tiger direct bitcoin refund
I did and I found 2 stories, both resolved in favor of the customer:
This proves my point that most merchants act honestly and that most disputes get resolved without chargebacks :)
> having the funds available again in a few minutes
No. When credit card issuers refund you instantly, it is always a TEMPORARY refund (check the fine print of your credit card agreement) - you still need to submit a full package usually within 60 days with evidence of the dispute (tracking numbers, product descriptions, pictures of what was received, etc) for the credit card issuer to investigate and either make the refund permanent, or resolve in favor of the merchant. That's why I keep explaining t you that submitting this evidence of the dispute is similar in complexity to submitting a complaint to the FTC as they ask the same things a credit card issuer would ask.
Out of curiosity: how many credit card disputes have you ever filed? What proportion were resolved in your favor, and in the merchant's favor?
>Likewise, a good fraction of credit card disputes end up being resolved in favor of the merchant, not the customer.
Do you have any evidence of this?
>I already told you submitting an FTC or BBB complaint is no more work than submitting a credit card chargeback.
But then right after you said I would need to compile all the evidence to do so. So what is it? No more work(and I just have to fill in a form) or more work?
Also you realize the BBB is a private company that has no teeth right?
>True if you go to the FTC. Not true if you go to small-claims court:
I see bitcoin people recommend small claims court all the time. It works great when the merchant it local. It doesn't work so well when the merchant isn't since you have to file in their county. So add on travel time, missed work, etc to travel to where ever they are(assuming they are in your country) and it becomes a lot less likely someone is going to go this route.
>I did and I found 2 stories, both resolved in favor of the customer:
Both of which involved around a week of hassle just to get their product. And if they weren't newly accepted and watched by the bitcoin community at that time what would the result have been? Also if you'd looked a few results down on google you'd have also found this story https://www.cryptocoinsnews.com/coinbase-extreme-bitcoin-tra...
This was a big company and if you read the correspondences they were more than happy to ignore the people until a 3rd party stepped in. This works great on rare occasions but bitpay isn't going to be able to afford to police transactions with their fees.
I'll also note you skipped over the miner disputes in your response.
You admitted already you have never filed a dispute yet you seem to talk with authority about the process? I've filed 2 disputes against merchants both found in my favour neither required submitting evidence and 1 dispute due to fraud that required me to submit a signed letter confirming I didn't make the charges.
http://bit.ly/10iW5wJ page 12: "Merchants report that they win, on average, 40% of the chargebacks they dispute". Obviously x% of these disputes (with 0 <= x <= 100) are disputes that the customer should have won, but the merchant did because the dispute process is not flawless.
> So what is it? No more work (and I just have to fill in a form) or more work?
Typically it is no more work. I have experience from almost filing a dispute on my Wells Fargo credit card against Sprint. I didn't end up filing it because Sprint sent me a refund at the last second. Wells Fargo's online dispute forms do ask for some evidence: such as a log of email exchanges, shipping tracking numbers, etc. That's how I know. Obviously the process varies between credit card issuers. And I am sure no evidence is required when it is clear the merchant is at fault (a phone call will do). But either way this is similar to the complexity of the process of submitting a complaint with the FTC, where it can be as simple as a phone call if verbal info is all you are willing to provide to them.
> Also you realize the BBB is a private company that has no teeth right?
> I see bitcoin people recommend small claims court all the time. It works great when the merchant it local. It doesn't work so well when the merchant isn't since you have to file in their county. So add on travel time, missed work, etc to travel to where ever they are(assuming they are in your country) and it becomes a lot less likely someone is going to go this route.
I agree, but don't lie by saying "it also requires that the company screw up repeatedly".
> This was a big company and if you read the correspondences they were more than happy to ignore the people until a 3rd party stepped in. This works great on rare occasions but bitpay isn't going to be able to afford to police transactions with their fees.
