On a panel with MasterCard and Visa

[elux]

Visa and Mastercard operate on the basis of "merchant-pull":   you have to give the keys to your safe to the merchant and then trust them to "pull" from your account only the amount they said they will.

To create this trust in consumers, Visa and MC have spent fifty years building an ever-more elaborate edifice:  PCI-DSS, Chip+PIN, spending a fortune building globally recognised brands, chargeback, the Visa/MC authorisation switches, the merchant acquirer business model, 3-D Secure, CVV2, and more and more and more and more and more and more and more.  It's just *exhausting*.  It costs so much money, creates so much complexity and it's all because their solution to the problem is fundamentally *wrong*.   Merchant-pull is an *insane* way to build a retail payments system.... but if all you had was 1960s technology, that was pretty much your only choice.

Bitcoin turns this whole rotten carcas on its head and makes it possible to do "consumer-push" instead.

The merchant tells *you* how much they want and you then send it to them.  *You're* in control.   *You* keep hold of the keys. They only get what *you* give them.  No need to trust the merchant.  No need for chip and PIN.  No need for *any* of the barnacles that are dragging the card industry down as it attempts to make a 1960s analogue technology relevant in a digital age.

That is a one hell of an elevator pitch. Bravo!

[1714135557]

1714135557

[Carlton Banks]

An "Up your sleeve" retort to problems with "no central authority" or "peer to peer money downloading" type-comments: I believe it is the Mastercard transaction network that employs a peer-to-peer topology to help them keep the data transmission levels low, and ergo, costs down. I would guess they may have some type of distributed ledger too, but I've only got a faint memory of all this. Perhaps you could ask them to explain the similarities and differences for you, I'd be interested to hear what they themselves would say 

[deepceleron]

These are problems that are unfixable with credit cards. Until they switch to a something you have + something you know + real crypto that prevents interception or reuse of a payment authorization, guarantee any authorized payment will be instantly and irrevocably paid to the merchant, and quit becoming a better-business-bureau, they will only suck.

Traditional payment networks (...) suffer inherent weaknesses:

• Some payment fraud is unavoidable,
• Completely non-reversible transactions are not possible; payment processors are involved in disputes,
• Identity fraud and remote account takeover using stolen credentials are possible,
• Payment processors can block funds and freeze accounts,
• You must provide your credit card or account number to sites, which can be stolen by hackers to spend your money.

Bitcoin has none of these problems:

• Confirmed Bitcoin payments are absolutely trustable,
• Payments are non-reversible; money cannot be recalled by the sender,
• Identity theft is a non-issue - payment recipients don't need to obtain the identity of buyers or store personal information to take payments,
• Nobody else can interfere with your Bitcoin balance or your ability to send or receive money,
• You are in control of your money - when you send a payment, the recipient or hackers cannot make other fraudulent withdraws from your wallet.

[TitanBTC]

Is there any way for us to plant bitcoin supporters in the audience so we can grumble with distrust at everything the CC companies say?  Professional promoters call this "papering the walls" but its been around since the days of Athenian democracy. 

There's noting like spontaneous cheers and applause to change people's hearts and minds.

[waxwing]

The merchant tells *you* how much they want and you then send it to them.

HOw is this different from a credit card?

 *You're* in control.   *You* keep hold of the keys.

This will not be felt as an advantage for most people. The analogy to the "key" with a credit card would be the pin number. In both cases, they can be lost or forgotten - the key difference is if you lose the card, the bank will reimburse/restore the facility after identification. If you lose your Bitcoin keys, forget it (assuming you're using Bitcoin directly and not via a third party).

They only get what *you* give them.

How is this different from a CC? Maybe I missed something here.

 No need to trust the merchant.  

If using Bitcoin in the normal sense, this is clearly false. Making this false statement as part of the pitch is not helpful. Of course there is escrow and other third party quasi-Bitcoin setups but that doesn't change the falsity of this statement.

No need for chip and PIN.

True, but there is need for a key and an internet connection.

 No need for *any* of the barnacles that are dragging the card industry down as it attempts to make a 1960s analogue technology relevant in a digital age.

Calling it "60s technology" isn't a particularly fair attack, really. It's based on a financial architecture that is indeed old, but of course it has moved on within that architecture.

