Bitcoin can replace the credit card today

[sidhujag]

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.

[Cubic Earth]

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.

[cbeast]

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

[IrishFutbol]

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.

[amspir]

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.

[IrishFutbol]

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?

[ns12123]

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

[amspir]

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. 

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.

2. Small mom & pop stores likely don't have the resources to stay up to date with pricing though BitCoin.

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.

3. Stores need to process transactions quickly.  If a bank is behind the BTC transfer, this can happen.  Person to person...not so easily.

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.

[IrishFutbol]

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. 

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.

2. Small mom & pop stores likely don't have the resources to stay up to date with pricing though BitCoin.

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.

3. Stores need to process transactions quickly.  If a bank is behind the BTC transfer, this can happen.  Person to person...not so easily.

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).

[MysteryMiner]

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

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

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.

[amspir]

Even my 12 years old desktop computer with 12 years old IBM GXP 120GB harddrives have no problem...

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

[bgade]

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.

[MysteryMiner]

Even my 12 years old desktop computer with 12 years old IBM GXP 120GB harddrives have no problem...

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

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.

[amspir]

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%.

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.

[S4VV4S]

How many times do I have to say this:

NEO-BEE IS ON IT!