Bitcoin Forum

I wrote an article about why Bitcoin and Cryptocurrency is so much better than the current system.

http://thedailycrypto.com/post/cryptocurrency-can-replace-credit-cards/

Let me know what you think.

The blockchain is already 15 GiB. Bitcoin can't replace credit cards if we don't solve this problem.

Why not credit cards accepting bitcoin? like coinkit

I've always just wondered why it can't be compressed at the very least.

can't this be worked around by third party applications ? for example multibit.

Also services like bitpay etc seem to provide quick integration for merchants, without them having to worry about the size of the blockchain.

Delete 15gb of porn first.

Bitcoin cannot replace the credit card today, simply because of it's 10 minute transaction time. Impractical in real world situations especially since it takes a few seconds(1-3) for you to be able to transfer money on a credit card, unlike Bitcoins 10-40minute wait...

I think you all might be forgetting a key word here??? CREDIT!!!!!!!


spend BTC now pay later? I dont think so.

May ripple/XRP. But who's gonna refund me if a fraudulent charges occur on my card.

Where are they located ?

"Electrum is an easy to use Bitcoin client ... There is no waiting time when you start the client, because it does not download the Bitcoin blockchain."

For example... though if you want to be paranoid or truer to the zero trust principle you should use a client that downloads and checks every single transaction.

Really?  Because I can transfer BTC just as quickly as I can make a purchase with a credit card.  The fact that my Bitcoins appear in my wallet BEFORE the Blockchain verifies the transaction is actually one of Bitcoins strengths.  Ever seen "pending deposits" on your bank account?  You know, the ones that can take days to clear before you actually get your money?  Fuck that.  I WANT MY BTC!!!

:)

Call of duty with all the extra's is 35GB, are you saying that infinity wards should not release another game because of the disk space used.

are you saying no one will play call of duty ghosts 2??

if people can install GTA, crisis, WOW and call of duty and not care, .... then i do not see a problem

1TB Hard drives is 66 times the storage needed for 5 years of bitcoin blocks. and it costs under $£70

Hehe! Actually I found myself booking flights, hotels and such in Bitcoin (and paying the bitpay premium...*) because I couldn't be hassled to go through the bother of a credit card booking. Also find myself donating more often just because it's so easy... me and other people if you look around.



*looking forward for one of these services that pays some of their costs in Bitcoin and thus accepts Bitcoin to their own wallet. At least hosting you can pay in Bitcoin dammit!
 

The solution is to have hardware wallets (yes they are needed to go mainstream anyways) that can have multiple currencies on them. Then you can use high value btc for buying a car and something like ltc or doge, to buy a frappucino

when doge blockchain becomes too big, no problem, you switch to catcoin or whatever.

BTC = store of value, large transactions
XYZ = fast micropayments, only buy as needed, can be sacrificed painlessly

Ripple.  Solved.

This solves the issue for end users, but exchanges, processors, miners, and power users will always need the blockchain.

  ;D ;D ;D

The blockchain is already highly optimized.  Compression only is effective when there are patterns in the data, or data that is not important for the end result that can either be summarized or discarded.  I doubt there is much information in the blockchain that fits into either of those categories.

What are you, living in 1995?

15 GB is not large. Any one of my 60 games on Steam are that size or bigger.

Seems ppl don't undestand blockchain size issue. The problem is bandwidth, not storage space. VISA processing volume (10'000 tps) requires 10'000 transaction/s * 200 bytes/transaction * 8 bit/byte = 15 Mbps connection, assuming 200 bytes per transaction, average transaction requires more bytes.

I think the BTC card is what Neo-Bee are trying to do.

If you deposit BTC in your wallet and it is available then when you swipe your card it only takes seconds (I am guessing).

But it was about 2GB a year ago. At this rate, it will require a NAS with several dozen 4TB hard drives in RAID by the end of 2016.

This!
Maybe you should change the title to debit cards :)

Have fun living with Google as your ultimate overlords. Surely, a company that admitted they spy on you daily...