The advantages of a credit card to a modern day first world consumer are easy to state: you can get your money back if someone cheats you. It has worldwide acceptance. If you lose your card, your money is not lost. You can pay for things with money you haven't yet earned.

The main disadvantage is well hidden: the slight extra cost that all buyers (credit card or not) bear because the merchant passes it on to you. The other minor disadvantages are to do with the headaches of bureaucracy and also things like charges and fees and perhaps loss of privacy.

Having said all this I will seem like an apologist for the current financial system, but actually I am anything but. My main purpose is to point out something I believe many are wilfully ignoring: Bitcoin is a replacement for cash - digital cash. It is not a replacement for the banking system. This was clearly stated by Satoshi from the beginning, and is obvious from the design.

Don't fall into either extreme: it is not a replacement for the entire financial system, but neither will it leave that system unchanged.

By changing the underlying medium of exchange (assuming it succeeds of course), Bitcoin will inevitably change the way banking, lending, commerce and so on are done. But it cannot provide all the functionality currently provided by banks, card providers, stock exchanges and so on - and pretending it can just weakens our arguments and makes us look naive.

[gendal]

The merchant tells *you* how much they want and you then send it to them.

HOw is this different from a credit card?

Thanks for calling me on this...  it shows I didn't do a good enough job of explaining my key point.

The point I was trying to make was that the architecture of card processing has a fundamental weakness: the consumer authorises the merchant to generate and send a message to the consumer's card issuer (via the card network) to take funds from their account  However, ensuring that the amount you authorised matches the amount they request is decidedly non-trivial.  In the absence of controls, the amount they ask for could be anything.  This means that every time you use your card you are open to the risk that the merchant asks for far more than you were expecting.

To mitigate this risk, the edifice of card security grew up over time....  in the paper days, the fact that both the merchant and retailer had an identical copy of the voucher allowed the consumer to dispute a fraudulent transaction. More recently, technologies such as chip+pin try to do something similar.  But they're all really just sticking plasters on the funamental problem: card processing relies on the merchant "pulling" the funds from the consumer's card issuer.

Now sure... it works (usually) - but the cost and complexity of making it work safely is large.

The point I was trying to make was that Bitcoin (like cash, as you say) works differently.  The key communication link is from the consumer to the merchant (i.e. a "push") and the consumer has full control over how much they send.

Now this isn't perfect...  you have to solve the problem of how the consumer knows *where* to send the money and all your other objections are valid (e.g. consumer has to be online, etc, etc)

But as an opening statement, I think this characterisation could be a very effective way of destabilising/undermining any representative from the card industry who one suspects of planning to spread FUD.

 *You're* in control.   *You* keep hold of the keys.

This will not be felt as an advantage for most people. The analogy to the "key" with a credit card would be the pin number. In both cases, they can be lost or forgotten - the key difference is if you lose the card, the bank will reimburse/restore the facility after identification. If you lose your Bitcoin keys, forget it (assuming you're using Bitcoin directly and not via a third party).

Agreed... I wasn't really addressing the pain of key management, etc...  this was really just a consequence of the push versus pull observation

They only get what *you* give them.

How is this different from a CC? Maybe I missed something here.

Hopefully my comments above helped explain what I was trying to convey - but the point I was making was that when you use a card you aren't actually "paying" the merchant and you aren't transferring funds to them.  You are *authorising* the merchant to pull.  And a huge amount of work is needed to ensure that what they actually pull from your account is what you authorised them to pull!

 No need to trust the merchant.  

If using Bitcoin in the normal sense, this is clearly false. Making this false statement as part of the pitch is not helpful. Of course there is escrow and other third party quasi-Bitcoin setups but that doesn't change the falsity of this statement.

I was too broad... I meant "no need to trust the merchant to pull only the funds you authorised them to pull"

 No need for *any* of the barnacles that are dragging the card industry down as it attempts to make a 1960s analogue technology relevant in a digital age.

Calling it "60s technology" isn't a particularly fair attack, really. It's based on a financial architecture that is indeed old, but of course it has moved on within that architecture.

I think it probably *is* fair :-)    The "authorise merchant to pull and put in place controls to make sure they only pull what they said they would" is the only way you could build the system in the 60s.  They have moved in terms of architecture since then but this fundamental model is still at the heart of how cards work... and my argument is that it's not an ideal way to do things. 

