Why bitcoin?

[X. Xerxes Morgan]

you can use it to become a pioneering entrepreneur I guess

if you even have to ask that question youre probably just a consumer that will eventually be forced to use bitcoins by companies like the ones you mentioned.

I would say that's a bit of hyperbole, but I get your point. I think a better way to put it is:

Yes, Bitcoin at it's current level of adoption is more of a hassle than a benefit for the completely average person who doesn't do any sort of transaction other than paying bills, buying groceries and gas, buying some stuff off Amazon every once in a while, etc. However, these are also certainly not the "shot callers" of the world, and definitely have a miniscule influence in adoption of new currencies. They go wherever the market pushes them.

That concerns me. It again seems as though bitcoin is specifically prohibitive to casual investors and low-income people. Or, more to the point, it prioritizes the rich and those who were early adopters.

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[buttcoin1]

Well, let's see...

1) first and foremost, reversible transactions open up a wonderful new world of petty fraud, especially for companies selling digital, ephemeral products (such as ebooks, or software, or online services) because delivery of those is problematic to prove outside some pretty in-depth interpol investigation.

Right. And with Bitcoin if someone steals my wallet and spends all the coins in it I'm screwed. No recourse. All my money is gone. With Credit cards I'm not liable and all my money is still there.

See what I did there? Still have money in the bank.

[faustianover]

Painpal and similar entities not so much "protect" against fraud as shift the damage to almost exclusively the established merchants (since scammers run for cash out pretty fast, they hardly care that much, it's basically them vs. time after you send them a Paypal transfer, and with proper skills and prep, they easily outrun an average person's ability to realize the fact of fraud and file complaints), which strikes me as somewhat perverse (though I could definitely see how some people might find that setup comforting)

As for due diligence, well, we have #bitcoin-police @ freenode. Do check those guys out ( Google  bitcoin police IRC if you don't know what the love Freenode is)

Bitcoin shifts damage exclusively to the consumer. I have no economics background, but aren't there more consumers then merchants? Aren't merchants themselves consumers? PayPal is not a perfect system. Bitcoin does not offer improvements to the consumer- just to the seller.

you can use it to become a pioneering entrepreneur I guess

if you even have to ask that question youre probably just a consumer that will eventually be forced to use bitcoins by companies like the ones you mentioned.

I would say that's a bit of hyperbole, but I get your point. I think a better way to put it is:

Yes, Bitcoin at it's current level of adoption is more of a hassle than a benefit for the completely average person who doesn't do any sort of transaction other than paying bills, buying groceries and gas, buying some stuff off Amazon every once in a while, etc. However, these are also certainly not the "shot callers" of the world, and definitely have a miniscule influence in adoption of new currencies. They go wherever the market pushes them.

I have a problem with this logic. Yes, large companies have influence over the market. However, most of these companies are successful because they understand their markets. Paypal is a big deal because paypal courts those looking for buyer-security. Why would a big company adopt Bitcoin? A company the size of amazon experiences minor fraud, but If they wanted to see the benefit of switching to Bitcoin, they would have to turn around and sell their customers on the idea of Bitcoin. They would have to push people to Bitcoin rather than paypal. And the concern I would see for them is the association. The first time a customer is scammed, their thought would be 'I never had this problem with paypal. Why did <company> tell me this is better?' And negative press spreads so much faster then positive.

From an outside perspective, I think it's a huge mistake for you to tell me that you don't want my business. I wouldn't bring a huge amount of money into the market, sure. but what about anyone else who is looking for the pros and cons of Bitcoins to the consumer and find this thread? I'm giving you a chance to make Bitcoin appealing to more people, and so far the most attractive thing I've heard is using it as a Western Union alternate.

[faustianover]

Also, Googled and looked into bitcoin-police. It looks very new- two posts on a blog, wiki with a lot of info on the mybitcoin scandal. Have they successfully helped anyone recover funds? Or at least, brought any bitcoin scammers to some form of justice? 

[faustianover]

Bitcoin shifts damage exclusively to the consumer. I have no economics background, but aren't there more consumers then merchants? Aren't merchants themselves consumers? PayPal is not a perfect system. Bitcoin does not offer improvements to the consumer- just to the seller.

Legit consumers pay for the cost of fraud by dishonest consumers.