Points you left out:

1. Credit card companies make money on interest, and can provide rewards programs to customers.  Bitcoins can't.  Advantage - Credit Cards.

2. Credit cards allow someone to know how much money they can spend.  Bitcoin prices are volatile, and need to be converted back to USD to determine their value.  Advantage - credit cards.

3. Theft and fraud - Someone steals my credit card, and the bank is SOL as long as I report it when I notice it.  Someone steals BitCoins, the owner is SOL.  Advantage - credit cards.

Points you're taking an awfully biased approach on.

1. Your chargebacks point is horribly limited in scope.  As a consumer, I prefer the charge back over the non-charge back option.  Consumer Advantage - credit cards.  Business advantage - depends on whether or not the business is large enough to operate their own credit card and earn the interest/fees associated with this.

2. Time of transaction - A pending transaction with a bank is slightly more reliable than a pending transaction with a random person.  For online purchases (excluding instantaneous downloads), it may not be an issue, but this would never work in retail stores, or for online products that people would instantly receive.

Pretty sure it can, can't it? All you need is current location of all the coins, you don't need the history of it, you just need the history to calculate the current location.

Why is this a problem?   Consumer flash memory devices that can hold 16G can be found for less than $10.  This eventually gets cheaper.   Mass produced devices can hold a ROM of the current history of the blockchain for even cheaper.

That's why we need a Coin with 3 seconds transaction times...

Read Satoshi's original paper, chapter 7:

https://bitcoin.org/bitcoin.pdf

Explains how to prune the blockchain, to about 5MB/year. (removing transaction hashes, only keeping the merkle root hash in the end)
Now we just have to wait for devs to implement it!

Bandwidth is another thing.. Come-from-beyond has a good point, but if internet speeds keep rising, I personally think by the time BTC gets to 10000transactions/s this will be high enough.
A lot of home connections are already able to easily keep up with that speed.

My thoughts.

I'd add one very simple point: the CC companies make billions of dollars every year.  Think about how they do that.  They are ruthless.  Clue: it's by tricking you into thinking you get a good deal.

I remember in the UK a year or two ago we had CC companies intentionally changing the monthly due date for repayments to catch people out that had set up standing orders to pay their bills on time!

Where can I donate more tin foil to your cause?   ;D

Is Ripple still going?  I thought it was exposed as an exploitable mess of IOUs?

Confirmation speed, transactions per second, volatility, non-reversible payments, and absence of credit... not there yet.

I love the idea of non-reversible payments, but it represents a major transition for consumers. Consider the most successful Bitcoin markets, black market sites, and their reliance on escrow. Although reversible payments can be a source of fraud, they are also used for consumer protection. I see the fraud limiting aspect of non-reversible payments benefiting sellers more than buyers. Mass scamming is incredibly easy for merchants, in absence of consumer protection. FE (finalizing early: releasing funds from escrow before the exchange of goods or services has been completed) has been a cornerstone of fraud in many marketplaces.

Credit is also valued by many people. It is out of philosophical alignment with the Bitcoin community, but not the majority of consumers.

Affecting cultural change is just as vital as making technical improvements. Bitcoin also does not have a stellar reputation, yet, and that is part of the change that needs to occur.

Beyond just 'can Bitcoin replace X?', clearly explaining why Bitcoin is better than X is necessary. Libertarian platitudes do not hold widespread traction.

Does Bitcoin offer a better end-user experience than a Starbucks mobile payment app (http://www.businessinsider.com/mobile-payments-at-starbucks-explode-in-2013-passing-the-1-billion-mark-2-2014-1)? Mass adoption includes those users.

I think Bitcoin has potential to be enormously successful---without immediate need to overthrow and replace alternate payment systems.

This.

Incorrect. The amount of money/time needed to fool the network with a 'fake' transaction is worth way more than the $5 coffee your trying to buy. Even if you are buying something like a massive house for a million dollars, if you cant wait 10-30min for the transactions to confirm then you have some serious priority issues.