By changing the underlying medium of exchange (assuming it succeeds of course), Bitcoin will inevitably change the way banking, lending, commerce and so on are done. But it cannot provide all the functionality currently provided by banks, card providers, stock exchanges and so on - and pretending it can just weakens our arguments and makes us look naive.

Sorry - that wasn't my intention.

Bitcoin is almost laughably immature in so many respects...  but by using "push" rather than "pull" as its core funds movement philosophy, I would argue it's on the right side of history

[westkybitcoins]

Having said all this I will seem like an apologist for the current financial system, but actually I am anything but. My main purpose is to point out something I believe many are wilfully ignoring: Bitcoin is a replacement for cash - digital cash. It is not a replacement for the banking system. This was clearly stated by Satoshi from the beginning, and is obvious from the design.

Hmm. Great point. I believe I've been viewing the two (digital cash and digital banking) as one, right from the start.

In reality, in the future we may see online sites with options to pay with Bitcoin (digital cash), or Bitcard (Bitcoin-based bank card). We'll have the usual sorts who tut-tut over the danger of holding all that digital cash at home, on your own computers, when it could all be safe and sound in BitBank, or whatever sort of overlaying system crops up on top of Bitcoin.

[moni3z]

Visa/MC require you to accept all their cards, regardless of the rate, and now it's illegal for merchants to charge extra to cover their insane fees, so prices of goods are being jacked up to serve their monpoly regardless of what method you pay with http://www.nytimes.com/2012/08/09/business/smallbusiness/visa-and-mastercard-settle-lawsuit-but-merchants-arent-happy.html

[BombaUcigasa]

It allows people to pay money for services and products, just like the electronic system, except it's decentralized, cheaper, faster, more secure, and you're not needed anymore. Bye!

[smoothie]

no identity theft for bitcoin users!

True. It would just be complete wallet theft if anyone ever got access to your private key.

[HeliKopterBen]

I would mention of situations where Bitcoin is complementary as opposed to a replacement to Visa / Mastercard

Here are some examples: Can you use Visa / Mastercard to:
Give money to a busker?
Give money to a homeless person?
Pay the kid next door to do some work in the yard?
Give an allowance to you kids? Note: See pre paid fees below.
Pay your babysitter?
Reimburse an employee for expenses as a small business person?
Pay any consumer / private individual?
Buy products or services online if you have no credit or poor credit? Note: Paying 20 USD or more in fees for a pre paid debit card to purchase a 20 USD item is not the answer.
Purchase a product or service from a merchant that does not have a merchant account?
Send money to a relative that lives in a remote village in Kenya?
Pay for high value low margin items online such as gold bullion coins for example?  
...

All of these work with Bitcoin but not with Visa / Mastercard

You could use these examples to show how incorporating bitcoin into their business would open them up to entirely new markets that they have been unable to tap before, generating new sources of revenue.

[ixne]

You could also mention that, while not completely anonymous, your use of bitcoin isn't inextricably tied up with personally identifiable information.  You don't need to announce to the merchant who you are and where you live, and it is much harder for companies to collect, store, and sell data about you and your purchases.

[RodeoX]

Another vote for bitcoin's utility, security, and low price. For on-line shopping nothing comes close in these areas.

[TangibleCryptography]

Could be smart to really push the fact that credit/debit cards were never meant for use on the internet. Internet didn't even exist when cards were first envisioned and created, whereas Bitcoin is built from the ground up to handle payments over the internet.

Also, in order to accept payments by cards, merchants need to register+pay fees+++. To accept payments in bitcoin, all you need is a private key (i.e. a number with some specific properties).

This. This. This and This.

Know your audience.  Those in the audience won't care about ending the Fed, the conspiracy of monetary inflation, the abuse of banks, anything about fractional reserve, or the benefits of anarchy and the power of Bitcoin to defund the state.

Know your audience.  Anyone who has accepted credit cards only and lost money to either identify fraud or so called "friendly fraud" will care about how CC & Internet don't work well together.  IIRC something like 90% of all credit card fraud involves "card not present" transactions.  It was never designed for that any everything in the past twenty years to reduce/control it has been a bandaid at best.  