From an outside perspective, I think it's a huge mistake for you to tell me that you don't want my business. I wouldn't bring a huge amount of money into the market, sure. but what about anyone else who is looking for the pros and cons of Bitcoins to the consumer and find this thread? I'm giving you a chance to make Bitcoin appealing to more people, and so far the most attractive thing I've heard is using it as a Western Union alternate.

It doesn't have to be either/or.  Bitcoin can co exists along with traditional "reversible & centralized" payment systems.  Likewise 3rd party services can be implented on top of Bitcoin to provide reversable transactions (if both the consumer and merchant want to).  No reason an entity like VISA couldn't exist in bitcoin world.  You buy with bitcoins.  The BTC are transfers to BISA.  BISA deposits funds to merchants Bitcoin account minus a holdback.  After 30 days holdback if released.  If a dispute happens customer contacts BISA and can be refunded from the holdback.  Not saying it SHOULD happen but if there is market demand it could certainly happens.

VISA is merely a reverseable abstraction on top of cash.
"BISA" is merely a reversable abstraction on top of Bitcoin.

Cash currently can't be reverse.  No mechanism for doing a cash chargeback.  Bitcoin is simply a truly cash equivelent for use online with all the advantages and disadvantages that go with it.

This is true, but it's harder to be scammed by cash based merchants. It's possible, but generally if you walk into an office, store, or artist you can get a feel for the quality of work/product. There is also a lot more work involved on the scammers part, and the potential rewards are nominal for most products/services. Excluding unsolicited salesmen approaching me (the physical equivalent of wealthy Nigerian widows), I can shop with some faith that my cash isn't going to end up just vanishing.

And yes, bitcoin does have to be either/or to see the benefit. The main selling point of Bitcoin- what I've seen time and time again, is that If i am a merchant, I will never have to deal with chargeback fraud. But if i accept Bitcoin and PayPal, the people who are honest enough to use Bitcoin wouldn't scam me in the first place. As long as I accept Paypal, I have to worry that I will be given false chargebacks. I would want to encourage people to use BTC, if not outright exclude PayPal.

[TheHeroMember]

Bitcoin is tax-free 

[indio007]

Bitcoin is tax-free 

Not if you convert it into to dollars for profit.

[methodsaint]

Bitcoin is tax-free 

Not if you convert it into to dollars for profit.

Really?

[faustianover]

To my understanding of US tax laws- If you earn money, it needs to be reported. If you make a tidy amount selling widgets for BTC, you'd need to report that income- Just as if you would report money earned in a foreign currency. (Especially if you then exchange the BTC for USD to buy food/pay bills/buy jetskis).

Even if BTC is not considered an actual currency, it's still a possession of some value- and I know at some point they ask about that. I've seen someone claim that 'BTC only has the value that's assigned to it' but that's true of well, everything.

I'd talk to a tax accountant about, if you have a decent sized wallet. Better to consult on it once, then muck up and look at fees and penalties.  I'm not going to assume it falls through a loophole just because I really want it to.

[Lolcust]

Well, let's see...

1) first and foremost, reversible transactions open up a wonderful new world of petty fraud, especially for companies selling digital, ephemeral products (such as ebooks, or software, or online services) because delivery of those is problematic to prove outside some pretty in-depth interpol investigation.

Right. And with Bitcoin if someone steals my wallet and spends all the coins in it I'm screwed. No recourse. All my money is gone. With Credit cards I'm not liable and all my money is still there.

So  you are   willing to shift the responsibility for your carelessness on other agents in the market who had nothing to do with your poor security decisions and terrible luck ?

:-P

Bitcoin shifts damage exclusively to the consumer. I have no economics background, but aren't there more consumers then merchants? Aren't merchants themselves consumers? PayPal is not a perfect system. Bitcoin does not offer improvements to the consumer- just to the seller.

Well, it seems to me that it's not a question of "who has more numbers" but a question of incentives such a set-up creates.