Also a 'faster' network will need more confirmations to be as secure as a 'slower' network. Ex: a network with 1min block times vs bitcoin with 10min block times: The faster network would require 10 confirms to be as secure as 1 confirm on the bitcoin network.

EDIT: I also believe that the time to actually transfer funds with a credit card in in the area of weeks, not seconds. The merchant has to sit on the transaction for a pretty long time before they actually get money from the CC company.

A merchant is also hindered in that the CC is soft, a customer can dispute and possibly reverse the transaction in the future.  It requires that the merchant have a credit relationship with the payment processor.  The merchant also pays a significant fee not traditionally passed on to the CC customers, but to all customers.

Customers may prefer the CC, because it provides reversible transactions and hidden fees not directly paid by the CC user.  Using the collected fees, the CC company gets to play silly games with points and cash-back programs to attract customers that are paid by all customers of the merchants.

Merchants will be the one to drive adoption, due to the advantage of much lower fees and irreversible transactions, and a merchant can accept payments without establishing credit with a payment processor.

Bitcoin wouldn't replace the credit card because no merchant in their right mind would forgo payments in USD for BTC with BITC's price volatility.  Are you guys serious?  BTC behaves more like a commodity or store of value than a currency.  Everyone hoards it.

Forgot how did Maakus project go on ultimate blockchain compression

Bitcoin is not legally regulated and can not be used as a means of payment

That's $0.625 per GB, that's insane. I buy at ~ $0.05 per GB, and, that's insanely expensive for just long-term storage of data that can easily be reacquired, most low-end hard-drives you can buy for ~ $0.03 per GB.

- Credit card companies have two types of consumers.  Those who have money and can pay off their bill monthly.  These people will earn rewards and do not pay interest.  It is better for them to use credit cards.  The other type is those that don't have money.  As they're using credit cards to borrow, they won't have any bitcoins to spend.  Either way, people will use credit over bitcoins.
 
- The price will never stabilize to the point where companies will not base the price of a good off of the dollar.  Maybe decades from now at the earliest.  Retailers will always base BTC off of stable government backed money.  Businesses aren't stupid.  They'll look at how the unstable, non-regulated, currencies of the pre-1900s, utterly destroyed businesses with massive value swings, and always seek to have their money in a currency that is regulated and has a predictable inflation rate.

- Good luck tracking someone down from across the country (or even out of the country) because of a $500 - $1,000 theft.  Or at least good luck in a way that won't cost you far more than that to get your money back.

- There's still two major problems with stopping double spending.  First, it's much easier to attempt than normal theft, and there would be plenty of people willing to try it.  Second, it would be near impossible to stop.  Similar to how some shoplifters "accidentally" forget about that last item in their cart, thieves could always claim they forgot that they had already moved their BTC in an earlier transaction.

Credit card companies are greedy and evil, but for the forseeable future, they're going to provide a much better option for paying for items.

These complaints are pretty much useless. To solve this, we need a new way of compressing either the whole block chain or making a single transaction smaller. Neither of these 2 would be hard to do if our development was more active, which sadly is not.

True under current conditions.  Speculators buy it because it is believed that it will be useful as a currency in the future.  As more bitcoin is used as currency rather than commodity, then the price will stabilize, or be more predictable, IMHO.

Easily is relative term...

The current state is 15GB, but if this grows much larger the full nodes will probably come rather rare... Which might cause some other issues.
But these full nodes need to boostrap the new nodes at times and that uses bandwith in addition to the current network traffic. In worst cases some new nodes might be unable to ever catchup...

Something in the digital currency space will eventually replace the debit card, I'm not sure it will be bitcoins though.  Too slow and transaction limits that simply can't handle the world's transactional volume.  Bitcoin is better suited as a store of value and IMO, shouldn't try to involve itself in micro-transactions because it's simply not good at it.  

Bitcoin + Ripple....now that's a different story and a viable solution that should seriously concern payment processors.  

U can't compress blockchain much, nor u can make a single transaction smaller.

