Hello Danny,
The consumer is protected by freedom of choice and a free market.
The consumer can choose whether or not to patronize a given merchant, the merchant cannot force consumers to choose his business.
If a merchant is dishonest, he will earn a reputation as such and will quickly lose consumers. Consumers will naturally choose a merchant with a good reputation over a merchant with a bad reputation. Any sector with a shortage of trustworthy merchants will soon find entrepreneurs entering the sector providing better and more trustworthy service and putting the dishonest merchant out of business. For this reason, it makes more sense for the merchant to be protected instead of the consumer.
Again, this paragraph is not wrong, but I think it misses other perhaps more important phenomenoms. Free market is too much of an abstraction for me to trust its supposed virtues, I wait for the practicalities to be observed. I think a customer is forced to poor choices, especially when deprived of informations, and commercial enterprises are not prone to truth. In a new niche for goods or services for example, I expect the consumers to be very wary if they lack insurances for their payments, scams could flourish, information is fringe.
Keep in mind that while bitcoin "feels" like an electronic payment system, it acts more like cash. If you walk into a merchant and purchase an item with cash and then discover when you get home that the merchant was dishonest, you have the exact same problem as you do with bitcoin. This is why bitcoin is often referred to
as a digital currency, digital gold, or digital cash.
I'm not used to pay cash, especially for large transactions, see the problem, plus in real life, you see the seller, he has a localization, a store, you met him, you saw the product you can take with you. On the internet one is supposed to pay with bitcoins that acts like cash unknown people for products that are not tangible, hmmmm, it doesn't sound good to me.
A distributed risk with a trusted third party (such as Visa, MasterCard, or a bank) arbitrating the transaction is an option with bitcoin just like it is with any other currency. There is nothing preventing an innovator from providing such a service in Bitcoin, it just hasn't been widely available yet. I fully expect that there will come a time in the near future (in the next 3 to 5 years) when someone will offer deposit accounts that are regulated, audited, and insured. They will offer the ability to make "instant" payments from this deposit account (no need to wait for confirmations if everyone can trust the provider). This third party risk arbitrator will provide many of the consumer protections that credit cards, debit cards, and other bank payment systems currently provide. Consumers will have the option of paying with "bitcoin cash" or with a "bitcoin payment processor". Merchants will be able to choose if they wish to accept a "bitcoin payment processor" so they don't need to wait for confirmations, or if they prefer "bitcoin cash" so they can avoid chargeback risk.
The market will then be able to settle the question of which type of payment is best for each situation.
Don't you feel it's like reinventing the existing real world simply because this bitcoin core idea of irreversibility touted as an advantage is naive and wrong, or perhaps just the only option that existed ? The designer, Nakamoto, whoever he or they are, perhaps were tech guys but didn't had a great understanding of the complicated economical matters. What keeps the insurance cost low are also the judicial consequences, if scams are easy, well spread and not punished, how do you prevent these costs from skyrocketting ? How do you prevent the third party to make a huge profit, just like a bank imposes its tax to a merchant because he uses a bank card system ? What's exactly left in the equation for a merchant to be cheaper with bitcoin than with usual means of payments as you claimed earlier the situation could be ?