Shifting all the damages to merchants penalizes fair merchants and mildly annoys (at best) scammers

Shifting  all the damages to the consumer does penalize a careless / inexperienced consumer, but in the end a consumer has more ways to do due diligence on a merchant than a merchant on a consumer (online merchants are, by necessity, somewhat static, while online consumers typically are pretty ephemeral)

To me, chargebacks are obviously a corrupt system that creates perverse incentives

Also, nothing in principle prohibits various "fraud insurance" schemes (including ones I would consider "perverse" ) from arising, but, due to bitcoin's transparency (paradoxically, bitcoin is perhaps by far the most transparent online payment system, since everyone can view everyone's transaction log)

BTW, transparency is one more notable feature of bitcoin - you can go and take a look how your transaction is "moving around" in Block Explorer, which might have a lot of uses.

Also, Googled and looked into bitcoin-police. It looks very new- two posts on a blog, wiki with a lot of info on the mybitcoin scandal. Have they successfully helped anyone recover funds? Or at least, brought any bitcoin scammers to some form of justice?  

Everything about bitcoin is by necessity young.

Also, bear in ming that new functionality is being developed and tested (check out multicoin, it's amazing)

[indio007]

Well it needs to be said what income is. It is any excess over par value in an exchange

[thefighter]

Because BTC can be used to buy goods or services that normally wouldn't be obtainable online through paypal, etc.
A.K.A , the reason why a lot of people get into BTC in the first place...

[GoWest]

http://bitcoin-trader.blogspot.com/2011/09/14-things-you-can-do-with-bitcoin-that.html

[lazycodre]

Right. And with Bitcoin if someone steals my wallet and spends all the coins in it I'm screwed. No recourse. All my money is gone. With Credit cards I'm not liable and all my money is still there.

See what I did there? Still have money in the bank.

credit cards arent actual money, theyre proxy money.
they assign a number to the actual money they hold in the vault. that money never actually moves.

you can use a service like that for bitcoins as well.

one that offers chargebacks, etc. and all of that.

[indio007]

Credit cards companies do not hold any money in a vault.

[faustianover]

Well, let's see...

1) first and foremost, reversible transactions open up a wonderful new world of petty fraud, especially for companies selling digital, ephemeral products (such as ebooks, or software, or online services) because delivery of those is problematic to prove outside some pretty in-depth interpol investigation.

Right. And with Bitcoin if someone steals my wallet and spends all the coins in it I'm screwed. No recourse. All my money is gone. With Credit cards I'm not liable and all my money is still there.

So  you are   willing to shift the responsibility for your carelessness on other agents in the market who had nothing to do with your poor security decisions and terrible luck ?

:-P

Bitcoin shifts damage exclusively to the consumer. I have no economics background, but aren't there more consumers then merchants? Aren't merchants themselves consumers? PayPal is not a perfect system. Bitcoin does not offer improvements to the consumer- just to the seller.

Well, it seems to me that it's not a question of "who has more numbers" but a question of incentives such a set-up creates.

Shifting all the damages to merchants penalizes fair merchants and mildly annoys (at best) scammers

Shifting  all the damages to the consumer does penalize a careless / inexperienced consumer, but in the end a consumer has more ways to do due diligence on a merchant than a merchant on a consumer (online merchants are, by necessity, somewhat static, while online consumers typically are pretty ephemeral)

To me, chargebacks are obviously a corrupt system that creates perverse incentives

Also, nothing in principle prohibits various "fraud insurance" schemes (including ones I would consider "perverse" ) from arising, but, due to bitcoin's transparency (paradoxically, bitcoin is perhaps by far the most transparent online payment system, since everyone can view everyone's transaction log)

BTW, transparency is one more notable feature of bitcoin - you can go and take a look how your transaction is "moving around" in Block Explorer, which might have a lot of uses.

Also, Googled and looked into bitcoin-police. It looks very new- two posts on a blog, wiki with a lot of info on the mybitcoin scandal. Have they successfully helped anyone recover funds? Or at least, brought any bitcoin scammers to some form of justice?  

Everything about bitcoin is by necessity young.

Also, bear in ming that new functionality is being developed and tested (check out multicoin, it's amazing)

My carelessness? Again, I'm Joe Average, but I have some standards I try to follow. If i'm looking at an online store that I have never used before, I look for a contact us page first- But I've seen more then a fair share of sites that don't have anything other then an email address. Then I look around for reviews- but what if the site is only a year old? Or how do I judge reviews? Astroturfing is a fear with anything that has too many 5 star reviews. I've seen more then one site that I waffled forever on if it looked or felt legitimate.
Now put this in terms of bitcoin where a lot of these merchants are six months to a year old. Oh, it's easy enough to identify a scammer once they've taken someones money and run, but until then... I don't know what you consider DD with just opened Bitcoin merchants.