I don't understand we you keep hanging on the fact that it requires 10+ minutes for a transaction WHEN if you have already deposited your coins in a card wallet the transaction goes automatically from your card wallet to the merchant wallet.
All you need is something like a bank that say: Yes this guy has coins so we get it from him and give it to the merchant.

You know somehow NEO-BEE comes to my mind ;)

EDIT: Same as credit card, the money is not moved from your account immediately. When you swipe your cards the service checks if you have enough balance and holds it, but doesn't send it to the merchant immediately. This is much better. If you have the coins the merchant gets it in 10 minutes or something. So if you were a merchant what would you choose considering the transaction fees as well?

I do not think the btc will replace credit card, but complimentary to it, which is a good to the consumer. For instant transaction, btc is not the right choice.

Mutual mircopayment channels chains(net) would give Visa's throughput:

Alice <==> Bank/ProxyServiceA [<==> Bank/ProxyServiceB, ...] <==> Bob

or

Customer ---> Bank/ProxyServiceA [<==> Bank/ProxyServiceB, ...] ---> Merchant

where
<==>: long term(monthly, yearly?) mutual micropayment channel
--->: long term one way micropayment channel


requires malleability fix

Nothing is impossible, the word itself says 'I'm possible'!
Audrey Hepburn

Guess so. We could rewrite the protocol and include a function that would rewrite the blockchain into a more memory effcient variant.

Speculators buy it because they believe the value will go up...big difference from believing it'll be used in the future.

There's some famous quotes from major institutions and investors from the real estate crash in 2008 and the tech crash of the late 90s about how they knew what they were buying was overvalued, but they bought it anyway because they thought they would be smart enough to sell before the bubble burst.

U can't win fighting against entropy.

It seems to me this issue always ignores the glaringly obvious - the benefits of credit cards to the purchaser.  Namely:
1. Credit.  Pay at the end of the month, defer over the next few months
2. Protection. goods or services sub-standard, not delivered, etc.  

When does Bitcoin offer a replacement service to these?

From the article:

There is no real hope of regulation (no central authority, resistance from most of community to the idea) and adoption from the general consumer is unlikely while we have no resolution of the above points.  

1) Credit doesn't have to be coupled with a payment system.  Credit cards have higher rates than a line of secured credit at a bank.
2) This comes at a cost.  Merchants are usually prohibited by contract from passing along the cost of lost funds and fees from CC transactions to just CC users. 

Right, they are called central clearing houses.  Ripple eliminates the need for central clearing houses, but if it's more centralization you like, that's fine with me.  To each his/her own.   ;)  Me, I like transactions confirmed in seconds instead of minutes, without a central clearing house and all for a fraction of a penny.  I'm betting the general public is going to like that better too. Time will tell.

Until a way to reverse fraudulent transactions is built into bitcoin, it can't replace credit cards.  People will not accept that if someone scams them or hacks their credentials, the transaction can't be reversed as it can with a bank transfer or credit card.

“You’re not obligated to win. You’re obligated to keep trying. To the best you can do everyday.”
― Jason Mraz

No, we hit the 7 transactions per second limit first.

Bitcoin really does have a scaling problem. There are potential technical solutions, but nobody has implemented anything ready for deployment yet.

(Keeping Bitcoins in an "online wallet" and doing transfers within the remote system is not a solution.)

No the blockchain size the tx limit of 7 per sec or security is a concern!

Imagine an insurer which makes a btc market..

I can envision front end centralization with profits in mind backed by decentralization of bitcoin.. Real transactiins get posted in a queue and frauders get hit with fraud..

Downside? When you make a payment to so
eone the sender needs to be registered with the market maker througg some credit mechanism like visa mastercard. How can they make it work? Simple the fees they generate are higher than the amount of fraud.. and the law is on their side.

The disk and bandwidth constraints will fade with time.  The growth of credit card transactions at this point, must be more or less linear.

I think about it like this, there was once a point when written text could fill a computers drive.  Now, as least for human consumption, text takes up a trivial amount of even a smartphones resources.