You imply TigerDirect was intentionally dishonest, but it is very obvious the incorrect refund amount ($14.99 instead of $167.21) was a glitch, a bug. No matter how you want to believe it, this story doesn't show that merchants are dishonest and evil when they take bitcoins and they know there are no chargebacks. Are you claiming some evil TigerDirect employee typed in $14.99 intentionally on his terminal to try to rip off the customer?
> I'll also note you skipped over the miner disputes in your response.
I didn't reply because this is not relevant: most customers who paid the manufacturers with credit cards could not dispute the charges either, because of the 60-day limit after which chargebacks are not allowed. So I am not sure what is your point... Whether you paid the manufacturer with a credit card or in bitcoins, all customers are out of their money regardless.
Also, you too skipped over many of my points:
- "But I am not claiming a legal action is as likely as a chargeback to make the customer whole. I am claiming a legal action works just as well as a chargeback to put pressure on merchants to keep them honest."
- "But I will repeat for the third time: this is not the only thing that incentivize merchants. FTC, BBB, legal actions, etc."
- "As I said, most merchants are trying to please customers, so most mistakes are resolved without a chargeback. I don't think you will disagree here"
- "So yeah for the 1% of cases where you think the merchant might be fraudulent use Bitcoin with escrow, or a credit card, or cash-on-delivery, or whatever. For the other 99% a standard non-escrowed Bitcoin transaction is acceptable."
Yes, but at least I can be made whole from a fraudulent merchant in a timely manner with a chargeback. Not so for any of the other methods you mentioned.
There is a huge difference between 90% (or even 99%) and a 100% eclipsed Sun. People in Norway should really travel to the Faroe Islands to experience totality :)
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.
> 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.
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.
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.
I don't know how you're assessing those pages, but bear in mind that
- Counting images can be misleading, since well-optimized sites use spritesheets or data URIs.
- If you're using something like Chrome's dev console to view requests, a lot of them are non-essential requests which are intentionally made after the page is functional.
- HTTP connection caps are per host. The benchmark is making hundreds of requests to one host, whereas a real page might make a dozen requests to the main server, a dozen to some CDN for static files, and a dozen to miscellaneous third parties.
- The benchmark is simulating an uncached experience; with a realistic blend of cached/uncached, HTTP 1 vs 2 performance would be much more comparable.
HTTP/2 is an improvement but if people expect a "5-15X" difference, they're in for a big disappointment.
"This study is very flawed. Talking to a proxy by SPDY doesn't
magically make the connection between that proxy and the original site
use the SPDY protocol, everything was still going through HTTP at some
point for the majority of these sites. Further, the exclusion of 3rd
party content fails to consider how much of this would be 1st party in a
think-SPDY-first architecture, where you know you'll reduce round
trips, so putting this content on your own domain all together would be
better, anyway."
In other words the guy benchmarked SPDY _slowed down by HTTP connections behind it_!!
Sure. It illustrates how any benchmark can be flawed because it's tailored to the point it's trying to make. The author of that article thought this scenario was "more realistic." What is more realistic to him is not to other people.
And thus, benchmarks are unhelpful.
I care about feature sets and major improvements, not minor down-to-the-wire fixes. If this were called HTTP/1.2 or something I'd be less critical, but there are so many issues and flaws left unfixed, with unhelpful bikeshedding occurring over perceived "performance".
No, they are helpful! Especially real-world benchmarks. Sure you can cook up utterly flawed benchmarks (like the one you pointed to), but that doesn't mean all benchmarks are unhelpful. A good engineer knows which benchmarks matter, which don't. You don't seem to be able to do that.
> If this were called HTTP/1.2 ...