And Bitcoin- if it is as anonymous as people say, has the incentive for long haul scams. I'm really not going to discuss the mybitcoin accusations- but the fact that people think it's possible someone started an exchange, waited a long while, before making off with a large sum of coins. Even if that's not what happened here, what's to stop it from happening in the near future?

Because BTC can be used to buy goods or services that normally wouldn't be obtainable online through paypal, etc.
A.K.A , the reason why a lot of people get into BTC in the first place...

This doesn't really appeal to me. I am understanding this as products/services that are illegal. While I have my own opinions about the laws involved, I don't think going to Bitcoin to use the net to circumvent them is a good idea. Bitcoin is anonymous, but still has transparent transactions. Also, if this is really the driving force of Bitcoin, it tarnishes the image of any legitimate merchants considering using it.

[nmat]

I can't believe no one mentioned the most objective advantage of bitcoin: I can send money around the world without paying anything.

It may not be that useful to the average consumer, but it is the first currency that allows this. For example, I am an european and I really like dealextreme.com because they offer free shipping and they sell cheap stuff. I would really like to pay them with bitcoins because I lose a lot of money with the EUR/USD conversion.

Also, bitcoin is not anonymous by design. It allows for a certain degree of privacy and it can be sort of anonymous, but you must use other tools for that. I agree with most of what faustianover said. Bitcoin does not have one simple great advantage for consumers. It is technologically rather interesting and it offers some interesting features that some people want. However most consumers simply don't find these attractive enough to justify the change. At least right now.

[MajorMiner]

Getting a little tired of being the bitch of the credit card companies, banks, paypal, and various governmental parasites...

[faustianover]

http://bitcoin-trader.blogspot.com/2011/09/14-things-you-can-do-with-bitcoin-that.html

Addressing my thoughts on this.

1) Tip your favourite blogger ten cents with a near-zero transaction fee (less than a penny).

Understood, though 10 cents seems a bit more of an insult then a tip. A dollar or two for no transaction fees is fine.

2) Write a book, create artwork, play a song, upload it, and sell it, now. No shopping carts, no publishers, no distributers, no PayPal, no credit cards, no addresses

I've actually looked into this, before I heard about Bitcoin. In this day and age it's actually pretty easy to setup a merchant site, or work with something like amazon's publishing service.Joe average can do it, if not as well as an expert. Bitcoin may make it a little easier. Oh the other hand, this is what also makes Bitcoin attractive to scammers.

3) Send a dollar to someone half a world away for less than a penny.

4) Send ten thousand dollars to someone half a world away for less than a penny.

These points could just be one point- which also is the same as the first point. Bitcoin offers cheap money transactions.  If i had contacts, I could almost see starting a Western Union style service. On the other hand, i'm hearing mixed things about the speed of Bitcoin transfers, and at this moment in time I'd have to turn around and exchange that money for local currency which in some places could be a three step process with more associated fees. (also, Id have to trust every single node involved to not take the money and run, or give false information as I took in applications to open branches)
It's one of Bitcoins better selling points, but it still need maturing for the public at large.


5) Maintain a savings account without paying someone else to hold your money or give it back to you.
 

My first thought at this question was "well, I could just stuff all my cash in a safe for the same benefit." Then I reread.
I have three bank accounts. None of them cost me money. My savings account earns money- not much, but it's still money they give me for keeping my money there. My checking accounts are free. For one checking account, I did have to pay a small onetime fee for a debt card, but that is the only fee involved. I've never had to pay ATM fees either- There's a slight, ever so slight inconvenience in that I have to keep track of where a branch ATM is if I need money, but I pass two of them on the way two and from work every day. I realize this may be a case where I'm not as much Joe Average- but There are decent banks out there.

6) Withdraw your winnings from an online casino - all of it - and get it instantly. Do it without anyone knowing your name or where you live.

7) Playing poker at your buddy's place? Don't worry about stopping at an ATM to get cash. Settle your winnings at the end of the night without trying to figure out how to make change.

Online poker I can see. But playing poker with your buddies- This isn't something I personally do, but if I did, I'd bring the cash I was planning on spending with me. Maybe I just don't get it.