Audio was next.  Computers can process, store, and transport all the audio the average person could ever want, almost trivially.  Storage space is a borderline consideration, but not for much longer.  Video is still being conquered, but we are getting there.

All of these formats have real world data-density saturation points based on the capabilities of us as humans to read, listen, and watch.  We have a natural saturation point for transactions as well.  There are only so many transactions we tend to make in a day!  Our computers' abilities are far outpacing the growth in human-based transaction count.  Of course this does not take into account computer driven transactions or micro transactions that we don't yet make.  Those will inevitably need to ride on different rails than the human-interaction transactions that visa and mastercard currently represent.

In a decade 100Mbps connections are going to very common.  That could easily handle 10,000 tps.

The credit cards are doing a pretty good job putting themselves out of business.

Too many people on here seem to be split as to what the purpose of BTC is.

If the purpose is a separate currency not controlled by the government, than the solution is simple.  Rely on the banks.  Have the banks hold the BTC.  Couple BTC with the current credit card / debit card system.  You'd get all of the convenience and advantages that the banks can offer, while still being able to hold money in BTC.  BTC will still be at somewhat of a disadvantage (lenders will not be comfortable with a BTC denominated credit card given the price volatility), but it will be useable.

If the purpose is to never involve the banks, then you're living in a dream world.  A system where everyone's holding their cash on flash drives will never be able to compete with debit / credit cards.  There's just too many inconveniences for the majority of people to ever care about it.

debit/credit cards are supported by fees that the customer doesn't pay directly.  This is done by having the merchant sign an agreement to not pass on these costs to credit card payment system users.  Small merchants must pay much more than bigger merchants.

A merchant will see the economical advantage using a lower cost system with fewer fees, and could provide a discount over credit card users.

Customers will be attracted to the anonymity and the ability to do person to person transactions -- like pay the babysitter.   The anonymity may be required in a situation like buying something at a pawnshop.  You might fear that if you use a credit card, the shady guys working in the back will come find where you live and burglarize you.

A few problems with this:
1. Big merchants run their own credit/debit cards because they can make money off of the interest and fees. 
2. Small mom & pop stores likely don't have the resources to stay up to date with pricing though BitCoin.
3. Stores need to process transactions quickly.  If a bank is behind the BTC transfer, this can happen.  Person to person...not so easily.

As you mentioned, BTC has potential in transferring money (especially international transfers).  But it's purpose else where is dubious without a bank.  And even if a pawn shop were to carry BTC, wouldn't someone just use cash if they wanted to stay anonymous?

i guess we can do it today, and then we can fix the upcoming bugs, so we can enjoy later.

I'm not sure what you're saying here, because I assume credit card payment processors and merchants are separate entities.  I'm sure there are exceptions.  One provides a service (processing transactions) for a fee for the other.   The differences in fees can be large as well, my local mom & pop store pays nearly a 10% fee, while some large merchants pay sub-2% fees.  The payment processors are acting as escrow agents, in that they make good on a fraudulent transaction.  The fee is a reflection of the credit-worthiness of the merchant.


It took a while for mom & pop stores to switch from mechanical charge plates with triplicate paper copies to electronic systems for processing credit cards as well.


The validity of a bitcoin transaction is dependent on the number of confirmations in the blockchain.  If I sell you a car, I'd probably wait for at least 6 confirmations before releasing it to you.  A person-to-person transaction or a large purchase should also be validated in this way.

For small purchases, you can't make the customer wait around.   Either it can be done with an ubiquitous escrow system using a bank-like institution that escrows the transaction and worked very much like the credit card processing system, or the merchant will assume a risk that some portion of bitcoin transactions turn out to be double spends, just like they assume a risk that a small portion of cash transactions are done with counterfeit money.

There are way to minimize that risk, such as a POS bitcoin system that requires that the customer transmit a copy of the signed transaction to the POS system.  The POS system is connected directly to the largest mining pools, and considers the transaction valid if all the connected mining pools acknowledge receipt of a valid transaction.