The mere fact you brought this up (no amount of backpedalling you may do after my comment on this) makes your criticism look even stupider. You should judge the spec based on its technical content, not based on whatever arbitrary version number was assigned to it. Talk about a bike-shed argument (http://en.wikipedia.org/wiki/Parkinson's_law_of_triviality)
The linked benchmark is flawed, as dlubarov noted above. I wanted to note that it is easy to write a flawed benchmark. And in this case, benchmarks are unhelpful, because my major lament is not efficiency or lack thereof, it is the lack of any new features or any consideration to any of the other pain points that exist on the Web today.
> doesn't mean all benchmarks are unhelpful
Didn't mean to imply that, although I can see how it could be read that way. Rest assured, I only believe benchmarks are unhelpful here. Oftentimes a benchmark is the best way to quantify usability, such as DoYouEvenBench (http://www.petehunt.net/react/tastejs/benchmark.html)
> backpedalling
I won't backpedal. This is important, actually, because the name it's given lends it some intrinsic hype. Let's say you're Google, and you're pushing a web standard that benefits you more than anyone else. What's more likely to be adopted, "HTTP/1.2" or "HTTP/2" ? It is important, in my opinion.
> The linked benchmark is flawed, as dlubarov noted above.
No, I already replied to him. You and him should spend some time looking at the Chrome network console visiting some of the top500 sites. It is very common for sites to be exactly like that: tons of small requests for small resources.
Okay. Fair enough. I concede that efficiency is important and that SPDY / HTTP/2 can improve upon it. But I don't believe that this is worth the hype because the exposed featureset is otherwise tiny. Efficiency is cool, yes, but I'm personally waiting until HTTP/3 fixes the other wrong things with the Internet before I implement anything. I think the amount of effort that goes into this is not worth the result. Why include tons of small resources on your page if they're not necessary? Why revamp a protocol entirely if all you have to do is stop including tons of small resources?
> Okay. Fair enough. I concede that efficiency is important and that SPDY / HTTP/2 can improve upon it.
Great, I appreciate you recognize this.
> Why include tons of small resources on your page if they're not necessary?
But it _is_ necessary. In every single of the examples I gave in my reply to dlubarov, it is necessary:
- There are 100+ small images, icons, etc and all are displayed on the nytimes.com homepage.
- All of the thumbnail pictures of ebay items on a listing are displayed to the user.
- The 50+ maps tiles downloaded when browsing Google Maps are all necessary.
- Etc
You seem to fail to realize that in 2015, not every web page can be dumbed down to a blob of static HTML and no more than 2-3 images. The modern web is complex. We needed a protocol that can serve it efficiently.
Basic income could be implemented by NOT raising taxes. So it would NOT cause inflation. Eliminate current social services (and all the financial overhead associated to it: entire government departments who sole job is to administer these services, etc), and just redistribute the funds that would have gone to these services to be, instead, redistributed as basic income. There. All you are doing is shuffling money around to change its distribution while reducing financial overhead. You are not raising taxes or creating new money. Money is just better distributed and hence spent on different areas of the economy.
(I don't know why, in the article, James Manzi says tax increases would be required. Maybe he has a certain opinion that in order to be effective, basic income should be greater than a minimum level that would not be met by my description above? I think my basic income would be sufficient. The US spends $1.5 trillion per year on welfare and pensions. If you take that money, one could redistribute it as a basic income of $1070 per month per household. That's significant enough to very helpful for society IMHO.)
Also, CC chargebacks are far from being perfect. 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 stall shipping (eg. claim delays, issues, ship the wrong thing, etc) for 60 days specifically to exploit this fact and exploit the fact customers don't know about this 60-day chargeback limit. 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 CC fine print, for example: "If your Password or PIN is used in such a transaction, you will be liable for the full debt" from http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...)
Don't forget that despite the lack of chargebacks, you still have all the other usual recourses available to you if you are defrauded after paying in bitcoins: small court claims, send a complaint to the FTC or BBB, etc. But the fact chargeback mechanisms are rarely needed in the first place, and have various limitations (60-day, PIN stolen, etc) indicates that Bitcoin doesn't need them to be reasonably successful as a payment technology.