Painting a picture for the audience about how Bitcoin is better for the merchant
1) no chargebacks --- ever
2) no need for a processors however processors (bitpay) can exist because many merchants want a turnkey solution
3) low/negigible fees (don't say "free")
4) open network, anyone can participate, build value added services, etc.
5) merchants can eliminate the cost and expensive of trying to identify their customers to stop payment fraud.
6) merchants can accepted orders from Somolia with no more risk than New York (use name of city where conference is located).
7) merchants don't need to hold on to cardholder information and thus there is less liability to the merchant (identity theft lawsuit) in the event of a breach of the merchant's servers.

[domob]

There are all very good and valid points already in this thread.  Let me just add my own recent experience:  It seems credit cards are prevalent in the US, but not so much in Europe.  I don't have one for instance, and also don't want to have one.  (Not because of my credit rating, it would be easy to get a card - but I really don't want it, mainly for the reasons listed above already.)  However, I just tried to book a hotel for my vacation, and it just wasn't possible without a credit card.  I even wrote to it and asked them directly whether I could pay in advance using a SEPA Euro transfer, but they didn't even reply.  Very frustrating!  On the other hand, when I went to 9flats, I had booked and paid with Bitcoins in a matter of minutes without needing to worry about banks or my non-existant credit card.

[freedomno1]

Secure transactions that prevent identity theft
No third parties required if a user is trusted
Escrow is the alternative
Trading bitcoins can occur directly between individuals anywhere in the world at lower cost.
Then converted to Fiat saving fees
Bitcoin was designed with the internet in mind
Growing adoption by merchants worldwide as they realize they do not need to pay additional fees to use bitcoin
Distrust of Mastercard and Visa as they force fees on merchants to pay for their premium card programs
Irreversible trades forces trust to be guaranteed.

Guess some of the videos before in this thread might be convenient
Ignore the First one above the line that's just amusement

https://bitcointalk.org/index.php?topic=279712.msg2997331#msg2997331

Edit: This one is best http://www.youtube.com/watch?v=K7LQu-eIOO0
http://www.scribd.com/doc/142758889/Why-you-should-invest-in-Bitcoin-Tuur-Demeester

A post from the Genesis Block still reading it since I reference it now and then
http://thegenesisblock.com/wp-content/uploads/2013/07/TGB-Bitcoin-Mid-Year-Review-and-Outlook-7.pdf?d855e7

[grau]

Thanks a lot for all the input. The event will take place tomorrow in Budapest. http://www.portfolio.hu/rendezvenyek/reszletes.php?id=163

The audience will be senior banker, fund manager and some regulators. It is a local event but unique that Bitcoin is discussed in such a forum. I will update you.

I already got a follow up invitation to the deputy secretary of state responsible for financial policy affairs.

[The Bitcoin Catalog]

Thanks a lot for all the input. The event will take place tomorrow in Budapest. http://www.portfolio.hu/rendezvenyek/reszletes.php?id=163

The audience will be senior banker, fund manager and some regulators. It is a local event but unique that Bitcoin is discussed in such a forum. I will update you.

I already got a follow up invitation to the deputy secretary of state responsible for financial policy affairs.

Good luck!

[gollum]

I am invited to join a panel discussion with local managing directors of MasterCard and Visa at a high profile Finance IT forum on 19. September.

Please feed me any arguments and facts with links you think would be helpful to make Bitcoin shine in comparison. Thanks in advance.

The biggest disadvantage of VISA and Mastercard:
Security is a joke. They should have 2 Factor Authentication to accept each transaction.

The security of bitcoin is not so good either since it is really easy to lose a wallet due to theft, deletion or hard drive failure. But bitcoin is new, it is evolving. Visa/Mastercard have been around for several decades, their security still sucks.

[niko]

Given the audience, the most productive approach is (was?) to demonstrate the simplicity of use, security, mention multisig and triple-entry accounting, and insist on opportunities Bitcoin could offer: tapping into new markets (see ArcticMine above), and irreversible, secure, quick, and global payments.

You might also flirt with tracking consumer spending habits based on data mining of the ledger. While transactions generally remain pseudonymous for the outside world, the parties to the transaction can learn a lot about each other.

Be prepared to refute the common myths of anonymity.