For 1, I was referring to how places like Target and other major retailers offer a special credit card in return for a discount on purchases made there.  Credit cards are a very profitable side business for these places.

For 2, there was a reason for that.  Unless you had a sizable group of people who were only using BTC, they would never bother with making a switch.  And the ones that are do so for novelty's sake / they know BTC is popular and it's basically a cheap way for them to get some sales and publicity.

For 3, that would be a good solution, though it may be difficult to get everyone on the same page (if there's no central organization / bank telling people how they'll need to do it).

1080i edition of Avatar movie directors cut are larger. The movie is maybe 2h30m long. Blockchain is 5+ years "long". As block size grows so grows the tx fee to keep it under control or sponsor larger storage by the tx fee. Disk space are not real problem. Even my 12 years old desktop computer with 12 years old IBM GXP 120GB harddrives have no problem storing the blockchain among other stuff and games. More modern computer will have zero problems with full node for next 10 years even when tx volume increases by orders of magnitude.

Yikes!  I hope you keep frequent backups on hard drives that old.

The 10% fees for small merchants are not realistic.  In the north american system, small merchants pay around 3%, not ten.  That being said, the vast majority of merchants pay at least 2.5%.  Very few are actually paying sub 2%.

The "corporate" cards you speak of are sponsored by a company like target.  Because they are the sponsor of the card, they do not have to pay interchange fees to Visa/Mastercard.  Essentially, charges at their own store are much cheaper.  They simply pass that 1-2% savings onto the customer to further encourage credit card use.  For them, its as cheap as taking a debit card.

Plus, if the customer doesn't pay on time, they get a cut of the interest charges.  That is where the real money is.

A normal credit card user pays at least some interest each month.  In a BTC credit card scenario, there is never any interest paid.  That in itself limits the amount of money that can be made by the system.


Outside of the discount fees, there are also monthly charges to maintain equipment and accounts.  Most merchants pay around $30-$40 a month for the equipment and processing.  Then they pay the additional discount fees for each transaction.

You will get interest once you can offer a system that offers a couple options.  For small merchants, a low upfront fee and lower monthly fees along with some processing charge.  For larger merchants, a higher monthly charge with no or very low processing charges. 

That is the system that is being designed with the Coino alt-coin.  It essentially operates on two modes - one is a gift card type process where mag cards have a set value that is spendable at any CoinoCard member.  The other is the more traditional wallet system we are used to.  It lives on a chip card that can (with the help of the pos system) sign a transaction that sends real Coino on the blockchain.

The POS system in this case is going to sell for $250-$295USD.  Monthly fees range from free to $20 depending on what level of service you want.  Bitcoin will likely never be able to offer the same service simply because of it being first gen digital currency. 

In time, even Coino won't be the best choice and the platform will need to transition to a newer and better implementation of digital currency. 

But for now... there are some great opportunities to end up with a new processing system that can give Visa/Mastercard/etc a run for their money and end up taking some market share long term.

I never keep backups. But they are running RAID1 configuration. One of them have problems but I don't know which one until it fails completely. Both have loud bearings, they sound like old 10k 3,5" drives. And when they spin up from cold start the sound are incredible until they reach full RPM and calibrate. I will make youtube video about this computer. It is one kickass Socket 423 Pentium4 system that is overclocked too.

Speaking about Bitcoin and it's limitations I really want to say take look at wiki here https://en.bitcoin.it/wiki/Weaknesses Here is no real or potential obstacles hat can prevent Bitcoin from becoming omnipresent money of Internet with strong presence in physical world too. Even aging computers can run Bitcoin fine. Any post-2008 made computer can and will run it fine.

For an independent merchant without the best credit, you end up having to go with a payment processor that will do your transactions at a higher rate.  Tack on per transaction fees, monthly charges, and low volume sales, it's very easy to hit 10%.

Sub 2% is possible for a convenience store selling branded gasoline -- the oil company gets sweetheart deals on card processing through the pumps and can pass that on that on to the store.