Eating out at a restaurant and the waitress won't split the bill? Let someone else pay and give them the exact amount you owe, to the penny. No need to carry cash.

9) Running out from the office to buy lunch for your co-workers? No need to collect the money in advance. Send them the payment address and they can pay their share without leaving their desks.

These hinge on the same thing that 7) does. I would need my buddies/coworkers to use Bitcoins. And if I wanted to get them to use Bitcoins, Their first question would be "Why".. which is what I'm asking right in this thread. Sure, paying debts back and forth via BTC might be simpler, but it's going to take a lot more then that to convince the people I associate with- especially when most of them have a low level of technical knowledge- to put a significant amount of money into BTC.

10) Set up an online store in minutes. No shopping carts, no payment processors, no fees.

11) Receive a payment and not worry about a chargeback from the credit card company or from PayPal. All payments are final.

10) is pretty much Identical to 2). It's incredibly easy to setup a Bitcoin business. From what I've seen, there isn't much hassle involved in becoming a Paypal business. I'm actually kinda uneasy about being so easy to setup a business- In the course of writing this, I realized not only does it invite scams, but it also requires less dedication on the part of the merchant. If I am serious about selling widgets online, I can spend time setting up a website and dealing with paypal. If that much is too hard, How do I expect to keep up if my shop becomes popular?

For that matter, I could sell things on ebay, or even just go to the communities I frequent and trade paypal information.

12) Send money to any organization. No middle-man can stop you from supporting a cause.

This contains a link to news about wikileaks. I applaud the ideal. I also am not comfortable bringing my politics into this- I want a reasoned debate, not a flaming. The thing is, Wikileak's politics aside - The reason a middleman would stop you, in every scenario I can think of, is illegality. As I responded to thefighter - This is not a reason for me to get into BTC. This is not the main reason to advertise BTC. This is a reason that any established business looking at accepting BTC would hesitate to associate with. Ideals are fine, I support you there. But if the primary drive of Bitcoin is to get money to business that paypal, mastercard, or banks won't touch because of legal concerns, the future of Bitcoin is not so bright.

13) Protect your wealth from your country's unsustainable financial policies without destroying the environment or native land.

Link to a discussion about the environmental damage of gold-mining. Without an economy background, I can't comment on 'unsustainable financial policies' (although also a bit confused. I thought a lot of nations were no longer on the gold standard?). I can ask about the impact of Bitcoin mining though. It probably is not be as bad, but I'd like to see the numbers.

14) Travel to another country. Cover your expenses without exchanging currencies (coming soon).


Well, let me know more about that when it's happened.

[faustianover]

I can't believe no one mentioned the most objective advantage of bitcoin: I can send money around the world without paying anything.

It may not be that useful to the average consumer, but it is the first currency that allows this. For example, I am an european and I really like dealextreme.com because they offer free shipping and they sell cheap stuff. I would really like to pay them with bitcoins because I lose a lot of money with the EUR/USD conversion.

Also, bitcoin is not anonymous by design. It allows for a certain degree of privacy and it can be sort of anonymous, but you must use other tools for that. I agree with most of what faustianover said. Bitcoin does not have one simple great advantage for consumers. It is technologically rather interesting and it offers some interesting features that some people want. However most consumers simply don't find these attractive enough to justify the change. At least right now.

So how do you change this? The sending money worldwide without worrying about conversion (Well, assuming bitcoin prices stabilize) is a good thing. It's also the only one I'm hearing.

A lot of talk about the upsides to Bitcoin requires Bitcoin be in common use. Sending money just to friends, not paying credit card fees, or having to worry about PayPal. To see these as superior to the alternatives, the community needs to sell the concept of Bitcoin. It's an uphill struggle.


It feels like one of the main reasons people get involved with BTC is as an investment vehicle- Either to start mining, or to play the 'buy low sell high' game (I guess scammers could fall under this too, get money quick schemes). This doesn't support BTC in the long run- A major drop in the exchange rate and people in this category would leave. Already I get the feel that most of the forks are in the same vein- Longing for the days when BTC was much easier to mine, before the peak in prices over the summer.

From a layperson view, I'd think getting more Average Joe's into BTC would help support the stability of the currency. It would certainly help get more established merchants to accept it, and help ensure its longevity. I just don't see an effort made to legitimately make Bitcoin attractive.