Bitcoin Use Case - Why this has value

[evoorhees]

Copied from: http://bitcoin-trader.blogspot.com/2011/10/ogrrcom-launches-massive-bitcoin.html   (a site I'm more impressed with every day - great editorials)

"[The market in digital goods] is huge and it's growing fast. Bitcoin allows us to take payments and not have to worry about chargebacks which have plagued virtual goods sales since the very beginning. Historically, to take a (generally) irreversible payment such as Western Union or a bank wire transfer, it meant exorbitant fees that made small transactions cost-prohibitive.

As you know, when you deliver a virtual item, you're left with no verifiable evidence that you've done so and it's very simple for the buyer to claim that they've never received it, or that their card was stolen, or that their child made the purchase without their permission. It's this not having to worry about chargebacks that allows us to store Bitcoin on behalf of our users and allow them to trade and cash out at any time. If we had to worry about deposits being reversed, there'd be no way we could allow users to make withdrawals. Bitcoin solves this problem."

This is why Bitcoin has fundamental value. It is useful. Beyond the rhetoric, the political implications, the economic theorizing, the hyperbole... beyond all that, Bitcoin is useful.

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[GoWest]

Thanks evoorhees.  I've had the opportunity to break a lot of interesting news to the community, but I feel this is the most exciting project I've written about since I began the blog in August.  This is an extremely well executed project that isn't just a Bitcoin redux of an existing service, but a true example of how the technology can be leveraged to gain real advantage over the competition.

[evoorhees]

but a true example of how the technology can be leveraged to gain real advantage over the competition.

And it won't be the last

[DeathAndTaxes]

A huge feature over Bitcoin is it actually solves two dilemas.

Dilemma One)  I am accepting currencies for this virtual item.  I am honest so I want to ensure that once I give the item the currency can't be taken from me.

Dilemma Two) I am paying for a virtual itme.  I am honest so I want to ensure that once I pay the item can't be taken from me.


Now Dilemma One is more common.  There are more dishonest "consumers" than "retailers" (although those terms become more ambiguous with systems like amazon & ebay).  The article talked about Dilemma One.

Here is an example of how it can solve Dilemma Two.  Say an online game like World of Warcraft accepted bitcoin for inter game transactions.  I don't play WOW but I know Blizzard is very much against tranfering of digital assets because legally they claim ownership of everything however I don't think that will last.  Users will demand true ownership of digital assets much like they do with physical assets.  So for lets just imagine in the future Blizzard both accepts Bitcoins and allows personal ownership and resale of digital assets.

I want to sell something in the game to you but I don't trust you.  You give me your bitcoin address.  I enter it into a contract on WOW server.  I transfer item A to you when a transaction showing signed by your private key involving X bitcoins is transfered to my address. I set a 7 days window where contract expires if not completed.  I trust Blizzard but I don't trust you.

Now you simply verify the transaction on WOW.  You trust Blizzard but you don't trust me.  Luckily you don't have to.  You pay me X bicoins signed with your private key to my address.  The WOW transactions server scans blocks w/ 6 confirmations for matching pending WOW contracts and executes them.

You and I don't trust each other but were were able to solve both Dillemmas.  Not only was the currency irrevocable but so was the virtual goods.

Now this example involves a trusted 3rd party (WOW).  But if a game exposed an API and assets could be transfered via public key infrastructure then it could be accomplished with no tursted 3rd party.  Please don't get limited to the game WOW.  It was just an example.  It could be used for other forms of irrevocable singleton virtual goods.

[matonis]

Thanks evoorhees.  I've had the opportunity to break a lot of interesting news to the community, but I feel this is the most exciting project I've written about since I began the blog in August.  This is an extremely well executed project that isn't just a Bitcoin redux of an existing service, but a true example of how the technology can be leveraged to gain real advantage over the competition.

Thanks for your report. Jesse is a good guy. Does anyone know if they've gone live yet or is it still invite-only?? All I could find on their site was a debate about approval for BTC withdrawals, etc.